Sanchayita Lahkar

In a recent judgment, the Delhi High Court Single Bench, of Justice Jasmeet Singh, directed the enforcement of a foreign arbitral award in favour of Construcciones Y Auxiliar De Ferrocarriles (CAF) and CAF India Pvt. Ltd., against Delhi Airport Metro Express Private Limited (DAMEPL). The court upheld both the final arbitral award dated 22.08.2016 and the partial award on costs of jurisdictional challenge dated 15.12.2015, dismissing objections raised by the judgment debtor under Section 48 of the Arbitration and Conciliation Act, 1996.

The court ordered the respondent to pay the full awarded amounts, interest, and costs as per the arbitral awards within four weeks.

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Construcciones Y Auxiliar De Ferrocarriles (Petitioner No. 1), a company incorporated in Spain, and CAF India Pvt. Ltd. (Petitioner No. 2), its wholly owned Indian subsidiary, sought enforcement of an arbitral award issued under the International Chamber of Commerce (ICC) rules. The dispute arose with Delhi Airport Metro Express Pvt. Ltd. (Respondent), a special purpose vehicle created by Reliance Infrastructure Ltd. (RInfra) to undertake the Delhi Airport Metro Express Line project.

The dispute cantered on two agreements signed on 30.06.2008: the Rolling Stock Supply Contract and the Maintenance Services Agreement (MSA). Both contracts contained arbitration clauses mandating arbitration in London under ICC rules. The petitioners filed for arbitration after disputes arose regarding the quality of rolling stock supplied and unpaid invoices under the MSA.

Arbitral proceedings began in 2014, resulting in three significant outcomes:

1. A partial award dated 02.12.2015, upholding the tribunal's jurisdiction despite objections from the respondent.

2. A partial award on costs dated 15.12.2015, awarding GBP 80,000 to the petitioners.

3. A final award dated 22.08.2016, granting monetary reliefs under both contracts and directing DAMEPL to return the performance guarantee amount and pay various sums with pre- and post-award interest.

DAMEPL challenged the awards under Section 34 of the Act, which was dismissed on grounds of jurisdiction. A further appeal under Section 37 remains pending.

The respondent contested enforcement, citing violations of Indian public policy, including the fundamental policy of Indian law and basic notions of morality and justice. It argued that the award ignored provisions of the Indian Contract Act and Sale of Goods Act, which, according to the respondent, permit compensation without proof of loss when contractual warranties are breached.

The petitioners, represented by Ms. Aishani Das, contended that the enforcement of a foreign award could only be denied under limited grounds enumerated in Section 48 of the 1996 Act. They cited precedents to support that the enforcement court could not re-examine the merits of the arbitral award. The arbitral tribunal had determined that DAMEPL failed to prove actual loss due to non-compliant rolling stock, and thus, no damages were warranted despite technical breaches.

Justice Jasmeet Singh recorded that the arbitral tribunal's award clearly dealt with the respondent's objections, including the breach of specifications and the failure to demonstrate any actual loss. The court observed:

"The starting-point is that a party who has been victim of a breach of contract must be compensated for the loss it has suffered as a result of that breach. In the present case, therefore, Respondent must be compensated for the loss that it has suffered as a result of Claimants' failure to meet the technical specifications in the Supply Contract."

However, the arbitral tribunal concluded that DAMEPL had not substantiated any claim of loss:

"Respondent has failed to provide any evidence of any such loss, whether monetary or otherwise... Since Respondent has not provided any evidence of loss, and no longer relies on its earlier allegations that DMRC was raising penalties in respect of the noise levels, the Arbitral Tribunal cannot award it compensation."

The court rejected the respondent's reliance on Section 59(1)(a) of the Sale of Goods Act and Section 73 of the Indian Contract Act, stating that compensation could only be granted for actual losses, which had to be substantiated with evidence.

Justice Singh noted: "The party who complains of breach must have really suffered some loss or damage apart from being faced with the mere act of breach of contract. That is because every breach of every contract need not necessarily result in actual loss or damage."

The court further noted that a certificate issued by Delhi Metro Rail Corporation confirmed that trains were operating to its satisfaction, further undermining the respondent's claim of any damages.

Regarding the partial award on costs, the court accepted the tribunal's reasoning that:

"Claimants, having defeated Respondent's jurisdictional objection before the Arbitral Tribunal, should in principle be entitled to the costs that they incurred in doing so."

It upheld the award of GBP 80,000 for legal costs associated with the jurisdictional phase.

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The objections raised by the respondent under Section 48 of the1996 Act stand rejected.

The Delhi High Court directed:

"The judgment-debtor/respondent is directed to pay to the decree holder/petitioners, the entire awarded amount along with awarded interests and costs in terms of the Foreign Award dated 22.08.2016 passed by the learned AT in ICC Case No. 19997/TO and Partial Award on costs of jurisdictional challenge dated 15.12.2015 passed in ICC Case No. 19997/TO within 4 weeks from today."

The petitioners were also instructed to file a calculation sheet within one week from the date of the order.

In view of the judgment passed today in O.M.P.(EFA)(COMM.)15/2019, the present petition becomes infructuous.

Hence, the present petition is disposed of being infructuous.

Advocates Representing the Parties

For the Petitioners: Ms. Aishani Das, Ms. Balapraghatha
For the Respondents: Mr. Anirudh Bakhru, Ms. Shruti Arora, Ms. Tarini Khurana, Ms. Vijay Laxmi

Case Title: Construcciones Y Auxiliar De Ferrocarriles & Anr. v. Delhi Airport Metro Express Private Limited (India)

Neutral Citation: 2025: DHC:2122

Case Number: O.M.P.(EFA)(COMM.) 15/2019 and O.M.P.(I)(COMM.) 375/2020

Bench: Justice Jasmeet Singh

[Read/Download order]