Mumbai High Court Orders Metro Corporation To Pay 250 Crore Award
The Bombay High Court has refused to grant an unconditional stay on the execution of a ₹250.82 crore arbitral award in favour of the L&T-STEC joint venture against the Mumbai Metro Rail Corporation Limited (MMRCL). Justice Somasekhar Sundaresan ruled that MMRCL had not demonstrated sufficient grounds to justify halting payment without deposit.
The court clarified that the award would remain stayed only if MMRCL deposits the full sum along with interest within eight weeks.The dispute arose from a contract awarded in May 2015 for the design and construction of tunnels and stations on the Mumbai Metro Rail project, predating the implementation of the Goods and Services Tax (GST). The three-member arbitral tribunal had directed MMRCL to pay ₹229.56 crore towards GST reimbursement for the period between July 2017 and September 2022, along with ₹21.26 crore for additional works claimed to be beyond the contract scope. A dissenting arbitrator had limited the GST compensation to ₹134.42 crore and identified a minor refundable amount of ₹27 lakh from the contractor.
MMRCL approached the High Court under Section 34 of the Arbitration and Conciliation Act, 1996, challenging the award. The corporation argued that the tribunal erred in calculating GST-related claims and failed to properly consider evidence, including testimony from its engineer-in-charge. Senior officials asserted that the award ignored legal and factual nuances of the contract and overstepped in assessing additional works.Representing the contractor, the L&T-STEC joint venture contended that the contract was a lump-sum arrangement, precluding a segmented analysis of tax components. The methodology for assessing GST impact had already been verified by prior reviews from the Dispute Adjudication Board and project engineers, consistent with tribunal findings.
Justice Sundaresan noted that arbitral awards are accorded high credibility, particularly following a detailed pre-arbitral process. The court found that the objections raised by MMRCL reflected interpretational differences rather than clear illegality. The tribunal had not excluded testimony from the engineer but had reasonably evaluated his expert inferences. Consequently, the court determined that the award was neither patently perverse nor untenable.The ruling underscores the High Court’s commitment to respecting arbitration outcomes while balancing procedural fairness. MMRCL has been directed to deposit the award amount with interest, after which L&T-STEC may withdraw the sum upon furnishing an unconditional bank guarantee.This decision signals the importance of timely compliance in large-scale infrastructure contracts and reinforces accountability mechanisms in public-private urban development projects.
