'Higher Credence Is Given To Award Passed After Detailed Pre-Arbitral Process': Bombay High Court

The Bombay High Court has held that arbitral awards passed after a detailed pre-arbitral process contractually agreed upon by the parties deserve a higher degree of credibility and judicial deference. The Court refused to grant an unconditional stay on the execution of an arbitral award in favour of the contractor, holding that mere disagreement with the arbitral tribunal's findings does not establish perversity warranting such relief.

Justice Somasekhar Sundaresan was hearing an application filed by Mumbai Metro Rail Corporation Limited (MMRCL) seeking an unconditional stay on the arbitral award dated June 16, 2025, passed in favour of L&T-STEC JV Mumbai. The dispute arose from a contract relating to the design and construction of certain stations and tunnels in the Mumbai Metro project. The award, amounting to approximately ₹250.82 crores, included compensation for additional work and reimbursement for GST impact. MMRCL contended that the award was perverse and contrary to commercial sense, particularly in its treatment of tax implications and additional work under the contract.

The Court noted that the arbitral tribunal's conclusions were largely in line with the DAB's findings. The Court emphasised that though the parties may have debatable differences in the interpretation, these differences are meant for consideration in the final hearing and are not ex facie perverse, so as to warrant an unconditional stay. It further observed:

“One cannot lose sight of the fact that the Impugned Award is in the nature of a money decree. Therefore, the scope of review has to be one of examining whether the Impugned Award is of a nature that no reasonable person could have ever come to the conclusions that it drew, and whether it was so perverse that in the final hearing, there is a high degree of prospect that the Impugned Award would be set aside.”

The Court also highlighted that the dissenting award did not take an extreme stand as taken by the corporation in the proceedings. It observed that when the arbitration is done after a detailed pre-arbitral process, a higher credence has to be given to the arbitral award, and finely nuanced points do not constitute grounds for interference. It observed:

“When parties proceed to arbitration and that too after a detailed pre-arbitral process being contracted, there has to be a higher credibility and credence given to the arbitral award. The contentions… fall in the realm of purporting to raise finely nuanced points that are best made in the final hearing. They do not constitute grounds to infer perversity based on any reasonable review on the face of the record, to warrant an unconditional stay.”

Holding that no case is made out of the Impugned Award being tainted by such perversity to warrant a stay, the Court directed MMRCL to deposit the awarded amount with interest within eight weeks, permitting the contractor to withdraw it upon furnishing an unconditional bank guarantee.

Appearances:

• For the Petitioner (MMRCL): Mr. Birendra Saraf, Advocate General, Senior Advocate, a/w Simil Purohit, Ameya Gokhale, Kriti Kalyani, Siddhant Marathe, Ansh Kumar, i/b Shardul Mangaldas.
• For the Respondent (L&T-STEC JV Mumbai): Mr. Vikram Nankani, Senior Advocate, a/w Indrnil Deshmukh, Saloni Kapadia, Karan Ghandhi, i/b Cyril Amarchand Mangaldas

Case Title: Mumbai Metro Rail Corporation Limited v. L&T-STEC JV Mumbai [Interim Application (L) No. 28857 of 2025 in Commercial Arbitration Petition (L) No. 28855 of 2025]

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