Mumbai, October 10, 2025: The Bombay High Court has declined to grant an unconditional stay on an arbitral award of approximately ₹250 crore in favour of a contractor for the Mumbai Metro Rail project. The court, however, stayed execution of the award on condition that the Mumbai Metro Rail Corporation Limited (MMRCL) deposits the entire amount with the court's registry within eight weeks. Justice Somasekhar Sundaresan, in an oral judgment, ruled that MMRCL had failed to establish the award was so “patently perverse” or “facially untenable” as to warrant a stay without financial security.
Background. The dispute stems from a contract awarded to L&T-STEC JV for design and construction of stations and tunnels for the Mumbai Metro. The contractor claimed compensation for additional GST burden after the tax's 2017 introduction under the contract's “Change in Law” clause, and separately claimed costs for implementing a higher “one strut failure” safety standard near heritage structures. A majority arbitral tribunal awarded ₹229.56 crores for the GST impact and ₹21.26 crores for the additional work, totalling ₹250.82 crores; the MMRCL-nominated arbitrator dissented, suggesting the GST amount should be around ₹134 crores.
Arguments. MMRCL, represented by Advocate General Dr. Birendra Saraf, argued the award was “ex facie perverse,” contending the tribunal failed to properly break down the lump-sum contract price to isolate the tax component. L&T's counsel, Senior Advocate Vikram Nankani, defended the award, noting the tribunal was technically qualified and its GST methodology had already been scrutinised by a chartered accountant and a Dispute Adjudication Board (DAB), with the award largely aligning with the DAB's findings.
Court's Reasoning. Justice Sundaresan found the GST dispute involved “finely nuanced points” on tax circular interpretation fit for a final hearing, but not the “abject perversity” needed for an unconditional stay, and that the award was reasoned and consistent with the prior DAB process. On the additional work claim, the court held the tribunal's view was a matter of technical “appreciation of evidence,” not prima facie perverse. The court also rejected MMRCL's claim that its key witness was “shut out,” noting his testimony was considered but his expert opinions were rightly treated with scepticism as he was not independent.
Directions. The court directed MMRCL to deposit the full ₹250 crore award amount with interest within eight weeks; upon deposit, L&T may withdraw the funds against an unconditional bank guarantee. The court clarified these observations were only for the stay application and would not influence the final hearing of MMRCL's challenge to the award under Section 34 of the Arbitration Act.
