Mumbai Metropolitan Region Development Authority v. Mumbai Metro One Private Limited

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.

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 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. 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 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 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 Others[1]. He also relies on judgment of the Delhi High Court in Trans Engineers India Private Limited Versus. Otsuka Chemicals (India) Private Limited[2] 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

2024 SCC OnLine Del 4964 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 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.

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-A[2] 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 2010 EWHC 3276 (TCC) 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 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.

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 Singh[5] 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

RSA No. 439 of 1986(O&M) decided on 14 January 2014 1966 SCC OnLine SC 255 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 subcontractors 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/subcontractors 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 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 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 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 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 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.

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

Balasamy Versus ISG Novasoft Technologies Ltd.[9] and of this Court in Hindustan Petroleum Corporation Limited Versus G. R. Engineering 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. 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. 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

2023 SCC OnLine Del 4039 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 JV17. 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.. 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 COMMERCIAL ARBITRATION PETITION (LODG.) NO. 28685 OF 2024 decided on 19 January 2026 2023 SCC OnLine SC 1366 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.

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

COMMERCIAL ARBITRATION PETITION NO. 247 OF 2024 decided on 19 November 2025 1965 SCC Online Guj 50 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 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 Arbitration Petition NO.375 OF 2024 decided on 9 December 2025. 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 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 CARBP (L) NO.34791 OF 2024 decided on 13 January 2026 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 Gujarat25 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 CARBP NO. 439 OF 2024 decided on 25 November 2025.

1977 (3) SCC 590 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.

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 CARBP NO. 788 OF 2024 decided on 3 December 2025 ARBITRATION PETITION NO. 579 OF 2024 decided on 19 December 2025.

CARBP No. 311 OF 2024. Decided on 1 December 2025 CARBP (L)No.33165 OF 2024 decided on 5 December 2025 2023 SCC OnLine Del 8044 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 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.

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 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 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 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 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 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 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 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. 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.

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 "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 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 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.

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 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 S[2]). Vide paragraphs 10, 18 and 22 of Schedule-S the duties and responsibilities of IE included:

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:-

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. 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 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, 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 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 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.

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 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.

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 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 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: 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 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

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 Corporation38 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

2023 SCC Online Del 8044 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.

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 subheads 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: No. Particulars Amount Amounts/ relief awarded 6(i)

I. Sub Total (A to H) Rs. 1103.68

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.

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 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 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 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 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 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 subheads 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/-.

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 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 crossexamination. 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 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 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 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 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 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) 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 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.

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 (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 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:- Annexure-11: Additional Overheads Expenses incurred after 31 July 2010 (A) Overheads Description Amount (Rs. Crores) Description Amount (Rs. Crores) Pre-operative expenses 96.29 Deposits and Advances 6.43 Operation and Maintenance 16.45

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 crossexamination of C.W.[2] in para-12.478 of the Majority Award, which reads thus: 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."

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. 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.

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.

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 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 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 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.

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.

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 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. …. 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 Limited39. While dealing with the concepts of ‘loss of profit’ and loss of profitability’, the Madras High 2025 SC OnLine Mad 8166 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 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 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)

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 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 case[7]. 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

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