The Supreme Court has refused to interfere with the Karnataka High Court’s judgment upholding a ₹122.76 crore arbitral award in favour of Navayuga Engineering Company in its dispute with Bangalore Metro Rail Corporation Limited (BMRCL), effectively bringing an end to BMRCL’s challenge.
A Bench of Justice Sanjay Kumar and Justice K. Vinod Chandran dismissed special leave petitions filed by BMRCL challenging the Karnataka High Court’s August 29, 2024 judgment, holding that there was “no good ground and reason” to interfere with the impugned decision. The Court also vacated its interim order dated November 29, 2024 relating to encashment of the bank guarantee.
The dispute arose out of a contract awarded by BMRCL to Navayuga Engineering Company for construction of elevated structures on the Bengaluru Metro’s Reach-1 corridor. Following disputes over project delays and rescission of portions of the work, the matter went to arbitration. In August 2018, a three-member arbitral tribunal awarded Navayuga ₹122.76 crore along with interest, including compensation towards finance charges incurred due to delays attributed to BMRCL.
BMRCL challenged the award under Section 34 of the Arbitration and Conciliation Act before the Commercial Court in Bengaluru, which partially allowed the challenge by setting aside the finance charge component of ₹40.01 crore under claims 8 to 10 on the ground that it was contrary to Indian law and amounted to patent illegality.
However, the Karnataka High Court reversed that decision in August 2024. The Division Bench held that the Commercial Court had exceeded the narrow scope of interference permissible under Section 34 by effectively re-appreciating evidence and substituting its own interpretation for that of the arbitral tribunal.
Appearances:
For Petitioner(s) : Mr. Dama Seshadri Naidu, Sr. Adv.; Mr. S. Sriranga, Adv.; Mr. Amit Pai, AOR; Ms. Sumana Naganand, Adv.; Ms. Pankhuri Bhardwaj, Adv.; Mr. Kushal Dube, Adv.; Mr. Tathagata Dutta, Adv.; Mr. Ssahel Sood, Adv.; Ms. Bhavana Duhoon, Adv
For Respondent(s): Mr. C. Aryama Sundaram, Sr. Adv.; Mr. Saurav Agrawal, Adv.; Mr. Shantanu Agarwal, Adv.; Mr. Zafar Inayat, Adv.; Mr. Kapil Rustagi, Adv.; Mr. Dheeraj P. Deo, Adv.; Mr. Harshit Malik, Adv.; Mr. Manas Arora, Adv.; Mr. Allaka Malikayil, Adv.; Ms. Prachi Dubey, Adv; Mr. Tushar Nair, Adv.; Mr. Aarya Bhat, Adv.; Mr. Sahil Tagotra, AOR
