'Scope Of Curative Jurisdiction Limited, Especially In Commercial Matters' : Supreme Court In DMRC v. DAMEPL Hearing

The CJI noted that when curative petitions are filed concerning commercial issues, the threshold for consideration is aggravated.

“ Particularly in a commercial case, that threshold must be particularly high, it's not like you are dealing with a human rights case, death penalty case etc..we get your point…it has to be seen in terms of certainty, consistency and predictability of the law.”

The Bench comprising Chief Justice, DY Chandrachud and Justices BR Gavai and Surya Kant was hearing a curative petition of the earlier ruling of the Court in DAMEPL v. DMRC LL 2021 SC 432, wherein the 2018 Arbitral award against the state-owned Delhi Metro Rail Corporation (DMRC) was upheld in light of DMRC's non-payment of contract termination fees.

Senior Advocate Harish Salve, appearing for DAMEPL at the outset objected to having the final decision of 2021 of the Supreme Court in a curative petition. Quoting Justice Krishna Iyer, in a matter of review concerning food and beverage taxes, Mr Salve expressed “ To ask for a review is to ask for the moon.”

Picking from thereon, the CJI further remarked, “To ask for a curative petition is to ask for a solar system which is beyond ours.”

The CJI noted that while the powers for hearing a curative petition are exceptional, they however do fall under Article 142 of the Constitution.

However, Mr Salve expressed his concerns over the ambit of the jurisdiction under Article 142 over arbitration matters. Giving the example of the precedent set in the recent curative petition decision of the Court in Union of India v. Union Carbide Corporation, Mr Salve contended, “ In Union Carbide, your lordships stamped out hard. The court was invited in Union Carbide Curative, to say that please hold that Hurra (Rupa Hurra v. Ashoka Hurra) doesn't contain and we can show substantial error and you can look..your lordships said sorry we will not do that.”

To buttress the same, Mr Salve read the relevant portion of Union Carbide as follows :

26. On this preliminary point, we may note that a curative petition relates to a reexamination of a final judgment of this Court, particularly one that has already undergone such re-examination through the Court's review jurisdiction. Since this Court's review jurisdiction itself is so restrictive, we find it difficult to accept that this Court can devise a curative jurisdiction that is expansive in character.

27. On the facts of this case, we have already noticed that when review petitions were filed against the orders recording the settlement, the Union of India sought to support the same. However, the Union subsequently opposed all other applications filed for reopening the settlement. We understand that such a strategy was adopted as the Union of India's endeavour is not to set aside the settlement but merely to 'top up' the settlement amount.

28. We have great hesitation in allowing such a prayer and granting such sui generis relief through the means of curative petitions. Although this Court in Rupa Ashok Hurra chose not to enumerate all the grounds on which a curative petition could be entertained; the Court was clear in observing that its inherent power ought not to be exercised as a matter of course, and that it should be circumspect in reconsidering an order of this Court that had become final on dismissal of the review petition. Nevertheless, looking at the nature of the matter before us, it would be advisable to also examine the curative petition(s), apart from the aforesaid preliminary objection.

CJI taking note of Para 28 of the same decision observed that “ The constitution bench also held the position that the circumstances for exercising the jurisdiction which is elucidated in para 49 are not exhaustive ….but at the same time we say that look there is an exceptional situation where you will not exhaustively list out those circumstances because you do not want to stultify the hands of the future benches.”

The relevant paragraph that the CJI referred to was :

49. Providing closure to a lis is also a very important aspect. This is more so in the context of the scenario faced by the Indian judiciary, where delay is almost inevitable. This concern would be further amplified in respect of a tort claim such as the present one - if evidence were to be led for each claimant, this would open a pandora's box in UCC's favour and would only be to the detriment of the beneficiaries. The money was needed in the immediate aftermath of the tragedy and not after three decades

Mr Salve reminded the bench that while the Union Carbide Case was rather pertaining to human rights, the present issue is purely of a commercial nature. The bench seemed agreeable to the same.

On the other hand, the DMRC, represented by Senior Advocate Mr Venugopal and Attorney General Mr R Venkataramani argued that a curative petition is possible in light of the observations made in Rupa Ashok Hurra v. Ashok Hurra, (2002) 4 SCC 388.

The following observations were relied upon to supplement their stand :

48. In the cases discussed above this Court reconsidered its earlier judgments, inter alia, under Articles 129 and 142 which confer very wide powers on this Court to do complete justice between the parties. We have already indicated above the scope of the power of this Court under Article 129 as a court of record and also adverted to the extent of power under Article 142 of the Constitution.

49. The upshot of the discussion in our view is that this Court, to prevent abuse of its process and to cure a gross miscarriage of justice, may reconsider its judgments in exercise of its inherent power.

50. The next step is to specify the requirements to entertain such a curative petition under the inherent power of this Court so that floodgates are not opened for filing a second review petition as a matter of course in the guise of a curative petition under inherent power. It is common ground that except when very strong reasons exist, the Court should not entertain an application seeking reconsideration of an order of this Court which has become final on dismissal of a review petition. It is neither advisable nor possible to enumerate all the grounds on which such a petition may be entertained.

Mr Venugopal emphasized that in the present impugned order of the Court, there exists a miscarriage of justice. As per the petitioners, the division bench of the High Court which partly set aside the award had held that the findings of the tribunal “are perverse, shocks the conscience and they are irrational”.

The senior counsel highlighted that when the authorities of DAMEPL entered into the construction agreement with DMRC, it soon realised within 1.5 years of operating the project that it had suffered heavy losses. When the respondents asked for deferment and restructuring, the DMRC refused.

It was further contended that the issue of termination of the contract by DMRC has not been reasonably dealt with by the Supreme Court.

Mr Venugopal referred to the reasoning given in paragraph 31 of the impugned judgement, which reads as follows :

“....The confusion around the date of termination is highlighted by the High Court by referring to the award of the Arbitral Tribunal in which it was held that the defects were not cured within the 90-day period from the date of the cure notice dated 09.07.2012. However, in paragraphs 128, 130 and 131, the Arbitral Tribunal, while considering the counter claim, referred to 07.01.2013 as the date of termination of the Concession Agreement. It is clear from a careful examination of the award that the Arbitral Tribunal had in precise terms held that the defects had to be cured within 90 days from the date of the cure notice dated 09.07.2012. Further, the Arbitral Tribunal held that the termination notice dated 08.10.2012 was issued as defects were not cured. The Tribunal expressed its view that consequently, the effective date of termination was 07.01.2013, which is 90 days from the termination notice. As there is no ambiguity in the findings of the Arbitral Tribunal regarding the time given for curing the defects and the effective date of termination of the Concession Agreement, we are not in agreement with the findings of the Division Bench that there is an ambivalence in the award concerning the date of termination, having a bearing on the final outcome of the award…”

The senior counsel stressed that in holding so, the court was not justified as the Tribunal has held 7.1.2013 as the date of termination, and “therefore how does the Supreme Court ignore the date which has been held in three places and there is an (inaudible) in the award considering the date having a bearing on the outcome. The Ancillory issue that arises is whether the period for curing the defect is 180 days or 90 days.”

The hearing will continue another day.

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.

The present curative petition has come against the Apex Court's judgement in 2021 wherein the award passed against DMRC attained finality.

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