Kolkata East-West Metro: Calcutta High Court Upholds Arbitral Award In Favour Of KMRC

The Calcutta High Court on Friday dismissed a challenge filed by ITD-ITD CEM Joint Venture against an arbitral award arising from the Kolkata East-West Metro Railway Project. It upheld the award in favour of Kolkata Metro Rail Corporation Ltd (KMRC).

Justice Gaurang Kanth rejected the contractor's petition under Section 34 of the Arbitration and Conciliation Act. The challenge was to portions of an arbitral award dated November 21, 2019.

The award had rejected the contractor's claims for unrecovered establishment costs and interest arising from alleged excess recovery and prolonged withholding of retention money relating to the underground metro corridor from Central Station to Subhas Sarobar. The contract, awarded on February 9, 2010, was valued at Rs 815.66 crore plus Euro 13.53 million.

The Court held that the arbitral tribunal's findings neither ignored the contract nor traveled beyond its terms. It said the tribunal had taken a plausible and reasoned view based on the contract and the evidence.

“The decisions relied upon by the Petitioner pertain to cases where the arbitral award was found to be in disregard of the contractual framework or vitiated by manifest illegality. In the present case, the findings of the Tribunal neither ignore the contract nor traverse beyond its terms; rather, they represent a plausible and reasoned view based on interpretation of the contract and appreciation of evidence. In the absence of any demonstrable perversity, patent illegality, or violation of public policy, the scope of interference under Section 34 remains limited, and the reliance placed on the aforesaid judgments is, therefore, misplaced.” the Court observed.

The dispute arose from the contractor's claims over project delays and retention money. ITD-ITD CEM said delays in handing over land, diversion of utilities and employer variations led to repeated extensions till February 2019. It sought compensation for alleged cost overruns and unrecovered establishment expenses. It also sought interest on alleged excess retention money withheld by KMRC.

The arbitral tribunal was constituted on January 7, 2019. In its November 21, 2019 award, it partly allowed Claims 2 and 4. It rejected Claim 1 on unrecovered establishment costs and Claim 3 on interest arising from retention money claims.

Before the High Court, the contractor argued that the tribunal wrongly interpreted contractual clauses. It also argued that the evidence had not been properly appreciated.

Rejecting the challenge, the High Court relied on Ssangyong Engineering & Construction Co. Ltd. It reiterated that courts exercising jurisdiction under Section 34 cannot re-appreciate evidence or substitute their own view merely because another interpretation is possible.

The Court noted that delays in completion were not attributable to the contractor. But it said ITD-ITD CEM failed to produce contemporaneous records proving actual unrecovered losses. It also failed to show exclusive deployment of resources during the extended period.

“The Petitioner has also failed to demonstrate, through evidence or contemporaneous records, any actual financial loss or prejudice suffered on account of the timing of the refund. In such circumstances, the Tribunal's finding that the claim is devoid of merit and unsupported by proof is both reasonable and in accordance with law. Accordingly, this Court is of the considered view that the findings of the Arbitral Tribunal on Claim No. 3 are sound, reasoned, and consistent with the contractual terms as well as the principles governing arbitral interference.”

Finding no perversity or patent illegality in the award, the Court dismissed the petition without costs.