A request for an unconditional stay on an arbitral award in favor of the L&T–STEC joint venture has been declined by the Bombay High Court, and an order for the deposit of ₹250.82 crore within eight weeks has been issued. The matter was decided on October 10 by a single-judge bench led by Justice Somasekhar Sundaresan, and the arbitral award dated June 2025 was allowed to stand. It was recorded that withdrawal of the deposit by L&T–STEC would be permitted upon the furnishing of an unconditional bank guarantee for an equivalent amount, ensuring financial security while the challenge proceeds.
The origins of the dispute were traced to a civil works contract awarded in May 2015 for the design and construction of tunnels and stations on the Mumbai Metro network. Subsequent to the rollout of the Goods and Services Tax (GST) in 2017, a “change in law” clause was acknowledged between the parties so that tax-regime alterations could be reflected in the contract’s financials. It was asserted by MMRCL that reimbursements were warranted for the GST impact and that compensation for additional works, specifically stronger earth-retaining structures, should be obtained. The contrary position was taken by L&T–STEC, and the conflict was placed before a three-member arbitral tribunal.
A majority of the tribunal was said to have awarded ₹229.56 crore as reimbursement for GST levies for the period from July 1, 2017 to September 30, 2022, and ₹21.26 crore for work determined to be beyond the original scope, resulting in a total of ₹250.82 crore becoming payable to the contractor. A dissent by the MMRCL-nominated arbitrator was placed on record, in which a calculation of ₹134.42 crore was proposed as the correct GST reimbursement, a reassessment by a chartered accountant was recommended, and a refund of ₹27.09 lakh to MMRCL was indicated.
In the High Court, an argument was raised by MMRCL that a misappreciation of the precise GST impact was committed by the tribunal, that exemptions were erroneously extended to unrelated heads such as housekeeping and refurbishment, and that the tribunal’s reliance was selectively placed on cross-examinations while material witness statements of MMRCL were insufficiently weighed. These submissions were examined by the Court and were found not to render the award perverse or arbitrary. It was stated that the tribunal’s view was aligned with the Dispute Adjudication Board’s report and that adequate reasons had been supplied.
An emphasis was placed by the Court on the principle that an arbitral award constituting a money decree is granted an unconditional stay only when it is “unsustainably unreasonable.” It was also observed that disagreement with the DAB and the tribunal does not, by itself, yield a perverse outcome. The controversy was characterized as interpretational in nature and as one influenced by fiscal statute. In consequence, an order was made for MMRCL to deposit the adjudicated amount within eight weeks, and permission was accorded for L&T–STEC to withdraw the sum upon provision of an unconditional bank guarantee. By this course, the sanctity of reasoned arbitral determinations in infrastructure disputes was reinforced, while the security of funds during pendency of challenge was ensured.