SC sets aside judgment upholding arbitral award against DMRC [Read Judgment]

NEW DELHI: The Supreme Court on Wednesday set aside an arbitral award directing the Delhi Metro Rail Corporation (DMRC) to pay nearly Rs 8,000 crore to Anil Ambani-led Reliance Infrastructure subsidiary, Delhi Airport Metro Express Private Limited (DAMEPL).

A bench of Chief Justice of India D Y Chandrachud and Justices B R Gavai and Surya Kant allowed the curative petition against its previous judgment.

“There was no valid basis for this court to interfere in Article 136 of the Constitution. The interference by this court has resulted in restoring a patently illegal award and cause grave miscarriage of justice,” the bench said.

While in September 2021, the Supreme Court had upheld the arbitration award including interest, in favour of DAMEPL, it had dismissed a review petition filed by DMRC in November 2021. Later in August 2022, DMRC filed a curative petition in the Supreme Court.

The principal amount of award was Rs 3,000 Cr which got increased to Rs 8,000 Cr due to interests.

The bench said that its earlier bench, which interfered with the Delhi High Court’s division bench’s decision of January 15, 2019 had resulted in a “grave miscarriage of justice” in directing DMRC to honour the arbitration award.

“The execution proceedings before the HC for enforcing the arbitral award must be discontinued and the amounts deposited by DMRC pursuant to the judgment of this court shall be refunded. The part of the awarded amount, if any, paid by DMRC as a result of coercive action is liable to be restored in its favour,” the court ordered.

In its judgment, the bench clarified that the exercise of the curative jurisdiction of this court should not be adopted as a matter of ordinary course.

“The curative jurisdiction should not be used to open the floodgates and create a fourth or fifth stage of court intervention in an arbitral award, under this court’s review jurisdiction or curative jurisdiction, respectively,” the bench said.

DMRC was aggrieved with an arbitral award directing it to pay Reliance Infrastructure subsidiary, DAMEPL.

The DMRC had lost its appeal challenging the award in the top court in September 2021. After which, DAMEPL moved the Delhi High Court to execute the award. In August last year, the apex court had asked the high court to defer the proceedings till a decision on the curative plea was made.

Attorney general R Venkataramani and senior advocate K K Venugopal, for the public sector DMRC, contended after the termination of the contract, the airport line has been successfully operated by DMRC since July 2013.

DAMEPL had raised safety issues in continuing with the contract to operate the 22.7km Airport Metro Express line, after which DMRC cancelled the contract in October 2012.

A joint public private partnership to build, operate and run the Airport Express line was made on August 25, 2008 between Delhi Metro Rail Corporation (DMRC) and DAMEPL. However, the pact fell apart over some defects in the line which were allegedly not cured by DMRC. DAMEPL then pulled out from running the Metro line over safety issues. While DMRC has been running the Airport Express line since 2013, it had taken the case to arbitration and an award was given in favour of DAMEPL.

The arbitral tribunal in its May 2017 award had accepted DAMEPL’s claim that the running of operations on the line was not viable due to structural defects in the viaduct through which the train would run. The award asked DMRC to pay nearly Rs 3,000 crore, along with interest.

On September 9, 2021, the apex court had dismissed a plea by Delhi Metro Rail Corporation against the arbitration award in favour of debt-laden Reliance Group, ADAG, after a four-year battle for control of money secured following a dispute on running of Delhi Airport Express Metro line.

The court had then held that the Delhi High Court was not right in interfering with the award of May 11, 2017 passed in favour of Delhi Airport Metro Express Pvt Ltd, a subsidiary of Reliance Infrastructure.

[Read Judgment]