Rs 8K Crore Relief To Delhi Metro : Supreme Court Allows DMRC's Curative Petition Against Arbitral Award In Favour Of DAMEPL

The Supreme Court on Wednesday (April 10) relieved the Delhi Metro Rail Corporation (DMRC) of a huge liability to the tune of Rs 8000 crores approximately by setting aside its 2021 judgment which upheld the arbitral award won by the Delhi Airport Metro Express Private Limited (DAMEPL, Reliance Infrastructure subsidiary) against the DMRC.

The arbitral award was passed in 2017 and the liability, along with the interest and other charges, exceeded Rs 8000 crores on the present date.

Allowing a curative petition filed by the DMRC, the bench comprising CJI DY Chandrachud, Justices BR Gavai and Surya Kant held that the Supreme Court erred in interfering with the 2019 Delhi High Court's judgment which had set aside the arbitral award passed against DMRC.

The bench observed that the Supreme Court ought not to have interfered with the Delhi High Court's judgment under Article 136 of the Constitution as it was a well-considered judgment. "By setting aside the High Court judgment, this Court restored a patently illegal award which saddled a public utility with an exorbitant liability," the Court observed. This resulted in a "great miscarriage of justice" which warrants the exercise of curative jurisdiction under Article 142 of the Constitution.

Allowing the curative petition, the Supreme Court thus set aside its 2021 judgment.

Restoring the parties to their position in which they were on the date of pronouncement of the Delhi High Court's judgment, the Court directed that the amounts deposited by the DMRC shall be refunded. Any amount paid by DMRC as part of coercive action has to be refunded and the execution proceedings for the award must be discontinued. 

The Court also clarified that its curative jurisdiction will be exercised only sparingly, only in the most deserving cases.

In the curative hearing, Attorney General for India R Venkataramani and Senior Advocate KK Venugopal (former AG) argued for the DMRC. Senior Advocate Harish Salve appeared for DAMEPL. The 3-judge bench reserved judgment on February 20.

Background 

This case has arisen out of the non-payment of termination fees to DAMEPL, owned by Anil Ambani's Reliance Infrastructure Limited, by the Delhi Metro Rail Corporation despite terminating a contract for running the airport metro line before the expiry of the contract period. The government corporation has been utilising the project assets constructed or installed by DAMEPL as well as the project revenues since July 2013, Mint has reported.

The dispute was referred to arbitration in 2017, wherein the Tribunal ruled in favour of DAMEPL, awarding the sum total of Rs. 2782.33 crores along with interest. DMRC's challenge against the said award was dismissed by a Single- Judge Bench of the Delhi High Court in March 2018. However, it succeeded in the Letters Patent Appeal that followed, wherein the award was aptly set aside. DAMEPL then knocked the Supreme Court for a final say on the matter.

The Supreme Court settled the issue on September 9, 2021, by setting aside the High Court's ruling and upheld the original award passed by the Tribunal.

With regard to the execution of the award, DAMEPL approached the Delhi High Court in September 2021 with an application for the execution of the award. As of September 10, 2021, according to DAMEPL, the DMRC owed Rs 7045.41 crores. In September 2021, DMRC deposited Rs 1000 crore in an ESCROW account. However, in December 2022, DMRC informed the court that it only had Rs 1642.69 crores in its bank account for the outstanding payment. The remaining funds were designated for various projects or allocated for employee-related expenses such as salaries, medical, and post-retirement benefits.

While the talks of a meeting were ongoing between the two key shareholders of DMRC - Union Ministry of Housing and Urban Affairs and the Delhi Government, DAMEPL moved the Supreme Court once again to seek directions on speedy execution. 

The Apex Court disposed of the matter asking the High Court to proceed further on the expeditious execution of the award.

As of February 14, 2022, the outstanding sum amounted to Rs 8009.38 crores, with the DMRC having cleared Rs 1678.42 crores of the total amount. In February 2023, DAMEPL informed the Court the pending amount now stands at Rs 6330.96 crores.

Case Details: DELHI METRO RAIL CORPORATION LTD. vs. DELHI AIRPORT METRO EXPRESS PVT. LTD. CURATIVE PET(C) No. 000108 - 000109 / 2022

Citation : 2024 LiveLaw (SC) 291

Click here to read the judgment