Reliance Infrastructure hits lower circuit as Supreme Court sets aside ₹8,000-crore arbitration award

Shares of Reliance Infrastructure hit their lower circuit on Wednesday after the Supreme Court set aside an arbitration award in favour of the Anil Ambani-led company.

The apex court has relieved Delhi Metro Rail Corporation (DMRC) of liability of ₹8,000 crore by setting aside its 2021 judgement favouring Delhi Airport Metro Express Private Limited (DAMEPL), a subsidiary of Reliance Infrastructure.

A bench headed by Chief Justice of India DY Chandrachud said that the top court had made an error interfering with the judgement of the Delhi High Court under Article 136 of the Constitution of India as it was a well-considered judgement.

"The amounts deposited by DMRC shall be refunded. Any amount paid by petitioner as part of coercive action has to be refunded," the bench said.

"By setting aside the High Court judgement, this Court restored a patently illegal award which saddled a public utility with an exorbitant liability," the court observed, Live Law reported.

What is the Delhi Metro vs Reliance Infrastructure case?

In 2008, DAMEPL and DMC signed an agreement to design, commission, operate and maintain the Airport Metro Express Line. The civil structures were constructed by DMRC, while DAMEPL looked after system workers.

The Anil Ambani-led company terminated the agreement in 2012, citing structural defects. A notice was served to DMRC.

Following inspections, the metro line was cleared for operations in 2013. The DMRC invoked the arbitration clause in the contract after the Reliance Infrastructure unit gave up the project within five months of restarting the line.

The arbitral award passed in 2017 directed DMRC to pay ₹2800 crore to DAMEPL. The amount has now crossed ₹8,000 crore with interest and other charges.

In 2018, a single judge of the Delhi High Court dismissed the case and upheld the award, but a Division Bench overturned the case on appeal.

The DAMEPL then moved to the Supreme Court in 2021, which upheld the arbitral award.