SC issues contempt notice to Reliance Infra subsidiary, Axis Bank in DMRC case

The dispute pertains to the operation of the Airport Express Metro line in Delhi, which was done by DAMEPL, which cancelled the contract in 2012 citing structural defects and invoked an arbitration clause to seek a termination fee and associated costs, which came up to ₹8,000 crore

New Delhi

The April 10 order by a three-judge bench headed by then CJI DY Chandrachud noticed that before the Supreme Court decision upholding the 2017 award, a division bench of the Delhi high court had given a reasoned decision in favour of DMRC. (HT Archive)

The Supreme Court on Wednesday issued notices of contempt to the directors of Reliance Infrastructure subsidiary Delhi Airport Metro Express Private Limited (DAMEPL) and Axis Bank for failing to refund nearly ₹2,600 crore to the Delhi Metro Rail Corporation (DMRC) after the effect of an arbitral award won by the former was overturned by the top court in April this year.

The arbitral ruling came in 2017, saddling the DMRC with the liability of paying nearly ₹8,000 crore to DAMEPL. Two successive challenges to the award were shot down by the top court, in September 2021 and November 2021, but these two verdicts were overturned by the top court on April 10, 2024, on a curative petition filed by DMRC. The order required DAMEPL to refund DMRC’s deposit from an escrow account maintained by Axis Bank.

DMRC was represented in court by Attorney General R Venkataramani and senior advocate Parag Tripathi, who pointed out that despite repeated requests to Axis Bank to release the amount, the bank claimed that it was studying the order of the top court.

On reaching out to DAMEPL for a refund, it informed the petitioner (DMRC) that the request was forwarded to the lenders, who have withdrawn or received the said amount. “No amount was refunded to the petitioner, resulting in wilful disobedience of directions issued by this court,” the DMRC stated in its petition.

Issuing notice on the petition, a bench headed by justice Surya Kant said, “We issue notice to the respondents to show cause why contempt of court proceedings not be initiated.”

The petition named DAMEPL’s full-time director Rakesh Kumar Yadav and Axis Bank’s managing director Amitabh Chaudhary. The bench, also comprising justices Dipankar Datta and Ujjal Bhuyan, exempted the two officials from personally appearing on the next date. The matter will be taken up after four weeks.

The petition said, “Total amount to be refunded to the petitioner as per the judgment of April 10 comes to ₹2599.18 crore along with interest at SBI PLR + 2% amounting to ₹1934.79 crore till June 7, 2024.”

This figure did not account for any future interest payable to the petitioner till the date of actual payment of refund.

The dispute pertains to the operation of the Airport Express Metro line in Delhi, which was done by DAMEPL, which cancelled the contract in 2012 citing structural defects and invoked an arbitration clause to seek a termination fee and associated costs, which came up to ₹8,000 crore.

The decision on the curative petition, the last resort available for recourse, filed by DMRC came amid execution proceedings initiated by DAMEPL.

The April 10 order by a three-judge bench headed by then CJI DY Chandrachud noticed that before the Supreme Court decision upholding the 2017 award, a division bench of the Delhi high court had given a reasoned decision in favour of DMRC.

The top court said, “By setting aside the judgement of the division bench (of the HC), this court restored a patently illegal award which saddled a public utility with an exorbitant liability. This has caused a grave miscarriage of justice, which warrants the exercise of the power under Article 142 in a curative petition.”

It was held that the tribunal overlooked “vital evidence,” including a certificate from the commissioner of Metro railway safety, in concluding that DMRC failed to cure the defects. It held the Delhi high court was right to set aside the “patently illegal” award in 2019.

The court also maintained 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...”