SC breather worth ₹8,000cr for DMRC in Delhi airport Metro case
DMRC challenged the decision, first at the high court, which set it aside, before the matter reached the Supreme Court
The Supreme Court on Wednesday overturned its own 2021 decision that upheld an arbitration ruling for Delhi Metro Rail Corporation (DMRC) to pay what is now ₹7,687 crore (including interest) to a Reliance Infrastructure subsidiary after over a dispute pertaining to the operations of the Airport Express Metro line.
Read here: SC's big relief to DMRC, not liable to pay ₹8,000 cr to RInfra's subsidiary
The judgment, which the court said was on the ground that it caused “grave miscarriage of justice”, was in response to a curative plea by DMRC against Delhi Airport Metro Express Private Limited (DAMEPL), a subsidiary of the Anil Ambani-led company, and represents a rare overturning of a decision at what is effectively the last avenue for judicial recourse.
The dispute centres on the Airport Express Metro line in Delhi, which was originally operated by DAMEPL. In 2012, the company cancelled the contract citing structural defects that made it unsafe for passengers and invoked the arbitration clause to seek a termination fee and associated costs. DAMEPL won the arbitration case in 2017 and the accruing amount had ballooned to roughly ₹7,700 crore in the present day.
DMRC challenged the decision, first at the high court, which set it aside, before the matter reached the Supreme Court, where the high court decision was overturned and the obligation was reinstated in 2021. The decision was then upheld in a review petition by the DMRC in November 2021, until Wednesday, when the top court reversed its stand at the stage of a curative petition.
The three-judge bench headed by chief justice of India (CJI) Dhananjaya Y Chandrachud appeared to note the rarity of the current outcome and 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...”
DMRC did not comment on the development. However, Union minister for housing and urban affairs Hardeep Singh Puri posted on X, “Satyamev Jayate! Historic judgement by the Hon‘ble SC in the curative petition filed by @OfficialDMRC in the case pertaining to the Airport Metro Line. Many congratulations to Team DMRC on achieving this landmark verdict.”
In the order, the SC held that “the process of arbitration has been perverted by the arbitral tribunal to provide an undeserved windfall to DAMEPL”, and held that any money deposited must be refunded. It also set aside proceedings in high court moved by DAMEPL to legally force DMRC to execute the arbitral award.
Reliance Infrastructure Limited, in a statement issued soon after the SC order, denied receiving any money from DMRC: “Reliance Infrastructure wishes to clarify that the order dated April 10, 2024 passed by the Supreme Court does not impose any liability on the company and the company has not received any money from DMRC/ DAMEPL under the arbitral award.” But the judgment quoted DAMEPL lawyers as having submitted that DMRC paid an amount of ₹2,599.18 crore, while ₹5,088 crore was outstanding as on January 31, 2024.
The curative jurisdiction of the Indian Supreme Court is a rare and exceptional remedy, intended to rectify gross miscarriages of justice. This jurisdiction is invoked only in extraordinary circumstances where a final judgment of the SC itself suffers from a manifest error resulting in egregious injustices or blatant disregard for law.
Setting aside an arbitral award in a curative plea is rare because of the limited scope of the curative jurisdiction as well as due to Indian court’s pro-arbitration stance, making them generally reluctant to interfere with arbitral awards except in extraordinary circumstances.
In Wednesday’s ruling, the SC found that the tribunal ignored vital evidence and reached a conclusion that no reasonable body of persons could arrive at. It also noted that DMRC took effective steps to cure the defects, contrary to the tribunal’s findings.
The bench said the tribunal overlooked “vital evidence,” including a certificate from the commissioner of metro railway safety, in concluding DMRC failed to cure the defects. It held the high court was right to set aside the “patently illegal” award in 2019.
“We have applied the standard of a ‘grave miscarriage of justice’ in the exceptional circumstances of this case where the process of arbitration has been perverted by the arbitral tribunal,” the order stated.
Read here: Supreme Court grants relief to DMRC on arbitral award to DAMEPL
Due to the high stakes involved, the top court allowed an open court hearing by hearing elaborate submissions by attorney general (AG) R Venkataramani and senior advocate KK Venugopal for DMRC and senior advocates Harish Salve and Kapil Sibal for DAMEPL.
The possibility of the now-cancelled payment being upheld had prompted discussions within the government to amend the law on Metro trains to legally prohibit any move to attach the Delhi Metro’s properties or funds, which could have effectively halted the Capital’s urban transit lifeline.
Venkataramani, representing DMRC, argued the defects had no “material adverse effect” on DAMEPL’s obligations as the Metro line is still running. The court agreed the tribunal erroneously rejected evidence of the line’s successful operation.