Mumbai Metropolitan Region ... vs Mumbai Metro One Private Limited on 24 February, 2026

Bombay High Court

Mumbai Metropolitan Region … vs Mumbai Metro One Private Limited on 24 February, 2026

2026:BHC-OS:5090
Neeta Sawant CARBP-427 OF 2024

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
COMMERCIAL ARBITRATION PETITION NO. 427 OF 2024

Mumbai Metropolitan Region Development
Authority .....PETITIONER

: VERSUS :

Mumbai Metro One Private Limited ....RESPONDENT

WITH
INTERIM APPLICATION NO. 3495 OF 2025

National Asset Reconstruction
Company Limited ...APPLICANT/INTERVENOR

IN THE MATTER BETWEEN:

Mumbai Metropolitan Region Development
Authority .....PETITIONER

: VERSUS :

Mumbai Metro One Private Limited ....RESPONDENT

Mr. J.P. Sen, Senior Advocate with Mr. Kunal Vaishnav, Ms. Prachi
Garg, Ms. Prerna Verma & Ms. Sayalee Dolas i/b DSK Legal, for the
Petitioner.

Mr. J.J. Bhatt, Senior Advocate with Ms. Anjali Chandurkar, Mr.
Dhishan Kukreja, Mr. D.J. Kakalia, Ms. Bhavna Singh Jaipuria, Mr. Paresh
Patkar, Mr. Ayaan Zariwalla & Ms. Bhakti Chandan i/b Mulla & Mulla &
CBC, for Respondent.

Ms. Gathi Prakash with Ms. Nidhi Asher & Ms. Vidushi Trivedi i/b Cyril
Amarchand Mangaldas, for Applicant in 1A/3495/2025.

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CORAM : SANDEEP V. MARNE, J.
RESERVED ON: 30 January 2026.
PRONOUNCED ON: 24 February 2026.

Judgment :

THE CHALLENGE

1) By this Petition filed under Section 34 of the Arbitration and
Conciliation Act, 1996 (Arbitration Act), Petitioner has challenged
majority Award delivered by the three-member Arbitral Tribunal on 29
August 2023. The majority Award has allowed claims of the Respondents
in the sum of about Rs. 496.48 crores along with interest. The Award
directs Petitioner to pay to the Respondent Rs. 35 crores towards
deductions made in the tranches of Viability Gap Fund alongwith
interest. The Award directs Petitioner to pay to the Respondent amount
of Rs. 13,16,00,000/- towards compensation for additional cost incurred
on account of payment of rent for the land at Wadala together with
interest. Petitioner is further directed to pay compensation of
Rs.30,48,00,000/- towards construction of steel bridge instead of
concrete bridge at Andheri Station alongwith interest. The Petitioner is
further directed to pay to the Respondent amount of Rs.411,70,21,968/-
towards increase in the cost of the Project. The Arbitral Award also holds
Respondent entitled to extension of time for completion of Project upto
7 June 2011. The award grants pendent lite interest, post award interest,
as well as costs of arbitration in favour of the Respondent. All
counterclaims of the Petitioner have been rejected in the majority
Award.

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2) A separate dissenting Award has been delivered by the
learned co-arbitrator on 29 August 2023 rejecting all claims of the
Respondent with a direction to the Respondent to pay sum of Rs. 1 crore
towards costs of arbitration to the Petitioner. The counterclaims of the
Respondent have been rejected in the dissenting Award.

3) The disputes and differences between the parties arose out
of Concession Agreement (CA) dated 7 March 2007 executed for setting
up of Mass Rapid Transit System (MRTS) alongwith Versova-Andheri-
Ghatkopar Corridor (VAG Corridor) which was the first Metro Line in
Mumbai (Metro-1). The disputes were referred to three member Arbitral
Tribunal comprising of Justice Shivaraj V. Patil, former Judge, Supreme
Court of India as the Presiding Arbitrator, Justice B.P. Jeevan Reddy,
former Judge, Supreme Court of India and Justice Gyansudha Misra,
former Judge, Supreme Court of India as co-arbitrators. The majority
award is delivered by the Presiding Arbitrator, Justice Shivraj V. Patil
and Co-Arbitrator- Justice Gyansudha Misra. The dissenting Award has
been given by the learned Co-Arbitrator- Justice B.P. Jeevan Reddy.
Petitioner seeks invalidation of the majority Award by the present
Petition filed under Section 34 of the Arbitration Act.

FACTS

4) On 19 August 2004, Government of Maharashtra sanctioned
implementation of rail based MRTS along Versova-Andheri-Ghatkopar
Corridor (Metro Project), to be implemented on Build, Own, Operate
and Transfer (BOOT) Model. Petitioner-Mumbai Metropolitan Region

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Development Authority (MMRDA) is a statutory corporation established
under the Mumbai Metropolitan Regional Development Authority Act,
1974 and it was appointed as the Project Implementation Agency for the
Metro Project. Petitioner-MMRDA invited Requests for Proposal. On 21
August 2004, a consortium consisting of Reliance Infrastructure Ltd and
Veolia Transport S.A. (consortium) submitted its bid on 10 January
2006 for the Metro Project including its technical proposal. As per the
financial bid, the consortium indicated expenditure for implementation
of the project at Rs.2356 crores, out of which MMRDA was to bear capital
contribution of Rs.1351 crores which was indicated as VGF. After
negotiations, the revised bid was submitted by consortium on 10 May
2006 by reducing the demand for MMRDA's VGF to Rs.650 crores. The
revised offer was accepted by MMRDA. By Resolution dated 14 June
2006, Government of Maharashtra sanctioned implementation of the
project at total cost of Rs.2356 crores. The Resolution contemplated
setting up of Special Purpose Vehicle (SPV) for implementing the
project in which the MMRDA was to be the shareholder to the extent of
26% equity on behalf of Government of Maharashtra. MMRDA issued
Letter of Intent (LOI) to the consortium on 20 June 2006.

5) MMRDA and consortium of Reliance Infrastructure Ltd. and
Veolia Transport S.A. incorporated Mumbai Metro One Private Limited
(MMOPL) as the SPV for implementation of Metro-1 project. In the SPV
of MMOPL, Reliance Infrastructure Ltd. held 69% equity share capital,
Veolia Transport S.A. held 5% equity share capital and MMRDA held
26% of equity share capital.

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6) On incorporation of MMOPL, Petitioner-MMRDA entered
into Concession Agreement dated 7 March 2007 with MMOPL which
contemplated concession period as 35 years from 7 March 2007 till 6
March 2042 including construction period not exceeding 5 years, unless
otherwise extended. The scope of work and obligations of MMOPL
included designing, constructing, operating, maintaining, owning and
transferring the MRTS. The obligations of MMRDA included grant of
access to MMOPL to the site including Right of Way (ROW), leasing land
for Car Depot, providing electric sub-stations and access to stations and
land temporarily for construction of elevated track way, station
buildings and staircases as envisaged under the Concession Agreement.
As per Schedule-A to the Concession Agreement, MMRDA was to
provide access to site, free from encumbrances in six identified stretches
of a total length of 11.332 Kms. along the VAG Corridor. MMRDA was
also to provide 13 Hectares of land at Versova (D.N. Nagar) within six
months for construction of Car Depot, which was to be used as Casting
Yard during construction phase. Under the Concession Agreement,
MMRDA was to provide VGF of Rs. 650 crores. Concession Agreement
also contemplated appointment of Independent Engineer (IE) for
overseeing the implementation of the Project. MMRDA accordingly
appointed Louis Berger Group Inc alongwith RITES Ltd. as Independent
Engineer.

7) According to the Petitioner, the land envisaged for setting
up of Car Shed/Casting Yard at D.N. Nagar, Versova was embroiled in
litigation. Before execution of Concession Agreement, MMOPL had
proposed to MMRDA that a plot of land at Wadala admeasuring about

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60,000 sq.mtrs be permitted to be used for setting up Casting Yard. After
execution of Concession Agreement on 7 March 2007, MMRDA allotted
land admeasuring 60,000 sq.mtrs at Wadala in terms of Allotment Letter
dated 25 April 2007 @ Rs.4.85 per sq.mtr. per day upto December 2007
and thereafter @ Rs.5.35 per sq.mtr. per day from January 2008 to
December 2008. MMOPL objected to the rates. Later, in a meeting with
the Chief Minister, it was agreed that the rent in respect of the land at
Wadala would be average of commercial and concessional rate. MMOPL
took physical possession of land at Wadala on 18 January 2008 for
construction of casting yard.

8) A segment of Metro works in Andheri was to cross the
Western Railway line, on account of which MMOPL was required to
obtain necessary approval from Western Railways and the Western
Railway gave in-principle approval to MMOPL for construction of a
segmental concrete bridge at Andheri on 30 October 2007.

9) Though the Concession Agreement was entered into on 7
March 2007, it appears that physical work of the Project commenced
only on 8 February 2008. MMRDA and MMOPL entered into
Supplemental Agreement, inter-alia for extension of time period to
provide Right of Way to MMOPL by a period of 180 days and
consequently concession period also got extended accordingly. The
second and the third extensions were given under Supplemental
Agreements dated 29 February 2008 and 27 August 2008 by 180 days
each and accordingly obligation to provide unencumbered Right of Way
was extended totally by 540 days upto 28 February 2009. In the

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meantime, MMOPL commenced construction work and claims to have
faced considerable impediments on account of MMRDA's failure to
handover Right of Way in timely manner and in removing the
encumbrances. Parties exchanged correspondence. MMOPL requested
for extension of time for completing the construction. The Independent
Engineer, after considering the factual situation recommended
extension of time upto 30 June 2014. By letter dated 19 December 2014,
MMRDA extended the Project completion date upto 28 August 2013. By
another letter dated 21 February 2014, the project completion date was
extended upto 31 March 2014. The Commissioner of Metro Rail Safety
sanctioned opening of Metro line on 2 May 2014. The Independent
Engineer issued provisional completion certificate on 6 May 2014. The
Railway Board granted clearance for rail systems on 5 June 2014. The
operation of Metro line commenced from 8 June 2014. The Independent
Engineer recommended extension of construction period upto 17 May
2014 by his letter dated 26 November 2014. MMRDA thereafter granted
extension upto 17 May 2014 by letter dated 11 December 2014.

10) According to MMOPL, the delay in implementation of the
Project resulted in increase in the cost of the Project from Rs.2356 crores
to Rs.4026 crores. On 14 July 2014, MMOPL addressed letter to MMRDA
claiming amount of Rs.1162 crores. This is how disputes and differences
arose between the parties under Concession Agreement, which were
referred to arbitration. The Arbitral Tribunal comprised of three former
Judges of the Supreme Court, Justice Shivraj V. Patil, former Judge,
Supreme Court of India as the Presiding Arbitrator and Justice B.P.
Jeevan Reddy, former Judge, Supreme Court of India and Justice

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Gyansudha Misra, former Judge, Supreme Court of India as Co-
Arbitrators. In its Statement of Claim as amended, MMOPL raised six
claims as under:

a. [Claim No.1]: Rs.62,26,63,973/- including interest at the rate of SBI
PLR+ 2% (14.75% + 2%) per annum as per the Particulars of Claim
(Annexure F-18) with further interest at the same rate on the principal
amount from the date of SoC till payment or realization;

b. [Claim No.2): Rs. 143.94 Crores including interest at the rate of SBI
PLR + 2% (14.75% + 2%) per annum as per the Particulars of Claim
(Annexure G-45) with further interest at the same rate on the principal
amount from the date of SoC till payment or realization.

c. In any event and without prejudice to prayer clause (b), if this
Tribunal holds that the claimant is not entitled to the said amount of
Rs.143.94 Crores, then, in that event, declaring that the respondent is
entitled to charge only a sum of Rs.44,98,94,270/- and that the
respondent is not entitled to charge any other sum, particulars whereof
are given in Annexure G-33 and to award Rs.35,78,79,565/- as per
Particulars of Claim (Annexure G-47) with interest thereon at the rate
of SBI PLR 2% (14.75%+2%) per annum from the date of deductions
thereof till payment or realization;

d. [Claim No.3]: Rs.91.08 Crores including interest at the rate of SBI
PLR+ 2% (14.75%+ 2%) per annum as per the Particulars of Claim
(Annexure H-40) with further interest at the same rate on the principal
amount from the date of SoC till payment or realization:

e. Declaring that claimant is entitled to a sum of Rs.35.59 Crores O&M
life cycle costs under the Agreement as per the statement annexed to
SoC as Annexure H-41:

f. [Claim No.4]: Rs.14.38 Crores including interest at the rate of SBI
PLR+ 2% (14.75% + 2%) per annum as per the Particulars of Claim
(Annexure 1-32) with further interest at the same rate on the principal
amount from the date of SoC till payment or realization;

g. [Claim No.5]: Rs.48.52 Crores including interest at the rate of SBI
PLR + 2% (14.75% + 2%) per annum as per the Particulars of Claim
(Annexure J-42) with further interest at the same rate on the principal
amount from the date of SoC till payment or realization;

h [Claim No.6]: declaring that the claimant is entitled to extension of
time for completion of the Project upto 7th June 2014 as against the
time extended by the respondent upto 17th May 2014:

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i. Rs.1372.47 Crores including interest at the rate of SBI PLR + 2%
(14.75% + 2%) per annum as per the Particulars of Claim (Annexure K-
121 hereto) with further interest at the same rate on the principal
amount from the date of SoC till payment or realization;

j. Cost of arbitration proceedings:

k. For such further and other reliefs as the nature and circumstances of
the case may require.

11) Petitioner-MMRDA filed Statement Of Defence and also
preferred counterclaim on 6 October 2015. The counterclaims made by
MMRDA were as under:
a. Rs.15,82,41,75,205.48 (being a sum of Rs.14,45,00,00,000/- plus an
amount of Rs. 137,41,75,205.48 as interest at a rate of Rs. SBI PLR + 2%
from the 10th March, 2015 (being the date of the demand notice) till
6th October, 2015), plus interest at the same rate till the date of actual
realization, for the delay caused above 30 + 1 months from the date of
handing over ROW in completing the milestones in terms of the
particulars of claim annexed at "Annexure R-CC-7;

b. Without prejudice and in the alternate to prayer clause (a) above, for
Rs.521,70,29,873.91 (being a sum of Rs.476,40,00,000/- plus an amount
of Rs. 45,30,29,873.91 as interest at a rate of Rs. SBI PLR + 2% from the
10th March, 2015 (being the date of the demand notice) till 6th
October, 2015), plus interest at the same rate till the date of actual
realization, for the delay caused above 54 + 1 months from the date of
handing over ROW in completing the milestones in terms of the
particulars of claim annexed at "Annexure R-CC-7";

c. In addition to prayer clauses (a) or (b) above, for Rs.61,38,25,824.66
(being a sum of Rs.56,60,00,000/- plus an amount of Rs.5,38,25,824.66
as interest at a rate of Rs. SBI PLR + 2% from the 10th March, 2015
(being the date of the demand notice) till 6th October, 2015), plus
interest at the same rate till the date of actual realization, for the delay
of 283 days in achieving the SPCD in terms of the particulars of claim
annexed at "Annexure R-CC-7;

d. All legal costs and expenses, plus interest @ 18% per annum
thereon, from the date of the respondent made actual payment
thereof, upto the date of actual re-imbursement by the claimant; and

e. For any such orders as this Tribunal may deem fit.

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12) Based on the pleadings, the Arbitral Tribunal framed issues.
The first two preliminary issues related to jurisdiction and limitation in
respect of Claim Nos.1, 2 and 6. The rest of the issues related to the six
claims raised by MMOPL and counterclaims raised by MMRDA.

13) The Arbitral Tribunal has delivered two Awards. The
majority Award is delivered on 29 August 2023 by the Presiding
Arbitrator, Justice Shivraj Patil and Co-Arbitrator- Justice Gyansudha
Misra granting some of the claims of MMOPL, while rejecting the rest, as
well as rejecting all counterclaims of MMRDA. The dissenting Award is
delivered by the Co-Arbitrator, Justice Jeevan Reddy who has rejected
all the claims of MMOPL and has awarded costs of Rs.1 crore to MMRDA
for raising fabricated case by MMOPL. The counterclaims of MMRDA are
also not granted in the dissenting Award.

14) MMRDA and MMOPL filed application under Section 33(1)
of the Arbitration Act for correction of the Award. By order dated 26
February 2024, the Arbitral Tribunal allowed the Application and has
effected corrections in the majority Award.

OPERATIVE DIRECTIONS IN THE MAJORITY AWARD

15) The operative directions in the Majority Award are as
under:-
(a) The respondent shall pay to the claimant Rs.35,00,00,000/-(Rupees
Thirty Five Crores only) towards deductions made by respondent from
16th, 19th and 20th tranches of Viability Gap Fund payable to the
claimant, along with interest thereon from respective due dates as

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shown in Enclosure-I to Annexure-1 to Synopsis on Claim 1 submitted
by the claimant on 6/7/2020 at the then prevailing SBI PLR + 2%.

(b) The respondent shall pay to the claimant Rs.6,14,72,498/-(Rupees
Six Crores Fourteen Lakhs Seventy Two Thousand Four Hundred
Ninety eight only) towards interest on delay in payment of Viability
Gap Fund tranches other than 16th, 19th and 20th tranches.

(c) The respondent shall pay to the claimant Rs.30,16,00,000/-(Rupees
Thirty Crores Sixteen Lakhs only) as compensation towards additional
cost incurred by the claimant on account of payment of rent for half of
the land at Wadala together with cost of funds/interest @ 10% p.a. on
the said amount from the respective dates of payments as set out in
Table in para 10.148 till the date of SoC.

(d) The respondent shall pay to the claimant Rs.30,48,00,000/-(Rupees
Thirty Crores Forty Eight Lakhs only) as compensation on account of
having to construct steel bridge instead of concrete bridge for Andheri
Station together with cost of funds / interest @ 10% p.a. upto the date
of SoC.

(e) The respondent shall pay O&M life cycle cost to the claimant in
accordance with Clause-5 of the Agreement dated 9/3/2011 between
Western Railway and the respondent by factoring in the additional cost
incurred in construction of Andheri Bridge (l.e. additional cost of
Rs.30.48 Crores plus cost of funds/interest @ 10% p.a. from 1/4/2012
upto 31/3/2013 and from 1/4/2013 to 10/6/2015).

(f) The claimant shall be entitled to extension of time for completion of
the Project upto 7/6/2011.

(g) The respondent shall pay to the claimant Rs.411,70,21,968/-
(Rupees Four Hundred and Eleven Crores Seventy Lakhs Twenty One
Thousand Nine Hundred Sixty Eight only) towards increase in cost.

ii) The relief granted at SI.No.(i)(a) above shall carry pendente lite
interest @ extant SBI PLR + 2%. The other reliefs shall carry pendente
lite interest @ 10% p.a.

iii) The sums awarded shall carry future interest @10% p.a.

iv) All other claims of the claimant are rejected.

v) The counter claims of the respondent are rejected.

vi) The respondent shall pay to the claimant Rs.1,00,00,000/- (Rupees
One Crore only) towards cost.

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vii) The seat of arbitration is Mumbai. However, for convenience, the
award is passed and pronounced at Hyderabad with the consent of the
parties.

OPERATIVE DIRECTIONS IN THE MINORITY AWARD

16) The operative directions in the Minority Award are as
under:-
For all the reasons given above, I am of the opinion that the claims
put-forward by the Claimant-MMOPL in this arbitration case are in
clear contravention of the provisions of the contract (concession
agreement), contrary to law besides being utterly unjust and unfair.
Accordingly, the claims put forward by the Claimant (MMOPL) in this
arbitration dispute (Metro-I) are hereby rejected and dismissed.

So far as the costs are concerned, since the Claimant has come forward
in this arbitration with a patently fabricated case as discussed herein
above, the Claimant (MMOPL) is held liable to pay a sum of Rs.1.00
crore (Rupees one crore only) by way of costs to the Respondent-
MMRDA.

The Counter claims of the Respondent do not call for any orders in
view of my findings in the main dispute. Read at pages 196-197 among
others. The Counter Claims are accordingly disposed of with no order
as to costs.

17) By the present Petition filed under Section 34 of the
Arbitration Act, Petitioner-MMRDA has challenged the majority Award.
By order dated 24th October 2024 this Court condoned the delay of 14
days in filing the Petition.

18) Petitioner applied for stay of the Award by filing Interim
Application No. 3642 of 2024. By order dated 10th June 2025, this Court
refused to grant unconditional stay to the Award and directed that if

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MMRDA deposited the entire awarded amount along with interest up to
31 May 2025, execution of the award would remain stayed during
pendency of the present Petition. Petitioner-MMRDA challenged the
order dated 10 June 2025 before the Supreme Court. By order dated 14
July 2025, the Supreme Court stayed the direction for deposit of entire
amount subject to deposit of 50% of the awarded amount.

19) National Asset Reconstruction Co. Ltd. (NARCL) has filed
Interim Application No. 3495 of 2025 seeking intervention in the
Petition contending that the lenders of the Respondent-MMOPL have
assigned their loans to NARCL by Assignment Deed dated 23rd December
2024. The intervention is sought for ensuring that in the event of any
amount being found due and payable to the Respondent under the
award, NARCL should be permitted to withdraw the amount deposited in
the Court.

SUBMISSIONS ON BEHALF OF PETITIONER

20) Mr. Sen the learned Senior Advocate appearing for the
Petitioner-MMRDA submits that the majority award suffers from patent
inconsistencies, findings recorded therein are patently perverse and that
the award of Claim Nos. 1,2,3 and 6 of the majority Award are patently
illegal. That MMOPL was not entitled to claim damages on account of
alleged delay as per the provisions of the CA as Respondent is
sufficiently compensated by increase in the concession period as per the
provisions of the CA. That the majority Award overrides the stipulations
of the CA by awarding damages to MMOPL. That under Article 4.1 and

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4.4 of the CA, inability by MMRDA to provide ROW would result only in
extension of concession period or termination thereof. That there is no
remedy in the contract for seeking any damages or monetary
compensation as a result of delay in provision of ROW. That in complete
disregard to the contractual provisions, the Arbitral Tribunal has
awarded damages to MMOPL. That MMOPL, being creature of contract,
cannot override the provisions thereof. That the Arbitral Tribunal has
rewritten the terms of contract in support of this contention, he relies
upon judgment of the Apex Court in PSA SICAL Terminals Pvt. Ltd.
Versus. Board of Trustees of V.O. Chidambranar Port Trust Tuticorin
and Others1. He also relies on judgment of the Delhi High Court in
Trans Engineers India Private Limited Versus. Otsuka Chemicals
(India) Private Limited2 in support of the contention that
misreading/misunderstanding of basic contractual framework vitiates
the Award.

21) Mr. Sen further submits that the Arbitral Tribunal has erred
in incorrectly imposing the liability for delay on MMRDA. That the
finding is based on completely erroneous and misconceived assumption
that MMRDA was obliged under the CA to provide MMOPL site/ROW
free from encumbrances after diversion of utilities within 180 days of
CA. That under the contractual stipulations of the CA, there is a
distinction between providing 'access to the site' and in making the 'site
free from encumbrances and after shifting the utilities'. That definition
of the term 'encumbrances' in the CA specifically excluded utilities and
roads. That therefore it was not the responsibility of MMRDA to remove
1
2021 SCC OnLine SC 508
2
2024 SCC OnLine Del 4964

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utilities and any delay in removal of utilities cannot be construed to
mean delay in handing over of ROW. Furthermore, it was the
responsibility of the concessionaire to identify the utilities and therefore
there was no question of diversion thereof within 180 days of execution
of CA. That it is a matter of fact that as work progressed and reached
particular stages, MMOPL intimated MMRDA of certain obstructions /
encumbrances / utilities which was discovered/identified by MMOPL
only at such stage. That the responsibility of MMRDA was only to
provide 'access to the site' after which MMOPL was to identify the
utilities. That the process of identification of utilities continued till
2012-13. The very assumption of the Arbitral Tribunal that MMRDA was
to make available the site/ROW free from all encumbrances and after
diversion of utilities within 180 days of execution of CA, is itself
contrary to the contractual terms. That the interpretation is not a
plausible interpretation of the CA. That the dissenting award has rightly
taken conduct of parties into consideration for holding that MMOPL
never insisted for clearance of encumbrances or removal of utilities
within 180 days.

22) Mr. Sen would further submit that substantial portion of
ROW was timely handed over by MMRDA to MMOPL as early as in
December 2007 by which time almost 68% of ROW was handed over to
MMOPL. He invites attention of the Court to letter dated 21 December
2007 by which MMOPL informed MMRDA that the stretches to be taken
over was only 4.85 kms. He further relies upon letter dated 27 April 2009
of MMOPL in support of the contention that 9.90 kms. ROW was handed
over to MMOPL for Metro work. That thus MMOPL itself admitted taking

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over large stretch of 11.4 kms. by April-June 2009. He relies upon
findings in dissenting award which appreciates the actions of MMRDA as
objective and pragmatic delivering best possible performance at various
stages.

23) Mr. Sen would then demonstrate contradictions in the
findings of the Arbitral Tribunal relating to delay in provision of ROW.
He would submit that the Arbitral Tribunal divided the distance of Metro
line into six stretches by further sub-dividing each stretch into sub
stretches and thereafter decided various contentions of the parties in
respect of each of the sub-stretches. He would submit that after deciding
the contentions of the parties, the majority Award fails to conclude as to
whether there was any delay on the part of MMRDA in provision of ROW
for individual sub-stretches. He invites attention of this Court to various
paragraphs of majority Award, where it is concluded that MMRDA was
not responsible for delay in those sub-stretches. He further contends
that the Tribunal has recorded a finding that there were no pleadings in
the statement of claim or affidavit of evidence in respect of allegations
in relation to several sub-stretches. He would therefore submit that
imposition of entire liability on MMRDA, as if the entire delay was
attributable to it, is completely erroneous. That the Tribunal has failed
to arrive at the finding as to who was responsible for the delay in
individual sub-stretches. However, it has erroneously concluded that
MMRDA has delayed handing over of portions of various stretches to
MMOPL, which delayed completion and commissioning of the Project.
That the Arbitral Tribunal has wrongly rejected counterclaims filed by
MMRDA by holding MMRDA responsible for handing over of ROW.

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24) Mr. Sen would further submit that since MMOPL's case was
based on 'global loss', the Tribunal ought to have satisfied itself that
there were no other factors contributing to the delay in holding MMRDA
solely responsible for the delay. That there were concurrent causes of
delay which was also the responsibility of MMOPL. That therefore award
of compensation was clearly not called for especially when MMOPL was
entitled for extension of time which is already granted. That MMRDA
had relied on judgment in the case of De Beers UK Limited Versus. Atos
Origin IT Servises UK Limited 3 which is totally ignored by the Arbitral
Tribunal. He relies upon findings in the dissenting Award that once
cause of certain delays by MMOPL/third parties is proved, the entire
claim must necessarily be rejected.

25) Mr. Sen would further submit that the claim of MMOPL was
time barred. That as per the initial Schedule-A2 of the CA, MMRDA was
to make available site to MMOPL in two tranches and not at one go and
therefore claim for damages filed after completion of project was
completely time barred.

26) Mr. Sen would further submit that the Tribunal's
computation and quantification of Claim No.6 is on an entirely
erroneous basis. That it has relied upon cost estimates for quantifying
the loss when infact actual numbers / details of cost incurred were
available on account of completion of the Project. That the methodology
of comparing initial cost estimate with final alleged cost incurred itself
is erroneous as estimates by their very nature are never final. That the

3
2010 EWHC 3276 (TCC)

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figure of Rs.2356 crores was the bid amount and that there is nothing on
record to indicate that it was an accurate estimation of project cost. That
it is erroneous to assume that increase in the estimated project cost
automatically resulted in losses to MMOPL. That the commercial risk of
an increase in the total cost beyond Rs.2356 crores was to be borne by
MMOPL.

27) Mr. Sen further submits that even if it is assumed that there
is an increase in the total project cost, the same was never proved or
established by MMOPL. That it only relied on board meetings for the
purpose of establishing alleged increase in the project cost to Rs. 4,321
crores. That mere presence of MMRDA's nominee director in the Board
or as a chairman of the audit committee, did not absolve MMOPL of the
burden to prove actual incurring of total project cost. That no evidence
was led in support of the claim that additional costs were confirmed in
the Board Meetings. The minutes of the Board Meetings were never
produced. That in any case, the claim amounts do not tally with each
other as the minutes of the meeting dated 23 May 2012 indicated project
cost of Rs.4321/- crores whereas the actual project cost indicated in
financial statements is Rs.4032 crores.

28) Mr. Sen further submits that mere board minutes cannot be
the basis to impose liability on MMRDA. That the Tribunal has erred in
holding that since there was MMRDA's nominee/representative on the
board of MMOPL, the amounts are accepted by MMRDA. That since
details of actual costs incurred were available, the Tribunal ought not to
have adopted a short cut method of accepting the figure of project costs

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from mere board minutes. That in any case, approvals by the Board of
MMOPL cannot bind MMRDA. He relies on minutes of the meeting dated
23 May 2012 to demonstrate that the resolution itself made it clear that
the analysis with respect to the revision in the estimation of project cost
was advised by nominee directors of MMRDA and that such analysis was
to be undertaken. That therefore there is no admission on the part of
MMRDA's Director on Board of MMOPL with regard to the project cost
of Rs.4321 crores. That the dissenting Award rightly appreciates this
position. He would submit that the Tribunal has misconstrued the
presence of MMRDA's nominees on the Board of MMOPL, which was
essentially for overseeing the project completion. MMRDA's nominee
was not involved in day to day functioning nor was a financial expert.
That therefore the Tribunal erroneously fastened the liability in respect
of the revised project cost on MMRDA holding that its nominee on the
board, who was part of audit committee, had right to verify the project
cost. He takes me through the evidence of R.W.2 in support of his
contention that the revised project cost was never agreed by MMRDA.
He submits that MMOPL has failed to prove its claim for alleged
additional cost incurred by them and having failed to produce the
relevant material and particulars, has erroneously relied on board
minutes to prove the claims for recovery of additional costs. That there
is no independent evidence of having actually incurred the additional
costs. That the dissenting Award rightly holds that mere presence of
MMRDA's nominee on the board of MMOPL does not mean any
admission on the part of MMRDA in relation to revised project cost.

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29) Mr. Sen further submits that MMOPL did not provide any
particulars of co-relation between board approvals for project cost of
Rs.4321 crores or revised cost of Rs.4026 crores. Neither in the pleadings
nor in the evidence, MMOPL provided any particulars or proof of
loss/damages suffered. That there is no evidence to show any nexus or
even a casual link between the alleged delays on the part of MMRDA and
the losses allegedly suffered by MMOPL. In support of his contention
that production of independent evidence is mandatory. Mr. Sen relies on
judgments in Central Bureau of Investigation Versus. V.C. Shukla and
others 4, M/s Khushal Chand Jagdish Rai of Jalabad (w) Tehsil Fazilka
District ferozepur through its sole proprietor Shilpa Rani w/o Raman
Kumar Versus. Hakam Singh5 and Chandradhar Goswami & others
Versus. Gauhati Bank ltd.6

30) Mr. Sen would further submit that though the Tribunal in
the majority award has recorded a finding that there was increase in the
total project cost, it ultimately held that each head of the claim was
required to be individually proved. That while examining various
subheads under Claim No.6, the majority award rejects claims towards
price verification, price adjustment, increase in costs of civil works and
additional amount paid to PMC for lack of proof and supporting
evidence. That though the Tribunal correctly applied the yardstick of
production of concrete proof and rightly demanded underlying
documents while adjudicating claims towards price variation, price
adjustment, cost of civil works and additional payments to PMC, it has

4
(1998) 3 SCC 410
5
RSA No. 439 of 1986(O&M) decided on 14 January 2014
6
1966 SCC OnLine SC 255

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failed to apply the same yardstick in respect of the four other subheads
of (i)increase in cost of system work, (ii)additional overheads and
supervision of construction work, (iii)additional interests and financial
expenses and (iv)opportunity costs on loss of profits. That these four
claims also suffered from the same defect of absence of evidence of
underlying documents but have still been granted by the Arbitral
Tribunal. In support, he relies on the judgment of the Apex Court in
Batliboi Environmental Engineers Limited Versus. Hindustan
Petroleum Corporation Limited and another 7

31) In respect of the award of claim in the sum of Rs.163.22
crores towards increase in the cost of system works, Mr. Sen would
submit that the claim was premised on the basis that the sub-
contractors engaged for the project were to be paid in foreign currencies
and that due to delays caused by MMRDA, the systems contract work
was to be performed at a much latter period resulting into losses due to
fluctuation in value of foreign currency. That to recover the damages on
this account, MMOPL was required in law to establish (i) when orders
would have been placed by them and delivery taken in normal course,
(ii) when they were actually placed and delivery taken, (iii) that this was
on account of delay attributable to MMRDA and not for some other
reason (iv) when payments were made to each of the vendors/sub-
contractors and quantum of those payments and (v) foreign exchange
rates on the relevant dates. That though all this information was
available with MMOPL, no material was produced before the Arbitral
Tribunal. Instead, it chose to rely on Annexure-9 to the Affidavit in

7
(2024) 2 SCC 375

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evidence of C.W.2 who himself had not personal familiarity with the
figures indicated therein. That Annexure-E filed alongwith the rejoinder
written submissions introduced new material including alleged foreign
exchange rates providing no opportunity to MMRDA to challenge the
same. That in any case, neither Annexure-9 nor Annexure-E contained
any material in support of the alleged loss suffered by MMOPL on
account of foreign exchange fluctuation. That the Tribunal erroneously
accepted the correctness of statements prepared by MMOPL in absence
of any evidence. That MMOPL did not discharge any burden in bore, and
the claims appears to be inconsistent with MMOPL's own Balance Sheet
which indicated cumulative foreign currency loss of Rs.39.25 crores,
which is totally inconsistent with the claim of loss of Rs.195.52 crores
and with the awarded sum of Rs. 163.22 crores. That during the course of
submissions, entry is sought to be explained by MMOPL that it pertains
to only for the year ending 31 March 2014 which is plainly perverse as
the entry in question is a cumulative figure of foreign currency loss upto
1 April 2013 (7,52,83,144 plus foreign currency loss for the year ending
31 March 2014 -Rs.31,72,62,664/-).

32) So far as the claim awarded in the sum of Rs.100 crores
towards additional overheads and supervision of construction works is
concerned, Mr. Sen would submit that the Tribunal had actually dealt
with three claims together viz.(i) additional payments made to PMC and
IE (ii) additional overheads and supervision of construction works and
(iii) additional interests during construction. He would submit that the
Tribunal rejected the first sub claim on the ground of non-production of
supporting material but erroneously awarded the sum of Rs.100 crores

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for additional overheads and supervision of construction works without
a scrap of supporting material. That for recovery of damages on account
of additional overheads, MMOPL was required to establish expenses
incurred by it on account of alleged overstay. Material such as purchase
orders, work orders, delivery challans and bank statements for proving
such alleged expenses was available with MMOPL, but the same was not
produced by it. It only relied on Annexure-11 to the affidavit of
evidence, which is merely a statement prepared by it without any
supporting material. That C.W.2 in the course of his cross-examination
admitted his unfamiliarity with those figures. Even otherwise, additional
overhead expenses are indirect expenses which could not be claimed on
account of Article-29.2 of the C.A. That this objection of MMRDA is not
even considered in the impugned Award.

33) So far as the claim of Rs.125 crores towards additional
interest and financial expenses awarded by the Tribunal is concerned,
Mr. Sen would once again submit that the same were 'indirect expenses'
incapable of being claimed on account of Article 29(2) of the CA. He
would further submit that to press the claim, MMOPL was required in
law to produce various evidence in support of alleged additional interest
and financial expenses such as arrangements entered into with lenders,
sanction letters, loan agreements, bank statements and ledger accounts
maintained by them in respect of the lending facilities. However, no
such material was produced by MMOPL which chose to rely on a mere
statement prepared by it, being Annexure-12 to the Affidavit of evidence
of C.W.2. That the statement explained nothing and is entirely devoid of

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any documentary support. C.W.2 also considered his unfamiliarity with
the basis on which the statement was prepared.

34) So far as the claim of Rs. 23.47 crores towards opportunity
costs of loss of profits is concerned, Mr. Sen would submit that the same
is again an 'indirect expense' incapable of being claimed in view of
Article-29(2) of the CA. That the claim was premised on the basis that if
project was to be completed in timely fashion, it would have been able to
realize its revenue as per its projections and that it was deprived of
opportunity costs on such loss of cash profits. That financial statements
of MMOPL till 2019-20 were available with the Tribunal indicating
figures generated through commercial operations which did not disclose
any profit. The only evidence led by MMOPL in support of the claim was
oral testimony of C.W.2, who did not have any personal knowledge.
MMOPL also relied on Information Memorandum of IDBI which was
never produced before the Tribunal. If there were no profits till 2013-14
as admitted by C.W.2, there was no question of any opportunity cost on
loss of profit. That the Respondent has made a fable attempt to draw
distinction between operational profit and cash profit to salvage the
situation which attempt is misplaced as even the figures of cash profit
cannot be derived from Balance Sheet actually available on record. He
would therefore submit that award of claim is plainly perverse.

35) Mr. Sen then deals with award of Claim No.3 relating to
change of scope of work in respect of the Bridge at Andheri which is
awarded in the sum of Rs.30.48 crores. He submits that mere change in
mode of construction did not constitute a 'change in scope' at all. That

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Article-16 of the CA prescribed a detailed procedure for effecting change
in the scope. That such procedure was admittedly not followed. That
MMOPL did not lead any evidence to prove that there was any change in
the scope of work. That MMRDA's witness (R.W.4) who was an expert
witness, has explained that Andheri bridge could have been built at
higher level which could have entailed additional costs of only Rs.1.12
crores and of Metro station of Rs.3.81 crores. That the Arbitral Tribunal
has rewritten the agreement by holding that Article-16 was not
mandatory. He further submits that no evidence was led by MMOPL in
respect of the alleged costs incurred by it and the figures claimed by it in
Table-1 of the rejoinder submissions were neither produced nor proved.
He would also submit that the claim was barred by limitation as the
alleged change in the scope occurred on 17 November 2008, whereas the
invocation of arbitration was made on 9 May 2015.

36) In respect of Claim No.2 relating to Wadala Casting Yard in
the sum of Rs.13.16 crores, Mr. Sen submits that the Arbitral Tribunal
framed a specific issue as to whether MMOPL accepted the rate for
Wadala land and whether it was estopped from claiming otherwise. The
Tribunal decided the first part of the issue in favour of MMRDA and held
the rate to be binding. However, it did not express any view on the issue
of estoppel. That there is apparent inconsistency in the finding of the
Arbitral Tribunal as it has erroneously held that MMOPL is entitled to
difference between the rates stipulated in the License Agreement and
the one agreed for D.N. Nagar land. That the findings are plainly
inconsistent thereby affecting the ultimate view taken by the Tribunal.
Once the Tribunal held that the arrangement struck in the meeting with

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the Hon'ble Chief Minister was binding, it ought to have held that the
provision under the contract regard imposition of rate @ Rs.1 per sq.mtr
per annum stood superseded/novated and could no longer furnish basis
for claiming damages. That the award exhibits lack of judicial approach
on the Arbitral Tribunal and in support, he relies upon judgment of the
Apex Court in Associate Builders Versus. Delhi Development Authority
8
.

37) In respect of Claim No.1 relating to Viability Gap Funding
awarded in the sum of Rs.35.78 crores, Mr. Sen would submit that a sum
of Rs.35,78,79,565/- was withheld by MMRDA from total VGF of Rs.650
crores on account of MMOPL's failure to pay amounts due under the
License Agreement for Wadala land. That the Tribunal has erred in not
appreciating that the relationship between the parties was in the nature
of licensor-licensee and the License Agreement did not contain any
arbitration clause. That the claim was in the nature of recovery of rent
and dispute in relation thereto could only have been adjudicated by a
Rent Court under Section 41 of the Presidency Small Causes Courts Act,
1882 read with Sections 5 and 8A of Maharashtra Government Premises
(Eviction) Act, 1955. That if award of Claim No.2 for Wadala Casting
yard is set aside, Claim No.1 would also automatically go.

38) Mr. Sen would further submit that in the event of this Court
holding that any part of the Award is not fit to be set aside under Section
34, it can apply the principles of severability of the arbitral award and in
support, he relies upon judgment of the Apex Court in Gayatri

8
(2015) 3 SCC 49

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Balasamy Versus ISG Novasoft Technologies Ltd.9 and of this Court in
Hindustan Petroleum Corporation Limited Versus G. R. Engineering
Private Limited 10 and Larsen & Tourbo Limited Versus Hindustan
Petroleum Corporation Ltd and Anr 11.

39) Mr. Sen would further submit that dissenting opinion of
minority award can be relied upon by a party seeking to set aside the
award and in support he would rely upon judgment of the Apex Court in
Dakshin Haryana Bijli Vitran Nigam Limited Versus. Navigant
Technologies Private Limited12. In support of the contention that the
Arbitral Tribunal has not recorded reasons in the award particularly
while awarding sub-claims under Claim No.6. he relies upon judgment of
the Delhi High Court in Delhi Development Authority Versus. Sunder
Lal Khatri & Sons13. On scope of this Court's power to interfere in the
arbitral award, he relies on judgments in Dyna Technologies Private
Lmited Versus. Crompton Greaves Limited14 and Ssangyong
Engineering And Construction Versus. National Highways Authority Of
India (NHAI)15. In support of his contention that evidentiary standards
cannot be relaxed in context of construction contracts involving
astronomical amounts, he relies upon judgment of Delhi High court in
Satluj Jal Vidyut Nigam Ltd Versus. Jaiprakash Hyundai Consortium
and Others16. In support of his contention that mere reproduction of
arguments of both sides and accepting as correct arguments of one side
9
2025 7 SCC 1
10
COMMERCIAL ARBITRATION PETITION NO. 984 of 2018 decided on 18 June 2025
11
APPEAL NO. 26 OF 2006 decided on 8 August 2025.
12
(2021) 7 SCC 657
13
2009 SCC OnLine Del 127
14
(2019) 20 SCC 1
15
(2019) 15 SCC 131
16
2023 SCC OnLine Del 4039

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do not amount to recording of reasons and that claim cannot be awarded
in absence of oral evidence he relies on judgment of this Court in
Hindustan Petroleum Corporation Ltd. Versus. Om Constraction on
behalf of Om Constraction Nice Projects Limited JV 17. In support of his
contention that claim of loss of profit cannot be granted in absence of
evidence he relies upon judgment of the Apex Court in Unibros Versus.
All India Radio18. On above broad submissions, Mr. Sen would pray for
setting aside the majority Award of the Arbitral Tribunal.

SUBMISSIONS ON BEHALF OF RESPONDENT

40) Mr. Bhatt, the learned Senior Advocate has appeared on
behalf of the Respondent-MMOPL and has canvassed detailed
submissions supporting the arbitral Award. He would submit that the
majority Award contains detailed analysis of recording cogent reasons
for awarding Claim Nos.1, 2, 3 and 6. That neither in the Petition nor
during the course of oral submissions, Petitioner has been able to make
out any of the enumerated grounds under Section 34 of the Arbitration
Act for invalidation of any part of the Award.

41) Mr. Bhatt would submit that the grounds raised by MMRDA
in the Petition are beyond the scope of Section 34 of the Arbitration Act.
That the Petition is filed and argued as if it is an appeal over the Award.
That this Court is being urged to reappreciate the evidence. That even if
there is any error in application of law or merely because an alternate

17
COMMERCIAL ARBITRATION PETITION (LODG.) NO. 28685 OF 2024 decided on 19
January 2026
18
2023 SCC OnLine SC 1366

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view is also possible, the same cannot be a ground to set aside the
Award. That the Court cannot take independent assessment of merits of
dispute. That even error committed in interpretation of clauses of
contract is an error within jurisdiction.

42) Mr. Bhatt would further submit that the contention of
MMRDA that MMOPL is only entitled to extension of time and not
damages itself exhibits clear admission that the delay is attributable to
MMRDA. That MMRDA does not dispute the grant of extension of time.
That under the Contract, grant of extension of time was warranted only
if there was delay on the part of MMRDA. That therefore it was not even
necessary to establish responsibility of MMRDA in cause of delay on
account of admitted extension of time granted by it. That the Tribunal
has devoted over 600 pages in the Award for minutely examining each
and every encumbrance and hindrance and has thereafter arrived at the
conclusion that there was no delay on the part of MMOPL in execution
of the Project and that the delay was attributable to MMRDA. He would
submit that Article-13.4 of CA stipulated that the IE was to determine
the cause of delay and recommend extension of time for construction
only if the delay was on the part of MMRDA in granting ROW. That there
is no dispute to the position that the IE recommended grant of extension
from time to time and MMRDA granted such extension by accepting
recommendations of the IE. That thus responsibility of MMRDA in
respect of the delay is clearly established. However, the Arbitral Tribunal
has conducted independent factual inquiry into the aspect of delay and
has held MMRDA responsible for delay in making available ROW.

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43) Mr. Bhatt would further submit that the contention of
MMRDA that MMOPL could have constructed Metro line piecemeal as
and when Right of Way was made available is misplaced and has been
rightly rejected by the Arbitral Tribunal. That construction of the Metro
line was to be sequential and continuous and that the same could not be
constructed piecemeal. He relies on judgments in Sutlej Construction
Limited Versus. Union Territory Of Chandigarh19 and Swastik
Construction & Anr. Versus. Mukesh alias Mohanlal Mulji Dhanesha
& Ors20.

44) Mr. Bhatt further submits that mere increase in the
concession period does not mean that MMOPL was not entitled to
damages. The Arbitral Tribunal has recorded detailed reasons for
rejecting this contention and has held that there is no clause in the
contract barring claimant from claiming monetary losses. In support, he
relies upon judgment of Gujarat High Court in Vinod Chandra Hiralal
Gandhi Versus. Vivekanand Mills Limited Ahmedabad 21.

45) Mr. Bhatt would further submit that the findings recorded
by the Arbitral Tribunal relating to increase in the project cost are well
supported by the documentary and oral evidence. That the Arbitral
Tribunal has considered inter alia minutes of meeting of MMOPL's audit
committee, minutes of various board meetings, audited financial
statements and minutes of special resolution amending the Articles of
Association of MMOPL for recording findings on increase in the project

19
(2018) 1 SCC 718
20
COMMERCIAL ARBITRATION PETITION NO. 247 OF 2024 decided on 19 November 2025
21
1965 SCC Online Guj 50

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cost. That Petitioner-MMRDA was 26% shareholder in MMOPL and
agreed to alter the Articles of Association to raise debt finance from the
lenders to meet revised project cost. Thus, all decisions relating to
revised project cost were taken with due concurrences with MMRDA.
That the award rightly holds that there was increase in the total project
cost from Rs.2356 crores to Rs.4026 crores resulting in differential
project cost of Rs.1670 crores. Mr. Bhatt would further submit that the
Arbitral Tribunal has not awarded the whole differential value of the
project cost in favour of MMOPL but has considered each of the claims
on merits and has awarded only part of them. That the Tribunal has
correctly found that there was increase in the cost of systems works
primarily on account of increase in the conversion rate of foreign
exchange. That contracts with foreign suppliers were entered into in
foreign currency and if Right of Way was given in a timely manner, the
import of goods and systems, particularly rolling stock, would have
taken place prior to original proposed completion date of 31 July 2010.
That due to delay on the part of MMRDA to give ROW in a timely
manner, the import of the goods had to be postponed, which resulted in
conversion of foreign currency into Indian Rupees at a higher value.
That the Tribunal has considered the entire evidence and has arrived at
the conclusion that MMOPL is entitled for compensation for the said
increase. However, while granting such increase, the Tribunal has
chosen the least possible figures that the exchange rates claimed are
based on official RBI records published from time to time. That while
arriving at its findings, the Arbitral Tribunal has evaluated and
considered evidence in the form of (i)contracts and amounts payable to
foreign vendors as approved by the Board of MMOPL (ii) Annexure-9 of

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C.W.2 affidavit of evidence, (iii) C.W.3 cross-examination on
computation of foreign exchange variation and (iv) data produced from
RBI's official website. That the Tribunal also considered alternative
methodologies for calculating foreign exchange variations furnished by
MMOPL at length and has thereafter accepted MMOPL's version. That
the Tribunal has proceeded on accepted and permissible principle of
rough and ready measure. In support, he relies upon judgment of this
Court on New India Assurance Co. Ltd. Versus. Shirdi Industries
Limited22.

46) Mr. Bhatt would further submit that the finding of fact
recorded by the Arbitral Tribunal after appreciation of evidence relating
to losses suffered on account of foreign exchange fluctuations do not
warrant interference in exercise of power under Section 34 of the
Arbitration Act. That the Tribunal has rightly relied upon approval of
Board of Directors of MMOPL which included representatives from
MMRDA. That since the amounts payable to foreign vendors is approved
by the Board, it is objectionable on the part of MMRDA to now question
correctness of the said figures. That if there was no delay on the part of
MMRDA in delivering the site/Right of Way, MMOPL would have
achieved COD by 31 July 2010 and would have paid consideration for
imported items required for the project at a much cheaper rate of foreign
exchange. That the Tribunal has merely considered the difference in the
average rate of foreign exchange in the year 2009-10 and the rate
applicable as on the date of actual purchase. That therefore award of

22
Arbitration Petition NO.375 OF 2024 decided on 9 December 2025.

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reasonable figure of Rs.163.22 crores by the Arbitral Tribunal does not
warrant any interference.

47) Mr. Bhatt further submits that the Petitioner is attempting
to mislead this Court by relying on Balance Sheet ending on 31 March
2014 in support of his contention that foreign exchange loss was only of
Rs.39 odd crores. He submits that the duly approved Balance Sheet every
year shows expenditure in foreign currency and CIF value of imported
goods. That the CIF value of imported goods for the balance sheet for
Financial Year 2013-14 is shown at Rs.3,36,60,75,390/- which is the
expenditure in foreign currency. That the sum of Rs.39.25 crores
indicated as foreign exchange loss in Balance Sheet ending 31 March
2014 is merely cumulative figure of loss in foreign exchange being the
difference between the amount booked in the Books of Accounts (being
only a book entry) where a bill is raised by a foreign supplier and the
amount that was later paid in the year and if not paid, the foreign
exchange rate as on 31 March of financial period. That this is in
accordance with statutory account standards. That therefore the said
figure of Rs.39.25 crores has nothing to do with the difference between
the amount that would have been paid in the Rupee terms had the
contract been completed on 31 July 2010 and the date on which the
contract was actually completed and the amount towards foreign
exchange actually paid considering the date of completion of contract.

48) Mr. Bhatt then justifies award of claim towards (i)additional
overheads of Rs.100 crores submitting that given the nature of project
requiring employment of manpower and machinery for its execution, it

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cannot be disputed that MMOPL was required to incur additional costs
during the prolonged period of execution. He submits that the after
considering the evidence on record, the Tribunal awarded conservative
sum of Rs.100 crores towards additional overhead costs as against much
higher amount which was reflected against this head in the financial
statement for the year 31 March 2011 and 31 March 2014. That the
figure is extremely conservative considering the original claim of
Rs.255.06 crores.

49) Mr. Bhatt also justifies the award of claim of Rs.125 crores
towards additional interest costs and financing charges contending that
the MMOPL had to incur additional interest and financial expenditure
on account of extension of execution period. That the Tribunal has
considered evidence on record in the form of MMOPL's witness,
evidence affidavit and Balance Sheet. That the figure of Rs.125 crores is
again extremely conservative as compared to the actual cost incurred by
MMOPL of Rs.369.51 crores. He takes me through the Balance Sheet of
MMOPL being exhibit, C-73 as on 31 March 2011 at Exh.C-76 as on 31
March 2014 to demonstrate that specific figures of bank and finance
charges were reflected herein and that the said figures are approved by
the audit committee chaired by MMRDA's representative. He relies on
judgment of this Court in Lotus Logistics and Developers Pvt. Ltd.
Versus. Evertop Apartments Co-operative Housing Society Limited 23.

50) Mr. Bhatt also supports the award of claim towards
opportunity cost submitting that the delay in achieving the completion

23
CARBP (L) NO.34791 OF 2024 decided on 13 January 2026

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date deprived MMOPL of avenues and that therefore it is entitled to
opportunity costs on loss of profits. That the Arbitral Tribunal has
awarded extremely conservative sum of Rs.23.47 crores at the rate of
10% as against the rate of 18% demanded by MMOPL. That while
awarding the said claim, the Tribunal evaluated evidence in the form of
MMOPL's business plan, statements setting out opportunity cost,
Information Memorandum prepared by IDBI, loss of revenues from
Financial Year 2011-15 and written and oral evidence of the parties. He
relies upon judgment of this Court in Regus South Mumbai Business
Centre Private Limited Versus. Marie Gold Realtors Private Limited 24
in support of his contention that even a business plan can be relied upon
by the Arbitral Tribunal for awarding claim. In support of his contention
that Arbitral Tribunal can make guesstimate of damages in a case
involving delay by a party, he relies upon judgments of the Apex Court
in the case of A.T. Brij Paul Singh and others Versus. State of Gujarat 25
and Mohd. Salamatullah and Others Verus. Govt. Of AP 26.

51) Mr. Bhatt justifies award of Claim No.3 regarding Andheri
bridge submitting that the CA envisaged construction of PSC bridge
across railway lines at Andheri but was required to construct steel bridge
on account of failure on the part of MMRDA in giving ROW in respect of
construction of PSC bridge. That the Arbitral Tribunal has constructed
clauses of the contract for arriving at the conclusion that there was
change in the scope and after considering the evidence on record,
awarded sum of Rs.30.48 crores towards the difference. That the

24
CARBP NO. 439 OF 2024 decided on 25 November 2025.
25
1984 (4) SCC 59
26
1977 (3) SCC 590

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consideration and reasoning of the Tribunal is cogent and conclusion is
correct conclusion. That the Tribunal has rightly awarded additional
costs of Rs.30.48 crores after evaluating the entire evidence on record.
That the awarded sum represents difference in the actual cost of steel
bridge and the estimated cost of PSC bridge. That Petitioner's IE has also
determined the actual cost incurred by MMOPL in construction of steel
bridge. That therefore award of this claim does not warrant any
interference in exercise of powers under Section 34 of the Arbitration
Act.

52) In respect of award of Claim Nos.1 and 2, Mr. Bhatt submits
that it was MMRDA's obligation to provide 13 hectares of land at D.N.
Nagar for car depot which was to be used for the purpose of casting yard
during the construction period. That MMRDA delayed handing over the
said land and provided the same in a piecemeal manner on 4 August
2008, 10 May 2010, November 2010 and September 2011. That full land
was not delivered. That MMOPL was therefore constrained to take up
another land on license which happened to be of MMRDA. That under
the CA, the land for Casting Yard was to be provided at nominal rate of
Rs.1 per sq.ft.per annum whereas it was forced to take land at Wadala at
a much higher cost. That the Tribunal has rightly awarded differential
amount arising out of rent payable in respect of land at Wadala. That the
entire cost of rent is not awarded and what is awarded is only rent in
respect of half of land at Wadala. That MMRDA had erroneously
deducted the amount of rent from VGF. That once Claim No.2 in respect
of Wadala land is upheld, Claim No.1 would automatically be upheld.

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53) Mr. Bhatt relies on judgments of this Court in Kotak
Securities Limited Versus Gajanan Ramdas Rajguru27, Hindustan
Petroleum Corporation Ltd. Versus. Aegis Logistics Pvt. Ltd. 28, Dimple
Enterprises Versus. Wework India Management Pvt. Ltd29, Central
Depository Services (India) Limited Versus. Daksha Narendra Bhavsar
and Another30, MahaOnline Limited Versus. Aksentt Tech Services
Limited31 and of Delhi High Court in MBL Infrastructures Limited
Versus. Delhi Metro Rail Corporation32. He would therefore submit that
in absence of any valid ground of challenge to the impugned majority
Award, the Petition is liable to be dismissed. On above broad
submissions, Mr. Bhatt would pray for dismissal of the Petition.

REASONS AND ANALYSIS

54) The disputes and differences between the parties have
arisen out of performance of CA dated 7 March 2007 executed for the
purpose of construction of Metro Line 1- Varsova-Andheri-Ghatkopar
Corridor, which is the first Metro Line in Mumbai. The CA provides for
concession period of 35 years from the date of execution thereof. The
Metro Project was to be completed and operations were to be started
within a period of five years. It appears that the Respondent gave a
schedule to Petitioner indicating the (COD) as 29 July 2009. However,
the commercial operations for Metro Line -1 started with effect from 8
June 2014 and there was delay in achieving the COD. The case involves
27
CARBP NO. 788 OF 2024 decided on 3 December 2025
28
ARBITRATION PETITION NO. 579 OF 2024 decided on 19 December 2025.
29
CARBP No.154 OF 2022 decided on 25 July 2025.
30
CARBP No. 311 OF 2024. Decided on 1 December 2025
31
CARBP (L)No.33165 OF 2024 decided on 5 December 2025
32
2023 SCC OnLine Del 8044

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peculiar feature of the Project implementing agency-MMRDA taking
part in implementation of the Project with the consortium, which was
awarded the tender. Accordingly, Respondent No.1-MMOPL was
incorporated as a Special Purpose Vehicle for implementation of Metro
Project comprising of MMRDA and consortium of Reliance Energy
(Reliance Infrastructure Limited) and Veolia Transport SA. The share
capital of MMOPL is owned by the three entities in proportion of 69% by
Reliance, 5% by Veolia and 26% of MMRDA.

55) After incorporation of MMOPL, Concession Agreement 7
March 2007 was executed by MMRDA, under which MMOPL agreed to
construct and operate the Metro Project as a Concessioner on Build-
Own-Operate-Transfer basis. The CA contemplated the concession
period of 35 years from 7 March 2007 upto 6 March 2042 including
construction period not exceeding five years. During the concession
period, Respondent-MMOPL can operate the Metro Line and recover the
cost incurred for its construction. The CA also provided for grant of
extension in respect of the concession period. As observed above,
implementation of the project got delayed and operations of Metro Line-
1 started from 8 June 2014. There is no dispute to the position that on
account of delay in execution of project and the delay in commencement
of commercial operations, the concession period has been
correspondingly extended by MMRDA. MMOPL claims that the Total
Project Cost went up due to delay. MMOPL is not satisfied by mere
extension of concession period and believes that extension of
concession period would not be sufficient for compensating it in respect
of additional cost incurred in execution of the project.

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56) The original cost of the project was Rs.2356 crores, out of
which Rs.650 crores were to be contributed by MMRDA as VGF towards
capital contribution. It is the case of MMOPL that by the time execution
of the project was complete the Total Project Costs escalated to Rs.4321
crores. However, ultimately the actual expenditure incurred for the
project was claimed by MMOPL at Rs.4026 crores.

57) The Respondent-MMOPL accordingly demanded sum of
Rs.1162/- crores from MMRDA on 14 July 2014. After the reference to
Arbitral Tribunal was made, the MMOPL filed Statement of Claim raising
total six claims as enumerated hereinabove. The three-member Arbitral
Tribunal has delivered a split verdict. The majority Award has partly
granted claim Nos.1, 2, 3 and 6 while rejecting the rest of the claims. The
minority Award rejects all the claim of the Respondent.

58) The summary of claims granted in the majority Award are as
under:

Claims Amount claimed Amount granted

Claim No.1 62,26,63,973 +interest Rs.35,00,00,000
+ 6,14,72,498
Claim No.2 143,94,00,000/- 13,16,00,000/-

Claim No.3 87,03,96,777/- 30,48,00,000/-

Claim No.6 1,372.47 crores 411,70,21,968/-

59) The Respondent-MMOPL has not challenged the Award and
therefore the limited remit of enquiry in the present Petition is about

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correctness of award of Claim Nos.1 to 3 and 6 in the majority Award.
Since the claims arise essentially out of allegation of delay on the part of
the MMRDA in not making available site/ROW, Arbitral Tribunal has
made detailed discussion on that aspect and has held MMRDA
responsible for delay in handing over ROW. The Arbitral Tribunal has
also recorded findings of increase in the total project cost. The Arbitral
Tribunal has thereafter discussed each head of claim and has recorded
its reasons for granting them. Since the Respondent-MMOPL has not
challenged rejection of Claim Nos.4 and 5 and part rejection of Claims
Nos.1 to 3 and 6, it is not necessary to deal with reasons recorded by the
Arbitral Tribunal for not awarding the said claims in favour of MMOPL.

60) Thus, broadly the remit of enquiry in the Petition revolves
around the three issues of (i) allegation of delay on the part of MMRDA
in making available ROW/site for execution of project; (ii) entitlement of
MMOPL for monitory compensation over and above extension of
concession period; (iii) MMOPL's claim of increase in the project cost to
Rs. 4026 crores (iv) liability of MMRDA to pay increased cost to MMOPL
and (v) quantification of Claim Nos.1 to 3 and 6. In the majority award,
MMRDA is held responsible for delay in execution of work due to failure
on its part in making available the ROW. It is held that since the COD for
the Project got extended, MMOPL is entitled to monetary compensation
for incurring of additional expenditure over and above extension of
concession period. The majority award has upheld MMOPL's claim of
increase in the project cost of Rs. 4026 crores and has adjudicated the
claims raised by it under various heads. While some of the claims are
rejected, the majority award has quantified the Claim Nos. 1 to 3 and 6

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and has awarded the same in MMOPL's favour. Petitioner-MMRDA has
challenged both entitlement of MMOPL in respect of Claim nos. 1 to 3
and 6 as well as their quantification.

61) I accordingly proceed to examine whether findings recorded
by the Arbitral Tribunal on the above aspects would pass the muster of
scrutiny by Section 34 Court.

SCOPE OF POWERS UNDER SECTION 34 OF ARBITRATION ACT

62) Before proceeding further, it would be apposite to broadly
outline the scope of jurisdiction of this Court while examining the
findings of the Arbitral Tribunal on the above issues. By now, the scope
of enquiry by Section 34 Court while deciding the objections to arbitral
award is well settled. The broad scope of powers of Section 34 Court has
been repeatedly outlined by the Supreme Court in various judgments.
Reference in this regard can be made to the judgments in Ssangyong
Engineering & Construction Co. Ltd.(supra) Associate Builders (supra),
Dyna Technologies Pvt. Ltd. (supra), Indian Oil Corporation Ltd
through its Senior Manager V/s. Shree Ganesh Petroleum
Rajgurunagar33, OPG Power Generation (P) Ltd. Vs. Enexio Power
Cooling Solutions India Pvt Ltd34 and PSA Sical Terminals Pvt. Ltd.
(supra). In the light of the well settled principles, it is not necessary to
reproduce the passages of those judgments. Suffice it to summarize the
principles governing the scope of inquiry under Section 34 of the
Arbitration Act. The arbitral proceedings are not per-se comparable to

33
(2022) 4 SCC 463
34
(2025) 2 SCC 417
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judicial proceedings before the Court. The intention of the legislature is
to recognise party autonomy. Party autonomy is the cornerstone of
arbitration, allowing parties to voluntarily choose how to resolve
disputes outside of traditional courts, including selecting arbitrators,
governing law, seat, language, and procedures. Since parties to dispute
choose the forum for dispute resolution through private arbitration,
they must show deference to the decision of the arbitrator chosen by
them. However, party autonomy is not absolute, as it is circumscribed by
the principles of public policy, mandatory laws, and procedural fairness.

63) The approach of the Court should be to respect the finality
of the arbitral award and not to interfere with the same in a casual or
cavalier manner unless the award is so perverse that the perversity goes
to the root of the matter. The Courts are therefore required to show
significant latitude towards arbitral awards. The Court exercising power
under Section 34 of the Arbitration Act cannot undertake independent
assessment of the merits of the dispute. The Court does not sit in appeal
over the award and therefore cannot reappreciate the evidence.
Appreciation of quality and quantity of evidence is outside the scope of
inquiry under Section 34 of the Arbitration Act. Merely because another
view is also possible based on material available on record, the same
cannot be a ground for setting aside the arbitral award. Mere erroneous
application of law or erroneous interpretation of contractual clauses
cannot be a ground for interference in the award. Interpretation of the
contractual clauses is in the exclusive domain of the Arbitral Tribunal
and therefore even if an error is committed in interpretation of contract,
the same is still an error within the jurisdiction. Inadequacy or

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insufficiency of reasons in the award is again not a ground for
invalidating the arbitral award. In a given case, where the underlying
reasons for making the award can be extracted from meaningful reading
of the entire award together with documents on record, the Court can in
fact explain such underlying reasons rather than setting aside the award
for insufficiency of reasons.

64) At the same time, if the findings recorded in the award are
based on absolutely no evidence, the award not only suffers from the
vice of perversity, but such perversity would go to the root of the matter
rendering the award invalid. There is fine distinction between the
concepts of 'no evidence' and 'insufficient evidence' and while the
former eventuality renders the award perverse, the latter does not. The
award can be invalidated for patent illegality appearing on the face of
the award, but such patent illegality must be such an illegality, which
goes to the root of the matter and not mere erroneous application of
law. If the Arbitral Tribunal, based on material before it, has recorded a
finding or has reached a conclusion, which no fair or reasonable minded
person would ever record or reach, the same would constitute patent
illegality in the award, making it susceptible to invalidation under
Section 34 of the Arbitration Act. While interpretation of contractual
terms is in exclusive domain of the Arbitral Tribunal, it does not mean
that the Tribunal can rewrite the terms of contract or foist an altogether
new commercial bargain on the parties. The Arbitral Tribunal is
mandated under Section 28 of the Arbitration Act to decide the disputes
between the parties in accordance with terms of the contract and not by
introducing a new contractual arrangement. Therefore, if the award is

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rendered in departure of the contractual terms, the same can be
invalidated by Section 34 Court. Being a creature of contract, the
arbitrator must stay within the bounds of contractual terms. The
Tribunal cannot exceed the contractual mandate and award claims by
invoking the principles of equity or 'in the interest of justice' when the
claim is not awardable as per contractual terms. Unless equitable
jurisdiction is conferred on the Tribunal by agreement between the
parties, the Tribunal cannot decide the matter as amiable compositeur.
Inconsistent and contradictory findings exhibiting internal conflict in
the award reflect patent illegality. Eschewing vital evidence on record
constitutes a valid ground of challenge to the Arbitral Tribunal.
Similarly, consideration of irrelevant material for awarding a claim also
exhibits perversity in the award.

65) Having dealt with the broad scope of powers of this Court to
interfere in the arbitral award under Section 34 of the Arbitration Act,
now I proceed to examine findings recorded by the Arbitral Tribunal on
various issues.

MOST CLAIMS RELATE TO DELAY IN EXECUTION OF PROJECT

66) There is no factual dispute to the position that execution of
the Metro Project has been delayed. The Commercial Operation Date
could not be achieved by the desired date. Though the COD was
supposed to be achieved within maximum period of 5 years in the CA, it
appears that the MMOPL had given a schedule under which the COD was
to be achieved by 29 July 2009. However, the physical work of the Project

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commenced only on 8 February 2008. The COD was extended by the
parties by mutual agreement from time to time and finally the
commercial operations commenced on 8 June 2014.

67) Most of the claims of the Respondent-MMOPL are related to
the aspect of delay. According to MMOPL the total project cost went up
from the estimate of Rs. 2356 crores to Rs. 4321 crores (which was later
claimed at Rs. 4032 crores). As observed above, the consortium had bid
at a particular value and the MMRDA was supposed to provide the
Viability Gap Funding of Rs. 650 crores. The project cost went up as the
MMOPL was required to incur additional cost for procuring equipment
and for system contracts, towards interest, overheads etc. According to
MMOPL since there was enormous rise in the project cost, it is entitled
to recover the same from MMRDA. As observed earlier, MMOPL is
expected to recover the expenditure incurred in execution of the Project
by operating the Metro Line during the concession period of 35 years.
CA provided for grant of extension of concession period if MMRDA is
found responsible for delay and accordingly extension of concession
period has actually been granted to MMOPL. According to MMRDA,
MMOPL can recover the additional cost by operating the Metro Line
during extended concession period. On the other hand, it is the case of
MMOPL that it cannot recover the entire additional cost only through
extension of concession period and is entitled to recover the additional
cost from MMRDA.

68) The Arbitral Tribunal was thus tasked upon to decide the
responsibility for delay. The majority award holds Petitioner-MMRDA

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responsible for delay in execution of project. According to MMRDA, even
MMOPL is responsible for delay and that since there are concurrent
delays, the Tribunal has erroneously put the entire responsibility for
delay at the doors of MMRDA. Thus inquiry into the responsibility for
delay was the main issue before the Arbitral Tribunal and answering that
issue decides MMOPL's entitlement in respect of most of the Claims

MMRDA'S OBLIGATION TO PROVIDE ENCUMBRANCE-FREE ROW

69) The Arbitral Tribunal has held in the majority award that it
was the responsibility of MMRDA to provide the site/ROW free from all
encumbrances after diversion of utilities 'within 180 days of the CA'.
According to the MMRDA, the finding is perverse and based on
implausible and irrational interpretation of the CA. The MMRDA accuses
the Arbitral Tribunal of having traveled beyond the express contractual
stipulations under the CA. It would therefore be necessary to consider
the relevant contractual stipulations. Under Article 13.4 of the CA,
parties contractually agreed as under:

13.4. Site to be free from Encumbrances

The Site shall be made available to the Concessionaire pursuant hereto
by MMRDA free from all encumbrances, after diversion of all utilities
and free from all occupations and without the Concessionaire being
required to make any payment to MMRDA on account of any costs,
expenses and charges for the use of such Site for the duration of the
Concession Period save and except as otherwise expressly provided in
this Agreement. MMRDA shall procure for the Concessionaire access to
the Site, free of Encumbrances, not later than 180 (one hundred eighty)
Days from the date of this Agreement and in accordance with the land
schedule (the "Land Delivery Schedule") set forth at Annexure of
Schedule A.

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Provided, however, that if MMRDA does not enable such access to any
part or parts of the Site for any reason other than a Force Majeure
Event or breach of this Agreement by the Concessionaire,
MMRDA shall extend the Scheduled Project Completion Date and the
Concession Period by such period as determined by the Independent
Engineer to compensate the Concessionaire

70) The Arbitral Tribunal has interpreted the above contractual
clause to mean that the contractual obligation for MMRDA in Article
13.4 of CA to provide the site/ROW within 180 days included removal of
all encumbrances including utilities. Relevant findings of the Arbitral
Tribunal in this regard are to be found in paragraphs 12.48 of the
majority Award, which read thus:-

12.48 Hence, it is held that it was the obligation of the respondent
under the CA to provide to the claimant Site / ROW free from all
encumbrances including utilities (except those which were not
required to be shifted), within 180 days of the CA
(emphasis added)

71) According to the Petitioner, the term 'encumbrance'
defined in the CA specifically excluded 'utilities and roads referred to in
Article 13.2'. The definition of the term 'encumbrance' in the CA is as
under:-

"Encumbrances" means any encumbrances such as mortgage, charge,
pledge, lien, hypothecation, security interest, assignment, privilege or
priority of any kind having the effect of security or other such
obligations and shall include without limitation any designation of loss
payees or beneficiaries (other than such designation of the Senior
Lenders pursuant to the Financing Documents) or any similar
arrangement under any insurance policy pertaining to the MRTS
Project, physical encumbrances and encroachments on the Site where
applicable herein excluding existing utilities and roads referred to
in Article 13.2.
(emphasis added)

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72) The Arbitral Tribunal has considered contractual Article
13.4 of the CA as well as the definition of the term 'encumbrance'
therein and has recorded following findings:

12.40. Respondent contended that Article 13.4 provided 180 days for
the respondent to procure for claimant access to the Site free from
Encumbrances' and in accordance with Schedule A, Annexure-II; that
the utilities referred to in Article 13 being utilities likely to be affected
during the construction of the 'Metro were excluded from definition of
Encumbrance; that respondent did not have obligation to remove /
divert such utilities within 180 days of the CA; that there was no time
limit prescribed within which the respondent was to make available the
Site to the claimant free from Encumbrances, after diversion of all
utilities free from all occupations.

12.41. In order to appreciate the respondent's contention, the
definition of term `Encumbrances' under CA needs to be analyzed.
`Encumbrances' was defined to mean inter alia any encumbrances such
as physical encumbrances and encroachments on the Site excluding
`existing utilities and roads referred to in Article 13.2'. The expression
"Physical Encumbrances and encroachments, on the Site" used in the
definition of "Encumbrance" was wide enough to include all Utilities, of
course other than utilities referred to in Article 13.2, which has been
expressly excluded. The expression 'Utilities'', as defined under the CA
meant the existing utilities on, along or under the Site that have been
"identified" by the claimant; and "if required for the Project", relocated
by respondent to a safe location, the location being such that the
continued presence of such utilities did not affect the execution of the
Project.

12.42. Now what were the 'existing utilities referred to in Article 13.2'?
It is seen that Article 13.2 granted to the claimant the right and license
to enter upon the Site for inter-alia constructing, , operating and
maintaining the Project subject however, to' any existing utilities on,
under or above the Site being kept in continuous satisfactory use. For
avoidance of doubt, Article 13.2made it clear that the said condition
was only meant to apply to those utilities that were likely to be
affected for the execution of works during the construction period.
Then what were the utilities that were likely to be affected for the
execution of works?

12.46. Considering that (i) article 13.4 required that the respondent
shall procure for the Claimant access to the Site, free of
'Encumbrances', not later than 180 days (ii) and the term

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"Encumbrances" as defined under the CA included all utilities other
than utilities contemplated under Article 13.2, which could not be
shifted and had to be maintained as it is, the respondent's contention
that it was not obliged to remove the utilities within 180 days, cannot
be accepted. The respondent's contention that utilities had to be
removed / relocated only as and when during the progress of the
construction a stage arose where such utilities obstructed further
construction activity, is contrary to the express terms of the CA which
required the respondent to provide to the claimant the Site free from
Encumbrances including all utilities except those specified under
Article 13.2. It is noticed that during the execution the respondent did
not put forth such interpretation of the terms of CA. Per contra the
Parties accepting that obligation of the respondent to provide the Site
free from encumbrances included shifting of utilities, had proceeded
accordingly and first and second Supplemental Agreements were
executed.

12.47. The respondent's contention is also contrary to Article 4.1 which
made the obligation of claimant subject to satisfaction in full of the
conditions precedent on or before the Financial Close including that
the claimant was granted ROW / Way Leave for the alignment of MRTS
free from all Encumbrances. The claimant's obligation to undertake
construction being subject to said conditions precedent, it is not
possible to accept the respondent's contention that the shifting /
removal of utilities was to be undertaken during the course of
execution. The contentions also overlook that Article 9.1 (viii) cast a
positive obligation on the respondent to shift the utilities, if required
not even though the provision gave an option to the respondent to
shift the utilities itself or through the concerned agency or through the
claimant by reimbursing the cost, existence of such option did not
relieve the respondent to ensure shifting of utilities. Postponing the
stage of shifting / removing the utilities to the stage at which
construction reaches a point requiring such shifting / removal is not
only contrary to the express language of Article 13.4 and 4.1, but would
also have made time bound achievement of specified milestones like
Financial Close and Scheduled Project Completion Date, difficult to
achieve and lead to results incongruous to the objective of the CA
which was time bound completion of the Project. It is not possible to
read the CA in a manner suggested by the respondent so as to hold that
the identification / shifting of the utilities was within claimant's
obligation.

73) Thus, the Arbitral Tribunal has holistically considered
various clauses of the contract for construing that identification and
shifting of utilities was within the domain of MMRDA and has
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accordingly concluded that it was the obligation of MMRDA to provide
site/ROW free from all encumbrances including utilities (except those
which were not required to be shifted) within 180 days of execution of
CA. For reaching the conclusion, the Tribunal has considered the factors
of (i) Article 13.4 prescribed period of 180 days for removal of
encumbrances (ii) definition of the term 'encumbrance' which includes
all utilities, except the ones contemplated in Article 13.2 which were
supposed to be preserved and maintained, (iii) obligation of MMOPL
being made subject to grant of ROW free from all encumbrances under
Article 4.1 (iv) positive obligation for MMRDA under Article 9.1 (viii) to
shift utilities; (v) interpretation by MMRDA during execution of contract
about shifting of utilities as and when work progressed (vi) execution of
first and second supplemental agreements extending the period due to
non-shifting of utilities. I do not find interpretation of contractual terms
by Arbitral Tribunal to be so irrational that no fair-minded person would
ever arrive at the same. As observed above, interpretation of contractual
clauses is in the exclusive domain of the Arbitral Tribunal. Even if any
error is committed by the Tribunal in interpreting the contractual
clause, it is an error within the jurisdiction of Tribunal not warranting
any interference in exercise of powers under Section 34 of the
Arbitration Act. Thus, the findings of the Arbitral Tribunal on MMRDA's
responsibility to provide encumbrance free ROW within 180 days for
execution of project recorded by the Arbitral Tribunal passes the muster
of Section 34 of the Arbitration Act.

74) Petitioner-MMRDA has also sought to rely on conduct of
parties for criticizing Arbitral Tribunal's findings on contractual

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obligation to provide encumbrance free ROW within 180 days of
execution of CA. However, the Tribunal has taken note of conduct of
parties in executing the first and second supplemental agreements due
to delay in removal of encumbrances. If the encumbrances were to be
removed only as the work progressed and only when MMOPL identified
the same and brought to MMRDA's notice, there was no need for
executing the two supplemental agreements. Also, construction of
contractual clauses made by the Arbitral Tribunal cannot be termed as
irrational merely by taking into consideration conduct of parties. Just
because MMOPL commenced construction work without waiting for
removal of all encumbrances and utilities and gave intimation of some
of the encumbrances during performance of the contract, it does not
mean that MMOPL had contractual obligation to identify the
encumbrances and intimate the same after which only MMRDA was to
remove the same. In my view therefore, conduct of the parties is not the
only relevant factor for determining the exact contractual obligations
agreed under the CA. The dissenting award appears to have laid
unnecessary emphasis on encountering of encumbrances of mosque,
hospital and a building which were apparently removed as and when the
construction at the site /location/spot actually commenced.

75) I therefore do not find that any valid ground is made out for
interfering in the findings recorded by the Arbitral Tribunal about
contractual obligations of MMRDA to provide encumbrance free ROW to
MMOPL within 180 days of execution of the CA.

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DELAY IN PROVIDING ROW RESULTING IN DELAY IN EXECUTION OF
PROJECT

76) The majority award adopts two-pronged approach while
deciding the issue of delay in execution of the Project and the
responsibility for delay. The Tribunal first adopted reverse methadology
by holding that extension of concession period was grantable only if
delay was not attributable to MMOPL and that since extension has been
granted, MMOPL cannot be held responsible for delay in execution of
the Project. It conducted inquiry whether extension for concession
period was granted, what was the reason for grant of extension and
whether grant of extension would mean that the delay was not
attributable to MMOPL. Second, the Tribunal has conducted actual and
factual enquiry into the delay and has held that MMRDA is responsible
for delay in execution of the Project. The majority award is prolific, and
significant part thereof is devoted in recording findings on second
enquiry into delay.

Inferring MMRDA's responsibility for delay based on extension of
Concession Period

77) The Arbitral Tribunal examined the role of the IE during
execution of the contract in the light of MMOPL's contention that grant
of extension of construction period automatically meant that MMOPL
was not responsible for delay. The Arbitral Tribunal considered
contractual terms of CA as well as IE Agreement and has concluded that
under paragraph 18 of Schedule 'S' to the CA, it was the duty and

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responsibility of the IE to recommend extension of COD and concession
period. The Tribunal held in paragraph 12.64 of the Award as under:-

12.64. Having regard to the submissions of both the Parties, it is
noticed that the Parties are in agreement that IE being a technical
expert, its findings / conclusions have to be given due weightage.
Under Article 13.4 of the CA, in the event of respondent's failure to
enable claimant's access to Site or any part thereof other than for a
Force Majeure event or breach of CA by the claimant, the respondent
was obliged to extend the Scheduled Project Completion Date and
Concession Period by such period as determined by IE. Article 14.2 and
14.4 of the CA obliged IE to inspect the construction works, once a
month during the construction period and submit an inspection report
to the authorities; the said report was required to include defects and
deficiencies, if any, with reference to the Scope of Project,
Specifications and Standards. As per Article 20.2 of the CA IE was
required to discharge duties and functions substantially in accordance
with terms of reference set forth in Schedule-S (sic S2). Vide
paragraphs 10, 18 and 22 of Schedule-S the duties and responsibilities
of IE included:

"10. To monitor the progress and quality of the works through periodic
inspections and submit report to the Concessionaire and MMRDA.

18. In the event of delays not attributed to the Concessionaire, but
likely to affect COD recommend suitable extension of COD and
Concession Period.

22. Any other duty not specifically listed about but necessary for
successful project implementation or as may be construed from the
concession agreement."

78) The Tribunal thereafter considered terms and conditions of
IE Agreement and held that under clause 2.13.0 extension of COD and
concession period could be recommended by the IE only if delays are not
attributable to the Concessionaire. Upon conjoint reading of the CA and
IE Agreement, the Tribunal concluded in paragraph 12.68 as under:-

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12.68. Neither under the CA nor the IE Agreement, IE could
recommend extension of time based on delays attributable to the

claimant. Even though for the purpose of recommending extension of
time IE could evaluate the causes for delay and determine whether the
delay was due to the fault of the claimant, however, recommendation
of extension of time was required to be made by IE, solely based on
delays not attributable to the claimant.

79) The Arbitral Tribunal thereafter went into the
recommendations of the IE and the reasons why he recommenced
extension of COD and ultimately concluded in paragraph 12.74 of the
Award as under:

12.74. IE had recommended extension of period of construction works
upto 30/6/2014. IE made recommendation based on mandate flowing
from the CA and the IE Agreement that the extension be determined
based on the delays to the extent same are attributable to respondent.
The said recommendation having been made by IE, a technical expert
appointed in terms of CA between the Parties needs to be given due
weightage. The respondent having unconditionally extended the
Schedule Completion date by 540 days i,e., upto 28/8/2013 by letter
19/12/2013, atleast upto the said period the respondent could not
contend that there were delays attributable to the claimant.

80) Thus, the Arbitral Tribunal has concluded that IE, being a
technical expert appointed in terms of CA, could recommend extension
of COD and concession period only if delay was not attributable to
MMOPL and that since MMRDA unconditionally extended COD by 540
days, it cannot be contended that delay for that period could be
attributable to MMOPL. This is the first method employed by the arbitral
tribunal in the majority award for deciding that the delay was not
attributable to MMOPL.

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Conduct of factual inquiry into responsibility for delay

81) As aforesaid, the Arbitral Tribunal did not stop at inferring
absence of responsibility for delay on the part of MMOPL only based on
extension of concession period, but went on to conduct factual enquiry
into the delay. Annexure-A to the CA divided the entire alignment into
six stretches and also specified the dates by which the MMRDA was
required to handover ROW/site for all the six stretches. Accordingly, the
Arbitral Tribunal conducted factual inquiry whether MMRDA delayed
handing over portions of various stretches and whether the same caused
delay in execution of the Project. Before doing that, the Arbitral
Tribunal repelled the contention of the Petitioner-MMRDA that the
construction work could be conducted in a piecemeal manner and
concluded that the work was supposed to be carried out sequentially.
The findings of the Tribunal in this regard are to be found in paragraph
12.12 of the Award, which read thus:

12.12. The contents of the Programme Chart including the description
of activity, the start and finish dates confirm that the claimant had
proposed to carry out the work sequentially and not in piecemeal
manner. After issuance of notice to proceed, the actual work broadly
comprised work of Viaduct, works at Stations and works at Depot. After
the said works the activities of delivery of Rolling Stock, integration
and trial were to follow. The items in the Chart disclose that the
activities were to be undertaken / completed within a particular period
for the entire line and each subsequent activity, with its own time
frame, was dependent on prior activity. Considering that the activities
had to be carried out within specified time frames, the claimant was
required to mobilize resources / manpower / plant & machinery etc.,
accordingly. The claimant was not expected to have separate or
different resources such as manpower, machinery and material etc., for
each of the activity that too for open ended period. In fact, the
claimant appointed ,sub-contractors to undertake specified works
during specified periods. Hence, it cannot be accepted that the

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construction work had to be done section-wise / stretch-wise. Only at
the end of the construction of the entire Project, it was to be
commissioned and a certificate of completion (provisional or final) was
to be given. The execution of construction work being an integrated
activity to be undertaken sequentially as per Schedule to achieve
Completion, it was not possible to assess if claimant suffered damages
on account of respondent's delays in handing over various ROWs and /
or other breaches and if so to quantify the same.

82) The Arbitral Tribunal divided each of the six stretches into
numerous sub-stretches and went on to consider the aspect of delay in
respect of each of the sub-stretches. The Tribunal's factual enquiry in
the majority Award runs from page Nos. 283 to 909. It must be observed
here that apart from the fact that the Arbitral Tribunal has recorded
findings of fact with regard to allegation of delay in respect of each of
the sub-stretches by appreciating the evidence on record, Mr. Sen has
fairly not sought to challenge those findings nor am I taken through
those findings by him. Instead, what Mr. Sen has done, and in my view
rightly so, is to raise a plea that since MMRDA is not held responsible in
respect of delay for some of the sub-stretches, imposition of entire
liability on MMRDA for delay is completely erroneous. This formulation
by Mr. Sen is captured in paragraph 18.20 and 18.21 of MMRDA's written
submissions and it would be apposite to extract the same for facility of
reference:
18.20. With respect to various contentions, the Tribunal has observed
that MMRDA was not responsible for the same. See: Paras 12.157 @p.
359 of the Compilation of the Award / Vol. II, 12.158, 12.159, 12.160,
12.172, 12.188 12.190, 12.207, 12.218, 12,238, 12.267, 12.276, 12.279,
12.280, 12.285, 12.288, 12.300, 12.328, 12.332, 12.336 of the Award.
Further, with respect to various contentions, the Tribunal has held that
the Claimant/MMOPL has not pleaded the same in its Statement of
Claim or affidavit of Evidence and has held that the Delay cannot be
attributed to MMRDA. See Paras 12.132 @ p. 325 of the Compilation of
the Award / Vol. II, 12.155, 12.156, 12.158, 12.159, 12.160, 12.172,
12.224, 12.245, 12.256 to 12.261, 12.268 to 12.271, 12.274 to 12.276,

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12.279 to 12.282, 12.283, 12.291, 12.296, 12.299, 12.300, 12.301,
12.306, 12.309, 12.310, 12.311, 12.312, 12.319, 12.344, 12.345, 12.363,
12.395 and 12.396 of the Award.

18.21. Thus, the imposition of entire liability on MMRDA as if the
entire delay is attributable to it. is completely erroneous. The Tribunal
has failed to arrive at a finding as to who was responsible for the delay
in the individual sub-stretches. However, after conclusion of the
discussions on ROW, the Tribunal has simply held that MMRDA had
delayed handing over of portions of various stretches to MMOPL which
had delayed the completion and commissioning of the Project (para
12.404. pg. 909 of the Compilation of the Award/Vol. IV)

83) Mr. Bhatt has fairly not contested the position that in
respect of some of the sub-stretches, MMOPL has not been successful in
demonstrating delay on the part of MMRDA either on account of
absence of pleadings or absence of evidence. However, he submits that
detailed discussion by the Arbitral Tribunal in paragraphs 12.110 to
12.403 at pages 283 to 908 of the Award contains analysis of each and
every encumbrance and hindrance. He submits that after analysing all
the encumbrances and hindrances and after considering the stipulations
of CA, correspondence between parties, monthly progress reports and
evidence rendered by respective witnesses, etc, the Tribunal has held
Petitioner responsible for handing over ROW in various stretches to
MMOPL.

84) In my view, the number of sub-stretches divided by the
Arbitral Tribunal while conducting enquiry into the aspect of delay are
large in number and merely because MMRDA is absolved in respect of
allegations of delay for few sub-stretches, the same would not mean that
the overall finding of the Arbitral Tribunal about Petitioner being
responsible for such delay suffers from an element of perversity. The

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Tribunal has ultimately concluded in paragraph 12.404 of the majority
Award as under:

12.404 The above discussion shows that the respondent had delayed
handing over of portions of various stretches to the claimant which
had in turn delayed the completion and commissioning of the Project.
The respondent delayed handing over of the complete ROW till
17/2/2014 when it finally handed over the Encumbrance free ROW for
one of the Lifts for Jagruti Nagar Station. Thereafter as estimated by
the 1E, the claimant was granted three months period' to complete and
commission the Project and accordingly SPCD was extended till
13/5/2014. The Provisional Completion Certificate was issued by IE as
per provisions of CA, on 6/5/2014. Subsequently the Railway Board,
Ministry of Railways, Gol granted, technical clearance on 5/6/2014 as
well as sanctioned introduction of operation of Standard Gauge
Coaches. Excluding the time taken by the Railway Board to grant
technical clearance and sanction introduction of operation of Standard
Gauge Coaches, which cannot be attributed to the claimant, the
claimant achieved SPCD in time extended by the respondent. The
delays in achieving SPCD being on account of various breaches /
default's attributable to the respondent, now the claimant's claim for
extension of time upto 7/6/2014 and damages by way of additional /
increased cost needs to be considered.

85) Petitioner has relied upon English judgment in De Beers
(supra) in support of his contention that where there is a concurrent
delay, the contractor is only entitled to extension of time and cannot
recover damages for loss caused by delay. It is held in paragraph 177 and
178 of the judgment as under:

177. The general rule in construction and engineering cases is
that where there is concurrent delay to completion caused by
matters for which both employer and contractor are responsible,
the contractor is entitled to an extension of time but he cannot
recover in respect of the loss caused by the delay. In the case of the
former, this is because the rule where delay is caused by the employer
is that not only must the contractor complete within a reasonable time
but also the contractor must have a reasonable time within which to
complete. It therefore does not matter if the contractor would have
been unable to complete by the contractual completion date if there
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had been no breaches of contract by the employer (or other events
which entitled the contractor to an extension of time), because he is
entitled to have the time within which to complete which the contract
allows or which the employer's conduct has made reasonably
necessary.

178. By contrast, the contractor cannot recover damages for delay in
circumstances where he would have suffered exactly the same loss as a
result of causes within his control or for which he is contractually
responsible.
(emphasis added)

86) In my view, the judgment in De Beers would have no
application to the facts of present case. In case before the UK High
Court, the contractor was also found to have delayed execution of the
contract but was seeking to recover damages from the employer by
accusing employer of delay. In the present case, however the Arbitral
Tribunal has not held MMOPL concurrently responsible for delay in
execution of the project. There is difference in the concept of MMOPL
being concurrently responsible for delay and MMRDA being held not
responsible for delay in few sub-stretches. If the Tribunal was to hold
MMOPL concurrently responsible for delay, what Mr. Sen argues would
have been right. However, my attention is not drawn to any findings
even in the majority award where it is held that the ROW was available,
but MMOPL delayed execution of Project at a particular stretch.
Absolving MMRDA of delay in respect of few stretches is an altogether
different and distinct concept than holding MMOPL responsible for
delay in execution of work where ROW was available. As observed above,
the entire ROW was not available and was provided in a phased manner
by MMRDA, the last hindrance being removed on 17 February 2014 i.e.
few months before commercial operations commenced. In that view of
the matter, the general rule discussed in De Beers of grant of only
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extension of time and not damages in case involving concurrent delay by
contractor cannot be attracted in the present case.

87) In my view, the Tribunal has conducted factual enquiry in
respect of delay for each of the sub-stretches and has thereafter reached
a conclusion that the complete ROW came to be handed over only on 17
February 2014 and that the delay in handing over ROW in respect of the
various sub-stretches delayed completion and commissioning of the
project. I am unable to notice any element of perversity and as observed
above, no attempt has been made on the part of the MMRDA to
demonstrate an element of perversity in those findings of fact.

88) The issue here is about overall delay in handing over ROW,
which Mr. Sen brands as 'global delay' and merely because MMRDA is
absolved of allegation of delay in respect of some of the sub-stretches,
the same would not render the overall finding of delay as perverse. The
case does not involve contributory delay on the part of MMOPL. There is
no finding by the Arbitral Tribunal that though ROW was available
MMOPL did not execute the work. The work apparently progressed as
ROW became available with passage of time. As observed above, the last
element of ROW became available to MMOPL on 17 February 2014 when
lifts for Jagruti Nagar station were installed and extension for COD was
granted till 13 May 2014. Thereafter provisional certificate was granted
by the IE on 6 May 2014 and commercial operations started on 8 June
2014. I therefore do not find any valid reason to interfere the overall
finding recorded by the Arbitral Tribunal in respect of 'global delay' in
provision of ROW by MMRDA.

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89) Mr. Sen submits that the substantial portion of ROW (of 7.7
kms out of 11.302 kms) was handed over to the MMOPL by December
2007, which position is ignored by the majority award. He relies on
correspondence between MMRDA and MMOPL of 21 December 2007 and
27 April 2009 in support of his contention that by April 2009, 9.90 km of
ROW was made available to MMOPL. It appears that in similar manner
letter dated 12 May 2011 was relied upon by MMRDA in support of its
claim of handing over of 98% ROW by 31 August 2011. The majority
award discusses this in paras 12.86 and 12.87 and has found the claim to
be factually incorrect. Also, there is no point in considering the
numerical percentages of ROW which was allegedly handed over. The
issue here is whether MMOPL delayed construction work despite
handing over ROW in a particular stretch and when is the last part of
ROW handed over. Firstly, there is no evidence to hold that MMOPL sat
tight at the relevant portion of site and failed to execute the work
despite availability of encumbrance free ROW. Secondly, it is an
admitted position that the last part of the ROW was made available to
MMOPL by MMRDA in February 2014 (Para 404 of the majority award).
Therefore, this Court is unable to hold that the conclusion reached in
the majority award about MMRDA being responsible for delay in
handing over encumbrance free ROW is an impossible conclusion which
no fair and reasonable minded person can ever record.

90) Mr. Sen has relied on findings recorded in the dissenting
award in which it is held as under:

They were aware of the existence of shops, monuments, religious
places and other difficulties inherent in the situation, which is clear

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from a reading of Art. 11A(1)and (2). In some cases, land had to be
acquired which could not have been done hurriedly. Several other
public authorities were involved in the sense that several underground
utilities were owned and operated by them, namely MCGM (water and
drainage lines) Gas lines, communication lines by TATA and Reliance
companies and so on. In short, the approach of the parties was to
go ahead with the construction work. As and when work
progressed, the utilities and encumbrances standing in the way
were relocated / diverted or were resolved in a manner permitting
the progress of the work. The Respondent was not insisting that
before the encumbrances were removed all the utilities should be
relocated / diverted, nor did the Claimant insist that all the
encumbrances be cleared at one go all along the rail track within 180
days. It should also be borne in mind that mere clearing/ removing the
encumbrances was not enough for the construction work to proceed;
the utilities should also be relocated/ diverted/ resolved for the work to
commence and proceed. Even if there were overhead or over-arching
utilities and encumbrances, they too needed to be resolved for the
work to proceed. In short, the parties were intent upon completing the
work in the given difficult circumstances and were not so much
concerned with the letter of the Agreement; that was the right attitude
in the given difficult circumstances, some of which have been
mentioned hereinabove.

91) The above findings in the dissenting award again deal with
the issue of making available the entire ROW at one go within 180 days
of execution of the CA. However, even if it is accepted arguendo that it
was practically impossible to make available the entire ROW for 11.4
kms at one go or that the MMOPL also did not insist on such
requirement before starting the work, the majority award makes a
detailed analysis as to how delay in removing each hurdle delayed
execution of the project. The dissenting award makes general
observations of possibility of temporary shops resurfacing after removal,
non-requirement of removal of a mosque, temple or hospital before start
of work at the relevant site, etc. While the findings in the dissenting
award about impossibility to ensure removal of each
hinderance/structure at one go are general in nature, the majority award

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discusses each of the hurdle/encumbrance/structure coming in the way
of construction of Metro line in over 600 pages. There are specific
findings recorded in the majority award as to how each of the hurdle
delayed construction work. No attempt is made to demonstrate any
element of perversity in those findings.

92) Also, perusal of the findings in the dissenting Award would
indicate that the same lays emphasis on some of the delays being
attributable to MMOPL and to the third parties. However, as observed
above, what the majority Award does is to consider the overall delay and
the findings of fact recorded in respect of overall delay cannot be set at
naught by selectively relying on some of the findings where MMRDA is
absolved in respect of allegations of delay.

93) I am therefore of the view that the conclusion in the
majority award about MMRDA being responsible for delay in handing
over encumbrance free ROW does not warrant interference in exercise of
powers under Section 34 of the Arbitration Act.

ENTITLEMENT OF MMOPL FOR MONETARY COMPENSATION/DAMAGES OR
ONLY EXTENSION OF CONCESSION PERIOD

94) According to the Petitioner-MMRDA, the CA does not
provide for remedy of seeking damages or monetary compensation from
MMRDA even for delay in provision of ROW. MMRDA contends that the
contractual remedy available for delay in provision of ROW is only by
way of extension of concession period. Petitioner has relied on Article
4.4 of the CA, which provides thus:
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4.4 Non-fulfilment of conditions precedent

If the Conditions Precedent set forth in Article 4.1 except in Sub-
Articles 4.1 (b) and (c) have not been satisfied on or before the
Financial Close and MMRDA has not waived, fully or partially, such
conditions under Article 4.2, MMRDA may, notwithstanding anything
to the contrary contained in this Agreement, terminate this Agreement
by giving a 30 (thirty) Days notice, without being liable in any manner
whatsoever to the Concessionaire and forfeit the Bid Security and/or
the Performance Security by way of Damages. If MMRDA does not
meet its Conditions Precedent set forth in Sub-Articles 4.1 (b) it
shall be entitled to extend the date for meeting such Conditions
Precedent up to a period not exceeding 180 Days. On such delay
in meeting Conditions Precedent by MMRDA, it shall extend the
date for achieving Financial Close and the Concession Period by a
period equal in length to such delay. If MMRDA is not able to
meet its Conditions Precedent even after such extension, MMRDA
and the Concessionaire shall mutually decide to either provide
any further extension to MMRDA or mutually agree to terminate
this Agreement. Upon such termination of the Agreement under this
Article 44, MMRDA shall refund in full Bid Security or the Performance
Security, as the case may be and reimburse costs incurred by the
Concessionaire and as certified by the Statutory Auditor and
recommended by the Independent Engineer.
(emphasis and underlining added)

95) Thus Article 4. 4 of the CA, provided for extension of COD
and concession period in the event of MMRDA not fulfilling the
'conditions precedent'. Based on this contractual clause, it is submitted
on behalf of Petitioner-MMRDA that Respondent is already sufficiently
compensated by increase in the concession period and having benefitted
from Article 4.4, MMOPL could not have claimed further damages. The
Tribunal's award of damages is criticized as override of contractual
stipulations.

96) It must be noted at once that though Article 4.4 of the CA
provides for the remedy of extension of concession period, it does not

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specifically bar the remedy of damages. It does not stipulate that no
damages would be payable for MMRDA's inability to meet the
'conditions precedent'. The Arbitral Tribunal has dealt with Petitioner's
objection to award of damages in the light of contractual remedy of
extension of concession period in paragraphs 12.88 to 12.109 of the
majority Award. The Tribunal has noted the aspect of absence of
contractual stipulation not barring the claim for monetary losses in para
12.101 of the Majority Award.

97) It is well settled position in law that stipulation in the
contract restricting right of a party to claim damages on commission of
breach by opposite party is not enforceable. The Arbitral Tribunal has
discussed the judgment of the Delhi High Court in Simplex Concretev
Piles (India) Ltd. Versus. Union Of India 35 in which it is held that
provisions of the contract, which sets at naught the legislative
intendment of the Indian Contract Act, 1972 by restricting right of a
party to claim compensation /damages would be void as being against
public interest and public policy. The Arbitral Tribunal has also taken
note of judgment of the Apex Court in P.M. Paul Versus. Union Of
India36 negating the similar objection of availability of only remedy of
extension of time and not damages. The Apex Court held that if
arbitrator has jurisdiction to find out whether there was delay
attributable to the Respondent therein, the Respondent was liable for
consequences of delay viz., increase in price. The Tribunal has also
taken note of the ratio of the judgment in A.N. Sathyapalan Versus

35
2010 SCC OnLine Del 821
36
1988 Sub 1 SCC 368
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State of Kerela37 where there was specific prohibition for price
escalation due to delay in execution of the work and the Apex Court
upheld arbitral award awarding claim for escalation of costs even though
there was bar for price escalation under the contract.

98) In relation to execution of metro work contract and in the
light of contractual provision for only extension of time of concession
period in the event of breach, the Delhi High Court in MBL
Infrastructures Ltd. v. Delhi Metro Rail Corporation 38 has held that the
clauses which restrict the right of a party to claim damages are
restrictive and that such clauses defeat the purpose of the Sections 55
and 73 of the Indian Contract Act, 1872

99) In Regus South Mumbai Business Centre Pvt. Ltd. (supra)
this Court has repelled the contention of impermissibility to award
monetary damages on account of contract providing for other
consequences for breach. This Court held thus:

It is contended on behalf of the Petitioner that the award of damages of
Rs.10,10,01,000/- by the learned Arbitrator is in the teeth of the
contract Clause-21. According to the Petitioner, if it had failed to
perform as per revenue projections to the liking of the Respondent,
only two consequences could flow therefrom viz. (i)termination of
Agreement and vacation of premises, or (ii) conversion of agreement
into leave and license. It is contended on behalf of the Petitioner that
under no circumstances, any third consequence in the form of damages
could be awarded by the learned Arbitrator and that award of damages
is like rewriting the terms of contract. Reliance is placed on judgment
of the Apex Court in PSA Sical Terminals Private Limited Versus
Board of Trustees (supra) in support of the contention that the learned
Arbitrator cannot rewrite the terms of the contract. I am unable to
agree that award of damages would amount to rewriting any

37
(2007) 10 SCC 43
38
2023 SCC Online Del 8044
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clauses of the Management Agreement. The effect of Clause-21 of
the Management Agreement, cannot be that no damages can be
awarded upon breach of contract and all that can be done is to
terminate the contract or convert the same into a license.

48) Petitioner's submission that breach of obligation to make best
endeavor to achieve revenue projections made in the Business Plan
would entail only consequences stipulated in Clause-21 of the
Management Agreement. As rightly pointed out by Mr. Sancheti, the
proposition is well settled, and Mr. Andhyarujina does not fairly
dispute, that any contract stipulating nonpayment of damages would
be void. Reliance by Mr. Sancheti on judgment of Delhi High Court in
MBL Infrastructures Limited (supra) in this regard is opposite. In fact
if the learned Arbitrator was to hold that no damages were
payable on account of stipulation in Clause-21, such finding
would have been in conflict of public policy of India.

49) It therefore cannot be accepted that though breach on the part of
the Petitioner to make best endeavours to achieve revenue projections
is proved, Petitioner will still walk away without any consequence. No
person with a common business sense would ever agree that upon
breach of the agreement there would be no consequence for party
committing breach. The Respondent in the instant case has expended
amount of Rs.7.8 crores in furnishing the premises to the liking of the
Petitioner. Therefore it could never have agreed to a term that even if
Petitioner was not to earn any revenue for the Respondent, there
would be no consequence to be suffered by the Petitioner. Going by
that interpretation, Petitioner could have not commenced the
operations and not inducted any person for use of the premises and
could have paid zero amount to the Respondent and all that
Respondent could suffer for such act was only termination of the
Agreement or to convert the same into leave and license. This would
make an absurd business proposition, which no fair-minded person
would ever agree for. In my view therefore, the objection to award of
damages raised on behalf of the Petitioner is clearly erroneous. If
Petitioner was to lead some evidence to prove any mitigating factors,
the learned Arbitrator could have reduced the amount of damages.
However, Petitioner thought it appropriate not to avail opportunity of
leading evidence and left no choice for the learned Arbitrator but to
award full difference in projected premium and actual premium as
damages.

(emphasis added)

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100) The Arbitral Tribunal has also analyzed the contractual
stipulations under Articles 4.4, 13.4 and 13.7 of the CA and has
concluded that there was no express bar against MMOPL seeking any
relief on account of MMRDA's delay in providing encumbrance-free
ROW, including by way of monetary compensation. This again is an
exercise conducted by the Arbitral Tribunal in its exclusive domain of
construction of contractual stipulations warranting no interference by
this Court in exercise of powers under Section 34 of the Arbitration Act.

101) In my view, therefore, the Arbitral Tribunal has rightly
concluded that claim for compensation / damages of MMOPL could be
adjudicated even though CA provided for only extension of concession
period as a consequence for delay.

AWARD OF DAMAGES UNDER CLAIM NO. 6

102) The Respondent-MMOPL sought damages in aggregate
amount of Rs.1372.47 crores under various sub-heads. These amounts
were sought as a result of delay in commencement of commercial
operations (original date 31 July 2010 and actual commencement dated 8
June 2014). However, the Arbitral Tribunal has allowed claim in the sum
of only Rs. 411,70,21,968/- in favour of MMOPL against only four sub-
heads while rejecting claims in respect of other four sub-heads. The
summary of demanded amounts and awarded amounts under Claim No.
6 is as under:

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No. Particulars Amount Amounts/ relief
awarded
6(i)
A. Increased Price Variation in Rs. 59.89 Crores 0
Civil Contracts
B. Price Adjustment in Civil Rs. 10.33 Crores 0
Contracts
C. Increase in cost of civil work Rs. 83.13 Crores 0
due to engagement of other
agencies
D. Increase in the cost of system Rs. 195.92 Crores Rs.163,22,44,188/-
works
E. Additional amount paid to Rs. 87.57 Crores 0
Project Management
Consultants, including the
Claimant's share of the fees to
the IE
F. Additional Overhead Expenses Rs. 255.06 Crores Rs.100,00,00,000/-
G. Additional Interest and Rs. 369.51 Crores Rs.125,00,00,000/-
Financing Expenses during
construction
H. Opportunity cost on loss of Rs. 42.26 Crores Rs.23,48,00,000/-
profit
I. Sub Total (A to H) Rs. 1103.68 Rs.411,70,21,968/-
Crores
J. Interest on 1 (Sub-total), from Rs. 186.39 Crores 0
7th June 2014 till 10th June,
2014
K. Interest and Refinancing Rs. 82.40 Crores 0
charges on additional loan from
8th June 2014 til 10th June,
2015
L. Total Rs. 1372.47 Rs.411,70,21,968/-
Crores

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103) Thus, the Arbitral Tribunal has rejected claims of the
Respondent-MMOPL under sub-heads of (i) increase in price verification
in civil contract, (ii) price adjustment in civil contracts, (iii) increase in
cost of civil work (iv) Additional amount paid to Project Management
Consultant (PMC) and IE. Only four claims have been awarded under the
sub-heads of (i) increase in the cost of system works, (ii) additional
overhead expenses (iii) additional interest and financial expenses during
construction and (iv) opportunity cost on loss of profit.

104) Before I proceed to examine each of the sub-heads under
Claim VI, which have been awarded by the Arbitral Tribunal, it would be
necessary to deal with the Petitioner's objection to the findings recorded
by the Arbitral Tribunal on 'Total Project Cost'.

TOTAL PROJECT COST

105) The Total Project Cost for the purpose of execution of CA
was capped at Rs.2356 crores under clause 1.1 thereof. This means that
even if actual capital cost of the project upon completion was higher, for
the purpose of CA the total project cost was not to be considered higher
than Rs.2356 crores. It appears that the same was relevant for the
purpose of fare computation and for computation to be made in case of
termination etc. According to MMRDA, the total project cost indicted in
the CA did not necessarily represent actual cost, which was likely to be
incurred for execution of the project and the commercial risk in respect
of increase in the project cost beyond Rs.2356 crores was to be borne by
MMOPL.

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106) MMOPL claims that the total project cost went upto Rs.4321
crores as indicated in minutes of Board Meeting dated 23 May 2012.
However, ultimately from financial statement as on 31 March 2015, the
figure under the head 'intangible asset-right under the CA' is indicated
as Rs.4032 crores and accordingly even in the pleadings MMOPL
ultimately admitted the figure of Rs.4032 crores as the total project cost.
Thus, differential increase in the project cost is Rs.1670 crores.
According to MMRDA the Respondent did not prove that the project cost
was actually increased to Rs.4032 crores by leading any independent
evidence. It is further contended that the amounts do not tally as the
minutes of Board Meeting indicated figure of Rs.4321 crores whereas
claimed expenditure is Rs.4026 crores. The MMRDA accordingly
criticises the finding of the Arbitral Tribunal about total project cost as
being based on no evidence and hence perverse.

107) The Arbitral Tribunal has recorded a finding of increase in
total project cost from Rs.2356 crores to Rs.4026 crores by taking into
consideration (i) minutes of Board Meetings, (ii) audited financial
statements and (iii) minutes of special resolution amending Articles of
Association of MMOPL. In Paragraph 12.412 of the Award, the Arbitral
Tribunal has taken into consideration 46 documents, which are minutes
of MMOPL's Audit Committee, minutes of MMOPL's board of directors,
audited financial statements and minutes of special resolution for
amending the Articles of Association. The Tribunal took into
consideration provisions of Section 292A of the Companies Act, 1956
and held that the audit committee was empowered to investigate in
relation to any items and that the audit committee's role was not

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confined to only overseeing or checking the auditors. Petitioner's Officer
(RW-2) was the chairman of the Audit Committee. The Tribunal
considered that under the Shareholders Agreement, Petitioner had right
to appoint three out of the 12 directors on MMOPL. It took into account
the minutes of Board meeting dated 23 May 2012 and 23 January 2013 in
which the Board noted the revised project cost of Rs. 4321 crores and
resolved to avail additional loan of Rs. 936 crores. The Tribunal also
noted the Special Resolution adopted by the Board on 5 February 2013
when the Board decided to amend the Articles of Association of MMOPL
to raise debt finance from lenders so as to meet the revised project cost.
The Arbitral Tribunal ultimately concluded in paragraph 12.422 and

12.425 as under:-

12.422 Having regard to these provisions, the minutes of meeting of
claimant's Audit Committee chaired by RW-2, minutes of claimant's
Board meetings, audited financial statements of the claimant and the
minutes of special resolution amending claimant's AoA for facilitating
raising of additional funds for meeting the revised Project cost, are
relevant and admissible in evidence to prove that there was a revision
in Total Project Cost. These cannot be ignored merely on the basis that
the same were not produced along with SoC or the affidavit of evidence
of witnesses of claimant. A Party is entitled to prove its case through
cross-examination of the witnesses of its opposite Party. Besides, this
Tribunal in minutes of 52nd meeting held on 8/3/2009 recorded that
documents produced during cross-examination of RW-2 would cause
no prejudice to the respondent and respondent was given liberty to
recall any of the witnesses if it so deemed fit. However, respondent
chose not to recall any of the witnesses. The respondent has not
pointed out any prejudice suffered by it on account of non-production
of the minutes of meetings of claimant's Audit Committee, Board of
Directors or Shareholders or its financial statements, by confronting
RW-2.

12.425. For the foregoing reasons, it is held that the claimant has
established that there was an increase / revision in Total Project Cost
from Rs.2356 Crores to Rs.4026 Crores. The difference between revised

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Project cost of Rs.4026 Crores and the original estimated cost of
Rs:2356 Crores under CA, works out to Rs. 1670 Crores.

108) The above findings recorded by the Tribunal in the majority
award are well supported by the material on record and cannot be
termed as perverse by any standards.

109) Petitioner has contended that the Board Minutes cannot be
the basis to impose the liability on MMRDA. Petitioner accuses the
majority Award of having adopted illegitimate shortcut by accepting the
figures approved in the Board Meetings. Petitioner has particularly
relied on Minutes of Board Meeting dated 23 May 2012 in which it was
resolved that 'analysis with respect of the revision in estimation of total
project cost, as advised by the nominee directors of MMRDA, be undertaken
and the company to provide all necessary and a reasonable support towards
the same'. The dissenting award is relied on by the Petitioner in which
it is held that the approval was not final. Petitioner has also contended
that mere 'right to verify' cannot be the basis for imposition of liability
on MMRDA as its role was to merely supervise the work and that it was
not involved in day-to-day management of the project. In my view,
however, Petitioner's criticism of majority award in this regard is not
fair. The findings on Total Project Cost are not based merely on Board
Minutes. There was an Audit Committee, which was supposed to audit
the accounts and the MMRDA's Officer was the chairman of the Audit
Committee. The case does not involve just a stray entry in the books of
accounts, which needs independent evidence to prove the same. The
Articles of Association of MMOPL are amended to indicate the increased
Total Project Cost and additional loans are procured to meet the

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additional expenditure. Thus there is additional material to support the
figure indicated in the board minutes and financial statements. Reliance
by Petitioner on the caveat in the minutes of board meeting dated 23
May 2012 also does not cut any ice as the figure of Rs.4321 crores has
ultimately been brought down to Rs.4032 crores in the financial
statement and the Tribunal has considered the reduced figure of Rs.
4032 crores while computing the Total Project Cost.

110) Petitioner has sought to contend that the Total Project Cost
did not necessarily represent the actual cost that may be incurred and
that the Tribunal has simply sought to determine the 'global loss' by
comparing originally estimated cost with the costs reflected in the
financial statements. The contention, I must say, is not entirely correct.
The finding of rise in the Total Project Cost is recorded for satisfying
itself that there has actually been increase in the cost of the project than
the one originally estimated. It cannot be contended that the figure of
Total Project Cost is absolutely irrelevant as the initial bidding was
based on the estimated protect cost of Rs. 2356 crores and the
consortium had demanded VGF of Rs.1351 crores from MMRDA. After
negotiations, the VGF demand was brought down to Rs. 650 crores and
the remaining amount of Rs.1706 crores was to be ultimately arranged
by the bidder, which finally became the SPV of MMOPL. Here the rise in
the Total Project Cost (Rs.1676 crores) is almost equivalent to the
Consortium's contribution in the project (Rs.1706 crores). Therefore,
the moment Total Project Cost increases phenomenally, the question
would obviously arise as to who would bear the increased cost. Mr. Sen
has contended that MMOPL bore the commercial risk of increase in the

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total cost of project beyond Rs. 2356 crores. However, in the present
case, increase in the Total Project Cost is not on account incurring of
additional cost during agreed project completion period, but the same is
on account of delay in execution of project. Can it be said that even if
MMRDA is found responsible for delay in completion of project, MMOPL
must bear the entire increase in the cost of project. The answer appears,
to my mind, to be emphatic in the negative.

111) However, it is not necessary to delve deeper into the aspect
of increase in the Total Project Cost as the Arbitral Tribunal has not
awarded any sum in favour of MMOPL representing difference between
estimated project cost and final project cost. As against the difference of
Rs.1676 crores in the Project cost, the Arbitral Tribunal has awarded
only claims in the sum of Rs.496.48 crores. This is clear from following

findings in paragraphs 12.426 of the Award :

12.426 However, merely because there was an increase / revision in
cost as against originally envisaged cost it cannot be presumed that the
same was on account of delays / defaults attributable to the
respondent. For ascertaining if increase / revision in cost was on
account of respondent's delays / defaults and if so to what extent, the
pleadings of the Parties and the evidence on record need to be
examined.

112) The Arbitral Tribunal has decided each sub-head of the
claims under Claim No.6 and has decided them independently based on
evidence on record and none of the claims are granted merely because
there was increase in the Total Project Cost. Ordinarily once execution
of the project gets delayed, there is bound to be some escalation in the
project cost and even MMRDA would not dispute this. How much

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increase actually occurred in the total project cost could be a subject
matter of debate, but it cannot be presumed that there is actually no
increase in the project cost at all. This dispute about the exact amount
of increase in the total project cost takes a back seat since this is not the
yardstick applied by the Arbitral Tribunal for deciding any of the claims
of the MMOPL. Therefore, instead of making any further discussion on
the issue of increase in the total project cost, it would be appropriate to
discuss various claims granted by the Arbitral Tribunal against four sub-
heads of Claim No.6.

INCREASE IN COST OF SYSTEM WORKS

113) This claim was premised on the basis that some of the
systems contracts were executed with agencies to whom the cost was to
be paid in foreign currencies and that the delay resulted in actual
purchases taking place much later than what was envisaged as per CA.
According to MMOPL value of Indian Rupee had depreciated against
foreign currency, as a consequence of which MMOPL had to bear
additional cost in Rupees for procuring foreign currency to be paid for
system contracts. The Respondent-MMOPL had claimed amount of
Rs.195.92 crores towards increase in cost of system works, out of which
the Tribunal has excluded sum of Rs.11.96 crores as the same related to
incremental octroi charges, which were not provided for or paid as per
MMOPL's books of accounts. Out of the balance amount of
approximately Rs.183.96 crores, the Tribunal has awarded the claim in
the sum of Rs. 163,22,44,188/-.

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114) There is no dispute to the position that execution of
contract involved import of goods and systems, the major component
being the import of the rolling stock required for operation of Metro
line. According to MMOPL, the proposed completion date was 31 July
2010 when various goods and systems, including rolling stock, would
have been imported by it. However, the same was actually imported
much later, by which time, there was substantial increase in the cost of
foreign currency due to depreciation of Indian Rupee. Respondent-
MMOPL produced Annexure-E to its rejoinder compilation, which was a
table representing data of exchange rate of Indian Rupee vis-a-vis
foreign currency during 1974-75 to 2012-13. The Respondent also relied
upon Annexure-9 to the Affidavit of Evidence of C.W.2 setting out the
details of MMOPL's foreign vendors for Metro Project and the amount
paid in foreign currency to each of those vendors (which also form part
of audited financial statement of MMOPL). The Respondent also relied
on the minutes of Board Meeting dated 29 April 2008, (which included
MMRDA's representative), which approved amount of USD 116,480,015
towards supply and service operation of rolling stock to be procured for
the project. The Tribunal took into consideration the above material and
has concluded in paragraphs 12.466 as under:

12.466. Having regard to the facts of the case it cannot be disputed that
there was foreign exchange rate variation on account of delay in
commissioning of the Project. It having been held that the delays were
attributable to respondent, claimant is entitled to be compensated for
the increased cost on account of such variation in foreign exchange
rates. The amount payable to the foreign Vendors had been approved
by the Board of Directors of the claimant which included the
representatives of the respondent. Considering that the foreign
exchange rate variation from CA till actual COD was unanticipated and
that had there been no delay on the part of respondent in delivering

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Site / ROW, the claimant could have achieved COD by 31/7/2010 and
would have paid the consideration for imported items required for the
Project in foreign currency at the exchange rates applicable during
2009-10, the claimant is held entitled to difference in average rate of
foreign exchange applicable in the year 2009-10 and the rates
applicable as on the date of actual purchase as given in Annexure-E to
the Rejoinder Compilation 21 submitted on 1/2/2021 amounting to
Rs.163,22,44,188/-.

115) According to the Petitioner, the Respondent-MMOPL was
required in law to establish by leading evidence as to when orders would
have been placed by it and delivery taken in normal course, when the
orders were actually placed and the delivery was taken and whether the
delay in placing orders and delivery was due to reasons attributable to
MMRDA and lastly when payments were made to vendors. According to
MMRDA, none of the above was proved by MMOPL and that therefore
award of claim in the sum of Rs.163,22,44,188/- is ex-facie perverse.
According to Petitioner, MMOPL relied merely on Annexure-9 to
affidavit of evidence of C.W.2, who himself was not personally familiar
with figures and statement of Annexure-E to rejoinder submission,
which was a new material introduced without opportunity of cross-
examination. In any event, it is contended that neither Annexure-E nor
Annexure-9 is sufficient to prove cause of any loss to MMOPL.

116) Annexure-9 to the affidavit of evidence of C.W.2 contains
details of claims in respect of loss caused due to foreign exchange
fluctuations. Enclosure-I to Annexure-9 gave details of each of the
vendors to whom foreign exchange is paid. Said enclosure contained
details of the amount booked in foreign currency, amount booked in
Indian rupee, average rate of booking, purchase order in foreign

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currency, purchase order in Indian currency and average rate of
purchase order. The rate differential was arrived at in column-G and
thereafter the exact amount of foreign currency loss was indicated in
column-H. It therefore cannot be contended that the Respondent-
MMOPL did not produce any details in support of claim of loss due to
fluctuations in rate of foreign currency. The Tribunal also considered
alternative methodology for calculating foreign exchange variations at
length and accepted MMOPL's version in paragraph 12.464 and 12.465 of
the Award. While doing so, the Arbitral Tribunal considered the
exchange rate applicable for the year 2009-2010 and compared the same
with the actual foreign currency spent by MMOPL for arriving at the
figure of foreign currency loss. It has particularly highlighted the fact
that MMRDA's representative participated in board decisions that
approved amounts payable to foreign vendors. What Petitioner expects
is that MMOPL ought to have produced documentary evidence of actual
purchase of foreign currency and payment thereof to each of the vendors
and thereafter compare the same with the rate of foreign exchange at
the time when it was expected to purchase imported goods if the
contract was to be performed in time. The Arbitral Tribunal, on the
other hand, has considered the figures produced by MMOPL as paid to
each of the vendors and has compared the same with applicable foreign
exchange rates during the year 2009-2010, when the goods would have
been imported if project was to completed in time. While it cannot be
contended that methodologies suggested by the Petitioner -MMRDA is
entirely wrong, at the same time, it cannot be contended that
methodology adopted by the Arbitral Tribunal is so irrational that no
fair-minded person would ever adopt the same. In my view, there is

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some evidence on record to support award of claim for increase in the
cost of system works. This Court cannot judge the adequacy of evidence
or quality thereof in exercise of powers under Section 34 of the
Arbitration Act. So long as there is some evidence on record to support
the claim, the Award would pass the muster under Section 34 of the
Arbitration Act.

117) Petitioner-MMRDA has sought to raise questions about
genuineness of MMOPL's claim towards loss arising out of foreign
exchange fluctuations by inviting attention of this Court to the balance
sheet for the year ending 31 March 2014, in which the figure of foreign
exchange loss is indicated as Rs.39,25,45,808/-. Though Mr. Bhatt has
attempted to explain this by contending that the said entry pertains to
only for a particular year, Mr. Sen has invited my attention to figure of
opening balance as on 1 April 2013 as Rs.7,52,83,144/- and after adding
the additional loss of Rs.31,72,62,664/- as on 31 March 2014, the
cumulative figure is indicated as Rs.39,25,45,808/-. This is further
explained by Mr. Bhatt and his written note in this regard reads thus:

MMRDA for the first time in its written submissions seeks to rely upon
certain financial statements to contend that the financial statements
never showed any expense in foreign currency except a sum of
Rs.167.01 crores for the first time in FY 2014-15 and that the only
foreign currency loss that was shown was a sum of approximately Rs.39
crores in the balance sheet ending 31 March 2014. It is submitted that
the aforesaid is an incorrect statement. Right from the beginning, year
in and year out, the duly approved balance sheets clearly show
expenditure in foreign currency and the CIF value of imported goods.
The CIF value of imported goods for the balance sheet for FY 2013-14
is shown at Rs.336,60,75,390/ which is the expenditure in foreign
currency. Again so far as the allegation regarding the sum of Rs.39.25
crores being the approximate foreign exchange loss is concerned, the
same is incorrect. The amount of Rs.39.25 crores of foreign exchange

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loss relates to a cumulative figure of loss in foreign exchange being the
difference between the amount booked in the books of accounts (being
only a book entry) when a bill is raised by the foreign supplier and the
amount either that was later paid in the year or if not paid, the foreign
exchange rate on 31 March of the financial period. This is in
accordance with the Statutory Accounting Standards produced during
the hearing for the Hon'ble Court's perusal and has nothing to do with
the difference between the amount that would have been paid in rupee
terms had the contract been completed on 31 July 2010 and the date on
which the contract was actually completed.

118) It appears that point of indication of figure of
Rs.39,25,45,808/- towards foreign exchange loss in balance sheet for
year ending 31 March 2014 was not raised by the Petitioner before the
Arbitral Tribunal, which appears to be the reason why the Arbitral
Tribunal has not dealt with the same. I am not persuaded to accept the
contention raised on behalf of the MMRDA in this regard because it is
too dangerous to set at naught award of the claim only on account of
surmise expressed by the MMRDA by relying on balance sheet in the
written notes of arguments without raising the same before the Arbitral
Tribunal. This is particularly so because the contention of the Petitioner
is essentially that award of claim in the sum of Rs.163.22 crores is highly
inflated and contrary to the financial statements. Furthermore, the
surmise of incurring of exchange loss as only Rs.39,25,45,808/- is
factually incorrect, as observed in the latter part of the judgment.

119) MMRDA has contended that no expenditure is reflected in
the foreign currency in financial statement from 1 April 2013 to 31 April
2014 and that for the first time an amount of Rs.167 crores is mentioned
as 'expenditure in foreign currency' against 'project expenditure' and it
is claimed that the same is contrary to MMOPL's claim of having

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incurred total expenses in foreign currency of Rs.840 crores in
Annexure- 'E'. This is demonstrated to be wrong by Mr. Bhatt by inviting
my attention to financial statement as on 31 March 2009 in which
expenses in foreign currency is indicated as Rs.90,24,65,301/-. Similarly,
for the year ending 31 March 2010, the expenditure incurred in foreign
currency is indicated as Rs.18,85,36,472/-. For the year 2010-2011, the
same is Rs.19,01,96,337/-. For the year 2011-2012 the figure is
Rs.17,29,72,517/-. Therefore, the contention of the Petitioner that no
expenditure on foreign currency is incurred upto 31 March 2011 appears
to be factually incorrect. It is therefore dangerous to rely upon surmises
raised by the Petitioner for the first time before this Court that the
foreign currency loss cannot be more than Rs. 39,25,45,808/-. I am
therefore inclined to accept explanation put forth by Mr. Bhatt in
paragraph 15 of his written submission as quoted above.

120) Thus, there is some evidence produced before the Arbitral
Tribunal about the losses incurred towards purchase of foreign exchange
by MMOPL. There can otherwise be no dispute to the position that the
Rupee value has depreciated during 2010 to 2014. Incurring of additional
expenses due to foreign exchange fluctuations is thus a known position.
The only issue is about the quantum of losses suffered by the
Respondent. The Tribunal has assessed the losses by taking into
consideration various material before it as discussed above. It is not that
the Tribunal did not have any material to assess the losses. At
Annexure-E to rejoinder submissions, MMOPL produced the historical
data of Rupee value vis-à-vis other currencies before the Arbitral
Tribunal. Based on that data, MMOPL provided revised details of

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purchase of foreign currencies in the respect of systems contracts for
each of the foreign vendors. The major impact of fluctuation in foreign
currency value was in respect of the rolling stock for operation of Metro
Line, which can be taken by way of illustration. The statement at
Annexure E to Rejoinder submissions show details of payments made to
CSR Nanjing Puzen Rollin in USD. During 2009-20 the average exchange
value of USD was Rs. 47.42. However, by the time the rolling stock was
purchased the same went up to Rs. 55.59 and Rs. 62.78 making
difference of Rs. 8.17 and Rs. 15.36 at the time of actual purchase.
However, the average rate differential is taken by MMOPL as Rs. 11.78
and this is how the additional expenditure of Rs. 128.26 crores is
indicated in the statement at Annexure-E for purchase of rolling stock.
Thus, it cannot be contended that the Tribunal had zero evidence for
deciding the claim. Increase in the cost of purchase of foreign exchange
cannot be a matter of debate and there is no perversity in the
assessment of additional expenditure made by the Tribunal.

121) In view of the above discussion, I am inclined to reject the
objection of Petitioner in respect of award of claim for increase in cost of
system works of Rs.163,22,44,188/-.

ADDITIONAL OVERHEADS AND SUPERVISION OF CONSTRUCTION WORKS

122) The Arbitral Tribunal in its majority award has considered
the three subheads under Claim No. 6 of (i) additional payments made to
Project Management Consultant and Independent Engineer, (ii)
additional overheads and supervision of constructions works and (iii)

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additional interest during construction. The first claim in respect of
additional payments made to PMC and IE is rejected whereas second and
third claims are partially allowed in the sum of Rs.100 crores and in the
sum of Rs.125 crores. The first sub-claim of additional payments made
to PMC and IE is rejected by recording a finding that the MMOPL did not
produce before the Tribunal the original agreed fees of PMC and
whether there was increase in the same on account of delay in execution
of the project. Similarly, in respect of the fees payable to IE, the Tribunal
observed that MMOPL did not produce record/agreement with IE to
show that enhanced fee was paid by it to IE. The Tribunal refused to
believe the figures in the books of MMOPL while awarding the claims of
additional fees allegedly paid to PMC and IE. The findings recorded by
the Arbitral Tribunal in para-12.495 of the majority Award read thus:

12.495. In absence of claimant having produced contract with / work
orders issued to PMC, it is not possible for this Tribunal to consider
what was the originally agreed fee of PMC and whether there was any
increase in the same on account of delay in execution of the Project.
Though Ex.C50 shows that originally Rs.7.48 Crores was payable by the
claimant to IE, claimant has not produced records / agreement with IE
to show the enhanced fee paid by it, if any, to IE. This Tribunal cannot
assume that the amount as per the Books of claimant shown to have
been expanded towards "other professional expenses incurred",
included the enhanced fee of IE, if any. Hence, the claimant's claim for
additional amount claimed to have been paid towards PMC or IE is
rejected.

123) However, the Arbitral Tribunal has allowed the sub-claim
under the head 'additional overheads and supervision of construction' in
the sum of Rs.100 crores. It is the contention of Petitioner-MMRDA that
if the claim of additional payments made to PMC and IE is rejected on
account of non-production of documents and by refusing to believe the

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figures in the books of accounts, same yardstick ought to have been
adopted for the claim of additional overheads and supervision of
construction works, for which also no evidence was produced.

124) In the Statement of Claim, MMOPL had claimed a sum of
Rs.261.66 crores towards additional overhead expenses, which was
reduced by it to Rs.255.06 crores after amending the Statement of Claim.
The basis for raising claim of Rs. 255.06 crores towards additional
overhead expenses was towards the expenses incurred in maintenance
of establishment for the purpose of supervision of construction works
till achievement of COD. The relevant pleadings in the Statement of
Claim in para-6.174 are as under:

6.174. Additional Overhead Expenses

i.The Claimant had to maintain its establishment for the purposes of
supervision of the construction works till the achievement of COD.
Such indirect expenses were planned to be incurred only till the
achievement of the scheduled COD of 31 st July 2010.

ii.If the Respondent had not caused delay to the achievement of the
scheduled COD by way of its several failures, then the Claimant would
not have the incurred the indirect cost at all.
iii. As such, the Respondent is liable to reimburse the overhead cost of
Rs. 261,66,95,571/- incurred by the Claimant in this regard.

(emphasis and underlining added)

125) Annexure-K-119(A) was filed by the Respondent along with
the Statement of Claim giving particulars of claim which reads :-

"ANNEXURE K-119(A) Additional Overheads Expenses incurred after 31 July
2010

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(A) Overheads

Description Amount (Rs. Cr).
Total Overheads (as per books) 347.23

(B) Reductions
Description Amount (Rs. Cr).
Pre-operative Expenses 96.29
Deposits and Advances 6.43
Operation & Maintenance 16.45
Total 119.17

Net Overhead (A -- B) 255.06

126) Petitioner-MMRDA opposed the claim towards overheads
incurred after 31 July 2010. Respondent-MMOPL led evidence of C.W.2
in support of the claim of additional overhead expenses, who deposed as
under :-
Claim No.6: Additional costs / expenses incurred by the claimant on
account of delays on part of the respondent.

12. The Claimant has provided Particulars of Claim as per Annexure K-
121 of the Statement of Claim amounting to Rs.1,547.78 Crores. I have
checked calculation of the same and observed that the said claim works
out to Rs.1,372.47 Crores as per Annexure 6 hereto. The said amount of
Rs.1,372.47 Crores includes the following:
(e) Additional Overhead Expenses amounting to Rs.255.06 Crores. The
claimant has incurred these Overhead Expenses after 31st July 2010
upto Commercial Operation Date (for short 'COD') on 8th June 2014.
The calculation is provided as Annexure 11 hereto."

127) In support of the claim, C.W.2 produced tabular statement
at Annexure-11 of his Affidavit of Evidence as under:-

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Annexure-11: Additional Overheads Expenses incurred after 31 July 2010

(A) Overheads
Description Amount (Rs. Crores)
Overheads 374.23

Description Amount (Rs. Crores)
Pre-operative expenses 96.29
Deposits and Advances 6.43
Operation and Maintenance 16.45
Total 119.17

Net Overheads 255.06

128) Thus, beyond leading oral evidence of C.W.2 and producing
mere statement showing break up of amounts, Respondent-MMOPL did
not produce even a single piece of document in support of the claim of
additional overheads expenses of Rs.255.06 crores. All that Annexure-11
to affidavit of evidence of C.W.2 depicts is that the total overheads as
per books was Rs.374.23 crores, from which deductions are made
towards preoperative expenses, deposits/advances and operation/
maintenance expenses amounting to Rs.119.17 crores and figure of
Rs.255.06 crores is arrived at, which was claimed as additional
overheads. C.W.2 was subjected to cross-examination by MMRDA, in
which he stated that Annexure-11 was prepared on the basis of SAP
report, which was not produced on record. He was unaware as to how
and who carried out the identification of overhead expenses in the
management. The Arbitral Tribunal has reproduced relevant cross-
examination of C.W.2 in para-12.478 of the Majority Award, which reads
thus:

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Q.33 Please go through the aforesaid exhibits and tell us that in respect of
which of the aforesaid exhibits, you have personally verified merely the
arithmetical accuracy of the calculations made and not the correctness
of the figures mentioned therein?
Ans....
(xvii) With regard to item (A) of Annexure 12 at page 52, the same
SAP report which is part of books of accounts has been referred.
The management has identified the interest and finance cost which has
been test-checked by me. Paragraph (B) is calculated by the
management as per interest and finance expenditure during
construction as envisaged in the financial closure which has been
reduced from item (A) above.

Q.158 Are SAP reports referred to by you in the aforesaid answer,
are on record of the present proceedings?

Ans: I am not aware.

Q.167 , Are you, aware of the basis on which the management
identified the overheads and interest and finance costs as stated by you
in your aforesaid answer?

Ans: These are identified based on the chart of ledgers and narration
mentioned in the SAP report.

Q.168 Who in the management carried out this process of
identification?
Ans: I am not aware.

Q.170 From what documents were the figures mentioned in Item (B) of
Annexure-11 and 12 arrived at?

Ans: With regard to item (B) of Annexure-11, these were arrived by the
management based on daily cash flow details. With regard to Item (B)
of Annexure-12, these were calculated as envisaged in the financial
closure.

Q.171 Which was the document you referred to as envisaged in the
financial closure?
Ans: Term loan agreement, wherein the details of cost of project and
means of finance were mentioned.

Q.172 Do you know whether the term loan agreement is on record
in the present proceedings?

Ans: I am not aware."
(emphasis added)

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129) Thus, in support of the claim for additional overheads,
MMOPL did not produce any evidence of having incurred any
expenditure. Beyond production of Annexure-11, which was in the
nature of particulars of claim and beyond examining C.W.2, who did not
have any personal knowledge about alleged expenditure, no other
evidence was produced to demonstrate that any additional expenditure
was indeed incurred by the Respondent.

130) The Tribunal was faced with this problem of absence of
evidence and has noted the same in paras-12.486 and 12.489 of the
majority Award, which reads as under :-

12.486 Similarly opposing the claimant's claim for additional overhead
expenses the respondent submitted that claimant did not produce any
evidence in SoC in support of; that the deposition made by CW-1 and
CW-2 are without personal knowledge; CW-2 claimed additional
overhead expenses amounting to Rs.255.06 Crores for the period
31/7/2010 upto COD on 8/6/2014; that CW-2 merely produced tabular
statement showing alleged overheads as per-Books amounting to
Rs.374.23 Crores minus pre-operative expenses, deposits and advances
and operation and maintenance expenses amounting to Rs.119.17
Crores. The response of CW-2 to Q.33, 158, 167, 170 and 173 show that
CW-2 claimed that for arriving at figure of Rs.274.23 Crores he had
gone through SAP reports; he however, admitted that SAP reports were
not on record; CW-2 claimed that overhead expenses were identified
by the management, but he was unaware as to who in management
carried out the identification; CW-2 admitted that the figure of
Rs.119.17 Crores was arrived by management based on daily cashflow
details; CW-2 was not aware as to why date of 31/7/2010 was taken and
admitted that he only verified the calculations; the claim under the
said Head was not a 'direct cost' within the purview of Article 29;
Claimant failed to prove the claim; it failed to produce SAP reports;
daily cashflow details, Bills, Invoices, Books of Accounts; the same
called for adverse inference; that claimant only produced tabular
statement, without supporting document; and claimant not only failed
to prove the actual expenditure, but also failed to prove the estimates
of original cost.

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12.489 In relation to claim for additional overheads and supervision of
construction works, the claimant contended that the total overheads
booked / incurred by the claimant amounting to Rs.374.23 Crores and
the amount of Rs.119.17 Crores towards pre-operative expenses etc.,
are taken from the Books of Accounts which formed the basis of duly
audited financial statements of the claimant including by the Audit
Committee and hence the claim is proved. However, the claimant did
not produce the SAP reports which formed the basis of amounts
mentioned in Annexure K- 119A, Annexure-11, daily cashflow
details, Bills, Invoices, Books of Accounts or any other relevant /
necessary documents to substantiate the claim.
(emphasis added)

131) Thus, in para-12.486, the Arbitral Tribunal has recorded an
emphatic finding of non-production of any evidence in support of claim
for additional overhead expenses. It has however still proceeded to
award the same partially in the sum of Rs. 100 crores. The only reason
recorded by the Arbitral Tribunal for awarding part claim towards
additional overheads is to be found in para-12.496 of the Majority
Award, which reads thus:

12.496. However having regard to the nature of the Project which
required claimant to employ manpower and machinery for its
execution, it cannot be disputed that on account of prolongation
of the execution period, claimant had to incur additional cost
towards overheads by having to retain the requisite manpower
and by having to deploy the requisite machinery etc., during the
extended period. At the same time, during initial period of execution,
considering that entire stretch was not available, the extent of
manpower and machinery deployed would have been limited. Taking
into account the overall facts of the case and the overhead
expenses for the prolonged period as recorded in Books of the
claimant, a sum of Rs.100,00,00,000/- is awarded towards
additional Overhead cost.

(emphasis added)

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132) Thus, the claim of Rs.100 crores is awarded by the Arbitral
Tribunal towards additional overheads by recording a general finding
that "considering the magnitude of the Project, it cannot be disputed that
on account of prolongation of the execution period, the claimant had to
incur additional costs by requiring to retain manpower and by having to
deploy the requisite machinery etc". The factor of 'magnitude of the
project' is thus considered by the Tribunal for awarding the claim of
additional overheads, that too in the round figure of Rs. 100 crores.
Because the 'magnitude of the project' was large, the Tribunal has
presumed that additional overheads must have been incurred by
MMOPL. Thus, the findings are presumptive in nature and do take the
colour of a surmise. Since the claim is allowed for alleged retention of
machinery during extended period, some evidence of such retention was
required to be produced. More importantly, how Respondent suffered
losses due to such extension was also required to be proved. Whether
Respondent had any other contract, which could not be performed due
to overstayal at the Project was also required to be established.
However, instead of expecting the Respondent to prove cause of loss,
the Arbitral Tribunal has held that 'it cannot be disputed' that claimant
had incurred additional cost. The claim was disputed by the Petitioner.
The findings are thus totally perverse.

133) Also, the Tribunal did take note of the fact that the extent
of manpower and machinery deployed was limited during initial days on
account of non-availability of the entire stretch. On this count, it has
reduced the claim from Rs. 255.06 crores to Rs. 100 crores. This finding
again indicates internal inconsistency in the Award. If Respondent did

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not deploy the requisite machinery due to non-availability of ROW, the
claim for incurring of additional cost due to deployment of machinery
during extended period was clearly incapable of being granted.

134) The further finding of the Tribunal in para-12.496 of the
majority award that 'taking into account the overall facts of the case and
the overhead expense for the prolonged period as recorded in the books of
the claimants, a claim of Rs.100,00,00,000/- is awarded towards
additional overhead costs' is criticized by Petitioner-MMRDA as being
grossly perverse lacking any basis. The Tribunal has sketchily referred
to the 'books of the claimant' in para-12.496 for awarding huge sum of
Rs.100 crores in favour of the Respondent. However, the Tribunal did
not have before it any such 'books of accounts' of MMOPL. C.W.2 gave an
express admission in the cross-examination that he had gone through
the SAP report in which the management had identified overheads and
that he had test checked them. However, it is an admitted position that
the said SAP reports were not filed by MMOPL on record. Upon being
cross-examined as to how the management had identified the
overheads, the witness replied that the identification was based on chart
of ledgers and directions mentioned in the SAP report. The ledgers were
however not produced. He was unaware about the exact person in the
management who had carried out the process of identification. In
answer to Question No.169, the witness referred to various overhead
ledgers relating to expenses incurred during construction period such as
employee related expenditure, traveling expenses, administration
expenses and other indirect expense related to the project. He has also
referred to cash flow details in answer to Question No.170. Finally, the

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witness admitted that he was not aware about the basis from which the
date of 31 July 2010 was arrived at and admitted that he had only
verified the calculation. Thus the witness, beyond verifying the
calculations, did not have any personal knowledge about incurring of
any expenses. Though he referred to the SAP reports, overhead ledgers,
daily cash flow details etc. none of them were produced on record.
Therefore, the Arbitral Tribunal did not have before it any 'books' of the
claimant referred to in para-12.496 of the Award.

135) In my view, therefore the claim of Rs.100 crores towards
additional overheads and supervision of construction works is granted
by the Arbitral Tribunal without any evidence on record and merely on a
surmise. There is absolutely no basis as to how the figure of Rs.100
crores is chosen by the Arbitral Tribunal. The Claimant demanded
amount of Rs.255.06 crores and after facing the situation of absence of
any evidence in support having actually incurred overhead expenses,
the Tribunal decided to choose an imaginary figure of Rs.100 crores,
without any underlying basis.

136) There are two more angles from which the claim towards
additional overhead expenses can be viewed. Firstly, MMOPL expressly
admitted in the Statement of Claim that the same was an 'indirect
expense'. Petitioner has relied upon Article-29.2 of CA which
stipulated thus :

29.2 . Compensation for default by MMRDA

In the event of MMRDA being in material default of CA, MMRDA shall
pay MMOPL as compensation, all direct additional costs suffered of

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incurred by the Concessionaire arising out of such material default by
MMRDA, either:
(a) in one lump sum within 30 (thirty) Days of receiving the demand or
(b) An increase in the Concession Period as per the recommendations
of the Independent Engineer for reimbursement of Force Majeure Costs
or (c) by permitting the Concessionaire to undertake any other
mutually agreed revenue generating activity.

(emphasis added)

137) According to the Petitioner-MMRDA, only direct additional
costs' suffered or incurred could be payable as compensation in the
event of material default of CA by MMRDA. While I am not basing my
findings with regard to the award of claim towards additional overheads
and supervision of construction works only on account of Article 29.2 of
the CA, this is a relevant factor to be taken into consideration and
cannot be ignored altogether. Parties specifically agreed that only direct
additional costs suffered or incurred by the concessionaire arising out of
material default by MMRDA could be paid as compensation. Since
MMOPL admitted in Statement of Claim that the expenses towards
additional overheads were 'indirect expenses', the Respondent-MMOPL
was not entitled to claim the same. The second way of looking at the
claim towards additional overheads is that MMOPL ought to have proved
the actual incurring of expenses so as to fit into the phrase 'all direct
additional costs' appearing in Article-29.2 of the CA. The very admission
that the claim is towards indirect expenses would mean that the
Respondent never intended to lead any evidence for actually incurring
thereof. Thus, failure to produce direct evidence of incurring of
additional overhead expenses has twin effects of (i) denial of claim on
fundamental principle of law and (ii) non-entitlement to claim under
Article-29.2 of the CA.
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138) Now I proceed to examine the effect of failure to lead
evidence of sufferance of actual direct loss on award of claim for
additional overhead expenses.

IMPERMISSIBILITY TO AWARD DAMAGES WITHOUT EVIDENCE OF LOSS
SUFFERED

139) By now it is well established principle that claim for
damages/compensation cannot be awarded in absence of production of
proof of actual cause of loss. Under Section 73 of the Indian Contract Act
1872, when a contract is broken, the party who suffers by such breach is
entitled to receive, from the party who has broken the contract,
compensation for any loss or damage caused to him thereby, which
naturally arose in the usual course of things from such breach. Such
compensation cannot be for any remote and indirect loss or damage
sustained by reason of the breach. Therefore sufferance of loss of
damage is sine qua non for awarding damages due to breach of contract.
Cause of such loss needs to be proved by leading evidence.

140) Mere entries in the books of accounts depicting sufferance
of loss are not sufficient for awarding the claim in absence of any
supporting evidence. Reliance by Mr. Sen on the judgment in Central
Bureau of Investigation Vs. V. C. Shukla (supra) in this regard is
apposite in which it is held thus:

34. The rationale behind admissibility of parties' books of account as
evidence is that the regularity of habit, the difficulty of falsification and
the fair certainty of ultimate detection give them in a sufficient degree a
probability of trustworthiness (Wigmore on Evidence, § 1546). Since,
however, an element of self-interest and partisanship of the entrant to

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make a person -- behind whose back and without whose knowledge the
entry is made -- liable cannot be ruled out the additional safeguard of
insistence upon other independent evidence to fasten him with such
liability, has been provided for in Section 34 by incorporating the words
"such statements shall not alone be sufficient to charge any person with
liability".

39. A conspectus of the above decisions makes it evident that even
correct and authentic entries in books of account cannot without
independent evidence of their trustworthiness, fix a liability upon a
person. ....
(emphasis added)

The Delhi High Court in Chakradhar Goswamy (supra) has held that
under Section 34 of the Evidence Act, liability cannot be saddled merely
on the basis of entries in books of accounts in absence of evidence. In
Khushal Chand (supra), the Punjab & Haryana High Court has followed
the judgment in CBI Vs. V. C. Shukla and it is held that few entries in
the books of accounts would not be sufficient to fix liability on the
person against whom the entries are produced and that the entries so
recorded are not substantive piece of evidence in itself unless the entries
are proved by leading cogent evidence.

141) Also, when the claim is for loss of profits due to overstay at the
contract site in construction contracts, damages can never be awarded in
absence of credible evidence of sufferance of loss. There is a
fundamental difference between the concepts of 'loss of profit' and 'loss
of profitability', which has been dealt with by the Single Judge of Madras
High Court in State Industries Promotion Corporation of Tamil Nadu
Ltd. Versus. RPP Infra Projects Limited 39. While dealing with the
concepts of 'loss of profit' and loss of profitability', the Madras High

39
2025 SC OnLine Mad 8166

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Court had referred to several judgments of the Apex Court. The
discussion by the learned Judge is long and illustrative and attention of
some part of the discussion would be appropriate. The Madras High
Court has held in paras-25 to 27 as under :-

25. The march of law, in order to understand the difference between loss of
profit and loss of profitability, is traced hereunder:
a) The first judgment is in Mohd. Salamatullah v. Government of
Andra Pradesh, (1977) 3 SCC 590 and the relevant portions are
extracted hereunder:
xxxx
b) A.T. Brij Paul Singh v. State of Gujarat, (1984) 4 SCC 59 and the
relevant portions are extracted hereunder:
xx
11. Now if it is well-established that the respondent was
guilty of breach of contract inasmuch as the rescission of
contract by the respondent is held to be unjustified, and
the plaintiff contractor had executed a part of the works
contract, the contractor would be entitled to damages by
way of loss of profit. Adopting the measure accepted by the
High Court in the facts and circumstances of the case between
the same parties and for the same type of work at 15 per cent of
the value of the remaining parts of the work contract, the
damages for loss of profit can be measured.
c) Dwaraka Das v. State of M.P., (1999) 3 SCC 500 and the relevant
portion is extracted hereunder:
9. xxx
Such a finding of the appellate court appears to be based on
wrong assumptions. The appellant had never claimed Rs.
20,000 on account of alleged actual loss suffered by him. He had
preferred his claim on the ground that had he carried out the
contract, he would have earned profit of 10% on Rs. 2 lakhs
which was the value of the contract. This Court in A.T. Brij
Paul Singh v. State of Gujarat [(1984) 4 SCC 59] while
interpreting the provisions of Section 73 of the Contract Act,
1872 has held that damages can be claimed by a contractor
where the Government is proved to have committed breach by
improperly rescinding the contract and for estimating the
amount of damages, the court should make a broad evaluation
instead of going into minute details. It was specifically held
that where in the works contract, the party entrusting the work
committed breach of contract, the contractor is entitled to
claim the damages for loss of profit which he expected to earn

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by undertaking the works contract. Claim of expected profits is
legally admissible on proof of the breach of contract by the
erring party. It was observed : (SCC pp. 64-65, paras 10-11)
xxx
To the same effect is the judgment in Mohd. Salamatullah v.
Govt. of A.P. [(1977) 3 SCC 590 : AIR 1977 SC 1481] After
approving the grant of damages in case of breach of contract,
the Court further held that the appellate court was not justified
in interfering with the finding of fact given by the trial court
regarding quantification of the damages even if it was based
upon guesswork. In both the cases referred to hereinabove, 15%
of the contract price was granted as damages to the contractor.
In the instant case however, the trial court had granted only
10% of the contract price which we feel was reasonable and
permissible, particularly when the High Court had concurred
with the finding of the trial court regarding breach of contract
by specifically holding that "we, therefore, see no reason to
interfere with the finding recorded by the trial court that the
defendants by rescinding the agreement committed breach of
contract". It follows, therefore, as and when the breach of
contract is held to have been proved being contrary to law and
terms of the agreement, the erring party is legally bound to
compensate the other party to the agreement. The appellate
court was, therefore, not justified in disallowing the claim of
the appellant for Rs. 20,000 on account of damages as expected
profit out of the contract which was found to have been illegally
rescinded.
26. Insofar loss of profitability which always is considered only based on the
evidence, was discussed in the following judgments:
a) The first judgment is Unibros v. All India Radio, 2023 SCC OnLine
SC 1366 and the relevant portions are extracted hereunder:
xxx
b) Batliboi Environmental Engineers Limited v. Hindustan Petroleum
Corporation Limited, (2024) 2 SCC 375 and the relevant portion is
extracted hereunder:
23. Ordinarily, when the completion of a contract is delayed
and the contractor claims that s/he has suffered a loss arising
from depletion of her/his income from the job and hence
turnover of her/his business, and also for the overheads in the
form of workforce expenses which could have been deployed in
other contracts, the claims to bear any persuasion before the
arbitrator or a court of law, the builder/contractor has to prove
that there was other work available that he would have secured
if not for the delay, by producing invitations to tender which
was declined due to insufficient capacity to undertake other
work. The same may also be proven from the books of accounts
to demonstrate a drop in turnover and establish that this result

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is from the particular delay rather than from extraneous causes.
If loss of turnover resulting from delay is not established, it is
merely a delay in receipt of money, and as such, the
builder/contractor is only entitled to interest on the capital
employed and not the profit, which should be paid.
27. The marked difference between the loss of profit and loss of
profitability was discussed by the Calcutta High Court in State of West
Bengal v. S.K. Maji, 2025 SCC OnLine Cal 3945 and the relevant portions are
extracted hereunder:
14. There lies a fundamental difference between claims raised by
contractors against employers for loss of profit and loss of profitability.
While loss of profit indicates claims for loss of expected profit due to
unexecuted work resulting from an illegal or premature termination of
the contract, loss of profitability of loss of business signifies claims for
reduction in the estimated profit margin due to prolongation of the
contract or claims for loss of opportunity to take up other projects
during the extended period where the contractor could have earned a
profit. Loss of profit and loss of profitability are often mistakenly used
interchangeably which has been noted by the Delhi High Court in Ajay
Kalra v. DDA as follows : (SCC OnLine Del para 137)
"137. 'Loss of Profits' and 'Loss of Profitability' has often been
interchangeably used in recovery cases. The former stands for
the loss incurred due to the non-completion/prevention from
completing of the contract on account of breach committed by
the respondent. The latter refers to the loss incurred due to the
delay in the project attributable to the respondent, due to
which the claimant has lost the opportunity to earn profits
through other projects after the contractual period."
15. It is now an established position of law that claims for loss of
profitability are not generally allowed in the absence of evidence to
prove such loss. The view of the courts on this issue is explicit through
judgments like Unibros case; Bharat Coking Coal Ltd. case and
Batliboi Environmental Engg. Ltd. case, as has also been relied upon
by the appellants in this matter. However, reliance on such cases is not
apposite in the present case since those conflate the concepts of loss of
profit and loss of business. It is pertinent to note here that even though
the Supreme Court used the expression "loss of profits" in essence the
claim was that of "loss of profitability" and thus, the requirement to
prove actual loss was mandated only for losses arising out of delay and
should not be misunderstood to be applicable to loss of profits for
unexecuted works.
16. In Unibros case the Supreme Court was faced with a similar
situation wherein the appellant's claim for loss of profit stemmed from
the delay attributable to the respondent in completing the project. It
had also been established that the loss of profit claimed was based on
the ground that the appellant having been retained longer than the
period stipulated in the contract and its resources being blocked for

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execution of the work relatable to the contract in question, it could
have taken up any other work order and earned profit elsewhere.
25. It is a general principle of law of contract that in case of breach of
contract, the injured must be put back in the same position that he
would have been if he had not sustained the wrong. Once the
contractor has established an illegal and unjustified termination of
contract and a breach thereof on the part of the employer, which was
also a finding of fact by the sole arbitrator in the present case, the
contractor cannot be further obligated to establish a loss suffered on
account of such breach, because a reasonable expectation of profit is
implicit in a works contract. [See MSK Projects India (JV) Ltd. case12].
Therefore, any loss occasioned due to illegal termination of works
contract, has to be compensated byway of damages once the breach on
part of the erring party is established. This is obviously subject to the
caveat that the compensation must be reasonable and the parties
should not be allowed to make a windfall profit, by a mere allegation of
breach of contract. However, it is a settled position of law that for
estimating damages, courts are not required to go into the minute
details; a broad evaluation of the same would suffice.
26. In J.G. Engg. (P) Ltd. v. Union of India the Supreme Court upheld
the award of loss of profits measured at 10 per cent of the value of the
remaining part of the contract which could not be performed due to
illegal termination of the contract. The measure of profit was assessed
at 15 per cent of the value of the remaining part of the work in A.T. Brij
Paul Singh case7. The Delhi High Court in R.K. Aneja v. DDA19 was of
the view that the petitioner was entitled to 10 per cent loss of profit on
the balance amount of work left undone without proof of loss of profit
which he expected to earn by executing the balance work.
xxx
(emphasis and underlining added)

142) Thus when the claim for damages/ compensation due to
prolongation of contract is raised, concerned, the same falls under the
head of 'loss of profitability' whereas when the claim for damages/
compensation relate to reasonable expectation of profit which is denied
due to illegal termination, the same falls under the head of 'loss of
profits'. In the present case the claim for additional overhead expenses
would fall under the former head of 'loss of profitability'. When the
claim is for 'loss of profitability', production of direct evidence is

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mandatory and in absence of which, the claim for damages cannot be
allowed.

143) I proceed to examine ratio of some of the judgments of the
Apex Court dealing with the effect of non-production of evidence to
prove cause of additional loss due to delay in extension of work. In
Bharat Coking Coal limited Versus L.K. Ahuja40 the Apex Court has
held in paragraph 24 as under:-

24. Here when claim for escalation of wage bills and price for materials
compensation has been paid and compensation for delay in the
payment of the amount payable under the contract or for other extra
works is to be paid with interest thereon, it is rather difficult for us to
accept the proposition that in addition 15% of the total profit should
be computed under the heading "Loss or Profit". It is not unusual for
the contractors to claim loss of profit arising out of diminution in
turnover on account of delay in the matter of completion of the
work. What he should establish in such a situation is that had he
received the amount due under the contract, he could have
utilised the same for some other business in which he could have
earned profit. Unless such a plea is raised and established, claim
for loss of profits could not have been granted. In this case, no such
material is available on record. In the absence of any evidence, the
arbitrator could not have awarded the same. This aspect was very well
settled in Sunley (B) & Co. Ltd. v. Cunard White Star Ltd. 5 by the
Court of Appeal in England. Therefore, we have no hesitation in
deleting a sum of Rs 6,00,000 awarded to the claimant.
(emphasis added)

144) The above principles enunciated in Bharat Coking Coal Ltd
have been reiterated by the Apex Court in the recent judgment in
Unibros (supra) in which the Appellant therein was awarded work
contract to carry out construction of Delhi Doordarshan Bhawan and
there was delay of 42 and ½ months in completion of the project. The

40
2004 (5) SCC 109
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Appellant claimed amount of Rs.1,44,83,830/- towards 'loss of profit' by
computing the same as profits that could have been earned during the
delay period of 42 and ½ months. The computation was based on figure
of 7 ½ % profit per year which was divided into figure of Rs.3,40,796/-
per month and by multiplying the said by figure of 42.5 months,
damages of Rs.1,44,83,830/- were sought. It appears that no
independent evidence was produced for having suffered actual loss
during the overstayal period. The Apex Court in Unibros held that for
supporting claim for loss of profit arising from a delayed contract or
missed opportunity from other available contracts, it becomes
imperative for the claimant to substantiate the presence of a viable
opportunity through compelling evidence. By referring to the Hudson's
Formula, the Apex Court held that the same cannot be applied in
vacuum as it merely provides an estimate of losses that a contractor may
suffer. It is held that the formula may be useful when needed but that
cannot alone prove contractor's loss of profits. The Apex Court has held
that the formula can only be used if the contractor has shown with
evidence the loss of profits and loss of opportunities it suffered owing to
the prolongation. The Apex Court held in paras-15 to 19 of the judgment
as under:
15. Considering the aforesaid reasons, even though little else remains
to be decided, we would like to briefly address the appellant's claim of
loss of profit. In Bharat Cooking Coal (supra), this Court reaffirmed the
principle that a claim for such loss of profit will only be considered
when supported by adequate evidence. It was observed:
"24. It is not unusual for the contractors to claim loss of profit
arising out of diminution in turnover on account of delay in the
matter of completion of the work. What he should establish in
such a situation is that had he received the amount due under
the contract, he could have utilised the same for some other
business in which he could have earned profit. Unless such a
plea is raised and established, claim for loss of profits could not

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have been granted. In this case, no such material is available on
record. In the absence of any evidence, the arbitrator could not
have awarded the same."
(emphasis ours)
16. To support a claim for loss of profit arising from a delayed contract
or missed opportunities from other available contracts that the
appellant could have earned elsewhere by taking up any, it becomes
imperative for the claimant to substantiate the presence of a viable
opportunity through compelling evidence. This evidence should
convincingly demonstrate that had the contract been executed
promptly, the contractor could have secured supplementary profits
utilizing its existing resources elsewhere.

17. One might ask, what would be the nature and quality of such
evidence? In our opinion, it will be contingent upon the facts and
circumstances of each case. However, it may generally include
independent contemporaneous evidence such as other potential
projects that the contractor had in the pipeline that could have been
undertaken if not for the delays, the total number of tendering
opportunities that the contractor received and declined owing to the
prolongation of the contract, financial statements, or any clauses in
the contract related to delays, extensions of time, and compensation
for loss of profit. While this list is not exhaustive and may include any
other piece of evidence that the court may find relevant, what is cut
and dried is that in adjudging a claim towards loss of profits, the court
may not make a guess in the dark; the credibility of the evidence,
therefore, is the evidence of the credibility of such claim.
18. Hudson's formula, while attained acceptability and is well
understood in trade, does not, however, apply in a vacuum. Hudson's
formula, as well as other methods used to calculate claims for loss of
off-site overheads and profit, do not directly measure the contractor's
exact costs. Instead, they provide an estimate of the losses the
contractor may have suffered. While these formulae are helpful when
needed, they alone cannot prove the contractor's loss of profit. They
are useful in assessing losses, but only if the contractor has shown with
evidence the loss of profits and opportunities it suffered owing to the
prolongation.
19. The law, as it should stand thus, is that for claims related to loss of
profit, profitability or opportunities to succeed, one would be required
to establish the following conditions: first, there was a delay in the
completion of the contract; second, such delay is not attributable to
the claimant; third, the claimant's status as an established contractor,
handling substantial projects; and fourth, credible evidence to
substantiate the claim of loss of profitability. On perusal of the records,
we are satisfied that the fourth condition, namely, the evidence to
substantiate the claim of loss of profitability remains unfulfilled in the
present case.

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145) Recently, this Court has also dealt with the issue of
difference in concepts of 'loss of profits' and 'loss of profitability' in
Solapur Municipal Corporation Vs. SMC GECP Ltd (JV) 41. Referring to
the judgment of the Madras High Court in State Industries Promotion
Corporation of Tamil Nadu Ltd (supra), this Court has held as under:

60) The conceptus of the above discussion is that the concept of 'loss of profit'
and 'loss of profitability' cannot be conflated. The former refers to damages
arising out of wrongful termination of contract, whereas the latter arises out
of overstay of the contractor at the site due to delay in execution of the work.
In the former case, the contractor is an injured party who is prevented from
executing balance work. Therefore, his claim for loss of profit is dependent
only on the issue of validity of termination of contract. Once termination is
found to be unjustified, it is permissible for the Court to award reasonable
percentage of unexecuted work as damages. However, in a case involving
claim for loss of profitability it, becomes necessary for the contractor to prove
as to how delay in execution of work and his overstayal at the site has led to
actual sufferance of damages. In such case, it is necessary to prove as to how
detention of manpower or machinery at the contract site prevented the
contractor from utilizing the same at some other contract site and how he
suffered loss on account of the same.

146) Thus, when the claim is for damages suffered due to
overstay at the contract site due to delay in execution of the contract,
production of concrete, credible and reliable evidence of having incurred
the expenses towards additional overheads is a sine qua non and in
absence of such evidence, the claim cannot be granted on a general
presumption or assumption that since execution of the contract got
delayed, the claimant must have incurred some additional overheads. In
the present case, the Tribunal has awarded huge sum of Rs. 100 crores to
MMOPL in absence of scrap of evidence.

41
Commercial Arb. Petition No. 444 of 2024 decided on 6 February 2026
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147) In my view, production of credible and cogent evidence of
having incurred additional overhead expenses was sine qua non for
entertaining the claim of MMOPL. Since MMOPL has failed to produce
the same, the Arbitral Tribunal ought to have rejected the claim. The
Tribunal could not have inferred that MMOPL must have incurred
expenses towards additional overheads just because the magnitude of
the Project was large. As observed above, there is an internal
inconsistency in the findings of the Arbitral Tribunal where it has held
that there was no sufficient deployment of manpower or machinery on
account of non-availability of entire Right of Way during initial contract
period. Despite this, the Tribunal has thought it prudent to award a huge
sum of Rs.100 crores towards additional overheads in absence of any
evidence being produced by MMOPL of having actually incurred any
additional overheads. In my view therefore, the award of claim in the
sum of Rs.100 crores towards additional overheads and supervision of
construction works deserves to be set aside.

Relevance Of Dissenting Award :

148) In the Minority Award, this claim is rejected by recording
following findings:

It is significant to note that the 'SAP Report' referred to in the
witness's answer to Q.No.33 has not been produced. Similarly, the
person/ persons in the management who have identified the overheads
from the SAP Report are neither examined nor is his/their names
shown. Again, the witness's answer to Q.No.167 and 169 show that the
overheads were Identified by the management based on the chart of
ledgers/ various overhead ledgers and narration mentioned in the SAP
Report. None of those documents or ledgers are produced. In answer to
Q.No.168, he answered that he is not aware whether the SAP Reports

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referred by him are produced before the Tribunal. Indeed, they were
not produced before the Tribunal. To reiterate the above answers of
the witness show that the relevant figures concerning overheads were
identified by the management and the witness merely 'test checked'
the calculations. It is equally important to note that SAP report and or
the 'ledgers' on the basis of which the management identified the
overheads has not been produced before the courts. The witness is not
aware as to who in the management had identified the overheads in
the SAP report. The witness does not identify such person he does not
even know his name'. The Books of Accounts have also not been
produced. In the absence of such books and in view of the failure of the
Claimant to produce SAP reports, which formed the basis of amounts
mentioned in Annexure K.119(A) (Annexure 11), the correctness of the
figures mentioned in Annexure 11 (Annexure K.119(A)) cannot be held
established. Again, daily cash flow details, bills, invoices of the books
of accounts or any other relevant document (including overhead
ledgers) have also not been produced.
In such a state of evidence, there is absolutely no basis upon which the
"additional overhead expenses" can be said to be established. Merely,
on the ground that the construction period was extended (as alleged by
the Claimant but denied by the Respondent), or on the presumption
that it was wholly or partly extended on account of the Respondent's
delays, the Tribunal cannot award any amount on this score.

149) Thus, the dissenting Award rejects the claim on account of
absence of any evidence in support of the claim.

150) In Dakshin Haryana Bijli Nagam Ltd. (supra) the Apex
Court has dealt with the aspect of relevance of a dissenting opinion. It is
held that dissenting opinion of a minority award can be relied upon by a
party seeking to set aside the award to buttress its submission in
proceedings under Section 34 of the Arbitration Act. It is further held
that while exercising powers under Section 34 of the Arbitration Act, the
Court is not precluded from considering the findings and conclusions of
the dissenting opinion of minority member of the Tribunal. The Apex
Court considered the commentary of Russel on Arbitration and of Garry
B. Born on International Commercial Arbitration and the ratio of the

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judgment in Ssangyong Engineering (supra) and has held in paragraphs
39 to 43 as under:-

Relevance of a dissenting opinion

39. The dissenting opinion of a minority arbitrator can be relied
upon by the party seeking to set aside the award to buttress its
submissions in the proceedings under Section 34. At the stage of
judicial scrutiny by the court under Section 34, the court is not
precluded from considering the findings and conclusions of the
dissenting opinion of the minority member of the Tribunal.

40. In the commentary of Russel on Arbitration, the relevance of a
dissenting opinion was explained as follows:

"6-058. Dissenting opinions.-Any member of the Tribunal who
does not assent to an award need not sign it but may set out his
own views of the case, either within the award document or in a
separate "dissenting opinion". The arbitrator should consider
carefully whether there is good reason for expressing his
dissent, because a dissenting opinion may encourage a
challenge to the award. This is for the parties' information only
and does not form part of the award, but it may be admissible as
evidence in relation to the procedural matters in the event of a
challenge or may add weight to the arguments of a party
wishing to appeal against the award."

41. Gary B. Born in his commentary on International Commercial
Arbitration opines that:

"Even absent express authorization in national law or
applicable institutional rules (or otherwise), the right to
provide a dissenting or separate opinion is an appropriate
concomitant of the arbitrator's adjudicative function and the
Tribunal's related obligation to make a reasoned award.
Although there are legal systems where dissenting or separate
opinions are either not permitted, or not customary, these
domestic rules have little application in the context of party-
nominated co-arbitrators, and diverse Tribunals. Indeed, the
right of an arbitrator to deliver a dissenting opinion is properly
considered as an element of his/her adjudicative mandate,
particularly in circumstances where a reasoned award is
required. Only clear an explicit prohibition should preclude the
making and publication to the parties of a dissenting opinion,
which serves an important role in the deliberative process, and

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can provide a valuable check on arbitrary or indefensible
decision making."

It is further commented that:

"There is nothing objectionable at all about an arbitrator
"systematically drawing up a dissenting opinion, and insisting
that it be communicated to the parties". If an arbitrator believes
that the Tribunal is making a seriously wrong decision, which
cannot fairly be reconciled with the law and the evidentiary
record, then he/she may express that view. There is nothing
wrong and on the contrary, much that is right - with such a
course as part of the adjudicatory process in which the
Tribunal's conclusion is expressed in a reasoned manner. And,
if the arbitrator considers that the award's conclusions require a
"systematic" discussion, that is also entirely appropriate;
indeed, it is implied in the adjudicative process, and the
requirement of a reasoned award."

It is further observed that:

"... the very concept of a reasoned award by a multi-member
Tribunal permits a statement of different reasons if different
members of the Tribunal in fact hold different views. This is an
essential aspect of the process by which the parties have an
opportunity to both, present their case, and hear the reasons
for the Tribunal's decision; not hearing the dissent deprives the
parties of an important aspect of this process."

42. In Ssangyong Engg. & Construction Co. Ltd. v. NHAI this Court
upheld the view taken in the dissenting opinion to be the correct
position in law. In this case, the Court was hearing a special leave
petition from an order 19 passed by a Division Bench of the Delhi High
Court. This Court noted that: (Ssangyong Engg. & Construction Co.
Ltd. case 2, SCC p. 150, para 12)

12. A Section 34 petition which was filed by the appellant was
rejected by the learned Single Judge of the Delhi High Court, by
a judgment and order dated 9-8-2016 (Ssangyong Engg. &
Construction Co. Ltd. v. NHAI 20), in which it was held that a
possible view was taken by the majority arbitrators which,
therefore, could not be interfered with, given the parameters of
challenge to arbitral awards. The learned Single Judge 20 also
went on to hold that the New Series published by the Ministry
could be applied in the case of the appellant as the base indices
for 2004-2005 under the New Series were available. Having so
held, the learned Single Judge stated 20 that even though the

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view expressed in the dissenting award is more appealing, and
that he preferred that view, yet he found that since the majority
award is a possible view, the scope of interference being
limited, the Section 34 petition was dismissed. A Section 37
appeal to the Division Bench of the Delhi High Court yielded
the same result, by the impugned judgment dated 3-4-2017.

43. This Court set aside the award. However, in para 77 of the
judgment, the Court held as under: (Ssangyong Engg. & Construction
Co. Ltd. case 2, SCC p. 200)

"77. The judgments of the Single Judge 20 and of the Division
Bench 19 of the Delhi High Court are set aside. Consequently,
the majority award is also set aside. Under the scheme of
Section 34 of the 1996 Act, the disputes that were decided by
the majority award would have to be referred afresh to another
arbitration. This would cause considerable delay and be
contrary to one of the important objectives of the 1996 Act,
namely, speedy resolution of disputes by the arbitral process
under the Act. Therefore, in order to do complete justice
between the parties, invoking our power under Article 142 of
the Constitution of India, and given the fact that there is a
minority award which awards the appellant its claim based
upon the formula mentioned in the agreement between
the parties, we uphold the minority award, and state that
it is this award, together with interest, that will now be
executed between the parties. The minority award, in paras
11 and 12, states as follows:

'11. I therefore award the claim of the claimant in full.

12. Costs no amount is awarded to the parties. Each
party shall bear its own cost. "

In Ssangyong, this Court upheld the view taken by the dissenting
arbitrator in exercise of its powers under Article 142 of the
Constitution, in order to do complete justice between the parties.
The reason for doing so is mentioned in para 77 i.e. the considerable
delay which would be caused if another arbitration was to be held. This
Court exercised its extraordinary power in Ssangyong keeping in mind
the facts of the case, and the object of expeditious resolution of
disputes under the Arbitration Act.

151) Thus, this Court can take into consideration the findings in
the dissenting Award. The dissenting opinion rightly holds that there is

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absolutely no evidence to award claim in the sum of Rs. 100 crores
towards additional overhead expenses. It is however clarified that the
dissenting opinion in the minority award is considered only for
buttressing this Court's independent finding that award of claim is
grossly perverse and patently illegal.

152) In view of above discussions, the claim for Rs.100 crores
awarded by the Tribunal in the Majority Award towards additional
overhead expenses deserves to be set aside.

ADDITIONAL INTEREST AND FINANCIAL EXPENSES

153) The Respondent-MMOPL claimed sum of Rs.408.59 crores
towards additional interest and financial expenses, which claim was
reduced by it by effecting amendment in the Statement of Claim to
Rs.369.51 crores. According to MMOPL, it was required to bear the
burden of paying additional interest on borrowed sums on account of
delay in execution of the Project. In the Statement of Claim, MMOPL
raised following pleadings in paragraph 6.175 as under:

6.175 Additional Interest during Construction

a) The schedule of interest repayments as given in the Financing
Documents stipulated payment of financing charges and interest
amount of Rs.144,00,00,000 Crores. On the other hand, the total
interest and financing charges payment incurred by the claimant
during the period of delay till the actual achievement of COD is
Rs.513.51 Crores.
b) This is another cost which the claimant would not have incurred if
the respondent had not caused delay to the achievement of COD. The
respondent is thus liable to reimburse the additional interest cost of

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Rs.369.51 Crores to the claimant, as set out in the statement enclosed
as Annexure K-119(8) hereto."

154) Along with the Statement of Claim, MMOPL produced
Annexure-K-119(B) providing the break up amount of Rs.369.51 crores
which is as under :

Annexure-K-119(B)

Additional Interest and Financing Expenditure during Construction.

(A) Interest and Financing Expenditure during Construction.
Description Amount (Rs. Cr)
Total Interest And Finance Cost (as per books) 513.51

(B) Reduction

Description Amount (Rs. Cr)
Interest Cost as per Original Cost Structure 119.00
Financing Charges as per original Cost Structure 25.00
Total 144.00

Ner Claimed (A-B) 369.51

155) In support of the claim towards additional interests and
financial expenses, Respondent-MMOPL examined C.W.2 as witness,
who deposed as under:

Claim No.6:

Additional costs / expenses incurred by the claimant on account of
delays on part of the respondent

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out to Rs.1,372.47 Crores as per Annexure 6 hereto. The said amount of
Rs.1,372.47 Crores includes the following:

(f) Additional Interest and Financing Expenditure during Construction
amounting to Rs.369.51 Crores. The claimant has incurred Additional
Interest Expenses and Financing Expenditure during construction
above Rs.144 Cr. as envisaged in the Financial Closure upto COD on
8th June 2014. The actual interest and Financing Expenditure incurred
by the claimant upto 8th June 2014 is Rs.513.51 Crores. The calculation
is provided as Annexure 12 hereto."

156) Along with his affidavit of evidence, C.W.2 produced
following statement at Annexure-12:-

Annexure-12

Additional Interest and Financing Expenditure during Construction.

(A) Interest and Financing Expenditure during Construction.
Description Amount (Rs. Cr)
Total Interest And Finance Cost (as per books) 513.51

(B) Reduction

Description Amount (Rs. Cr)
Interest Cost as per Original Cost Structure 119.00
Financing Charges as per original Cost Structure 25.00
Total 144.00

Ner Claimed (A-B) 369.51

157) Thus, the only details provided in the statement at
Annexure-12, which was in the nature of particulars of claim, was the
figures of total interests and finance cost of Rs.513.51 crores (less)
interest cost and finance cost as per the original cost structure of Rs.144
crores. This is how the figure of Rs.369.51 crores was claimed as cost
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incurred towards additional interests and financial expenses. C.W.2 was
subjected to cross-examination and the relevant part of his cross-
examination reads thus :-

12.484. Relevant cross-examination of CW-2 as regards the claim for
additional interest during construction period is as below:

"Q.33 Please go through the aforesaid exhibits and tell us that in
respect of which of the aforesaid exhibits, you have personally verified
merely the arithmetical accuracy of the calculations made and not the
correctness of the figures mentioned therein?

Ans. ..
(xvii) With regard to item (A) of Annexure 12 at page 52, the same SAP
report which is part of books of accounts has been referred. The
management has Identified the interest and finance cost which has
been test-checked by me. Paragraph (B) is calculated by the
management as per interest and finance expenditure during
construction as envisaged in the financial closure which has been
reduced from item (A) above.

Q.158 Are SAP reports referred to by you in the aforesaid answer, are
on record of the present proceedings?

Ans: I am not aware.

Q.167, Are you aware of the basis on which the management identified
the overheads and interest and finance costs as stated by you in your
aforesaid, answer?

Ans: These are identified based on the chart of ledgers and narration
mentioned in the SAP report.

Q.168 Who in the management carried out this process of
identification?

Ans: I am not aware.

Q.170 From what documents were the figures mentioned in Item (B) of
Annexure-11 and 12 arrived at?

Ans: With regard to item (B) of Annexure-11, these were arrived by the
management based on daily cash flow details. With regard to Item (B)

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of Annexure-12, these were calculated as envisaged in the financial
closure.

Q.171 Which was the document you referred to as envisaged in the
financial closure?

Ans: Term loan agreement, wherein the details of cost of project and
means of finance were mentioned.

Q.172 Do you know whether the term loan agreement is on record in
the present proceedings?

Ans: I am not aware."

158) Thus, in the cross-examination, C.W.2 stated that for
arriving at the figures in Item-A of Annexure-12, he had gone through
the SAP report and that the same was not available on record. He further
stated that interest and final costs were identified by the management
and he was not aware as to who in the management carried out
identification. He further admitted that the figures mentioned in Item-B
of Annexure-12 were calculated by the management as envisaged in
financial closures and that the documents referred to in the financial
closures was term loan agreement. He admitted that he was not aware as
to whether the term loan agreement was not on record. This was the
only evidence available with the Arbitral Tribunal and Petitioner-
MMRDA specifically raised the issue of absence of evidence in support of
claim. The defence adopted by Petitioner-MMRDA in respect of the
claim towards additional interests and financial expenses is noted by the
Arbitral Tribunal in paragraph 12.487 of the majority Award, which
reads thus:

12.487 Contesting the claimant's claim for additional interest, the
respondent submitted that the claimant did not produce any evidence
in support of said claim. CW-1 and CW-2 deposed in the matter

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without personal knowledge; according to CW-2 the claimant incurred
additional interest and financing expenditure during construction
above Rs.144 Crores as envisaged in financial closure upto COD /
8/6/2014 amounting to Rs.513.51 Crores; that in support of said claim
CW-2 merely produced tabular statements; the statement made
bY'CW-2 in response to Q.33, 158, 167, 168 and 170 to 172 show that
CW-2 claimed that the figures in Annexure-12 were arrived based on
SAP reports; however, CW-2 admitted that SAP reports were not
on record; CW-2 claimed that the interest and finance cost were
identified by the management, but he could not identify the person in
the management who did so; CW-2 claimed that the amount of Rs.144
Crores 'was as envisaged in financial closure / term loan agreement,
but admitted that term loan agreement was not on record.

159) Thus the Arbitral Tribunal has noted the factum of non-
production of SAP report and term loan agreement in para 12.487 of the
majority Award. However it has still proceeded to award the claim. The
exact reasons recorded by the Tribunal for awarding the claim towards
additional interests and financial expenses are not very clearly
discernable from the Award. However, it has observed in Para12.490 of
the majority Award thus:

12.490 Claimant claimed total interest and finance cost as Rs.513.51
Crores. CW-2 in response to Q.33 stated that the same is based on SAP
report which forms part of claimant's Books of Accounts. Claimant
stated that it had reduced from Rs.513.51 Crores, interest cost as per
original cost structure amounting to Rs.119 Crores and financing
charges as per original cost structure amounting to Rs.25 Crores i.e.,
totally Rs.144 Crores to arrive at additional interest claimed. In
response to Q.170 and 171 CW-2 stated that the interest cost and
financing charges as per original structure were calculated based
on term loan agreement, which formed part of financial closure.
The claimant contended that the respondent was aware of the
term loan agreement, as the same was approved by respondent
under the provisions of CA; and there is no evidence led by
respondent that the figures mentioned by CW-2 based on term
loan agreement was incorrect.

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160) What is stated in Para 12.490 are not really the reasons for
awarding the claim. But it appears that the Arbitral Tribunal has
considered the term loan agreement, referred to by C.W.2, which
admittedly was not produced on record by MMOPL. It has only recorded
submission of MMOPL that the MMRDA did not produce evidence to
prove that the figure mentioned by C.W.2 based on term loan agreement
was incorrect. The Award does not indicate whether this contention of
MMOPL is accepted by the Tribunal or not. Suffice it to observe that the
contention was outrageous and ought to have been rejected by the
Tribunal. The onus was not on MMRDA to disprove the statement of
C.W.2.

161) The findings recorded in Para 12.492 to 12.494 of the
majority award do not throw any light on claim towards additional
interest and financial expenditure.

162) The Tribunal thereafter straightaway proceeded to award
claim for additional interest and financial expenditure in the sum of
Rs.125 crores by recording following findings in paragraph 12.497:

12.497. Similarly, it cannot be disputed that on account of extension
of execution period, the claimant had to incur additional interest and
financial expenditure. Considering the interest cost and financing
charges as shown in the Books of the claimant, having regard to
the facts of the case, the claimant is held entitled to additional
interest cost and financing charges amounting to Rs.
125,00,00,000/-.
(emphasis added)

163) Thus, in absence of any evidence on record, a huge sum of
Rs.125 crores is offered on a platter to MMOPL by recording generic

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finding that 'it cannot be disputed that on account of extension of execution
period, the claimant had to incur additional income/financial expenditure'.
This finding is again based purely on a surmise in absence of any
concrete evidence on record. Petitioner-MMRDA had specifically
disputed the claim and therefore the finding that incurring of additional
interests and financial expenditure could not disputed is perverse. More
importantly, the Arbitral Tribunal had zero evidence in respect of
incurring of any actual additional interest or financial expenses by
MMOPL. No evidence is discussed in the Award. The Tribunal has made
vague reference to 'books of the claimants' even though no books
showing incurring of any additional interest during extended period of
contract were produced before the Arbitral Tribunal or are discussed by
the Tribunal. Again, while awarding sum of Rs.125 crores as against the
claim of Rs.369.51 crores, no underlying basis is provided by the
Tribunal.

164) In my view, award of claim of Rs. 125 crores towards
additional interests and financial expenses suffers from the same vices
as discussed while dealing with the claim of additional overheads and
supervision of construction works. Here also, the claim is towards
'indirect expenses' and was barred under Article-29.2 of the Concession
Agreement. It was incumbent for MMOPL to demonstrate that any
expenses towards additional interest were actually incurred by it by
leading evidence so as to fit the same in the expression 'direct additional
costs' appearing in Article-29.2 of the CA. However, even if the aspect of
indirect expense is to be ignored, the claim is not supported by any
evidence.

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165) Since the award of claim of Rs.125 crores towards additional
interests suffers from the same vices as discussed in relation to claim for
additional overhead costs, it is not necessary to repeat the discussion for
need to lead credible evidence to establish the claim and
impermissibility to award the claim in absence of any evidence.

166) Mr. Bhatt has submitted that the Arbitral Tribunal had
sufficient evidence before it for awarding the claim of additional interest
and financial expenses. He has submitted that the Arbitral Tribunal has
considered evidence of witness of MMOPL and duly approved balance
sheets at Exhibits-C73 and C76. I have already considered and analyzed
the evidence of C.W.2 and have recorded a conclusion that the oral
testimony of C.W.2, by itself, does not provide any succor to MMOPL's
claim for additional interest or financial expenses. So far as MMOPL's
reliance on audited balance sheets at Exhibits-C73 and C76 are
concerned, the Tribunal has not referred to the same in the majority
Award. However, even if the documents at Exhibits C-73 and C-76 are
taken into consideration, it is difficult to arrive at a conclusive finding
that MMOPL incurred expenditure of Rs.369.51 crores towards
additional interest /financial expenses. Exhibit-C73 is the balance sheet
for the year ending 31 March 2011 and in that document, the figure
indicated against 'Bank and Financial charges' is cumulatively at
Rs.10.34 crores. Similarly, in the document at Exhibit-C-76, the
cumulative figure indicated in the balance sheet for the year ending 31
March 2014 against the head 'Bank and Financial Charges' is Rs.25.36
crores.

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167) Though this Court is not supposed to independently assess
the evidence on record while exercising powers under Section 34 of the
Arbitration Act, I have still proceeded to consider the two documents in
the form of audited balance sheets at Exhibits-C-73 and C-76 to find out
whether any underlying basis can be gathered for award of sum of Rs.125
crores in favour of MMOPL by applying the principles in the judgment of
the Apex Court in OPG Power Generation Limited. However, even after
going through the documents produced before the Arbitral Tribunal and
to which Mr. Bhatt has drawn my attention, I am unable to arrive at a
conclusion that MMOPL produced any concrete or credible evidence of
having incurred expenditure of Rs.369.51 crores towards additional
interest or financial expenses. Mr. Bhat has attempted to salvage the
situation by contending that what is granted by the Arbitral Tribunal is
only a conservative figure of Rs.125 crores though MMOPL has actually
incurred additional financial expenses and interest of Rs.369.51 crores. I
am unable to agree. As observed above, the Arbitral Tribunal can enter
into realm of guesswork only if it is impossible to arrive at the exact
amount to be awarded as compensation due to peculiar nature of
contract. The principle cannot be invoked in a case where there is total
absence of evidence of having incurred the actual expenditure. In my
view therefore, award of sum of Rs.125 crores towards claim for
additional interest and financial expenses cannot pass the muster of
Section 34 of the Arbitration Act merely because same is significantly
lower than what was claimed by MMOPL (Rs.369.51 crores).

168) As observed above, reasons recorded for rejection of claim
towards additional overheads squarely applies in relation to claim for

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additional interest and financial expenses. Award of claim of Rs.125
crores towards additional interest and financial expenses is thus
patently illegal and liable to be set aside. In the dissenting Award, the
claim is rejected by holding as under:

It may be noticed that both in Annexure K-119B as well as Annexure 12
to CW.2's affidavit, the "total interest and finance cost" is stated to be
"as per books". However, no such books (account books) have been
produced by the Claimant, which means that the first and basic figure
of Rs.513.51 crores has not been proved according to law.

It is relevant to notice that according to CW.2, item A of Annexure 12
at page 52 (of CW.2's affidavit) is said to be referable to "SAP Report
which is part of books of accounts". But, the Claimant has not
produced either the SAP Report or the books of accounts. So far as the
figures in item (B) are considered the witness merely says they were
'calculated by the management as per interest and finance expenditure
during construction period as envisaged in the financial closure.' The
witness has not verified these figures and none from the management
is examined to prove his calculations.

In the absence of Books of Accounts and the "SAP Reports" said to be
part of Books of Accounts" of the Claimant, the exercise Indulged by
the Claimant is an exercise in futility.

This item of claim is accordingly rejected.

169) The dissenting award rightly holds that no account books
have been produced by the Respondent. Rejection of claim in the light of
absence of evidence in the dissenting award appears to be in order. Here
also, it needs to be clarified that the dissenting opinion in the Award is
considered only for buttressing the finding that the award of claim
towards additional interest /financial expenses is without any evidence.
Award of claim in the Majority Award is independently found to be
grossly perverse and patently illegal.

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170) In my view therefore, award of claim of Rs. 125 crores towards
Additional interest and financial expenses cannot be sustained and is
liable to be set aside.

OPPORTUNITY COST OF LOSS OF PROFIT

171) In its Statement of Claim, MMOPL claimed a sum of
Rs.96.59 crores towards opportunity cost on loss of profit contending
that if operations of the Metro Project had commenced from 31 July
2010, it would have been to realise the revenue as per its projections. It
was contended by MMOPL that on account of delay caused by MMRDA
in completion of the Metro Project, MMOPL was deprived of cash profit
and accordingly it claimed interest on opportunity cost on such loss of
cash profits. However, by amending the Statement of Claim, the claim
under this sub-head was reduced to Rs.42.26 crores. The Arbitral
Tribunal has allowed the claim under this sub-head only to the extent of
Rs.23.47 crores.

172) In support of its claim of opportunity cost on loss of profit,
the MMOPL raised following pleadings in paragraph 6.176 of Statement
of Claim, which reads thus:

6.176 Opportunity cost on loss of Cash profit (revenue after deducting
direct operating expenses and interest cost).
i) If the operations of the Project had been commenced as scheduled
from 31st July 2010, the claimant would have been able to realize the
revenue as per the revenue projections.

ii) Because of the delay caused by the respondent, the claimant has
been deprived of the cash profit which it would have otherwise made if
the operations had commenced from the scheduled COD.

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iii)The respondent is liable to reimburse the interest on the
Opportunity cost on loss of Cash profit amounting to Rs.42.26 Crores
suffered by the claimant on account of the failure by the respondent.
Such additional costs are set out In the Statement enclosed as
Annexure K-120 hereto."

173) To prove the claim, MMOPL led evidence of C.W.2, who
produced with his affidavit of evidence, a statement at Annexure A-13
which reads thus:-

Particulars 2011 2012 2013 2014 2015
Revenue(Rs.Cr) 110.00 229.00 288.00 298.00 310.00
Operating Exp 17.00 70.00 95.00 76.00 77.00
EBIDTA 93.00 159.00 193.00 222.00 233.00
EBIDTA% 84.55% 69.43% 67.01% 74.50% 75.16%
Interest 75.00 150.00 150.00 150.00 150.00
Net Earnings 18.00 9.00 43.00 72.00 15.80

Time Period (In Yrs) 3.52 2.69 1.69 0.69 0.19
Annual Compounding 1.79 1.56 1.32 1.12 1.03
Factor @ 18% upto 7th June
2014
Amount (Rs. In Crores) 14.23 5.04 13.84 8.66 0.49
Total 42.26

*Net earnings for the year 2015 adjusted on proportionate basis upto 07th June, 2014
(COD Date). The same is based on the Information Memorandum prepared by IDBI in
May 2008, which has been appraised by the lenders.

174) MMOPL's witness-C.W.2 deposed that MMOPL was entitled
to interest on opportunity cost of loss of cash profit due to delay in
achievement of COD and that he had verified calculations and that claim
worked out to Rs.42.26 crores based on loss of cash profit upto 2014 as

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apprised by Lenders. C.W.2 deposed in his affidavit of evidence as
under:-
12. The Claimant has provided Particulars of Claim as per Annexure K-
121 of the Statement of Claim amounting to Rs. 1,547.78 Crores. I have
checked calculation of the same and observed that the said claim works
out to Rs. 1,372.47 Crores as per Annexure 6 hereto. The said amount
of Rs. 1,372.47 Crores includes the following:

(g) Interest on Opportunity Cost on Loss of Cash Profit (revenue after
deducting direct operating expenses and interest cost) due to delay in
achievement of the COD. I have checked calculation of the same and
observed that the Claim works out to Rs.42.26 Crores based on Loss of
Cash Profit upto 07 June 2014 as appraised by the Lenders. The
calculation is provided as Annexure 13 hereto."

175) C.W.2 was subjected to cross-examination, relevant part of
which has been culled out in paragraph 12.503 of the majority Award
and which is as under:

12.503 Relevant cross-examination of CW-2 as regards claim for cost
on loss of profit is as under.

"Q.33. Please go through the aforesaid exhibits and tell us that in
respect of which of the aforesaid exhibits, you have personally verified
merely the arithmetical accuracy of the calculations made and not the
correctness of the figures mentioned therein

Ans.

(xvill) With regard to Annexure 13 at page 53, the management has
calculated interest on opportunity cost on loss of cash profit based on
the Information Memorandum prepared by IDBI Bank and appraised by
the lenders. I have checked the mathematical accuracy.

Q.174. Have you personally computed any of the figures
mentioned therein?

Ans: I have checked the mathematical correctness.

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Q.175. Do I take it that all that you have done in respect of this
Annexure is to check as to whether the arithmetical additions and
subtractions contained therein are correct?

Ans: Yes.

Q.176. To your knowledge, since when is the Claimant generating
cash profits?

Ans: I was the auditor of the Claimant upto 2013-14. During that
time, the project was under construction, which means that
during those years, there was no cash profits."
(emphasis added)

176) Thus, upon being asked as to whether he had personally
verified the figures in the exhibits or had only checked the mathematical
accuracy in calculations, the witness deposed that he had checked only
the mathematical accuracy. The witness further deposed that he was
auditor of the Claimant only upto 2013-14 and that till that time, the
project was under construction and that there was no question of
generating any cash profit. The Arbitral Tribunal recorded the objection
of the Petitioner-MMRDA about failure to produce any supporting
documents in support of the claim in paragraphs 12.504 and 12.505 as
under:-

12.504 The respondent submitted that in SoC claimant merely annexed
a Chart at Annexure K-120 setting out calculation of alleged loss. The
evidence of CW-1 and CW-2 is not based on their personal knowledge:
CW-2 stated that he had checked the calculation towards claim and
observed that the claim works out to Rs.42.46 Crores based on loss of
cash profit upto 7/6/2014 as appraised by the lenders; that in support
of the claim, CW-2 merely produced tabular statement showing the
calculation; the statement made by CW-2 in response to Q.33, 174 to
176 show that CW-2 had only checked the mathematical accuracy of
the figure and CW-2 was only aware that upto 2013-14 the claimant
was not earning any cash profits; that the claim is not a direct cost
contemplated under Article 29 of CA; claimant failed to produce Books
of Accounts, the Information Memorandum prepared by IDBI Bank

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etc., warranting adverse inference. Claimant not only failed to prove
loss of profit, but also failed to prove the originally estimated profits.

12.505 The claimant claimed that opportunity cost of loss of cash profit
was derived from Information Memorandum prepared by IDBI.
However, it did not produce the same. Claimant contended that since
the Information Memorandum prepared by IDBI was submitted to the
respondent for approval as part of Financing Documents under Article
4 of CA and on the basis of the same financial close took place with the
approval of the respondent and that there was no evidence led by
respondent that figures mentioned by CW-2 based on said Information
Memorandum were incorrect. Claimant enclosed extracts of Business
Plan as Annexure-H to the Rejoinder Compilation 21 submitted on
1/2/2011. The claimant computed loss of opportunity based on its
business plan dated 10/1/2006 as under:

Particulars 2011 2012 2013 2014 2015
Cash Surplus During the 10 21 54 55 12.10
year (Rs. In Crores)
Time Period in years 3.52 2.69 1.69 0.69 0.19
Annual Compounding 1.79 1.56 1.32 1.12 1.03
Factor @18% (upto 7
June 2014)
Amount 7.91 11.76 17.38 6.61 0.38
Total 44.04

177) The Arbitral Tribunal further relied upon Information
Memorandum prepared by IDBI, which was not produced before it by
MMOPL on the ground that the same was produced with MMRDA for
approval as a part of financial documents under Article 4 of the CA.
However, MMOPL enclosed extracts of business plan as Annexure-H
with rejoinder compilation, which the Arbitral Tribunal took into
consideration. After considering the so-called extract of 'business plan'
(culled out in para 12.505 of award and which is reproduced above) the
Arbitral Tribunal considered that the revenue of Financial Year 2011 was

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projected as Rs. 110 crores, the operative cost was 17 crores and
accordingly earnings before interest, depreciation, tax and amortization
was Rs.93 Crores. After considering the projected interest of Rs.75
crores, the net earnings in the year 2011 was projected as Rs.18 crores.
The Arbitral Tribunal applied 18% interest on the figure of Rs.18 crores
and accordingly arrived at an amount of Rs.5.04 crores for Financial
Year-2012, Rs.13.84 crores for Financial Year-2013, Rs.8.66 crores for
Financial Year-2014 and Rs.0.49 crores for Financial Year-2015. Findings
of the Arbitral Tribunal in paragraph 12.506 read thus:-

12.506. In the Information Memorandum based on which the lenders
sanctioned loans, for FY 2011 revenue of Rs.110 Crores was projected.
Operative cost was taken as Rs.17 Crores. Earnings before interest,
depreciation, tax and amortization were at Rs.93 Crores (i.e., Rs.110
Crores minus Rs.17 Crores). Interest projected in the said year was
Rs.75 Crores based on the value of loan which was sought and
eventually granted. Based on these the net earnings for the year 2011
were projected as Rs.18 Crores (i.e., Rs.93 Crores minus Rs.75 Crores).
On the said amount of Rs.18 Crores the claimant contended that it
could have earned 18% interest p.a. computed annually for a period of
3.52 years i.e., from 1/8/2010 to 7/6/2012. Claimant made similar
calculations for FY 2012, FY 2013, FY 2014 and FY 2015 (i.e., from
1/4/2014 to 7/6/2014) for which it claimed Rs.5.04 Crores, Rs.13.84
Crores, Rs.8.66 Crores and Rs.0.49 Crores, respectively.

178) However, the Arbitral Tribunal ultimately reduced the rate
of interest from 18% to 10% and accordingly decided to award
cumulative amount of Rs.23,47,77,780/- in favour of the MMOPL.

179) In my view, there is absolutely no basis for awarding the
claim of interest on the alleged loss of profit. The claim is awarded
merely on the basis of Information Memorandum prepared by IDBI and
the so-called 'business plan' produced at Annexure-H to the rejoinder.

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Admittedly, the IDBI's Information Memorandum was never produced
before the Arbitral Tribunal. C.W.2, on his own, did not contribute
anything in his oral testimony to support the claim. He testified that
beyond checking mathematical corrections, he had no knowledge about
the correctness of figures claimed by MMOPL. The Award of the claim is
thus based on zero evidence as MMOPL failed to produce even a single
document to prove that it could have earned profits during the alleged
delay period of 3.5 years. As observed above, concrete and credible
evidence needs to be produced in support of claim of loss of profitability.
When the claim of loss of profit itself was unsustainable, the question of
awarding any interest thereon was far too stretched. It is another matter
that MMOPL itself failed to generate any profit from the project after
COD for 5 years till Financial Years 2019-20.

180) Mr. Bhatt has attempted to suggest that non-reporting of
actual net profits after COD till 2019-20 cannot be a ground for
presuming that there could have been no cash profit in respect of the
project after the COD. He has contended that the figure of net profit is
arrived at after deducting interest liability, depreciation, amortization,
etc. and therefore one cannot only consider the net profit figure for
assuming that no cash profits were earned. In my view, this justification
sought to be provided by MMOPL is not only speculative in nature, but
also no figures are placed before the Arbitral Tribunal even in respect of
alleged cash profits after COD.

181) Award of claim of Rs.23.47 crores merely by taking into
consideration figures in the so-called business plan is against

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fundamental policy of Indian Law and contravenes public policy
doctrine. The claim was based on so called statement prepared by C.W.2,
who himself admitted that beyond checking mathematical accuracy, he
himself had no knowledge about underlying figures indicated in the said
statement. The claim was clearly speculative in nature and could not
have been awarded in absence of any concrete evidence.

182) It has been rightly held in dissenting Award that MMOPL
did not produce its books of accounts or so-called Information
Memorandum of IDBI bank. The dissenting Award records as under:-

It is worth noticing that while the Claimant has made this item of
claim for "opportunity cost on loss of cash profit", CW.2 repeatedly
speaks of "interest on opportunity cost...". This contradiction is by
itself sufficient to reject this item of claim since the only evidence, oral
and documentary" in support of this item of claim is that of CW.2
alone.

Significantly the Claimant has not produced its Books of Accounts nor
did it produce the 'Information Memorandum prepared by IDBI Bank'
referred to in CW.2's answer to Q.No.133 (quoted above). Indeed, the
witness admits in so many words that all that he did was to 'check as to
whether the arithmetical additions and subtractions contained therein
are correct'.

It is further clear that the Claimant has based its estimates of the
amount claimed herein on the basis of the business plan (part of its bid
submitted in 2005-06) which can hardly be an acceptable basis for
computing loss. It has also claimed Annual compounding factor at the
rate of 18% per annum upto 7.6.2014.

When CW.2 has not produced the Information Management prepared
by RBI (referred to in his answer to Q.33 (xviii), the argument of the
Claimant that the said Memorandum submitted to the Claimant and
which formed the basis of financial close is sufficient to shift to burden
to the Respondent to disprove the contents of the said Memorandum,
is wholly unacceptable.

For the above reasons, this item of claim is rejected.

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183) The dissenting Award has taken into consideration the
contradictions in the head of the claim which was 'opportunity cost on
loss of cash profit' whereas C.W.2 repeatedly referred to the same as
'interest on opportunity cost'. The majority Award itself grants 10%
interest on alleged possibility of making net earnings of Rs.18 crores per
year. This claim is awarded as if the same is an interest over the
opportunity cost. Be that as it may. The dissenting award rightly holds
that mere business plan submitted as part of bid documents cannot be
an acceptable basis for computing loss.

184) In my view, the award of claim of Rs.23,47,77,780/-under
the heading 'opportunity cost on loss of cash profit' is clearly
unsustainable and is liable to be set aside as being patently illegal.

WHETHER TRIBUNAL COULD HAVE AWARDED CLAIMS BASED ON
GUESSWORK?

185) It is contended on behalf of Respondent-MMOPL that even
if it is held that there is no direct evidence to support the claims for (i)
overhead expenses, (ii) additional interest and (iii) opportunity cost on
loss of profits, the Arbitral Tribunal was entitled to award the claims by
undertaking the exercise of guesswork and by applying rough and ready
formula. It is contended that Courts have repeatedly upheld the
arbitrators' power to award damages/compensation on the basis of
guesswork or on guesstimate and that it is not necessary in every case to
prove the actual figure of loss suffered.

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186) Mr. Bhatt has strenuously relied on judgment of the Apex
Court in A.T. Brij Paul Singh (supra) in support of his contention that
the Tribunal was entitled to make 'guesstimate' of damages considering
that the case involves delay by MMRDA. In my view, the judgment in
A.T. Brij Paul Singh is clearly distinguishable and would have no
application to the facts of the present case. In the case before the Apex
Court, the contract was terminated and the claim was for expected profit
out of the remaining work. It is in the light of this position that the Apex
Court held that when the Respondent therein was guilty of breach of
contract and where rescission of the contract by the Respondent was
held to be unjustified, since Plaintiff-contractor had executed part of the
work, he would be entitled to damages by way of loss of profits which
was computed as 15% of balance value of work. The present case does
not involve termination of contract nor does it involve a claim towards
reasonable expectation of profit for uncompleted work. Therefore, the
judgment in A.T. Brij Paul Singh would have no application to the facts
of the present case.

187) Mr. Bhatt has also relied on the judgment of the Apex Court
in Mohd. Salamatullah (supra) in which the Government had placed
orders with the plaintiff therein for manufacture of certain number of
guns and on account of breaches of the contract committed by the State,
the same could not be performed. The plaintiff contractor claimed
compensation at the rate of 15% of total amount invested in gun making
and the same was upheld by the Apex Court. Thus, in Mohd.
Salamatullah the claim involved claim for 'loss of profit' of remaining
part of unperformed work and the judgment would have no application

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to the facts of the present case, which involves the claims for 'loss of
profitability' due to delay in execution of contract.

188) Award of sums of Rs.100 crores towards additional
overheads, Rs. 125 crores towards additional interest and Rs. 23.47
crores towards opportunity cost is sought to be justified by Mr. Bhatt by
contending that the Tribunal has merely performed a 'guesswork'. In my
view, though the Tribunal is entitled to undertake the exercise of
guesswork in a given case, the same can be done only when it is not
possible to arrive at the exact figure of damages by the claimant. In a
case 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 short cut for production of evidence.
Guesswork can be undertaken only when it is impossible to compute the
exact quantum of losses suffered by the injured party. If evidence of
sufferance of loss itself is not available, the Arbitral Tribunal cannot
award damages of lesser sum than the one by presuming holding that
some loss must have been suffered. When award of damages itself is not
warranted due to absence of evidence, awarded claim cannot be
sustained before Section 34 Court because the Tribunal awards far lesser
sum or conservative sum than the one demanded.

189) In Satluj Jal Vidyut Nigam (supra) a Single Judge of Delhi
High Court has deprecated award of claims merely on mathematical
derivation without any proper foundation in pleadings and without any
cogent evidence. The Court has held in para-57 as under :-

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57. Entertaining financial claims based on novel mathematical
derivations, without proper foundation in the pleadings and/or
without any cogent evidence in support thereof can cause great
prejudice to the opposite party. Especially in the context of
construction contracts where amounts involved are usually
astronomical, any laxity in evidentiary standards and absence of
adequate diligence on the part of an arbitral tribunal in closely
scrutinizing financial claims advanced on the basis of
mathematical derivations or adoption of novel formula, would
cast serious aspersions on the arbitral process. The present case is
an example where substantial liability has sought to be fastened on
one of the contracting parties based on specious paper calculations. It
cannot be overemphasized that arbitral tribunals must exercise due
care and caution while dealing with such claims.

(emphasis added)

190) Reliance by Mr. Bhatt on judgments of this Court in Swastik
Constructions (supra), New India Assurance Co. Ltd. (supra) is
inapposite since award of damages by the arbitrators in those cases is
upheld by this Court in the light of peculiar facts of those cases. In
Hindustan Petroleum Corporation Vs. Aegis Logistics Pvt. Ltd (supra)
award of damages is held to be well supported by evidence on record.

191) In the present case, Arbitral Tribunal has not clarified that it
is awarding damages by adopting the principle of guesswork. The theory
of guesswork is pressed into service by Respondent to some how save
the claims from being set aside. In any case the principle of guesswork
cannot be applied in the present case as the Respondent has failed to
produce evidence, which it could have produced if it has really suffered
any losses.

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CONTENTION THAT APPLICATION OF ERRONEOUS YARDSTICK IN
DETERMINING DAMAGES IS NOT A GROUND TO SET ASIDE AWARD

192) On behalf of Respondent-MMOPL, an overarching
submission is made to save award of claims for (i) overhead expenses,
(ii) additional interest and (iii) opportunity cost on loss of profits that
even if this Court comes to a conclusion that the yardstick applied by the
Arbitral Tribinal for award of any of the claims is erroneous, that alone
cannot be a ground for setting aside the award.

193) Mr. Bhatt has relied upon this Court's judgment in Lotus
Logistics and Developers Private Limited (supra) in support of the
contention that mere application of erroneous yardstick for arriving at
figure of damages/compensation cannot always be a ground for
invalidating the Award and that Section 34 Court could not interfere in
the Award so long as it is satisfied that the ultimate amount awarded by
the Tribunal is unduly excessive. In my view, the judgment has no
application to the facts of the present case. In case before this Court in
Lotus Logistics and Developers Private Limited one of the issues was
about computation of amount of compensation /damages by taking into
consideration value of flats and the building rather than considering the
cost of demolition and reconstruction of the buildings. This court was
satisfied that damages /compensation was required to be awarded and
that the amount awarded is also found to be correct. The Arbitral
Tribunal in that case had evidence in the form of total cost of flats and
building and also the cost of demolition and reconstruction of the
building. The Tribunal has chosen the former though the correct
yardstick was the latter. Since the awarded sum is found to be justified

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even by applying the latter yardstick, this Court upheld the award. In the
light of the peculiar facts and circumstances of that case, this Court held
that mere application of erroneous yardstick for quantifying the
damages cannot be a ground for invalidating the Award in exercise of
powers under Section 34 of the Arbitration Act. The judgment therefore
has no application to the facts of the present case where this Court is
satisfied that no damages/compensation deserve to be granted in favour
of the MMOPL in respect of three heads of (i) additional overheads (ii)
additional interest and (iii) opportunity cost on loss of profits.

CLAIM 3- CHANGE OF SCOPE

194) In Claim No. 3, MMOPL claimed an amount of
Rs.87,03,96,777/- towards additional cost incurred in construction of
overhead bridge above western railways track at Andheri station.
MMOPL contended that Andheri bridge was originally planned by it to
be constructed as Pre-Stressed Concrete Balanced Cantilever Bridge
(PSC Bridge), but it was compelled to construct it as Truss Type Steel
Girder Bridge (Steel Bridge). According to MMOPL, the change
amounted to 'change of scope of work' as per the CA and that MMRDA
was liable to pay to MMOPL cost and additional expenses allegedly
incurred by it due to purported change of scope of work. The Arbitral
Tribunal has awarded the claim in the sum of Rs.30,48,00,000/- against
Claim No. 3 together with interest @10% per annum upto the date of
Statement of Claim.

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195) Under Chapter-VII of the technical proposal of MMRDA, the
Andheri bridge was to comprise of PSC Bridge of single span of 60
meters and the said technical proposal became part of the CA. However,
ultimately MMOPL was required to construct the Steel Bridge as per the
requirement of Western Railways. Additionally, MMOPL also relied on
clause-5 of the Agreement of March 2009 executed between Western
Railway, MMOPL and MMRDA under which it was entitled to O & M and
life cycle cost.

196) The claim was opposed by MMRDA by contending that
change of methodology for construction of the bridge did not necessarily
amount to 'change of scope' of work within the meaning of CA and that
therefore, MMOPL was not entitled to be granted any amount towards
alleged additional expenditure incurred towards construction of the
steel bridge. Article 16 of the CA dealt with 'change of scope' of work
and the same stipulated thus:-

16. Change of Scope
16.1. Change of Scope
MMRDA may, notwithstanding anything to the contrary contained in
this Agreement, require provision of such additional works and
services on or about the MRTS Project which are beyond the scope of
the Project as contemplated by this Agreement ("Change of Scope").
All such changes shall be made by MMRDA by an order (the "Change of
Scope Order") issued in accordance with the procedure set forth in this
Article 16 and giving consideration to O&M and lifecycle costs. The
cost thereof shall be expended by the Concessionaire and reimbursed
to it by MMRDA in accordance with this Article 16.

16.2.Procedure for Change of Scope
(a) MMRDA shall whenever it desires provision of additional works and
services referred to in Article 16.1, issue to the Concessionaire a notice
of change of scope (the "Change of Scope Notice) specifying in
reasonable detail the works and services contemplated thereunder.

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(b) Upon receipt of such Change of Scope Notice, the Concessionaire
shall provide to MMRDA and the Independent Engineer such
information as is necessary and reasonable together with preliminary
documentation in support of the following:

(i) the impact, if any, which the Change of Scope is likely to have
on the Project Completion Schedule if the work is required to
be carried out before COD, and;
(ii) the cost to the Concessionaire of complying with such Change
of Scope Notice
(iii) the options suggested for implementing the proposed Change
of Scope and the effect, if any, each such option would have on
the costs and time for the implementation thereof including a
detailed breakdown by work classifications. Provided, however,
that the costs of providing such information shall be
reimbursed to the Concessionaire by MMRDA to the extent
such costs are certified to be reasonable by the Independent
Engineer.
If MMRDA desires, after receipt of information set forth in Article
16.2. to proceed with the Change of Scope, it shall convey the desired
option to the Concessionaire by issuing a Change of Scope Order and
thereupon the Parties shall, with assistance of the Independent
Engineer, thereupon make good faith efforts to mutually agree upon
the costs and time for implementing of the same. Upon reaching an
agreement relating to such costs and time. MMRDA shall issue a
written confirmation of the change of scope order and thereupon the
Concessionaire shall proceed with performance of such orders. In the
event the Parties are unable to agree. Mmrda may by issuing a
confirmation in writing of such Change of Scope Order, require the
Concessionaire to proceed with the performance of the change in
Scope Order pending resolution of such dispute

16.3 OMITTED

16.4 Payment for Change of Scope
The Concessionaire shall after commencement of work, present to
MMRDA bills for payment in respect of the works in progress or
completed works, as the case may be, supported by such
documentation as is reasonably sufficient for MMRDA to determine the
accuracy thereof, including invoices from Contractors and
subcontractors and certification of such claims by the Statutory
Auditors. Within 30 (thirty) Days of receipt of such bills, MMRDA shall
disburse to the Concessionaire such amounts as are certified by the
Independent Engineer as reasonable, and in the event of any Dispute,
the same shall be settled in accordance with the Dispute Resolution
Procedure. For the removal of doubt, it is hereby clarified that any

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undisputed amount shall be payable without resorting to Dispute
Resolution Procedure.

16.5 Restriction on Change of Scope
Notwithstanding anything to the contrary contained in this Article 16,
the Concessionaire shall be entitled to nullify any Change of Scope
Order if it causes cumulative costs relating to all the Change of Scope
Orders to exceed 5% (five per cent) of the Total Project Cost, provided
however that the provisions of this Article 16.5 shall not be applicable
in case inclusion of the Airport Link is provided as a part of the MRTS
project resulting in a Change of Scope Order.

197) According to MMRDA, only additional works and services in
respect of the project, which were beyond the scope of the project as
contemplated by the CA qualified as 'change of scope' and that there
was a detailed procedure agreed between the parties for changing the
scope of work. The Arbitral Tribunal has considered Article 16 of the CA
and has recorded a finding that construction of Steel Bridge instead of
PSC Bridge amounted to change in scope as contemplated under Article
16. The Tribunal dealt with Petitioner's objection at great length. It took
into consideration oral as well as documentary evidence on record. The
Tribunal took note of letter dated 12 May 2011 by MMOPL addressed to
MMRDA, in which MMOPL had specifically brought to the notice of
MMRDA that change in construction of bridge would entitle MMOPL to
reimbursement of cost. The Tribunal also took note of the fact that
MMRDA had not refuted the claimed cost at that time. The Tribunal also
took note of the fact that MMOPL addressed letter dated 14 June 2013
claiming additional cost on account of change in scope and the IE by
letter dated 3 August 2013 proceeded to consider the MMOPL's
entitlement by accepting that same amounted to change in scope. After
considering the entire material on record, the Tribunal has concluded in
paragraphs 11.30 to 11.33 of the majority Award as under:-

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11.30. The respondent contended that "Change of Scope" under Article
16 applied only when respondent required provision of additional
works or services beyond the scope of work of the claimant under the
CA; that under Article 16 respondent was required to compensate or
reimburse the claimant for every change in design or construction
methodology. The provision of additional works and services which are
beyond the scope of the Project, as mentioned in Article 16.1, was wide
enough to include any additional works or services resulting from
change in design or methodology from what was originally envisaged
under the CA, particularly when the same entailed additional costs.
Hence, change in design in the instant case amounts to change of
scope as contemplated under Article 16.1.

11.31. Article 16.1 of CA required respondent to issue notice of change.
Even though respondent did not issue such notice, it kept quiet when
claimant informed that it was made to construct steel bridge in place of
PSC bridge and that the same would have cost implication. The
respondent did not stop claimant from proceeding as per changed
scope, It did not point out that any other alternative was possible.
Once the claimant has proved that change in scope as contemplated
under Article 16 indeed took place and the claimant undertook the
work based on instructions of the respondent, the respondent cannot
deny the compensation contemplated under Article 16 of the CA by
citing its own failure or the failure of IE to arrive at the additional cost.
There was substantial compliance with Article 16 of CA in that the
change of scope did occur and the claimant completed the work
accordingly. The other requirement of Article 16 for determination of
additional cost with the assistance of IE, is not mandatory. In fact
Article 16 itself contemplated that failing mutual agreement among
the Parties as regards the additional cost, the respondent could require
claimant to proceed with the work as per changed scope pending
resolution of dispute in relation to the cost. More so in the instant case
upon respondent's failure to get the requisite ROW for originally
envisaged PSC Bridge, there was no other option left to the claimant
but to proceed with changed scope and only the determination of
additional cost was left to a later date.

11.32. The respondent relied on Dishambar Nath Agarwal v.
Kishanchand and Ors. AIR 1990 Allahabad 65, paragraph-22 and 23,
wherein referring to terms of compromise between parties as to mode
of payment, it was observed that if any agreement states that a
particular act relating to the furtherance of the contract was to be done
in a particular manner, then it should be done in that manner and it is
not open to the concemed party to chalk out his own manner of
performance. In such case as per the compromise the payment was
required to be made by the plaintiffs through crossed A/c Payee Draft

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in favour of defendant at Gwalior. It was admitted that plaintiffs had
not got any draft prepared in favour of defendant in terms agreed in
the compromise. In the circumstances the court held that any amount
of readiness in any other manner on the part of plaintiffs by arranging
for money, giving notice to defendant, sending telegram and remaining
present at Sub-Registrar's office will not amount to due performance of
the contract. The respondent also relied on Niloufer Siddiqui & Ors. V.
Indian Oil Corporation Ltd., & Ors. 2007 SCC OnLine Pat 27 and G+H
Schallschutz GmbH v. Bharat Heavy Electricals Ltd., 267 (2020) DLT
201 wherein the aforesaid decision in Dishambar Nath Agarwal has
been followed. The facts of the said cases are clearly distinguishable
and inapplicable to the present facts where respondent did not object
to the claimant completing the work as per changed scope without
respondent insisting for adherence with procedure contemplated under
Article 16 of the CA. These decisions cited by respondent have no
application to the instant case where the procedure contemplated is
held to be not mandatory under the given circumstances..

11.33 In the circumstances, this Tribunal thus finds that the change
from PSC Bridge to Steel Bridge amounted to change in scope as
contemplated under Article 16 of the CA and it was on account of
respondent's inability to get the requisite ROW from WR.

198) The Tribunal has thus constructed Article 16 of CA to mean
that construction of Andheri bridge from originally planned PSC Bridge
to Steel Bridge amounted to 'change of scope'. It is well settled principle
that construction of contractual terms is in the exclusive domain of the
Arbitral Tribunal. It is sought to be urged before me that interpretation
of Article 16 by the Arbitral Tribunal is faulty. Even if it is momentarily
accepted that any error is committed by the Arbitral Tribunal in
interpreting Article 16, the said error is within the jurisdiction of the
Arbitral Tribunal not warranting any interference in the Award by
Section 34 Court.

199) Even otherwise, a plausble view is adopted by the Arbitral
Tribunal in holding that change of originally planned PSC Bridge at
Andheri station to Steel Bridge would be change in scope within the

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meaning of Article 16 of the CA. The Respondent-MMOPL has proved by
leading evidence that it has incurred additional cost and if the Arbitral
Tribunal has arrived at a finding that MMOPL is required to be
reimbursed in respect of additional cost incurred for construction of
steel bridge at Andheri, it cannot be contended that the approach of the
Arbitral Tribunal is so irrational that no fair minded person would ever
adopt the same. I am unable to accept Mr. Sen's contention that the
Tribunal has re-written the contract between the parties by holding that
the construction of Steel Bridge at Andheri amounted to change of scope
under Article 16 of the CA.

200) The dissenting Award has merely concentrated on following
of procedure under Clauses 1 and 2 of Article 16 by holding that the said
procedure was mandatory and that awarding the claim in absence of
following of the procedure would amount to rewriting of Article 16 by
nullifying the same. I am unable to agree with the said finding in the
dissenting Award. It is a matter of fact that MMRDA's own IE has
accepted position that construction of Steel Bridge amounted to change
in scope. Therefore, mere non following of the procedure specified in
Clauses-1 and 2 of the Article 16 cannot be a reason for holding that
award of the claim would result in rewriting of Article 16. The Arbitral
Tribunal in the majority award has taken note of the correspondence in
which MMRDA had never taken a position that the prescribed procedure
was not followed and has correctly concluded that MMRDA was
estopped from raising the issue of non-following of procedure
particularly after it allowed MMOPL to proceed with the work without
strict adherence to Article 16 of the CA. This findings recorded by the

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Arbitral Tribunal in majority award are plausible. They are neither
perverse nor irrational for Section 34 Court to interfere in the same.

201) It is contended by the MMRDA that claim for additional cost
for construction of Andheri bridge was barred by limitation. This
objection, I must observe, is stated only to be rejected. MMOPL was not
supposed to invoke arbitration or raise the claim towards incurring of
additional expenditure for construction of Andheri bridge during
currency of contract during pendency of and execution of work. The
claim was under active consideration of MMRDA. Its IE certified the
same in 2013. The Arbitral Tribunal has recorded following findings
while repelling the objection of limitation in paragraph 11.38:

11.38. After the change in scope, the claimant by letter dated
17/11/2008 had intimated the respondent that the changes required by
Railways shall be treated as change of scope and the cost and time
impact of same shall be submitted in due course. The respondent did
not refute the said understanding/assertion of the claimant. In terms of
Article 16 of the CA the additional cost resulting from change of scope
was required to be computed. The agreement between the Parties did
not fix any period for payment of the additional cost. As per Article 18
of the Schedule to the Limitation Act, for the price of work done by
plaintiff for the defendant at his request, where no time has been fixed
for payment, the period of limitation is three years when the work is
completed. The claimant has produced Completion Certificate issued
by it to its Sub-Contractor engaged for construction of Deck Slab of
Andheri Bridge on 20/3/2013 (Anx.M). Subsequent to the completion
the claimant addressed a letter to the respondent on 14/6/2013 putting
forth claim of Rs.109.87 Crores as additional cost on account of change
of scope (Anx.N). IE by letter dated 3/8/2013 proceeded on the basis
that there was a change in scope and called upon the claimant to
further information (Anx.H-9). This was followed by correspondence
between the Parties / IE pertaining to submission of
information/documents relating to additional cost. The respondent
itself by letter dated 28/11/2013 referred the claim for additional cost
on account of change of scope to IE. The respondent by letter dated
16/1/2014 to the claimant required the claimant to submit certain
documents to IE to facilitate the IE to examine the claim. However, in
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meeting between the Parties and IE, on 3/2/2014, the respondent
contended that change of scope from Cement to Steel was due to
Railways and therefore respondent did not have an obligation to
compensate claimant. By letter dated 24/2/2014 the respondent
requested the claimant to clarify under what provision of CA the
claimant was entitled to additional cost. These communications show
that the respondent was still considering the claimant's claim.
Invocation of arbitration by the claimant by notice dated 9/5/2015 was
well within three years of completion of the Steel Bridge i.e., March
2013.

202) The findings recorded by the Arbitral Tribunal while
rejecting objection of limitation are neither perverse nor irrational. The
view taken by the Arbitral Tribunal is again plausible. The Arbitral
Tribunal has considered the entire correspondence on record, from
which it is established that the MMRDA's own IE had called for further
information from MMOPL by treating construction of Steel Bridge as
change in scope by letter dated 3 August 2013. The Tribunal also took
note of letter dated 24 February 2014, in which MMRDA has requested
MMOPL to clarify the exact provision of CA, under which additional cost
was claimed. In my view, the findings of the Arbitral Tribunal on issue of
limitation do not warrant interference by this Court.

203) Lastly, the Claim No.3 for additional cost for construction of
Andheri steel bridge is objected by MMRDA by contending that no
evidence was led by MMOPL in support of incurring of additional
expenditure. However, perusal of the majority Award indicates that the
Arbitral Tribunal has conducted detailed factual enquiry into the
estimated cost of PSC Bridge and actual cost in construction of Steel
Bridge. It has held that estimated cost of construction of PSC Bridge was
Rs.19,97,88,706/- whereas actual cost incurred by MMOPL for

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construction of steel bridge is Rs.46,16,94,636/-. MMOPL also produced
invoice of M/s. Amit Constructions, who was one of the vendors whose
services were utilized for construction of Andheri Bridge. It therefore
cannot be contented that there was absolutely no evidence in support of
actual cost incurred in construction of Steel Bridge at Andheri.
Therefore this objection of MMRDA deserves rejection.

204) Consequently award of Claim No. 3 in the sum of Rs. 30.48
crores deserves to be upheld by rejecting the objection raised by
MMRDA.

CLAIM NOS.1 AND 2 RELATING TO WADALA CASTING YARD

205) Claim Nos. 1 and 2 are essentially interrelated because
MMRDA had withheld amount of Rs.35,78,79,565/- towards Viability
Gap Funding on account of non-payment of rent for Wadala land by
MMOPL.

206) As observed above, the MMRDA had contractually agreed to
provide VGF totally amounting to Rs. 650 crores under the CA. However,
amount of Rs.35,78,79,565/- towards VGF was withheld by the MMRDA
complaining that MMOPL failed to pay rent in respect of land at Wadala
used for casting yard during construction period. Under Claim No.1,
MMOPL demanded the said withheld amount of Rs.35,78,79,565/- and
interest of Rs.19,76,32,819/- (total of Rs. 55,55,12,384/-). Additional
interest on delayed disbursement of VGF Rs.6,71,588/- was also claimed
and this is how Claim No.1 was sought in the sum of Rs.62,26,63,972/-.

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207) Thus, Claim No.1 hinged squarely on MMOPL's entitlement
the rent in respect of Wadala land. Claim No.2 raised by MMOPL was in
the sum of Rs.143.94 crores, breakup of which was as under:-

Sl. Particulars Revised Claim Reference
No. amount (In
Cr)
A Rent on Wadala Casting Yard
paid/payable to MMRDA
1. Total demand made by MMRDA 79.01 As per Statement of
Defence filed by
Respondent/MMRDA -
Annexure RB18 @
Pgs.1298-303 CC Vol 3
2. Cost of funds of MMOPL calculated 39.84 Enclosure 1 and 2
on Rent paid to MMRA (on Rs.44.99
Crores)
3. Less: Rent for casting yard land (0.03) Enclosure 1
that was supposed to be paid as per
the Concession Agreement
Total claim towards rent 118.82
B. Logistics Cost
1. Additional Logistics cost incurred 9.83 Enclosure 4
(estimated) due to change in
casting yard
2. Cost of funds of MMOPL applicable 9.83 Enclosure 4
on additional logistics cost
Total Claim towards logistics cost 25.12
Total Claim (A+B) 143.94

208) Since Claim No.1 has correlation with Claim No.2, it would
be necessary to examine the background in which the dispute relating to
rent payable in respect of Wadala land arose between the parties.

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209) Under the CA, the Petitioner-MMRDA had permitted land
admeasuring 13 hectares at D.N. Nagar, Versova, which was to be
allotted for setting up a Car Depot, to be utilized as Casting Yard during
execution of the Project. In the Casting Yard, the girders used for
construction of overhead metro line were to be casted. Use of the land at
D.N. Nagar for casting yard was to be at a nominal rent of Rs.1/- per
sq.mtrs per year. However, it appears that there was delay in acquisition
of land at D.N. Nagar and there were several other factors which delayed
handing over of land to the Respondent for being used as casting yard.
Therefore, Respondent-MMOPL was required to scout for alternate land.
It identified the land belonging to MMRDA at Wadala which was handed
over to MMOPL for setting up the casting yard. The land at Wadala
admeasuring 60,000 square meters was allotted as per allotment letter
dated 25 April 2007 at the rent of Rs.4.85 per sq.mtrs per day upto
December 2007 and thereafter at Rs.5.35 per sq.mtrs per day from
January 2008 to December 2008. MMOPL objected to the terms of
allotment stating that the rent was very high and demanded nominal
lease charges of Rs.1/- per sq.mtr per annum. To resolve the issue, joint
meeting of MMRDA and MMOPL was held before the Hon'ble Chief
Minister on 10 December 2007, when the Hon'ble Chief Minister
directed that the land be allotted at the rate of average of concessional
rate and commercial rate. The MMOPL accordingly took possession of
60,000 sq.mtrs of land at Wadala in January 2008 and commenced its
activities. By the letter dated 14 January 2008, MMRDA demanded rent
@ Rs.3.63 per sq.mtr per day for 2008 and Rs.4/- per sq.ft per day for
2009. Again, there were disputes between the parties about rent. It
appears that possession of part of the land at D.N. Nagar admeasuring

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9.06 hectares was handed over to MMOPL in August 2008 and according
to MMOPL, condition of land at D.N. Nagar was not fit for immediate
use. Further allotments in parts were made increasing the total area at
9.8 hectares on 5 May 2010, 30 November 2010 and 15 September 2010.
By notice dated 14 June 2010, MMRDA directed MMOPL to vacate the
land at Wadala on the ground that the same was to be handed over to
Lodha Developers. After several rounds of correspondence, MMRDA
demanded commercial rent from 1 March 2011. MMOPL pointed out
that it had already paid rent upto 31 March 2012 and requested MMRDA
to permit use of Wadala land till March 2012. Thereafter, MMRDA took
possession of parts of the land at Wadala in various phases in 2012 and
in the meeting held on 7 May 2012, it was recorded that the land
admeasuring 1044.63 sq.mtrs was already handed over and additional
land of 2500 sq.mtrs was ready to be handed over at Wadala. It appears
that MMOPL finally vacated and handed over Wadala land on 23 August
2012. According to MMOPL, it paid rent of Rs.44,98,94,270/- for use of
Wadala land from 18 January 2008 to 23 August 2012 whereas, the
demand by MMRDA was of Rs.79,64,42,238/-.

210) In the above background, MMRDA demanded
reimbursement of additional costs of Rs.99.22 crores by letter dated 28
September 2012. MMRDA's IE rejected the demand. In the Statement Of
Claim, Respondent demanded Rs.143.94 crores towards reimbursement
of rent and other expenses incurred in respect of use of Wadala land for
casting yard. MMRDA denied liability to pay Rs.1,43,94,00,000/- and
contended in the Statement Of Defence as under :-

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4.1. In the 113th meeting of the Executive Committee of MMRDA held
on 19.04.2005, the commercial rent rate for grant of lands for projects
implemented by MMRDA through contractors was fixed at Rs.1.24 per
day per sq. mtr. with revision by 10% every year from thereon.

4.2. The land at D.N. Nagar (which was to be used for the purpose of a
car depot) was embroiled in litigation in the year 2007, which was
beyond the control of MMRDA.

4.3. MMOPL vide its letter dated 16.02.2007 (i.e., even before the
execution of the CA) identified the plot of land admeasuring about
60,000 sq. mtr. at Wadala for setting up of casting yard and requested
MMRDA to permit them to use the same.

4.4. The land at Wadala was granted to the MMOPL vide Allotment
Letter dated 25.04.2007 and the license to use the same was extended
by 3 License Agreements.

4.5. The Respondent has charged/recovered rent for Wadala land in
accordance with the meeting with the then Chief Minister of
Maharashtra held on 10.12.2007 whereunder, in order to resolve the
land and Right of Way (ROW) issues, the CM ordered MMRDA to make
available possession of 6 hectares of land at Wadala to MMOPL for
setting up of casting yard and the rent for the same land shall be paid
at an average of the commercial and concessional rate:

4.6. Pursuant to the said Meeting, the parties executed License
Agreements in respect of land at Wadała for development,
construction and maintenance of casting yard, the factum of which was
suppressed by MMOPL in the SoC.

License Agreement Lease Period and Rent Annexures
Stipulated

1 License Agreement From 18.12.2008 to Annexure RB-14 @
executed in March 2010 30.09.2009 at Rs.3.60 per Pgs.224-227 of CC Vol 1
day per sq mtr upto
31.12.2008 and at Rs.4 per
day per sq mtr upto
30.09.2009.
2nd License Agreement From 01.10.2009 to Annexure RB-15 @
executed in March 2010 31.03.2010 at Rs.4 per day Pgs.228-231 of CC Vol 1
per sq mtr upto 31.12.2009
and at Rs.4.40 per day per
sq mtr upto 31.03.2010

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3rd License Agreement From 01.04.2010 to Annexure RB-17 @
executed in May 2010 30.09.2010 at Rs.4.40 per Pgs.232-235 of CC Vol 1
day per sq mtr upto
30.09.2010.

4.7. The aforesaid License Agreements were willingly and
unconditionally entered into by MMOPL who agreed to the rates at
which the rent was charged for Wadala land. Therefore, MMOPL is now
estopped from making any claims for lower rent for the same.

4.8. MMOPL never contemporaneously demanded that the rent ought
to be reduced to Rs.1 per month per annum as has been contended by
them for the first time only in the SoC. On the contrary. MMOPL
unconditionally paid the rent on Wadala land from time to time.

4.9. The proceedings qua D.N. Nagar land came to an end in July 2008.
In the meanwhile, MMOPL vide its letter dated 21.11.2007 agreed to
the revision of D.N. Nagar land to an area of about 9.33 hectares and
accepted the reduced area without demur or protest.

4.10. The 3 License Agreement expired on 30.09.2010. MMRDA vide
letters dated 02.02.2011 and 17.02.2011 called upon MMOPL to hand
over the Wadala land to Lodha Builders. MMRDA vide letter dated
11.10.2011 informed MMOPL that it will be charged rent at commercial
rates with effect from March 2011. It is to be noted that the
commercial rent on Wadala land was only charged from October 2011.
MMRDA took possession of the Wadala land on 05.10.2012.

4.11. MMRDA was under no obligation under the CA to provide
additional or any land for the purposes of a casting yard.

4.12. Assuming whilst denying that there was any agreement to
provide lands at concessional rates, the same was superseded by the
subsequent conduct/License Agreements and there was a novation.

4.13. Assuming whilst denying that MMRDA was obliged to provide
Wadala land under the CA, the same was not required to be provided at
Rs.1 per sq. mtr. The obligation of MMRDA, if any, to provide land at
nominal rent of Rs.1 per sq. mtr. was limited only to D. N. Nagar land.

4.14. Owing to MMOPL's failure to pay rent from 01.10.2010 till
23.08.2012 and failed to vacate Wadala land, MMOPL was bound to pay
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rent at prevailing market rates w.e.f. 01.10.2010 onwards. Since
MMOPL had occupied the Wadala land till October 2012, there was
considerable delay caused to MMRDA in handing over the required
land to Lodha Builders resulting in substantial losses to MMRDA.

211) Since there was an overlap in respect of Claim Nos.1 and 2,
the Arbitral Tribunal in majority Award, has awarded sum of Rs.35
crores in respect of Claim No.1 towards deductions made by MMRDA in
VGF tranches and also awarded interest of Rs.6,14,72,498/-. For Claim
No.2, the Arbitral Tribunal has awarded sum of Rs.13,16,00,000/-
towards compensation for additional costs incurred by MMOPL towards
rent for Wadala land.

212) Mr. Sen has submitted that the Tribunal has rendered
contradictory findings in respect of the various issues under Claim No.2.
He particularly highlights the following findings rendered by the Arbitral
Tribunal in para-10.116 to 10.118 of the Award:

10.116 It is seen that even though initially claimant had sought for
allotment of Wadala land at concessional rate of Re.1/- per Sq.mtr. per
annum, the various letters issued by the claimant particularly reply
letters dated 15/1/2008 and 13/12/2008 shows that the claimant itself
accepted the liability to pay rent for Wadala land in accordance with
direction/decision of Chief Minister and paid the rent accordingly
without any demur and even signed various License Agreements
acknowledging the liability to pay the rent at rate stipulated therein.
Though the claimant had initially sought for waiver of security deposit,
the same was declined by the respondent and claimant even paid the
security deposit amount. The claimant thus accepted the, decision as
per meeting held with Chief Minister on 10/12/2007 and the terms of
various License Agreements executed between the Parties as regard
liability to pay the rent and security deposit for the Wadala Land.

10.117 As rightly pointed out by the respondent under Section 19 of
the Contract Act a contract can be avoided on the ground that it was
without free consent. For the said purpose a Party seeking to avoid the

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contract is required to establish that its consent to the agreement in
question was caused by coercion, fraud or misrepresentation. The
claimant has not pleaded or alleged or proved that the agreements in
relation to Wadala lands had been entered into on account of any
fraud, coercion or misrepresentation.

10.118 Having regard to the above discussions, it is held that the
decision as per the meeting with Chief Minister dated 10/12/2007 and
the terms as to rate of rent and security deposit stipulated in the
License Agreements between the Parties as regard Wadala Land, are
binding on the claimant.

213) Mr. Sen has accordingly submitted that the Tribunal has
held that rates stipulated in the license agreement executed between the
parties in respect of Wadala land were binding on MMOPL. However,
according to Mr. Sen, the Arbitral Tribunal has recorded a diametrically
opposite finding while upholding the claim of the Respondent-MMOPL
for reimbursement of half of the rent paid by it from 1 April 2010
onwards in para-10.150 as under:

10.150 The claimant is held entitled to reimbursement of half of the
rent paid by it for the period 1/4/2010 onwards (as per Sl.Nos.6 to 13 of
Anx.B3) amounting to Rs.1,316.00 lakhs (i.e., 2,632 lakhs / 2) by way of
compensation towards additional cost incurred towards rent on
account of respondent's failure to provide land at D.N. Nagar fully and
in time for claimant to set up one of the Casting Yards.

214) According to MMRDA, though it was agreed in the CA to
provide land at D.N. Nagar for casting yard at the rent of Rs.1/- per
sq.mtr p.a., the said agreement stood novated/varied in the decisions
taken in the meeting with the Hon'ble Chief Minister as incorporated in
the License Agreement. It has also contended that MMOPL did not
contemporaneously protest against MMRDA's letter's dated 11 October

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2011 about charging of rate at commercial rates in respect of Wadala
land from March 2011 nor cross-examined R.W.1 on that aspect.

215) The Arbitral Tribunal has rejected the theory of
novation/variation of contract by recording following findings in
paragraph 10.120 of the Award:

10.120 Merely because the claimant agreed to pay/fent for the Wadala
land in accordance with the decision in the meeting with the Chief
Minister and various License Agreements executed by the Parties, the
obligation of the respondent under the CA to provide to the claimant
the land at D.N. Nagar for the purpose of inter-alia setting up Casting
Yard at concessional rate of Re.1/- per Sq.mtr. per annum, could not be
superseded and no novation of contract between the Parties in said
regard took place.

216) The Tribunal thereafter considered whether MMRDA was
justified in charging market rent for Wadala land after expiry of license
period on 30 September 2010 and it concluded in paragraphs 10.124 to
10.126 as under :-

10.124 It is not in dispute that there was no written License Agreement
for the period beyond 30/9/2010 and that subsequently the claimant
handed over the possession of Wadala land to the respondent, though
there is dispute as to dates on which the possession was handed over.

10.125 In the aforesaid background it needs to be decided whether the
respondent could have charged rent at commercial rate for the Wadala
land with effect from 11/10/2011 to 4/10/2012. Both Parties having
agreed that rent payable for Wadala land would be in accordance with
the decision as per meeting with Chief Minister and in terms of the
License Agreements executed between the Parties, if the license period
expired and the claimant continued to be in possession, in absence of
consensus ad idem between the Parties the respondent could not have
unilaterally determined or fixed rent at a higher / commercial rate.
Admittedly the claimant used the Wadala land for the purpose of the
Project only. There is no basis for the respondent to have charged
commercial rent from 11/10/2011, contrary to the decision arrived at
the meeting with the Chief Minister that average of the commercial
and concessional rent would be charged.

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10.126 Hence, it is held that the respondent was not entitled to
unilaterally demand/charge rent at commercial rate from 11/10/2011.

217) The Arbitral Tribunal thereafter took into consideration
MMRDA'S obligation under the CA for provision of land for 2 casting
yards for the Project, out of which land admeasuring 13 hectares at D.N.
Nagar was to be allotted at concessional rate of Rs.1/- per sq.mtr per
anum. However, the Arbitral Tribunal has held that MMOPL could not
claim reimbursement of the entire additional rent/liability incurred by it
for setting up the casting yard at Wadala and held that the claim was
maintainable for reimbursement of additional rent/liability in respect of
the Wadala land, which MMOPL could have saved by setting up casting
yard at D.N. Nagar land. This is how the claim for reimbursement is
sanctioned only in respect of half of the amount paid by MMOPL in
respect of Wadala land. The Tribunal's findings in this regard in
paragraphs 10.138 and 10.139 are as under:

10.138 Considering that the Parties envisaged two Casting Yards for
the Project and the claimant was entitled to set up only one of the
Casting Yards at Car Depot land at D.N. Nagar, which was to be made
available at concessional rate and the respondent had no obligation to
provide additional land for second Casting Yard, the claimant cannot
claim reimbursement of the entire additional rent/liabilities incurred
by it for setting up the Casting Yard at Wadala. The claimant can
maintain claim for reimbursement of the additional rent paid/liability
incurred in respect of Wadala land for setting up Casting Yard, which it
could have saved by setting up the Casting Yard at D.N. Nagar land. In
the Technical Proposal vide Clause 7.4.8.1 of Chapter VII the claimant
had proposed to set up Casting Yard in around 35,000 Sq mtrs, area
and a second Casting Yard requiring similar 35,000 sq. mtrs, area at
Sahar International Airport. Considering that as per claimant's
Technical Proposal which forms part of CA, two Casting Yards each in
an area of about 35,000 Sq. mtrs.. including one at D.N. Nagar, was
envisaged, on account of respondent's failure to deliver the land at
D.N. Nagar timely and fully, the claimant was deprived of 35,000 Sq.
mtrs, land for setting up the Casting Yard. In lieu of two Casting Yards

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envisaged in claimant's Technical Proposal, it set up a single Casting
Yard at Wadala land measuring 62,206.206 Sq.mtrs.

10.139. Having regard to above aspects the claimant is held entitled to
reimbursement of half of the amounts paid by it in respect of Wadala
land.

218) The Arbitral Tribunal has thus refused to accept the case of
novation of contract on account of MMOPL's agreement to pay rent for
Wadala land in accordance with the decision of the meeting with the
Hon'ble Chief Minister. Agreement to pay rent for alternate land is
altogether different concept than obligation of MMRDA to provide land
at D.N. Nagar at concessional rate under the CA. It is just a matter of
coincidence in the present case that even alternate land fell in the
ownership of MMRDA. If MMRDA was not to make available alternate
land, MMOPL would have identified some other private land and had
paid rent for it. In such a case, the agreement between MMOPL and the
land owner for payment of rent cannot have any possible reflection on
MMRDA's obligation to make available D.N. Nagar land at concessional
rates. Merely because MMOPL agreed to pay rent at a particular rate in
respect of alternate land does not absolve contractual obligation on the
part of MMRDA to provide land at D.N. Nagar at concessional rate. The
act of MMOPL in using alternate land at Wadala was in the interest of
expeditious completion of the project. MMOPL would have been
justified in waiting for allotment of entire 13 hectares land at D.N.Nagar
which would have further delayed execution of the project. It therefore
made alternate arrangement for setting up casting yard and it is just a
matter of coincidence that the alternate land also belonged to MMRDA.
Therefore, the rate at which MMOPL agreed to pay rent in respect of

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Wadala land can have no correlation with MMRDA's contractual
obligation arising out of the CA. Therefore, MMOPL's agreement to pay
rent in respect of Wadala land cannot amount to novation or variation of
contractual obligations under the CA.

219) It was Petitioner's obligation to provide land at
concessional rates for setting up casting yard for execution of the
project. Since it has failed to provide the land, MMOPL was required to
scout for alternate land and pay rent therefor. In such circumstances the
Arbitral Tribunal has upheld the claim of MMOPL in respect of 50% rent
actually paid by it for Wadala land. In my view, such a direction in the
Award warrants no interference in exercise of powers under Section 34
of the Arbitration Act. It is not possible to accept Petitioner's contention
that the Award in this regard suffers from perversity, non application of
mind or absence of judicial approach and reliance in this regard on
judgment in Associate Builders (supra) is inapposite.

220) The objection of estoppel raised by MMRDA is also without
any substance. If MMOPL was forced to operate casting yard at alternate
site, the same does not mean that MMOPL was estopped from claiming
reimbursement of rent paid for alternate land. MMRDA has clearly
mixed the two issues of disputes over the rent payable for Wadala land
and MMRDA's contractual obligation under the CA to provide 13
hectares land at D.N. Nagar for casting yard. As observed above, it is just
a matter of coincidence that the owner of alternate land is also MMRDA.
MMOPL has resolved the disputes relating to land at Wadala through
meeting with the Hon'ble Chief Minister. Before the Arbitral Tribunal,
the dispute is not over the quantum of rent payable for Wadala land.

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That dispute is outside the arbitration agreement under the CA.
However, what is claimed by MMOPL is that MMRDA must reimburse it
in respect of the rent paid for alternate site when casting yard was to be
operated at D.N. Nagar almost free of cost. It is therefore difficult to
accept the contention that the Arbitral Tribunal has created a new
contract between the parties by rewriting the understanding and
Petitioner's reliance on judgment of the Apex Court in PSA Sical
Terminal is inapposite.

221) It also cannot be contended that the impugned award does
not record reasons for its decision qua Claims Nos.-1 and 2 in the
impugned award. The Arbitral Tribunal has considered every aspect of
the case and has recorded detailed reasons for partly accepting the claim
towards rent for Wadala land. It can also not be contented that any vital
material is ignored by the Arbitral Tribunal. Therefore, reliance on
judgment of the Apex Court in Dyna Technologies Pvt. Ltd. by the
Petitioner is also inapposite.

222) It is sought to be suggested that the disputes relating to
rent payable under the License Agreements in respect of Wadala land
were outside the scope of arbitration and could only be decided by the
Small Causes Court under Section 41 of the Presidency Small Causes
Courts Act,1882. This submission is raised by intermixing the issues of
quantum of rent payable for Wadala land with Petitioner's contractual
obligation to allow use of the land at D.N.Nagar at concessional rates.
The Arbitral Tribunal was not concerned with the quantum of rent
payable for Wadala land nor has determined the said issue. In fact, it has
ruled against MMOPL that it is contractually bound to pay the agreed

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rent. The issue in the arbitration is slightly different i.e. MMRDA's
liability to reimburse the rent in respect of alternated land. This
obligation for reimbursement cannot be decided by the Small Causes
Court and has rightly been adjudicated by the Arbitral Tribunal.

223) In my view, therefore partial award of Claim Nos-1 and 2 do
not suffer from any of the enumerated infirmities under Section 34 of
the Arbitration Act.

SEVERANCE OF AWARD

224) This Court has sustained some of the claims and has found
award of some of the claims in the majority Awards to be unsustainable.
In my view, it is easily possible to severe good parts of the award from
bad parts by applying the principles in the judgment of the Apex Court
in Gayatri Balasamy Versus. Isg Novasoft Technologies Limited 42 in
which the Apex Court has held in paragraphs 32 to 37 and 44 to 45 as
under:

32. In the present controversy, the proviso to Section 34(2)(a)(iv) is
particularly relevant. It states that if the decisions on matters
submitted to arbitration can be separated from those not submitted,
only that part of the arbitral award which contains decisions on
matters non-submitted may be set aside. The proviso, therefore,
permits courts to sever the non-arbitrable portions of an award from
arbitrable ones. This serves a twofold purpose. First, it aligns with
Section 16 of the 1996 Act, which affirms the principle of kompetenz-
kompetenz, that is, the arbitrators' competence to determine their own
jurisdiction. Secondly, it enables the Court to sever and preserve the
"valid" part(s) of the award while setting aside the "invalid" ones.
Indeed, before us, none of the parties have argued that the Court is not
empowered to undertake such a segregation.

33. We hold that the power conferred under the proviso to Section 34
(2)(a)(iv) is clarificatory in nature. The authority to sever the "invalid"
portion of an arbitral award from the "valid" portion, while remaining
42
2025 7 SCC 1
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within the narrow confines of Section 34, is inherent in the Court's
jurisdiction when setting aside an award.

34. To this extent, the doctrine of omne majus continet in se minus-
the greater power includes the lesser-applies squarely. The authority to
set aside an arbitral award necessarily encompasses the power to set it
aside in part, rather than in its entirety. This interpretation is practical
and pragmatic. It would be incongruous to hold that power to set aside
would only mean power to set aside the award in its entirety and not in
part. A contrary interpretation would not only be inconsistent with the
statutory framework but may also result in valid determinations being
unnecessarily nullified.
35. However, we must add a caveat that not all awards can be severed
or segregated into separate silos. Partial setting aside may not be
feasible when the "valid" and "invalid" portions are legally and
practically inseparable. In simpler words, the "valid" and "invalid"
portions must not be interdependent or intrinsically intertwined.
If they are, the award cannot be set aside in part.

36. The Privy Council, in Ram Protap Chamria v. Durga Prosad
Chamria2 addressed this issue with the following pertinent
observations:

(Dasuram Mirzamal/283, SCC OnLine Gau para 18)

"18.... if, however, the pronouncement of the arbitrators is such that
matters beyond the scope of the suit are inextricably bound up with
matters falling within the purview of the litigation, in that case, the
court would be unable to give effect to the award because of the
difficulty that it cannot determine to what extent the decision of the
subject-matter of the litigation has been affected and coloured by the
decision of the arbitrators in regard to matters beyond the ambit of the
suit."

Thus, the power of partial setting aside should be exercised only
when the valid and invalid parts of the award can be clearly
segregated-particularly in relation to liability and quantum and
without any corelation between valid and invalid parts.

37. We would now proceed to examine, the permissibility and scope of
the Court's modification powers, within the parameters of Section 34 of
the 1996 Act. In doing so, we will distinguish the Court's power of
modification from: (i) the Court's power of setting aside an award; (ii)
the arbitrator's power under Section 33 to correct, reinterpret, and/or
issue an additional award; and (iii) the power of the Court to remand
the award to the arbitrator under Section 34(4).

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44. We are of the opinion that modification represents a more limited,
nuanced power in comparison to the annulment of an award, as the latter
entails a more severe consequence of the award being voided in toto. Read
in this manner, the limited and restricted power of severing an award
implies a power of the Court to vary or modify the award. It will be wrong
to argue that silence in the 1996 Act, as projected, should be read as a
complete prohibition.

45. We are thus of the opinion that the Section 34 Court can apply
the doctrine of severability and modify a portion of the award while
retaining the rest. This is subject to parts of the award being separable,
legally and practically, as stipulated in Part II of our Analysis.

(emphasis added)

225) Here the bad part of the award is not inseparably
interwoven with the good part. The claims which are found to be
unsustainable are independent of the claims which are sustained.
Therefore, setting aside claims towards additional overheads, additional
interests, financial expenses and opportunity costs on loss of profit
would have no impact on sustaining the claims towards Andheri Bridge,
Wadala land and increase in cost of system works. Hence the principle of
severability can easily be adopted in the present case.

COSTS

226) Since the majority Award is being partly sustained and
partly set aside, I deem it appropriate not to award costs of the present
Petition in favour of any of the parties. The Arbitral Tribunal has
awarded costs of Rs.1 crore in favour of MMOPL. However, since some of
the claims of MMOPL are found to be totally unfounded, I deem it
appropriate to reduce costs of arbitration to Rs.50,00,000/- which shall
be payable by MMRDA to MMOPL.

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CONCLUSIONS

227) In view of the above discussions, award of following claims
by the Tribunal is sustained:

(i) Claim No.1 for deductions from VGF of Rs.35 crores plus
interest of Rs.6,14,72,498/-.

(ii) Claim No.2 for recovery of costs towards casting yard at
Wadala land of Rs.13,16,00,000/-.

(iii) Claim No.3 for additional costs incurred due to change of scope
for Andheri bridge of Rs.30,48,00,000/-.

(iv) Claim No. 6(d) for increase in the cost of system works of
Rs.163,22,44,188/-.

228) Following claims awarded by the Arbitral Tribunal in the
Majority Award cannot be sustained and are liable to be set aside :

(i) Claim for additional overhead expenses of Rs.100 crores.

(ii) Claim for additional interests and financing expenses of Rs.125
crores.

(iii) Claim for opportunity costs on loss of profit of
Rs.23,47,77,780/-.

Additionally, the costs of arbitration directed to be paid by the
Petitioner need to be reduced to Rs. 50,00,000/-
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INTERVENTION APPLICATION

229) National Asset Reconstruction Co. Ltd. has filed Interim
Application No. 3495 of 2025 for intervention in the Arbitration
Petition. NARCL is an Asset Reconstruction Company registered under
the SARFAESI Act, 2002. The intervention is sought on the ground that
MMOPL had availed loan facilities of Rs.1650 crores from various
lenders. It is contended that MMOPL and lenders have entered into
Escrow Agreement dated 16 March 2016, under which any amount
received in relation to Metro Project by MMOPL through any source is to
be deposited in the Escrow Account. It is further contented that under
the Substitute Agreement dated 16 March 2016, MMRDA, MMOPL and
the lenders have agreed that senior lenders have the right to substitute
MMOPL by a selectee for residual period of concession. It is contended
that MMOPL has defaulted in repayment of loans, on account of which
the loan accounts are declared NPA and proceedings are initiated
against MMOPL for recovery of debts in DRT. According to NARCL,
Assignment Deed dated 23 December 2024 is executed by the lenders
(Canara Bank, Indian Bank, Bank of Maharashtra, State Bank Of India and
IDBI Bank), assigning their loans granted to MMOPL to NARCL. During
the course of hearing of the Petition, Ms. Gathi Prakash, the learned
counsel appearing for the Intervenor-NARCL has contended that in the
event of the arbitral Award being sustained, the deposited amount
alongwith accrued interest be transferred to the Escrow Account. Mr.
Bhatt has expressed no objection for such arrangement. Since the Award
is being partly sustained, the amount deposited in this Court, can be
permitted to be transferred to the Escrow Account as per the prayer of
the NARCL.
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ORDER

230) I accordingly proceed to pass the following order:

i) The Majority Award is partly sustained and partly set aside.

ii) Award of claims in the Majority Award in respect of Claim No.1
of Rs.35 crores for deductions made in the tranches of VGF
together with interest of Rs.6,14,72,498/-, Claim No.2 of
Rs.13,16,00,000/- towards compensation for additional costs
incurred for payment of rent for Wadala land, Claim No.3 of
Rs.30,48,00,000/- towards compensation for construction of
steel bridge at Andheri and Claim No.6(d) of Rs.163,22,44,188/-

towards increase in the cost of system works are upheld.

iii) Award of Claim No. 6(f) for additional overhead expenses of
Rs.100 crores, additional interests and financing expenses of
Rs.125 crores and opportunity costs on loss of profits of
Rs.23,47,77,780/- are set aside.

iv) Accordingly, directions in para-19(i)(a) to (f) of the Majority
Award are sustained and direction in para-19(i)(g) is modified
to the extent that Respondent is entitled to sum of only
Rs.163,22,44,188/- towards increase in the cost.

v) Directions for payment of interest in para-19(ii) and (iii) are
also sustained, except with a modification that the interest
would be payable only on the awarded sums.

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vi) Direction for payment of costs of arbitration in para-19(vi) is
modified by directing that Respondent-MMOPL shall be
entitled to costs of arbitration of Rs.50,00,000/-.

vii) Rest of the award shall remain undisturbed.

viii) If the amounts payable to MMOPL under the modified Award
exceeds the amount deposited by MMRDA in this Court, the
Prothonotary & Senior Master, shall transmit the entire
deposited amount alongwith accrued interest to the Escrow
Account details of which shall be provided by NARCL to the
Prothonotary. In the event, the amount under the modified
Award is less than the amount deposited in this Court together
with accrued interest, after transfer of due amount to Escrow
Account, balance amount shall be refunded to the Petitioner-
MMRDA.

231) With the above directions, Arbitration Petition is partly
allowed. Considering the facts and circumstances, there shall be no
further order as to costs. All pending Interim Applications are disposed
of.

[SANDEEP V. MARNE, J.]

232) After the judgment is pronounced, Mr. Vaishnav, the
learned counsel appearing for the Petitioner prays for stay of direction
No.(viii) for remittance of amount to NARCL, for a period of 8 weeks.
The parties would be at liberty to present the exact amount payable to
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the Respondent-MMOPL under the modified Award as per the judgment
before the Prothonotary & Senior Master. However, the Prothonotary &
Senior Master shall transmit/pay the amount to the Escrow account of
NARCL after a period of 8 weeks.





                                                                            [SANDEEP V. MARNE, J.]




         Digitally
         signed by
         NEETA
NEETA    SHAILESH
SHAILESH SAWANT
SAWANT   Date:
         2026.02.24
         19:27:39
         +0530

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