Supreme Court Reserves Judgment On Delhi Metro's Curative Petition Against Arbitral Award Favouring DAMEPL

The bench comprising CJI DY Chandrachud and Justices JB Pardiwala and Manoj Misra reserved judgment on the Curative Petition filed by the Delhi Metro Rail Corporation (DMRC) challenging the Court's 2021 decision of upholding an arbitral award of Rs 7200 Crores won by the Delhi Airport Metro Express Private Limited (DAMEPL)

Senior Advocate Mr Kapil Sibal appearing on behalf of DAMEPL stressed the limited scope of curative jurisdiction in arbitration matters.

He explained that the Supreme Court has multiple juridictions including Special Leave to Appeal under Article 136, appellate jurisdiction, jurisdiction under Article 32 and the powers to do complete justice under Article 142. Curative is the last of the resort left for the aggrieved parties.

It was emphasised that the present matter is governed by the Arbitration and Conciliation Act of 1996 (Act of 1996) and the challenge to the award should be limited to the contours as defined by Sections 34 and 37 of the Act.

“ It is not a case of corruption, this is not a case of fraud, this is not a case against fundamental policies of India, this is not a case qua morality or justice, if at all you wish to bring it, it is a case of patent illegality”

Sibal recalled that the tribunal's award was challenged under Section 34 of the Act of 1996, set aside under Section 37 and restored under Article 136 by the Apex Court. He highlighted that the contours of Article 136 of the Constitution are that a matter may be interfered with when the parameters of the statute are not followed, or where “ manifest injustice has been done by virtue of judgement rendered under 37”.

It was further contended that since such a parameter has been exhausted under the Court's jurisdiction in light of Article 136, the matter cannot be further challenged under curative jurisdiction, because that is not an appeal. The appeal was exhausted by virtue of the Court's ruling under Article 136 Jurisdiction.

“Curative petition is not an appeal. 136 is an appeal at the discretion of the Supreme Court so how do you apply a curative petition applying a standard which has been rejected under the 136 jurisdiction”

CJI taking note of the same asked, “What happens in a situation where the division of the High Court interferes with an order under 34 on the ground that the yardstick of 34 was not correctly applied by the single judge , the High Court therefore sets aside the order”

Mr Sibal answered that if the Court decides to lay down that 'Manifest injustice' will be decided upon the facts of each case under curative jurisdiction, that would lead to opening the pandora's box.

Senior Advocate Mr Harish Salve who also appeared for DAMEPL argued on the factual merits of the award.

Mr Salve's contentions can be summarised as follows : (1) The Tribunal found the DMRC's failure to take effective steps to cure the defects in the project; (2) Having a clearance certificate of the CMRS (Commissioner of Metro Railway Safety) alone would not be sufficient to continue the project as DMRC did not fix the broken girders which would have led to criminal negligence if DAMEPL decided to run the metro. Mr Salve expressed, “If I ran the train however safe it was, without the CMRS certificate it would be illegal”; (3) The issue of notice of termination by the DMRC had not been raised and argued before the Court in the previous challenge under Section 37 of the Arbitration Act of 1996; (4) The termination notice by the DMRC means that specific performance in the contract law cannot be granted, Mr Salve stated, “They have the train, they have to pay for the train…and this award is for the train, the value of which calculated as per the contract and if the amount balloons because they have not paid, that is the law of arbitration”.

In their short rejoinder, Senior Advocate and former Atttorney General Mr Venugopal and Attorney General, Mr R Venkatramani reiterated their stand that the Tribunal held the official date of termination of notice to be 7.1.2013 and that the Supreme Court was wrong in holding to the contrary.

As per paragraph 31 of the impugned judgment, the Court made the following observations of the issue of termination notice :

“ ...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…”

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