Mumbai Metro dispute: Bombay High Court partly upholds arbitral award in favour of Reliance Infra

The Bombay High Court has partly upheld an arbitral award of over ₹1,100 crore in favour of Mumbai Metro One Private Ltd (MMOPL) against the Mumbai Metropolitan Region Development Authority (MMRDA) in a dispute over cost escalation and delay in Mumbai’s first metro line [Mumbai Metropolitan Region Development Authority v. Mumbai Metro One Private Ltd].Pertinently, Justice Sandeep V Marne reiterated the limited scope of interference under Section 34, noting that it does not sit in appeal over an arbitral tribunal and cannot re‑appreciate evidence. However, the Court also struck down several heads of damages for want of evidence..The dispute concerned the elevated Metro-1 line connecting Versova, Andheri and Ghatkopar, which was Mumbai’s first modern metro corridor. MMRDA, a government body, hired MMOPL, promoted by Anil Ambani’s Reliance Infrastructure, to build and run the line under a long‑term concession agreement. The project was originally estimated to cost ₹2,356 crore and was supposed to be completed within five years but commercial operations actually began in June 2014 after delays and cost overruns. .MMOPL claimed that delays by MMRDA in giving clear “right of way” or access to land along the route and in providing depot and casting‑yard land, forced it to spend much more than planned. A three‑member arbitral tribunal of former Supreme Court judges adjudicated the dispute and, in a 2:1 majority award in 2023, ordered MMRDA to pay around ₹496 crore plus interest. With interest up to May 31, 2025, the award amount stood at ₹1,169 crore, according to Reliance Infrastructure’s disclosure..MMRDA challenged the majority award before the High Court under Section 34 of the Arbitration and Conciliation Act. Justice Sandeep V Marne agreed with the tribunal that delays in providing right of way and casting‑yard land were attributable to MMRDA and had pushed up the project cost. .The judge specifically accepted the conclusion that the total project cost increased from ₹2,356 crore to about ₹4,026 crore and that MMOPL is entitled to monetary compensation over and above the extended concession period.As part of the long‑running dispute, MMRDA deposited ₹560.21 crore (50% of the total award as on May 31) with the High Court after the Supreme Court modified an earlier High Court order that had directed the deposit of the entire amount as a condition for stay of the award..At the same time, the High Court gave significant relief to MMRDA by striking down three substantial heads of compensation for lack of evidence. MMOPL could and should have produced that evidence, the High Court said.Taking particular exception to the tribunal’s approach on these damages, the judge observed, “Where production of evidence is possible, but the claimant fails to produce the same, the Tribunal cannot take the alternative route of guesswork and award the claim for damages merely on surmises. To paraphrase, guesswork cannot be a shortcut for the production of evidence. Guesswork can be undertaken only when it is impossible to compute the exact quantum of losses suffered by the injured party.”.In view of this reasoning, the court struck down three components of the award - ₹100 crore for additional overheads and supervision during prolonged construction, ₹125 crore for extra interest and financing charges, and ₹23.47 crore as “opportunity cost” or loss of profits allegedly arising from the delayed start of operations.The Court has also permitted the parties to place before the registry a calculation of the exact amount now payable to MMOPL under the modified award and directed that this sum be released in terms of the financing documents, but only after a period of eight weeks..Senior advocate JP Sen with advocates Kunal Vaishnav, Prachi Garg, Prerna Verma and Sayalee Dolas, briefed by DSK Legal, appeared for MMRDA. Senior advocate JJ Bhatt with advocates Anjali Chandurkar, Dhishan Kukreja, DJ Kakalia, Bhavna Singh Jaipuria, Paresh Patkar, Ayaan Zariwalla and Bhakti Chandan, briefed by Mulla & Mulla & CBC, appeared for MMOPL.Advocates Gathi Prakash, Nidhi Asher and Vidushi Trivedi, briefed by Cyril Amarchand Mangaldas, appeared for the National Asset Reconstruction Co. Ltd. [Read Judgment].Follow Bar and Bench channel on WhatsAppDownload the Bar and Bench Mobile app for instant access to the latest legal news.