Bombay HC refuses unconditional stay on Rs 250 crore award against Mumbai Metro Rail Corporation Limited

The high court held that “no case is made out such the impugned award is tainted by such perversity that it brooks no deposit for stay on its execution”. Justice Sundaresan noted that the award would be stayed, subject to MMRCL depositing the entire awarded amount along with the interest till date in the court within eight weeks.

In case of deposit of the amounts, the judge said the contractor shall be entitled to withdraw the same along with accruals by providing “full unconditional bank guarantee” as per high court rules.

The bid for contract in question was made by respondent L&T-STEC JV Mumbai in May 2015 before the introduction of Goods and Services Tax (GST). The Arbitral Tribunal, consisting of three members by majority, directed MMRCL to pay Rs 250.82 crore to the contractor, of which Rs 21.26 crore was related to cost variation due to additional work carried out beyond the scope of the project.

Moreover, Rs 229.56 crore was attributable to the claims towards reimbursement for the impact of GST introduction for the period between July 1, 2017, and September 30, 2022.

MMRCL-appointed arbitrator dissented

The majority award was passed by the presiding arbitrator and the arbitrator nominated by the contractor. The arbitrator appointed by the MMRCL, the third member, on the other hand, had dissented from the majority and held that on additional works, the contractor owed a refund of Rs 27.09 lakh to the corporation and the GST amount was limited to Rs 134.42 crore.

Aggrieved by the majority award, MMRCL had approached the high court earlier this year.

Advocate General Birendra Saraf for MMCRCL claimed that the award was “ex facie perverse and has made such obvious blunders that no reasonable arbitral tribunal could have taken the approach adopted by the Arbitral Tribunal”.

The MMRCL contended that it was “entirely arbitrary to provide any compensation for impact of GST introduction, without such data breaking down the components of the price bid of the contractor”.

Saraf claimed that the Tribunal “shut out” the Corporation’s witness statement by the engineer-in-charge of the project, who had supervised the project, and who could have elaborated on technical and contractual aspects. He said that evidence of the said witness could be considered as he was independent since he was not on the payroll of the corporation and was only assigned a specific role in the project.

The contractor, through senior advocate Vikram Nankani, sought dismissal of the plea and added that the Tribunal did not exclude the engineer-in-charge’s evidence but had treated it with caution, considering he was not an independent witness.

“It is apparent that the witness was not shut out by the Arbitral Tribunal. The witness was examined and cross-examined,” the bench noted, adding that the Tribunal had “discounted” his claims to expertise in his opinions since he could not be treated as an independent expert.

The judge clarified that the present order was not the final adjudication of merits of the matter. The high court said the impugned award was “not facially untenable and is not undermined by patent illegalities”.

The high court went on to note, “The closest the Corporation came to approaching this standard was with the contention about the witness being shut out, but that is not a convincing manner of reading the approach of the Arbitral Tribunal to the witness.”

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