DELHI AIRPORT METRO EXPRESS PVT. LTD. versus DELHI METRO RAIL CORPORATION LTD. on 9 September 2021

SUPREME COURT REPORTS

[2021] 5 S.C.R.

ADELHI AIRPORT METRO EXPRESS PVT. LTD.

v.

DELHI METRO RAIL CORPORATION LTD.

(Civil Appeal No. 5627 of 2021)

BSEPTEMBER 09, 2021

[L. NAGESWARA RAO AND S. RAVINDRA BHAT, JJ.]

Arbitration and Conciliation Act, 1996: s. 34 – Interferencewith the arbitral award – Scope of – On facts, arbitration clauseinvoked on account of dispute pertaining to Metro Rail projectCbetween the parties – Arbitral tribunal held the termination noticeissued by the appellant was valid and on basis of ‘Adjusted Equity’passed an award of Rs.2782.33 crore, along with interest, in favourof the appellant – Single Judge of the High Court dismissed thepetition u/s. 34 for setting aside the award – However, the DivisionDBench partly set aside the award – On appeal, held: While decidingapplications u/s. 34, the courts are mandated to strictly act inaccordance with and within the confines of s. 34, refraining fromappreciation or re-appreciation of matters of fact as well as law –Courts do not sit in appeal against the arbitral award – Permissiblegrounds for interference with a domestic award u/s. 34(2-A) on theEground of patent illegality is when the arbitrator takes a view whichis not a possible one, or interprets a clause in the contract which nofair-minded or reasonable person would, or commits an error ofjurisdiction by wandering outside the contract and dealing withmatters not allotted to them – Conclusions of the arbitrator whichFare based on no evidence or have been arrived at by ignoring vitalevidence are perverse and can be set aside on the ground of patentillegality – Also, consideration of documents which are not suppliedto the other party is a facet of perversity falling within the expression‘patent illegality’ – If a dispute which is not capable of settlementby arbitration is the subject-matter of the award or if the award isGin conflict with public policy of India, the award is liable to be setaside – The conclusion of the Division Bench that the award of thearbitral tribunal suffers from patent illegality and shocks theconscience of the court is erroneous – Judgment of the DivisionBench of the High Court set aside and the arbitral award in theHfavour of the appellant is restored.

Allowing Civil Appeal No.5627 of 2021 and dismissing CivilAppeal No.5628 of 2021, the Court HELD: 1.1 A cumulative reading of the UNCITRAL ModelLaw and Rules, the legislative intent with which the Arbitrationand Conciliation Act, 1996 is made, Section 5 and Section 34 ofthe 1996 Act would make it clear that judicial interference withthe arbitral awards is limited to the grounds in Section 34. Whiledeciding applications filed under Section 34 of the Act, courtsare mandated to strictly act in accordance with and within theconfines of Section 34, refraining from appreciation or re-appreciation of matters of fact as well as law. [Para 22][1004-E-F]

Uttarakhand Purv Sainik Kalyan Nigam Limited. v.Northern Coal Field Limited (2020) 2 SCC 455; BhavenConstruction Through Authorised Signatory PremjibhaiK. Shah v. Executive Engineer Sardar Sarovar NarmadaNigam Ltd. and Another 2021 SCC OnLine SC 8;Rashtriya Ispat Nigam Limited v. Dewan Chand RamSaran (2012) 5 SCC 306 : [2012] 4 SCR 122 – reliedon.

Ssangyong Engineering and Construction CompanyLimited v. National Highways Authority of India (NHAI)(2019) 15 SCC 131 : [2019] 7 SCR 522 – referred to.

1.2 The limited grounds available to courts for annulmentof arbitral awards are well known to legally trained minds.However, the difficulty arises in applying the well-establishedprinciples for interference to the facts of each case that come upbefore the courts. There is a disturbing tendency of courts settingaside arbitral awards, after dissecting and reassessing factualaspects of the cases to come to a conclusion that the award needsintervention and thereafter, dubbing the award to be vitiated byeither perversity or patent illegality, apart from the other groundsavailable for annulment of the award. This approach would leadto corrosion of the object of the 1996 Act and the endeavoursmade to preserve this object, which is minimal judicialinterference with arbitral awards. That apart, several judicialpronouncements of this Court would become a dead letter if A

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Aarbitral awards are set aside by categorising them as perverse orpatently illegal without appreciating the contours of the saidexpressions. [Para 24][1007-H; 1008-A-D]

1.3 Patent illegality should be illegality which goes to theroot of the matter. In other words, every error of law committedBby the arbitral tribunal would not fall within the expression ‘patentillegality’. Likewise, erroneous application of law cannot becategorised as patent illegality. In addition, contravention of lawnot linked to public policy or public interest is beyond the scopeof the expression ‘patent illegality’. What is prohibited is forcourts to re-appreciate evidence to conclude that the award suffersCfrom patent illegality appearing on the face of the award, as courtsdo not sit in appeal against the arbitral award. The permissiblegrounds for interference with a domestic award under Section34(2-A) on the ground of patent illegality is when the arbitratortakes a view which is not even a possible one, or interprets aDclause in the contract in such a manner which no fair-minded orreasonable person would, or if the arbitrator commits an error ofjurisdiction by wandering outside the contract and dealing withmatters not allotted to them. An arbitral award stating no reasonsfor its findings would make itself susceptible to challenge on thisaccount. The conclusions of the arbitrator which are based on noEevidence or have been arrived at by ignoring vital evidence areperverse and can be set aside on the ground of patent illegality.Also, consideration of documents which are not supplied to theother party is a facet of perversity falling within the expression‘patent illegality’. [Para 25][1008-D-G]F

1.4 Section 34 (2) (b) refers to the other grounds on whicha court can set aside an arbitral award. If a dispute which is notcapable of settlement by arbitration is the subject-matter of theaward or if the award is in conflict with public policy of India, theaward is liable to be set aside. Explanation (1), amended by theG2015 Amendment Act, clarified the expression ‘public policy ofIndia’ and its connotations for the purposes of reviewing arbitralawards. It has been made clear that an award would be in conflictwith public policy of India only when it is induced or affected byfraud or corruption or is in violation of Section 75 or Section 81

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of the 1996 Act, if it is in contravention with the fundamentalpolicy of Indian law or if it is in conflict with the most basic notionsof morality or justice. [Para 26][1008-H; 1009-A-B]

Ssangyong Engineering and Construction CompanyLimited v. National Highways Authority of India(NHAI)(2019) 15 SCC 131 : [2019] 7 SCR 522;Renusagar Power Co. Ltd. v. General Electric Co. 1994Supp (1) SCC 644 : [1993] 3 Suppl. SCR 22 – referredto.

2.1 As there is no ambiguity in the findings of the arbitraltribunal regarding the time given for curing the defects and theeffective date of termination of the Concession Agreement, thefindings of the Division Bench that there is an ambivalence inthe award concerning the date of termination, having a bearingon the final outcome of the award is not accepted. The arbitraltribunal in its award clearly held that DMRC failed to cure thedefects before the expiry of 90 days from the initial notice layingdown the non-exhaustive list of defects issued on 09.07.2012.The said conclusion is the outcome of interpretation of Article29.5.1 of the Concession Agreement by the tribunal. An attemptwas made by the Counsel for the Respondent to impress uponthis Court that as the termination notice would become effectiveonly after 90 days from the date of its issue, i.e., 08.10.2012,DMRC could avail this period as well to address the defects andif the defects stood cured or effective steps were taken withinthis additional 90-day period, the termination notice becamedefunct and should not be effectuated. Construction of a provisionof the Concession Agreement is within the domain of the arbitraltribunal. The view taken by the arbitral tribunal that the defectshave to be cured within 90 days from the date of the cure notice,failing which DAMEPL is entitled to terminate the ConcessionAgreement, is a possible interpretation of Article 29.5.1. Thefindings of the arbitral tribunal are not interfered with on thispoint, even assuming a different view can be taken on a readingof the said Article. [Para 31][1012-F-H; 1013-A-D]

2.2 The arbitral tribunal was called upon by the parties todecide whether there was a breach of the Concession Agreement A

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Adue to the fault of DMRC and whether the defects pointed out byDAMEPL were cured within the period specified in the noticedated 09.07.2012. Safety of the AMEL was not an issue that fellfor determination by the arbitral tribunal, though DAMEPL hadinsisted on not continuing operations of the Line citing safetyconcerns arising from the defects in its structural integrity. It isBno doubt true that the Commissioner is the competent authorityto determine the safety of the AMEL. It is also beyond cavil thatthe Commissioner would not have granted permission to restartthe AMEL unless it was of the opinion that restarting ofcommercial operations would not pose a danger to the public.CHowever, the certificate by itself cannot come to the rescue ofDMRC to show that the defects pointed out by DAMEPL werecured within the expiry of 90 days from 09.07.2012. The findingof the arbitral tribunal that the defects were not cured is one offact which cannot be interfered with by the court. [Para 33][1014-C-F]D

2.3 The CMRS certificate was relied upon by DMRC beforethe arbitral tribunal as a strong piece of evidence to support itscase that the defects were cured. DMRC did not contend beforethe tribunal that the CMRS certificate is binding and is conclusiveof the defects being cured/effective steps taken to cure theEdefects. The conditions imposed by the Commissioner relatingto speed restrictions and close monitoring of the Line, accordingto the tribunal, support the contention of DAMEPL that thedefects were not fully cured. The issue before the tribunal waswhether the defects were cured within 90 days from the noticeFdated 09.07.2012 and the certificate dated 18.01.2013 is relevantfor deciding the said issue. The High Court’s view that the issueof the CMRS certificate being dealt with separately has a bearingon the tribunal’s determination of the validity of the terminationnotice cannot be accepted. The members of the arbitral tribunal,nominated in accordance with the agreed procedure between theGparties, are engineers and their award is not meant to bescrutinised in the same manner as one prepared by legally trainedminds. In any event, it cannot be said that the view of the tribunalis perverse. Therefore, the High Court’s opinion that the award H

of the tribunal on the legality of the termination notice is vitiateddue to the vice of perversity cannot be accepted. [Para 34][1014-F-H; 1015-A-B]

2.4 The Division Bench referred to various factors leadingto the termination notice, to conclude that the award shocks theconscience of the court. The discussion in the impugnedjudgement amounts to appreciation or re- appreciation of the factswhich is not permissible under Section 34 of the 1996 Act. TheDivision Bench further held that the fact of the AMEL beingoperated without any adverse event for a period of more thanfour years since the date of issuance of the CMRS certificate,was not given due importance by the arbitral tribunal. As thearbitrator is the sole judge of the quality as well as the quantity ofthe evidence, the task of being a judge on the evidence beforethe tribunal does not fall upon the court in exercise of itsjurisdiction under Section 34. On the basis of the issues submittedby the parties, the arbitral tribunal framed issues for considerationand answered the said issues. Subsequent events need not betaken into account. [Para 35][1015-B-E]

2.5 The conclusion of the Division Bench that the award ofthe arbitral tribunal suffers from patent illegality and shocks theconscience of the court is held to be erroneous. [Para 36][1015-E-F]

2.6 The tribunal focused on two components of TerminationPayment, which are ‘Debt Due’, and 130 % of the ‘AdjustedEquity’. The tribunal was correct in holding that the amount ofRs.611.95 crore advanced by DAMEPL’s promoter would qualifyfor inclusion under the definition of ‘Equity’ on a plain reading ofthe said definition. Construction of the contract is within thejurisdiction of the tribunal and merely because another view ispossible, the court cannot interfere with such construction andsubstitute its own view. [Para 39][1018-F-G; 1019-A-B]

2.7 The opinion of the tribunal is that the amount ofRs.611.95 crore was an amount advanced by DAMEPL’s promoterwhich was not disputed by DMRC. The submission advanced byDMRC, that it was only the equity share capital as is understoodwithin the meaning of the Companies Act, 2013 which is liable tobe paid by DMRC under Article 29.5.2, was rejected by the AB

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ATtribunal. The view taken by the tribunal that the amountcontributed by a member of the consortium or by shareholdersto meet the ‘Concessionaire’s Capital Costs’ in any form,including where such funds are classified as subordinated debt,cannot be treated as ‘Subordinated Debt’ in terms of its definitionin the Concession Agreement, is a reasonable and possible view.BOn the other hand, the Division Bench of the High Court reliedupon the board resolution dated 16.03.2011 and held that thetribunal ought not to have treated the said amount as ‘Equity’after the share application money was converted intosubordinated debt. After a detailed consideration of the relevantCclauses of the Concession Agreement, the High Court held thatthe tribunal had committed a serious error in its tabulation of‘Adjusted Equity’ by completely ignoring the evidence on record.[Para 41][1019-G-H; 1020-A-C]

2.8 Even assuming the view taken by the High Court is notDincorrect, a possible view expressed by the tribunal onconstruction of the terms of the Concession Agreement cannotbe substituted by the High Court. This view is in line with theunderstanding of Section 28(3) of the 1996 Act as a ground forsetting aside the arbitral award. No case has been made out bythe High Court to establish violation of Section 28(3). HavingEcarefully examined the Concession Agreement, the findingsrecorded by the tribunal and the findings recorded by the DivisionBench, it cannot be held that the opinion of the tribunal oninclusion of Rs.611.95 crore under ‘Equity’ is a perverse view. Itcannot be said that the tribunal did not consider the evidence onFrecord, especially the resolution dated 16.03.2011 passed byDAMEPL’s board of directors. Also, there is no fault with theapproach of the tribunal that the understanding of the term equityas per the Companies Act, 2013 is not relevant for the purposesof determining ‘Adjusted Equity’ in light of the express definitionof the term in the Concession Agreement. The support placedGby the Division Bench on the interpretation of Section 28(1)(a) ofthe 1996 Act as adopted in Associate Builders’s case is, therefore,no longer good law. The findings of the High Court are set asideand the award by the tribunal in respect of the computation ofTermination Payment under Clause 29.5.2 is upheld.[Para 42][1020-C-H]H

Associate Builders v. Delhi Development Authority(2015) 3 SCC 49 : [2014] 13 SCR 895 – held not goodlaw.

Ssangyong Engineering and Construction CompanyLimited v. National Highways Authority of India(NHAI)(2019) 15 SCC 131 : [2019] 7 SCR 522 –referred to.

2.9 As regards the ground of challenge in SLP(c) No. 8311of 2019, as the participation of DAMEPL in several meetingsheld after issuance of the termination notice dated 09.07.2012and its decision to continue operating the AMEL was withoutprejudice, the tribunal rejected the submission of DMRC thatthe doctrine of waiver applied and that DAMEPL was estoppedfrom terminating the Concession Agreement after having activelyparticipated in the process of rectifying the defects pointed out.The Division Bench of the High Court approved the said findingon the ground that the decision of the tribunal could not be heldto be flawed within the limited scrutiny afforded to courts underSection 34 of the 1996 Act. The Division Bench of the High Courtrightly refrained from interfering with the findings on waiver bythe tribunal. The prayer for a direction to DAMEPL for specificperformance of its obligations under the Concession Agreementto operate the AMEL was refused by the tribunal. The DivisionBench of the High Court in its judgment observed that the saidfindings had not been challenged before the High Court.Therefore, there is no reason for this Court to adjudicate on thepoint of specific performance of the Concession Agreement.[Para 43, 44][1021-B-E]

2.10 The tribunal awarded interest in accordance with theterms of the Concession Agreement on termination payment.DMRC contended before the High Court that the award in respectof interest had to be set aside on the ground that it would resultin unjust enrichment. After a thorough consideration of Article29.8 and Article 36.2.6.1 of the Concession Agreement, the HighCourt has rightly refused to interfere with the findings by thetribunal relating to interest and there is no cause for interference.The judgment of the Division Bench of the High Court is setaside. [Para 45, 46][1021-E-G]

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AState of Rajasthan v. Puri Construction Co. Ltd. andAnother (1994) 6 SCC 485 : [1994] 3 Suppl. SCR 616– referred to.

CIVIL APPELLATE JURISDICTION : Civil Appeal No.5627of 2021.

From the Judgment and Order dated 15.01.2019 of the High CourtDof Delhi at New Delhi in FAO (OS) (COMM) No.58 of 2018.

With

Civil Appeal No.5628 of 2021.

Tushar Mehta, SG, Harish N. Salve, J. J. Bhatt, P. S. Narsimha,EParag Tripathi, Ajit Sinha, Sr. Advs., Ms. Anjali Chandurkar, MaheshAgarwal, Ms. Megha Mehta, Nishant Rao, Biswabara Dash, E. C.Agrawala, Tarun Johri, Advs. for the appearing parties.

The Judgment of the Court was delivered by

L. NAGESWARA RAO, J.F

Leave granted.

1. Whether in exercise of its power under Section 37 of theArbitration and Conciliation Act, 1996 (hereinafter, ‘the 1996 Act’), theDivision Bench of the Delhi High Court was right in interfering with theGaward dated 11.05.2017 passed by the Arbitral Tribunal in favour of theAppellant -Delhi Airport Metro Express Pvt. Ltd. (hereinafter, ‘DAMEPL’or the ‘Concessionaire’), is the question that arises for consideration inthese Appeals.

2. Delhi Metro Rail Corporation Ltd. (hereinafter, ‘DMRC’), aHjoint venture of the Government of India and the Government of National

Capital Territory of Delhi, proposed implementation of the Airport MetroExpress Line project in New Delhi, from New Delhi Railway Station toDwarka Sector 21 via Indira Gandhi International Airport, New Delhi(hereinafter, ‘AMEL’). The approximate length of the project was 22.7kilometers. It was decided to develop the project by engaging aconcessionaire for financing, design, procurement, installation of allsystems (including but not limited to rolling stock, overhead electrification,track, signaling and telecommunication, ventilation and air conditioning,automatic fare collection, baggage check-in and handling, depot and otherfacilities). DMRC had to undertake design and construction of basiccivil structure for the project, which was in the nature of a public privatepartnership.

3. The bid of a consortium comprising Reliance Energy Limited(renamed as Reliance Infrastructure Limited) and M/s Construccionesy Auxiliar de Ferrocarriles, S.A. was accepted by DMRC, by issuing aletter of acceptance on 21.01.2008. Thereafter, on 25.08.2008, aConcession Agreement was entered into between DMRC and DAMEPLfor design, installation, commissioning, operation and maintenance of theAMEL. It was agreed between the parties that all civil works as well asappointment of consultants, land acquisition and other clearances fromthe Government and other authorities have to be obtained by DMRCand the design, supply, installation, testing and commissioning of varioussystems like rolling stock, power supply, overhead equipment, signalling,track system, platform, screen doors, ventilation, architectural finishingetc. were to be provided by DAMEPL. As the work could not becompleted in time, extensions were granted and finally, safety clearanceswere obtained from the Commissioner of Metro Railway Safety(hereinafter, the ‘CMRS’ or ‘Commissioner’) on 10.01.2011. The dateof commercial operation was achieved on 23.02.2011.

4. On 22.03.2012, DAMEPL requested DMRC for a jointinspection of viaduct and its bearings before expiry of the defect liabilityperiod of the civil contractors. Another letter was written by DAMEPLon 23.05.2012, complaining of issues relating to the design and quality inthe installation of viaduct bearings. It was mentioned in the said letterthat there were signs of girders having sunk at some locations as a resultof deformations/cracks. DMRC responded to the said letter of DAMEPLon 08.06.2012 by which DAMEPL was informed that inspections werecarried out at the locations pointed out by DAMEPL and no bearings AB

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Awere found damaged. However, DMRC admitted that grouting materialfilled above/below the bearings was damaged/loosened for which actionwould be taken to repair them on priority. Due to the said defects, DMRCadvised DAMEPL to impose speed restrictions as deemed necessary inthe interest of safety.B5. The Ministry of Urban Development, Government of India B5. The Ministry of Urban Development, Government of Indiaconvened a meeting of all the stakeholders on 02.07.2012. The views ofall the parties relating to the defects were obtained and a Joint InspectionCommittee was formed. An interim report was submitted by the JointInspection Committee after inspection on 4[th]& 5[th] July, 2012.Subsequently, DAMEPL stopped operations of the Line on 08.07.2012.C

6. A notice was issued by DAMEPL on 09.07.2012, asking DMRCto cure the defects in DMRC’s works within a period of 90 days fromthe date of the notice, failing which it shall be treated as a breach havingMaterial Adverse Effect on the Concessionaire under the ConcessionAgreement. In the said notice dated 09.07.2012, ‘a non-exhaustive listDof defects’ was set out by DAMEPL. Thereafter, a number of meetingswere conducted between the parties which were attended by SYSTRA,the original design consultant for the viaduct sections. It appears fromthe record that DMRC had also engaged some other agencies for carryingout the repair work.E

7. DAMEPL issued a notice dated 08.10.2012 terminating theConcession Agreement as, according to it, the defects that were pointedout in the notice dated 09.07.2012 were not cured within a period of 90days, resulting in an Event of Default under the Concession Agreement.DMRC invoked arbitration under Article 36.2 of the ConcessionFAgreement on 23.10.2012. On 22.01.2013, the Line was restarted withreduced speed after a certificate sanctioning resumption was issued bythe Commissioner on 18.01.2013. According to DAMEPL, it agreed tooperate the Line only as an agent in public interest and on instructions ofDMRC, although DAMEPL’s stance was not accepted by DMRC.DAMEPL stopped its operations on 30.06.2013 and handed over theGLine to DMRC on the next day.

8. At this stage, it is relevant to refer to Article 36 of the ConcessionAgreement which refers to dispute resolution. Article 36.2.2, read withArticle 36.2.3, provides that all disputes, whatsoever arising betweenthe parties, out of, touching upon or relating to construction, measuring,H

operation or effect of the Concession Agreement or the breach thereof,shall be settled through arbitration by reference to a sole arbitrator, wherethe total value of claims do not exceed Rs.1,500,000/-. Beyond this limit,the dispute shall be referred to three arbitrators who will be selectedfrom a panel of engineers with requisite qualifications and professionalexperience relevant in the field to which the Concession Agreementrelates. The panel shall be from serving or retired engineers of governmentdepartments or of public sector.

9. The main issue that arose for determination before the ArbitralTribunal constituted under the Concession Agreement is the validity ofthe termination notice dated 08.10.2012. DMRC claimed that thetermination notice issued by DAMEPL is illegal, as DMRC had takenvarious steps honouring its obligations under the Concession Agreement.A direction was sought from the Arbitral Tribunal to DAMEPL to takeover operations of the AMEL under the Concession Agreement, and inthe alternative, to grant compensation of Rs.3,173 crore with interest of18% per annum. Further monetary reliefs were sought by DMRC. Theclaim of compensation sought by DMRC was dependent on thedetermination of the main issue, i.e., the validity of the termination noticedated 08.10.2012.DMRC also raised an issue on the real motive ofDAMEPL to terminate the Concession Agreement. DAMEPL justifiedthe termination as being in conformity with the Concession Agreementand consequently, filed a counter claim seeking an amount of Rs.3,470crore as termination payment along with interest and further amounts asdetailed in the counter claim, on the ground that DMRC did not cure thedefects in the civil structure in terms of the cure notice dated 09.07.2012. As DMRC did not comply with its obligations under Article 29.5.1(i),DAMEPL justified the termination notice dated 08.10.2012 and theconsequent claim of termination payment from DMRC under Article29.5.2.

10. The Arbitral Tribunal formulated the following primary issuesfor consideration in relation to the termination notice dated 08.10.2012: - “i) Were there any defects in the civil structure of the airportmetro line?

(ii) If there were defects, did such defects have a materialadverse effect on the performance of the obligation ofDAMEPL under CA?

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A(iii) If there were defects in the civil structure, which had amaterial adverse effect on the performance of the obligationsunder the CA by DAMEPL, have such defects been cured byDMRC and / or have any effective steps been taken within aperiod of 90 days from the date of notice by DAMEPL to curethe defects by DMRC and thus were DMRC in breach of theBCA as per 29.5.1 (i)?”

11. In assessing whether the defects pointed out by DAMEPLwere cured and/or effective steps to cure them were taken by DMRCwithin the time stipulated in the notice dated 09.07.2012, the ArbitralTribunal undertook an in-depth analysis of the defects in the civil structureCand steps taken for their repair/rectification. Insofar as the existence ofdefects is concerned, the Arbitral Tribunal concluded that there were asmany as 1551 cracks in 367 girders, i.e., 72 % of the girders were affectedby such cracks. Reports of inspections conducted at the behest of DMRC,giving mapping data of the cracks, were relied upon by the Tribunal toDhold that such cracks were spread in a large number of girders. TheTribunal referred to the meeting dated 02.07.2012 conducted by theMinistry of Urban Development during which the Managing Director,DMRC expressed his views that the cracks occurred during “lowering”and not during operations. The evidence of Mr. Muls of Systra wasconsidered by the Arbitral Tribunal to hold that they were not sure of theEcause of the cracks. On account of such large numbers of cracks in thebase slab of the pre-stressed concrete girders in about a year of trainoperation, coupled with unreliable measurement of crack depth and non-serious inspection of the repairs by an agency appointed by DMRC, theArbitral Tribunal was of the opinion that these defects adversely impacted Fthe integrity of the structure. As effective steps were not taken withinthe cure period of 90 days, the Tribunal held that DMRC was in breachof the Concession Agreement, resulting in Material Adverse Effect onthe Concessionaire.

12. As far as twist in the girders were concerned, the ArbitralGTribunal found that there were about 80 girders with twists varyingbetween 10 to 20 mm which had not been rectified and no effectivesteps were taken to cure the defects in such girders. The defects pointedout by DAMEPL regarding gaps between the shear key and the girderbeing more than 25 mm and between 10 mm to 25 mm were not addressedand only gaps below 10 mm were addressed by some grinding, detailedH

methodology for which was not brought out by DMRC in its evidence,as per the findings of the Arbitral Tribunal. Therefore, the Tribunalconcluded that these defects were neither cured nor effective stepstaken by DMRC within the cure period up to 08.10.2012, constituting amaterial breach on the part of DMRC. On the basis of the above findingsand findings in relation to other defects, deficiencies and constraints inthe civil structure of the AMEL which are not referred to herein, theArbitral Tribunal concluded that the defects had not been cured withinthe cure period of 90 days from 09.07.2012 nor had effective steps beentaken to cure such defects. Ergo, the termination notice issued byDAMEPL on 08.10.2012 was valid.

13. Having decided on the validity of the termination notice, theTribunal went on to consider certain legal issues so as to determinequestions around specific performance of the contract, or alternatively,the award of damages and the outcome of the counter claim filed byDAMEPL. One such issue considered by the Arbitral Tribunal waswhether the issue of certificate by the Commissioner on 18.01.2013,giving clearance for resuming operations of the AMEL, showed that thedefects were duly cured. After examining the certificate issued by theCommissioner, the Arbitral Tribunal held that while the Commissionerhad sanctioned resumption of services, certain conditions were imposed,essentially relating to the restriction of speed up to 50 km per hour, whichhad a material bearing on the prime purpose of the AMEL intended toserve as a high-speed connectivity line. Moreover, the Commissionerhimself recognized that the operation of the Line had to be regularlymonitored. The subsequent operation of the Line by DMRC was foundto be not relevant for determining the validity of the termination noticedated 09.07.2012. The Arbitral Tribunal answered this issue in favourof DAMEPL. On consideration of the counter claim of DAMEPL, theprincipal issue that came up before the Arbitral Tribunal was ondetermination of the amount of Termination Payment payable by DMRCunder the Concession Agreement. In this regard, the Tribunal had todetermine the quantum payable under each component of TerminationPayment, one of which was ‘Adjusted Equity’. DAMEPL sought paymentof an amount of Rs.3,470 crore as Termination Payment. In this total, anamount of Rs.685 crore, which had been infused by DAMEPL’s promoter,was factored in by DAMEPL for the purposes of calculating ‘AdjustedEquity’. Relying on the relevant clauses of the Concession Agreement,the Tribunal first sought to determine the portion of funds that would A

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Aqualify as ‘Equity’ under the Concession Agreement, which would thenbe used for arriving at the figure of ‘Adjusted Equity’. Out of Rs.685crore which was sought to be slotted under the head ‘Equity’ byDAMEPL, an amount of Rs.611.95 crore was determined to be ‘Equity’by the Tribunal, on the basis of the evidence produced and the constructionof the relevant provisions of the Concession Agreement. Thereafter, theBTribunal worked out ‘Adjusted Equity’ at Rs.983.02 crore and awardeda total amount of Rs.2782.33 crore, along with further interest, asTermination Payment to be made to DAMEPL.

14. DMRC filed a petition under Section 34 of the 1996 Act forsetting aside the award of the Arbitral Tribunal dated 11.05.2017 in theCDelhi High Court, which was dismissed by the learned Single Judge ofthe High Court by a judgement dated 06.03.2018 observing that groundsfor interference had not been made out by DMRC. The learned SingleJudge held that the findings recorded by the Arbitral Tribunal on facts,law and interpretation of the Concession Agreement were all within theDrealm of the Arbitral Tribunal and they needed no intervention by theCourt exercising its power under Section 34 of the 1996 Act. He wasalso of the view that the Court cannot substitute its view when there aretwo views possible and the view taken by the Arbitral Tribunal is aplausible one.

E15. DMRC filed an appeal under Section 37 of the 1996 Act readwith Section 13 of the Commercial Courts, Commercial Division andCommercial Appellate Division of High Courts Act, 2015 (the title sinceamended to Commercial Courts Act, 2015), challenging the correctnessof the judgment passed by the learned Single Judge on 06.03.2018dismissing the objections filed by DMRC under Section 34 of the 1996FAct. The Division Bench reversed the judgement of the learned SingleJudge and allowed the appeal filed by DMRC. The award passed by theArbitral Tribunal was partly set aside. The parties were left to invokethe arbitration clause for adjudication of the issues that were not decidedby the Division Bench. The judgement of the Division Bench datedG15.01.2019 is assailed in these Appeals.

16. DMRC has also filed SLP (C) No.8311 of 2019 challengingthe correctness of the aforesaid judgement of the Division Bench inrelation to the issues of grant of interest, waiver of the termination noticedue to DAMEPL’s conduct of operating the project for more than fiveHmonths from 22.01.2013, refusal by the Division Bench to grant relief of specific performance of the Concession Agreement and non-considerationof the issue pertaining to the real reason for the termination of theConcession Agreement by DAMEPL.

Reasons given by the Division Bench for setting aside theaward

17. The Division Bench of the High Court held that the award ofthe Arbitral Tribunal had recorded two different termination dates. Asthe Tribunal had based its reasoning on the validity of the terminationnotice on two different dates leading to confusion and ambivalence as tothe termination notice and the date of termination, the award was foundto be suffering from the vices of perversity, irrationality and patentillegality. The High Court observed that in deciding the question on defectsin the civil structure and whether effective steps were taken to cure thedefects, the Arbitral Tribunal had committed serious error by holding,without ‘reason’, that the vital evidence of the sanction granted by theCMRS for resumption of commercial operations of the AMEL and thefact that DMRC had successfully operated the AMEL from 30.06.2013till the date of the award without any adverse incident wereinconsequential. The High Court found fault with the Arbitral Tribunal invirtually negating the certificate issued by the CMRS under the DelhiMetro Railway (Operation and Maintenance) Act, 2002 (hereinafter,‘the Delhi Metro Act’) and held that the cumulative effect of the findingsof the award on this issue ‘shocked the conscience of the court’.

18. On the issue of Adjusted Equity, while considering the approachtaken by the Arbitral Tribunal for computation of the amounts payableunder Article 29.5.2, the High Court was of the opinion that the Tribunal’sreasoning was completely flawed and perverse. The High Court ruledthat the reasoning adopted by the Tribunal was patently illegal and theconclusion reached after doing so, was one which no reasonable personwould have come to. According to the High Court, the treatment ofRs.611.95 crore as ‘Equity’ by the Tribunal, on the ground that such aproject could not have been executed with only Rs.1 lakh as equity fundedby DAMEPL’s promoter (in terms of share capital), was based on anassumption that the debt-to-equity ratio is commonly 60:40 or 80:20,contrary to the evidence on record. This was held to be an egregiousmistake committed by the Tribunal. The High Court also found faultwith the award which ignored the resolution passed by the board ofdirectors of DAMEPL on 16.03.2011, by which the amount of Rs. 611.95

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Acrore was converted to subordinated debt. The High Court held that‘Adjusted Equity’ under the Concession Agreement does not contemplatefunds recognized as subordinated debt to be treated as ‘Equity’. Withrespect to the interpretation of the various provisions of the ConcessionAgreement and the resultant conclusions on ‘Adjusted Equity’, the HighCourt held that the findings of the Tribunal on this issue were in violationBof Sections 28(1)(a) and 28(3) of the 1996 Act, as elaborated in AssociateBuilders v.Delhi Development Authority[1], as contractual provisionshad been interpreted in a way no fair-minded and reasonable personwould.

19. In light of the reasons mentioned, the High Court set aside theCconclusions of the Arbitral Tribunal on the validity of the terminationnotice and that Rs.611.95 crore was ‘Equity’ for the purpose of Article29.5.2 of the Concession Agreement. Consequently, the award ofRs.2,782.33 crore to DAMEPL was set aside. In view of the abovefindings, the High Court considered the direction for payment of interest

Dto have become infructuous. The High Court felt that it would beinappropriate to hear the parties on the issue of restitution at that stageand granted liberty to the parties to move appropriate applications underthe 1996 Act to seek remedies available to them.

Contours of the Court’s power to review arbitral awardsE20. The 1996 Act was enacted to consolidate and amend the law

20. The 1996 Act was enacted to consolidate and amend the lawrelating to domestic arbitration, international commercial arbitration andenforcement of foreign arbitral awards and also to define the law relatingto conciliation and for matters connected therewith, by taking into accountthe United Nations Commission on International Trade LawF(UNCITRAL) Model Law on International Commercial Arbitration andthe UNCITRAL Conciliation Rules. One of the principal objectives ofthe 1996 Act is to minimize the supervisory role of courts in the arbitralprocess. With respect to Part I of the 1996 Act, Section 5 imposes a baron intervention by a judicial authority except where provided for,notwithstanding anything contained in any other law for the time being inGforce. An application for setting aside an arbitral award can only bemade in accordance with provisions of Section 34 of the 1996 Act.Relevant provisions of Section 34 (as they were prior to the Arbitrationand Conciliation (Amendment) Act, 2015) read as under:- “34. Application for setting aside arbitral award. — (1)Recourse to a Court against an arbitral award may be madeonly by an application for setting aside such award inaccordance with sub-section (2) and sub-section (3).

(2) An arbitral award may be set aside by the Court only if—

(a) the party making the application furnishes proof that—

(i) a party was under some incapacity, or

(ii) the arbitration agreement is not valid under the lawto which the parties have subjected it or, failing anyindication thereon, under the law for the time being inforce; or

(iii) the party making the application was not givenproper notice of the appointment of an arbitrator or ofthe arbitral proceedings or was otherwise unable topresent his case; or

(iv) the arbitral award deals with a dispute notcontemplated by or not falling within the terms of thesubmission to arbitration, or it contains decisions onmatters beyond the scope of the submission toarbitration:

Provided that, if the decisions on matterssubmitted to arbitration can be separated from thosenot so submitted, only that part of the arbitral awardwhich contains decisions on matters not submitted toarbitration may be set aside; or

(v) the composition of the arbitral tribunal or thearbitral procedure was not in accordance with theagreement of the parties, unless such agreement was inconflict with a provision of this Part from which theparties cannot derogate, or, failing such agreement, wasnot in accordance with this Part; or (b) the Court finds that—

(i) the subject-matter of the dispute is not capable ofsettlement by arbitration under the law for the time beingin force, or A

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A(ii) the arbitral award is in conflict with the public policyof India.

Explanation.—Without prejudice to the generality ofsub-clause (ii), it is hereby declared, for the avoidanceof any doubt, that an award is in conflict with the publicBpolicy of India if the making of the award was inducedor affected by fraud or corruption or was in violationof section 75 or section 81.

”…

21. An amendment was made to Section 34 of the 1996 Act byCthe Arbitration and Conciliation (Amendment) Act, 2015 (hereinafter,‘the 2015 Amendment Act’). A perusal of the statement of objects andreasons of the 2015 Amendment Act would disclose that the amendmentto the 1996 Act became necessary in view of the interpretation of theprovisions of the 1996 Act by courts in certain cases which had resultedDin delay of disposal of arbitration proceedings and increase in interferenceby courts in arbitration matters, which had the tendency to defeat theobject of the 1996 Act. Initially, the matter was referred to the LawCommission of India to review the shortcomings in the 1996 Act in detail.The Law Commission of India submitted its 176[th] Report, recommendingvarious amendments to the 1996 Act. However, the Justice SarafECommittee on Arbitration constituted by the Government, was of theview that the proposed amendments gave room for substantial interventionby the court and were also contentious. Thereafter, on reference, theLaw Commission undertook a comprehensive study of the amendmentsproposed by the Government, keeping in mind the views of the JusticeFSaraf Committee and other stakeholders. The 246[th] Report of the LawCommission was submitted on 05.08.2014. Acting on therecommendations made by the Law Commission in its 246[th] Report,amendments by way of the 2015 Amendment Act were made to severalprovisions of the 1996 Act, including Section 34. The amended Section34 reads as under: -G

“34. Application for setting aside arbitral award. — (1)Recourse to a Court against an arbitral award may be madeonly by an application for setting aside such award inaccordance with sub-section (2) and sub-section (3).

(2) An arbitral award may be set aside by the Court only if—H

(a) the party making the application furnishes proof that—

(i) a party was under some incapacity, or

(ii) the arbitration agreement is not valid under the lawto which the parties have subjected it or, failing anyindication thereon, under the law for the time being inforce; or

(iii) the party making the application was not givenproper notice of the appointment of an arbitrator or ofthe arbitral proceedings or was otherwise unable topresent his case; or

(iv) the arbitral award deals with a dispute notcontemplated by or not falling within the terms of thesubmission to arbitration, or it contains decisions onmatters beyond the scope of the submission toarbitration:

Provided that, if the decisions on matterssubmitted to arbitration can be separated from thosenot so submitted, only that part of the arbitral awardwhich contains decisions on matters not submitted toarbitration may be set aside; or

(v) the composition of the arbitral tribunal or thearbitral procedure was not in accordance with theagreement of the parties, unless such agreement was inconflict with a provision of this Part from which theparties cannot derogate, or, failing such agreement, wasnot in accordance with this Part; or (b) the Court finds that—

(i) the subject-matter of the dispute is not capable ofsettlement by arbitration under the law for the time beingin force, or

(ii) the arbitral award is in conflict with the public policyof India.

Explanation 1. —For the avoidance of any doubt, it is clarifiedthat an award is in conflict with the public policy of India,only if,—

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(i) the making of the award was induced or affected byfraud or corruption or was in violation of section 75 orsection 81; or A

(ii) it is in contravention with the fundamental policy ofIndian law; or

(iii) it is in conflict with the most basic notions of moralityor justice.

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Explanation 2. —For the avoidance of doubt, the test as towhether there is a contravention with the fundamental policyof Indian law shall not entail a review on the merits of thedispute.

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(2-A) An arbitral award arising out of arbitrations other thaninternational commercial arbitrations, may also be set asideby the Court, if the Court finds that the award is vitiated bypatent illegality appearing on the face of the award:

Provided that an award shall not be set aside merely onDthe ground of an erroneous application of the law or by re-appreciation of evidence.

”…

22. A cumulative reading of the UNCITRAL Model Law andRules, the legislative intent with which the 1996 Act is made, Section 5Eand Section 34 of the 1996 Act would make it clear that judicialinterference with the arbitral awards is limited to the grounds in Section34. While deciding applications filed under Section 34 of the Act, courtsare mandated to strictly act in accordance with and within the confinesof Section 34, refraining from appreciation or re-appreciation of mattersFof fact as well as law. (See: Uttarakhand Purv Sainik Kalyan NigamLimited. v. Northern Coal Field Limited.[2],Bhaven ConstructionThrough Authorised Signatory Premjibhai K. Shah v. ExecutiveEngineer Sardar Sarovar Narmada Nigam Ltd. andAnother[3]andRashtriya Ispat Nigam Limited v. Dewan Chand RamSaran[4]).G

23. For a better understanding of the role ascribed to courts inreviewing arbitral awards while considering applications filed under 2 (2020) 2 SCC 4553 2021 SCC OnLine SC 84 (2012) 5 SCC 306H

Section 34 of the 1996 Act, it would be relevant to refer to a judgment ofthis Court in Ssangyong Engineering and Construction CompanyLimited v. National Highways Authority of India (NHAI)[5 ]whereinR.F. Nariman, J. has in clear terms delineated the limited area for judicialinterference, taking into account the amendments brought about by the2015 Amendment Act. The relevant passages of the judgment inSsangyong (supra) are noted as under: - “34. What is clear, therefore, is that the expression “publicpolicy of India”, whether contained in Section 34 or in Section48, would now mean the “fundamental policy of Indian law”as explained in paras 18 and 27 of AssociateBuilders [Associate Builders v. DDA, (2015) 3 SCC 49: (2015)2 SCC (Civ) 204] i.e. the fundamental policy of Indian lawwould be relegated to “Renusagar” understanding of thisexpression. This would necessarily mean that WesternGeco [ONGC v. Western Geco International Ltd., (2014) 9SCC 263 : (2014) 5 SCC (Civ) 12] expansion has been doneaway with. In short, Western Geco [ONGC v. Western GecoInternational Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ)12] ,as explained in paras 28 and 29 of AssociateBuilders [Associate Builders v. DDA, (2015) 3 SCC 49 :(2015) 2 SCC (Civ) 204], would no longer obtain, as underthe guise of interfering with an award on the ground that thearbitrator has not adopted a judicial approach, the Court’sintervention would be on the merits of the award, which cannotbe permitted post amendment. However, insofar as principlesof natural justice are concerned, as contained in Sections 18and 34(2)(a)(iii) of the 1996 Act, these continue to be groundsof challenge of an award, as is contained in para 30of Associate Builders [Associate Builders v. DDA, (2015) 3SCC 49 : (2015) 2 SCC (Civ) 204] .

35. It is important to notice that the ground for interferenceinsofar as it concerns “interest of India” has since beendeleted, and therefore, no longer obtains. Equally, the groundfor interference on the basis that the award is in conflict withjustice or morality is now to be understood as a conflict withthe “most basic notions of morality or justice”. This again AB

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would be in line with paras 36 to 39 of AssociateBuilders [Associate Builders v. DDA, (2015) 3 SCC 49 :(2015) 2 SCC (Civ) 204] , as it is only such arbitral awardsthat shock the conscience of the court that can be set asideon this ground.

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36. Thus, it is clear that public policy of India is nowconstricted to mean firstly, that a domestic award is contraryto the fundamental policy of Indian law, as understood inparas 18 and 27 of Associate Builders [AssociateBuilders v. DDA, (2015) 3 SCC 49: (2015) 2 SCC (Civ) 204],or secondly, that such award is against basic notions of justiceor morality as understood in paras 36 to 39 of AssociateBuilders [Associate Builders v. DDA, (2015) 3 SCC 49 :(2015) 2 SCC (Civ) 204] . Explanation 2 to Section 34(2)(b)(ii)and Explanation 2 to Section 48(2)(b)(ii) was added by theAmendment Act only so that Western Geco [ONGC v. WesternGeco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC(Civ) 12] ,as understood in Associate Builders [AssociateBuilders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204],and paras 28 and 29 in particular, is now done away with.

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37. Insofar as domestic awards made in India are concerned,Ean additional ground is now available under sub-section (2-A), added by the Amendment Act, 2015, to Section 34. Here,there must be patent illegality appearing on the face of theaward, which refers to such illegality as goes to the root ofthe matter but which does not amount to mere erroneousapplication of the law. In short, what is not subsumed withinF“the fundamental policy of Indian law”, namely, thecontravention of a statute not linked to public policy or publicinterest, cannot be brought in by the backdoor when it comesto setting aside an award on the ground of patent illegality.

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38. Secondly, it is also made clear that reappreciation ofevidence, which is what an appellate court is permitted to do,cannot be permitted under the ground of patent illegalityappearing on the face of the award.

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39. To elucidate, para 42.1 of Associate Builders [AssociateBuilders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204], H

namely, a mere contravention of the substantive law of India,by itself, is no longer a ground available to set aside anarbitral award. Para 42.2 of Associate Builders [AssociateBuilders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204],however, would remain, for if an arbitrator gives no reasonsfor an award and contravenes Section 31(3) of the 1996 Act,that would certainly amount to a patent illegality on the faceof the award.

40. The change made in Section 28(3) by the Amendment Actreally follows what is stated in paras 42.3 to 45 in AssociateBuilders [Associate Builders v. DDA, (2015) 3 SCC 49 :(2015) 2 SCC (Civ) 204] , namely, that the construction ofthe terms of a contract is primarily for an arbitrator to decide,unless the arbitrator construes the contract in a manner thatno fair-minded or reasonable person would; in short, thatthe arbitrator’s view is not even a possible view to take. Also,if the arbitrator wanders outside the contract and deals withmatters not allotted to him, he commits an error of jurisdiction.This ground of challenge will now fall within the new groundadded under Section 34(2-A).

41. What is important to note is that a decision which isperverse, as understood in paras 31 and 32 of AssociateBuilders [Associate Builders v. DDA, (2015) 3 SCC 49 :(2015) 2 SCC (Civ) 204] , while no longer being a groundfor challenge under “public policy of India”, would certainlyamount to a patent illegality appearing on the face of theaward. Thus, a finding based on no evidence at all or anaward which ignores vital evidence in arriving at its decisionwould be perverse and liable to be set aside on the ground ofpatent illegality. Additionally, a finding based on documentstaken behind the back of the parties by the arbitrator wouldalso qualify as a decision based on no evidence inasmuch assuch decision is not based on evidence led by the parties,and therefore, would also have to be characterised asperverse.”

24. This Court has in several other judgments interpreted Section34 of the 1996 Act to stress on the restraint to be shown by courts whileexamining the validity of the arbitral awards. The limited grounds available A

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Ato courts for annulment of arbitral awards are well known to legallytrained minds. However, the difficulty arises in applying the well-established principles for interference to the facts of each case thatcome up before the courts. There is a disturbing tendency of courtssetting aside arbitral awards, after dissecting and reassessing factualaspects of the cases to come to a conclusion that the award needsBintervention and thereafter, dubbing the award to be vitiated by eitherperversity or patent illegality, apart from the other grounds available forannulment of the award. This approach would lead to corrosion of theobject of the 1996 Act and the endeavours made to preserve this object,which is minimal judicial interference with arbitral awards. That apart,Cseveral judicial pronouncements of this Court would become a deadletter if arbitral awards are set aside by categorising them as perverseor patently illegal without appreciating the contours of the saidexpressions.

25. Patent illegality should be illegality which goes to the root ofDthe matter. In other words, every error of law committed by the ArbitralTribunal would not fall within the expression ‘patent illegality’. Likewise,erroneous application of law cannot be categorised as patent illegality.In addition, contravention of law not linked to public policy or publicinterest is beyond the scope of the expression ‘patent illegality’. What isprohibited is for courts to re-appreciate evidence to conclude that theEaward suffers from patent illegality appearing on the face of the award,as courts do not sit in appeal against the arbitral award. The permissiblegrounds for interference with a domestic award under Section 34(2-A)on the ground of patent illegality is when the arbitrator takes a viewwhich is not even a possible one, or interprets a clause in the contract inFsuch a manner which no fair-minded or reasonable person would, or ifthe arbitrator commits an error of jurisdiction by wandering outside thecontract and dealing with matters not allotted to them. An arbitral awardstating no reasons for its findings would make itself susceptible tochallenge on this account. The conclusions of the arbitrator which are based on no evidence or have been arrived at by ignoring vital evidenceGare perverse and can be set aside on the ground of patent illegality. Also,consideration of documents which are not supplied to the other party isa facet of perversity falling within the expression ‘patent illegality’.

26. Section 34 (2) (b) refers to the other grounds on which a courtcan set aside an arbitral award. If a dispute which is not capable ofHsettlement by arbitration is the subject-matter of the award or if the

award is in conflict with public policy of India, the award is liable to beset aside. Explanation (1), amended by the 2015 Amendment Act,clarified the expression ‘public policy of India’ and its connotations forthe purposes of reviewing arbitral awards. It has been made clear thatan award would be in conflict with public policy of India only when it isinduced or affected by fraud or corruption or is in violation of Section 75or Section 81 of the 1996 Act, if it is in contravention with the fundamentalpolicy of Indian law or if it is in conflict with the most basic notions ofmorality or justice. In Ssangyong (supra), this Court held that the meaningof the expression ‘fundamental policy of Indian law’ would be inaccordance with the understanding of this Court in Renusagar PowerCo. Ltd. v. General Electric Co.[6 ]In Renusagar (supra), this Courtobserved that violation of the Foreign Exchange Regulation Act, 1973, astatute enacted for the ‘national economic interest’, and disregardingthe superior courts in India would be antithetical to the fundamentalpolicy of Indian law. Contravention of a statute not linked to public policyor public interest cannot be a ground to set at naught an arbitral awardas being discordant with the fundamental policy of Indian law and neithercan it be brought within the confines of ‘patent illegality’ as discussedabove. In other words, contravention of a statute only if it is linked topublic policy or public interest is cause for setting aside the award asbeing at odds with the fundamental policy of Indian law. If an arbitralaward shocks the conscience of the court, it can be set aside as being inconflict with the most basic notions of justice. The ground of morality inthis context has been interpreted by this Court to encompass awardsinvolving elements of sexual morality, such as prostitution, or awardsseeking to validate agreements which are not illegal but would not beenforced given the prevailing mores of the day.[7]

27. In light of the principles elucidated herein for interferencewith an arbitral award by a court in exercise of its jurisdiction underSection 34 of the 1996 Act, we proceed to consider the questions thatarise in these Appeals as to whether the Division Bench of the HighCourt was right in setting aside the award of the Arbitral Tribunal dated11.05.2017.

Validity of the termination notice and consequences of theCMRS sanction 6 1994 Supp (1) SCC 6447 Ssangyong (supra)

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A28. Mr. Harish Salve, learned Senior Counsel appearing for theAppellant (DAMEPL), submitted that the High Court committed an errorin setting aside the award of the Arbitral Tribunal by deviating from thewell-settled principles for interference under Sections 34 and 37 of the1996 Act. The findings recorded by the Arbitral Tribunal in relation tothe existence of defects in the civil structure and failure on the part ofBDMRC in curing those defects/not taking effective steps to cure thedefects are findings of fact which cannot be made subject to review bythe court exercising its jurisdiction under Section 34. He asserted thatinterpretation of the provisions of the Concession Agreement is withinthe domain of the Arbitral Tribunal and even if such interpretation is notCthe most accurate interpretation in the opinion of the court, the awardcannot be set aside if the Arbitral Tribunal has taken a possible view. Hecontended that the certificate issued by the CMRS, which was reliedupon by DMRC, was considered by the Tribunal to rightly conclude thatthe conditions imposed for restarting the AMEL showed that the defectswere not cured. He further submitted that the cure notice was issued onD09.07.2012 demanding the rectification of defects within a period of 90days from the date of the notice, as per the Concession Agreement.After the expiry of 90 days, the termination notice dated 08.10.2012 hadbeen issued. He stated that there cannot be any doubt that the defectshad to be cured within 90 days from the date of the cure notice. HeEemphasized that the observations of the High Court as regards confusionin the mind of the Arbitral Tribunal regarding the date of the terminationnotice are unfounded. The relevant portions of the award were shownto the Court to argue that the Arbitral Tribunal was clear in its mind thatthe defects had to be cured within 90 days from the date of cure noticedated 09.07.2012. On the defects not being cured within the 90-dayFperiod, the termination notice was issued on 08.10.2012, with the effectivedate of termination as 07.01.2013. The further submission made on behalfof DAMEPL is that the subsequent successful operation of the AMELfor nearly four years is not relevant for adjudication of the disputesbetween the parties by the Arbitral Tribunal. Finally, according to Mr.GSalve, the High Court committed a palpable error in setting aside theaward.

29. Mr. P.S. Narasimha and Mr. Parag Tripathi, learned SeniorCounsel appearing for DMRC, on the other hand, supported the judgmentof the Division Bench of the High Court by arguing that the award isHcontrary to public policy. Mr. Narasimha relied upon the Delhi Metro

Act and the Rules made thereunder to submit that the CMRS is the soleauthority to determine the safety of the Metro Railway and the certificateissued by the Commissioner on 18.01.2013 is conclusive proof of thefact that the defects pointed out by DAMEPL had been rectified. It wascontended on behalf of DMRC that the period for curing the defects didnot lapse on expiry of 90 days from the initial notice dated 09.07.2012but extended for another 90 days from the termination notice dated08.10.2012. According to the Respondent, a serious error was committedby the Arbitral Tribunal in its interpretation of Article 29.5.1 of theConcession Agreement. Abundant material placed by DMRC to showeffective steps were taken to cure the defects was not considered bythe Arbitral Tribunal. The Commissioner in exercise of his powersconferred by the Delhi Metro Act permitted the opening of the AMELon 18.01.2013 after considering all safety aspects and the AMEL hasbeen in operation since then without any adverse event. The subsequentsmooth functioning of the AMEL is a relevant consideration which wasignored by the Arbitral Tribunal. DAMEPL’s participation in severalmeetings that were conducted which led to inspections and steps takento address the defects as well as the AMEL being run by DAMEPLfrom 22.01.2013 to 30.06.2013 would show that even DAMEPL wasaware that effective steps had been taken to cure the defects.

30. Termination by DAMEPL for DMRC Event of Default isdealt with in Article 29.5.1 which reads as under: - “29.5 Termination for DMRC Event of Default 29.5.1 The Concessionaire may after giving 90 (ninety) daysnotice in writing to DMRC terminate this Agreement upon theoccurrence and continuation of any of the following events(each a “DMRC Event of Default”), unless any such DMRCEvent of Default has occurred as a result of ConcessionaireEvent of Default or due to a Force Majeure Event.

(i) DMRC is in breach of this Agreement and such breachhas a Material Adverse Effect on the Concessionaireand DMRC has failed to cure such breach or takeeffective steps for curing such breach within 90 (ninety)days of receipt of notice in this behalf from theConcessionaire; A

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A(ii)DMRC repudiates this Agreement or otherwise evidencesan irrevocable intention not to be bound by thisAgreement;

(iii) GoI or GNCTD or any Governmental Agency have byan act of commission or omission created circumstancesBthat have a Material Adverse Effect on the performanceof its obligations by the Concessionaire and have failedto cure the same within 90 (ninety) days of receipt ofnotice by DMRC in this behalf from the Concessionaire;

(iv) DMRC has delayed any payment that has fallen dueCunder this Agreement if such delay exceeds 90 (ninety)days.”

31. By referring to certain paragraphs of the award, the DivisionBench of the High Court held that there was confusion in the mind ofthe Arbitral Tribunal relating to the actual date of termination, whichDwould have a material bearing on the exegesis of Article 29.5.1. Theconfusion around the date of termination is highlighted by the High Courtby referring to the award of the Arbitral Tribunal in which it was heldthat the defects were not cured within the 90-day period from the dateof the cure notice dated 09.07.2012. However, in paragraphs 128, 130and 131, the Arbitral Tribunal, while considering the counter claim, referredEto 07.01.2013 as the date of termination of the Concession Agreement.It is clear from a careful examination of the award that the ArbitralTribunal had in precise terms held that the defects had to be cured within90 days from the date of the cure notice dated 09.07.2012. Further, theArbitral Tribunal held that the termination notice dated 08.10.2012 wasFissued as defects were not cured. The Tribunal expressed its view thatconsequently, the effective date of termination was 07.01.2013, which is90 days from the termination notice. As there is no ambiguity in thefindings of the Arbitral Tribunal regarding the time given for curing thedefects and the effective date of termination of the ConcessionAgreement, we are not in agreement with the findings of the DivisionGBench that there is an ambivalence in the award concerning the date oftermination, having a bearing on the final outcome of the award. Theancillary issue that arises for consideration is whether the period forcuring the defects is 180 days or 90 days under Article 29.5.1 of theConcession Agreement. The Arbitral Tribunal in its award has clearlyHheld that DMRC failed to cure the defects before the expiry of 90 days from the initial notice laying down the non-exhaustive list of defectsissued on 09.07.2012. The said conclusion is the outcome of interpretationof Article 29.5.1 of the Concession Agreement by the Tribunal. Anattempt was made by the learned Senior Counsel appearing for theRespondent to impress upon this Court that as the termination noticewould become effective only after 90 days from the date of its issue,i.e., 08.10.2012, DMRC could avail this period as well to address thedefects and if the defects stood cured or effective steps were takenwithin this additional 90-day period, the termination notice became defunctand should not be effectuated. Construction of a provision of theConcession Agreement is within the domain of the Arbitral Tribunal.The view taken by the Arbitral Tribunal that the defects have to becured within 90 days from the date of the cure notice, failing whichDAMEPL is entitled to terminate the Concession Agreement, is a possibleinterpretation of Article 29.5.1. We refuse to interfere with the findingsof the Arbitral Tribunal on this point, even assuming a different view canbe taken on a reading of the said Article.

32. The High Court was of the view that the Tribunal committeda grave error in ignoring the CMRS certificate, as the Tribunal lost sightof the binding nature of the certificate. According to the Division Bench,the Arbitral Tribunal went wrong in considering the issue of the CMRScertificate as a separate issue, distinct from the questions pertaining tothe termination of the Concession Agreement. The Delhi Metro Actwas promulgated for the operation, maintenance and regulation of theworking of the metro railway in the National Capital Region, metropolitancity and metropolitan area. The Commissioner of Metro Railway Safety,appointed under Section 7 of the said Act, has the duty to inspect themetro railway with a view to determine whether it is fit to be opened forthe public carriage of passengers and report thereon to the CentralGovernment as required thereunder. Section 15 of the Delhi Metro Actprovides that before granting sanction to the opening of the metro railwayby the Central Government under Section 14, a report has to be obtainedfrom the Commissioner certifying fitness of the metro railway so as notto be of any danger to the public. Rule 11 of the Opening of Delhi MetroRailway for Public Carriage of Passengers Rules, 2002 imposes a dutyon the Commissioner to inquire into all relevant matters concerning safetybefore coming to a conclusion that the metro railway should be opened.Sanction to open the metro railway line for public carriage of passengersis granted by the Central Government after considering the report of the AB

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ACommissioner on the fitness and safety aspects. The contention on behalfof DMRC is that the certificate issued by the Commissioner is bindingon the Arbitral Tribunal and the Tribunal could not have taken a differentview. In addition thereto, the certificate is conclusive of the fact thatthere were no defects in the civil structure, as otherwise, the Commissionerwould not have permitted the AMEL to be opened. On the basis of theBcertificate issued by the Commissioner, the Respondent has argued thatall defects pointed out by DAMEPL had been cured. In any event,effective steps had been taken to cure the defects by periodical meetingsand inspections being held.

33. The Arbitral Tribunal was called upon by the parties to decideCwhether there was a breach of the Concession Agreement due to thefault of DMRC and whether the defects pointed out by DAMEPL werecured within the period specified in the notice dated 09.07.2012. Safetyof the AMEL was not an issue that fell for determination by the ArbitralTribunal, though DAMEPL had insisted on not continuing operations ofDthe Line citing safety concerns arising from the defects in its structuralintegrity. It is no doubt true that the Commissioner is the competentauthority to determine the safety of the AMEL. It is also beyond cavilthat the Commissioner would not have granted permission to restart theAMEL unless it was of the opinion that restarting of commercial operationswould not pose a danger to the public. However, the certificate by itselfEcannot come to the rescue of DMRC to show that the defects pointedout by DAMEPL were cured within the expiry of 90 days from 09.07.2012.The finding of the Arbitral Tribunal that the defects were not cured isone of fact which cannot be interfered with by the court.

34. The CMRS certificate dated 18.01.2013 was relied upon byFDMRC before the Arbitral Tribunal as a strong piece of evidence tosupport its case that the defects were cured. DMRC did not contendbefore the Tribunal that the CMRS certificate is binding and is conclusiveof the defects being cured/effective steps taken to cure the defects.The conditions imposed by the Commissioner relating to speed restrictionsGand close monitoring of the Line, according to the Tribunal, support thecontention of DAMEPL that the defects were not fully cured. The issuebefore the Tribunal was whether the defects were cured within 90 daysfrom the notice dated 09.07.2012 and the certificate dated 18.01.2013 isrelevant for deciding the said issue. We are not in agreement with theHigh Court’s view that the issue of the CMRS certificate being dealtH

with separately has a bearing on the Tribunal’s determination of thevalidity of the termination notice. The members of the Arbitral Tribunal,nominated in accordance with the agreed procedure between the parties,are engineers and their award is not meant to be scrutinised in the samemanner as one prepared by legally trained minds. In any event, it cannotbe said that the view of the Tribunal is perverse. Therefore, we do notconcur with the High Court’s opinion that the award of the Tribunal onthe legality of the termination notice is vitiated due to the vice of perversity.

35. The Division Bench referred to various factors leading to thetermination notice, to conclude that the award shocks the conscience ofthe court. The discussion in paragraph 97 of the impugned judgementamounts to appreciation or re-appreciation of the facts which is notpermissible under Section 34 of the 1996 Act. The Division Bench furtherheld that the fact of the AMEL being operated without any adverseevent for a period of more than four years since the date of issuance ofthe CMRS certificate, was not given due importance by the ArbitralTribunal. As the arbitrator is the sole judge of the quality as well as thequantity of the evidence, the task of being a judge on the evidence beforethe Tribunal does not fall upon the court in exercise of its jurisdictionunder Section 34.[8] On the basis of the issues submitted by the parties,the Arbitral Tribunal framed issues for consideration and answered thesaid issues. Subsequent events need not be taken into account.

36. For the aforementioned reasons, the conclusion of the DivisionBench that the award of the Arbitral Tribunal suffers from patent illegalityand shocks the conscience of the court is held to be erroneous.

Adjusted Equity

37. Article 29.5.2 of the Concession Agreement which deals withTermination Payment is as follows:- “29.5.2 Upon termination by the Concessionaire on accountof DMRC Event of Default, DMRC shall pay to theConcessionaire, by way of Termination Payment, an amountequal to

a) Debt Due;

b) 130 % of the Adjusted Equity;

8 State of Rajasthan v. Puri Construction Co. Ltd. and Another (1994) 6 SCC 485

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Ac) Depreciated Value of the Project Assets, if any, acquiredand installed on the Project after the 10[th] anniversary of theCOD.”

38. It is relevant to note the definitions of ‘Adjusted Equity’,‘Concessionaire’s Capital Costs’, ‘Debt Due’, ‘Equity’, and ‘SubordinateBdebt’ as provided in the Concession Agreement, which read as follows:- “Adjusted Equity” means the Equity funded in Indian Rupeesand adjusted on the first day of the current month (the“Reference Date”), in the manner set forth below, to reflectthe change in its value on account of depreciation andCvariations in WPI, and for any Reference Date occurring:

a)on or before COD, the Adjusted Equity shall be a sumequal to the Equity funded in Indian Rupees andexpended on the Project, revised to the extent of onehalf of the variation in WPI occurring between the firstDday of the month of Appointed Date and the ReferenceDate;

b)from COD and until the 4[th] (fourth) anniversary thereof,an amount equal to the Adjusted Equity as on CODshall be deemed to be the base (the “Base AdjustedEEquity”) and the Adjusted Equity hereunder shall be asum equal to the Base Adjusted Equity, revised at thecommencement of each month following COD to theextent of variation in WPI occurring between COD andthe Reference Date;

c)after the 4[th] (fourth) anniversary of COD, the AdjustedFEquity hereunder shall be a sum equal to the BaseAdjusted Equity, reduced by 0.42% (zero point four twoper cent) (This number shall be substituted in each caseby the product of 100 divided by the number of monthscomprising the Concession Period. For example, theGfigure for a 20 year Concession Period shall be 100/240 = 0.416 rounded off to decimal points i.e. 0.42)thereof at the commencement of each month followingthe 4[th] (fourth) anniversary of the Project CompletionDate and the amount so arrived at shall be revised tothe extent of variation in WPI occurring between CODH

and the Reference Date; and the aforesaid shall apply,mutatis mutandis, to the Equity funded in Indian Rupees.For the avoidance of doubt, the Adjusted Equity shall,in the event of Termination, be computed as on theReference Date immediately preceding the TerminationDate; provided that no reduction in the Base AdjustedEquity shall be made for a period equal to the duration,if any, for which the Concession Period is extended,but the revision on account of WPI shall continue to bemade.”

“Concessionaire’s Capital Costs” means following:

•Prior to COD, the cost of the Concessionaire’s Works asset forth in the Financing Documents plus any furtheradditional capital cost for any Change of Scope instructedsince the finalisation of the Financing Documents; and

• After COD, the actual capital cost of the Concessionaire’sWorks upon Project Completion as certified by the StatutoryAuditors.”

“Debt Due” means the aggregate of the following sumsexpressed in Indian Rupees outstanding on the Transfer Date:

a)the principal amount of the debt provided by the SeniorLenders under the Financing Agreements for financingthe Total Project Cost (the “principal”) but excludingany part of the principal that had fallen due forrepayment two years prior to the Termination Date; b)all accrued interest, financing fees and charges payableunder the Financing Agreements on, or in respect of,the debt referred to in Sub-clause (a) above until theTransfer Date but excluding (i) any interest, fees orcharges that had fallen due one year prior to theTransfer Date, (ii) any penal interest or charges payableunder the Financing Agreements to any Senior Lender,and (iii) any pre-payment chares in relation toaccelerated repayment of debt except where suchcharges have arisen due to Authority Default; and

c)any Subordinated Debt which is included in theFinancial Package and disbursed by lenders forfinancing the Total Project Cost.”

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SUPREME COURT REPORTS

A“Equity” means the sum expressed in Indian Rupeesrepresenting the equity share capital of the Concessionaireand shall include the funds advanced by any Member of theConsortium or by any of its shareholders to the Concessionairefor meeting the equity component of the Concessionaire’sCapital Costs.”B“Subordinated Debt” means the aggregate of the followingsums expressed in Indian Rupees or in the currency of debt,as the case may be, outstanding as on the date of termination:

a)the principal amount of debt provided by lenders or theConcessionaire for meeting the Concessionaire’s CapitalCCost and subordinated to the financial assistanceprovided by the Senior Lenders; and

b)all accrued interest on the debt referred to in Sub-clause(a) above but restricted to the lesser of actual interestrate and a rate equal to 5% (five per cent) above theDBank Rate in case of loans expressed in Indian Rupeesand lesser of the actual interest rate and six-monthLIBOR (London Inter Bank Offer Rate) plus 2% (twoper cent) in case of loans expressed in foreign currency,but does not include any interest that had fallen dueone year prior to the Termination Date;E

sprovided that if all or any part of the SubordinatedDebt is convertible into Equity at the option of thelenders and/ or the Concessionaire, it shall for thepurposes of this Agreement be deemed to beSubordinated Debt even after such conversion and theFprincipal thereof shall be dealt with as if suchconversion had not been undertaken.”

39. The Tribunal focused on two components of TerminationPayment, which are (i) ‘Debt Due’, and (ii) 130 % of the ‘AdjustedEquity’. According to the Appellant, the Division Bench committed anerror in concluding that the expression ‘Adjusted Equity’ in the ConcessionGAgreement should be calculated by taking into account only the sharecapital of DAMEPL. The Appellant contended that the Tribunal hadrightly held that the expression ‘Adjusted Equity’ should include themoney brought in by DAMEPL’s promoter and had fairly concludedthat the amount of Rs.611.95 crore was used as expenses, therebyHqualifying as ‘Concessionaire’s Capital Costs’ under the Concession Agreement. The Tribunal was correct in holding that the amount ofRs.611.95 crore advanced by DAMEPL’s promoter would qualify forinclusion under the definition of ‘Equity’ on a plain reading of the saiddefinition. Construction of the contract is within the jurisdiction of theTribunal and merely because another view is possible, the court cannotinterfere with such construction and substitute its own view.

40. On the other hand, it was contended by DMRC that the amountof Rs.611.95 crore was recorded as ‘share application money’ in thebalance sheet of DAMEPL as on 31.03.2010. However, the said amountwas shown as subordinated debt in the balance sheet as on 31.03.2011.The Respondent referred to the resolution passed by the board of directorsof DAMEPL on 16.03.2011, in which a decision was taken to convertthe share application money into subordinated debt. DMRC urged thatthe conversion of the share application money as subordinated debt wasa calculated move on the part of DAMEPL. If the share applicationmoney had been allowed to retain the nature of equity, DAMEPL wouldhave lost the entire amount in the event of termination of the ConcessionAgreement by DMRC for Concessionaire Event of Default in terms ofArticle 29.1.1. After electing to convert the share application moneyinto subordinated debt, DAMEPL should not be permitted to claim thatfor the purposes of computation of ‘Adjusted Equity’, the said amountbe treated as ‘Equity’. It was further argued on behalf of the Respondentthat no material was produced by DAMEPL to show that the amount ofRs. 611.95 crore was actually used for ‘Concessionaire’s Capital Costs’.Reference was also made to the testimony of one of the witnessesproduced by DAMEPL to contend that the amount of Rs.611.95 crorecannot be treated as equity in accordance with the provisions of theCompanies Act, 2013. DMRC contended that the High Court aptly setaside the findings recorded by the Tribunal in respect of computation of‘Adjusted Equity’.

41. We do not intend to re-examine the entire material on recordfor the purpose of deciding whether the High Court was right in reversingthe conclusion of the Tribunal in relation to computation of the amountunder Article 29.5.2 of the Concession Agreement. The opinion of theTribunal is that the amount of Rs.611.95 crore was an amount advancedby DAMEPL’s promoter which was not disputed by DMRC. Thecontention advanced by DMRC, that it was only the equity share capitalas is understood within the meaning of the Companies Act, 2013 whichis liable to be paid by DMRC under Article 29.5.2, was rejected by the A

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ATribunal. The view taken by the Tribunal that the amount contributed bya member of the consortium or by shareholders to meet the‘Concessionaire’s Capital Costs’ in any form, including where such fundsare classified as subordinated debt, cannot be treated as ‘SubordinatedDebt’ in terms of its definition in the Concession Agreement, is areasonable and possible view. On the other hand, the Division Bench ofBthe High Court relied upon the board resolution dated 16.03.2011 andheld that the Tribunal ought not to have treated the said amount as ‘Equity’after the share application money was converted into subordinated debt.After a detailed consideration of the relevant clauses of the ConcessionAgreement, the High Court held that the Tribunal had committed a seriousCerror in its tabulation of ‘Adjusted Equity’ by completely ignoring theevidence on record.

42. Even assuming the view taken by the High Court is notincorrect, we are afraid that a possible view expressed by the Tribunalon construction of the terms of the Concession Agreement cannot besubstituted by the High Court. This view is in line with the understandingDof Section 28(3) of the 1996 Act as a ground for setting aside the arbitralaward, as held in Associate Builders (supra) and thereafter upheld inSsangyong (supra). No case has been made out by the High Court toestablish violation of Section 28(3). Having carefully examined theConcession Agreement, the findings recorded by the Tribunal and theEfindings recorded by the Division Bench, we are not in a position to holdthat the opinion of the Tribunal on inclusion of Rs.611.95 crore under‘Equity’ is a perverse view. It cannot be said that the Tribunal did notconsider the evidence on record, especially the resolution dated 16.03.2011passed by DAMEPL’s board of directors. We also do not find fault withthe approach of the Tribunal that the understanding of the term equity asFper the Companies Act, 2013 is not relevant for the purposes ofdetermining ‘Adjusted Equity’ in light of the express definition of theterm in the Concession Agreement. As has been held in Ssangyong(supra), mere contravention of substantive law as elucidated in AssociateBuilders (supra) is no longer a ground available to set aside an arbitralGaward. The support placed by the Division Bench on the interpretationof Section 28(1)(a) of the 1996 Act as adopted in Associate Builders(supra) is, therefore, no longer good law. In view of the foregoing, weset aside the findings of the High Court and uphold the award by theTribunal in respect of the computation of Termination Payment underClause 29.5.2.H

Grounds of challenge in SLP (C) No. 8311 of 2019 filed byDMRC

Grounds of challenge in SLP (C) No. 8311 of 2019 filed byDMRC

43. One of the legal issues considered by the Tribunal is whetherDAMEPL waived their rights to terminate after participating in thereconciliation process and after operating the AMEL for more than fivemonths from 22.01.2013 to 30.06.2013. As the participation of DAMEPLin several meetings held after issuance of the termination notice dated09.07.2012 and its decision to continue operating the AMEL was withoutprejudice, the Tribunal rejected the submission of DMRC that the doctrineof waiver applied and that DAMEPL was estopped from terminatingthe Concession Agreement after having actively participated in theprocess of rectifying the defects pointed out. The Division Bench of theHigh Court approved the said finding on the ground that the decision ofthe Tribunal could not be held to be flawed within the limited scrutinyafforded to courts under Section 34 of the 1996 Act. In our view, theDivision Bench of the High Court rightly refrained from interfering withthe findings on waiver by the Tribunal.

44. The prayer for a direction to DAMEPL for specificperformance of its obligations under the Concession Agreement to operatethe AMEL was refused by the Tribunal. The Division Bench of the HighCourt in its judgment observed that the said findings had not beenchallenged before the High Court. Therefore, there is no reason for thisCourt to adjudicate on the point of specific performance of the ConcessionAgreement.

45. The Tribunal awarded interest in accordance with the termsof the Concession Agreement on termination payment. DMRCcontended before the High Court that the award in respect of interesthad to be set aside on the ground that it would result in unjust enrichment.After a thorough consideration of Article 29.8 and Article 36.2.6.1 ofthe Concession Agreement, the High Court has rightly refused to interferewith the findings by the Tribunal relating to interest and we see no causefor interference.

46. For the aforementioned reasons, the Appeal filed by DAMEPLis allowed and the judgment of the Division Bench of the High Court isset aside. The Appeal arising out of SLP(C) No. 8311 of 2019 filed byDMRC is dismissed.

Nidhi Jain

Appeals disposed of.

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