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Referring to its impugned judgment passed by the top court in 2021 court has said the interference by the Court has resulted in restoring a patently illegal award which has caused a grave miscarriage of justice
The Supreme Court today has set aside the arbitration award passed in favor of Anil Ambani-promoted Reliance Infrastructure’s Delhi Airport Metro Express Pvt Ltd (DAMEPL).
Court has allowed a curative petition against a 2021 judgment of itself wherein after noting that “There is a disturbing tendency of courts setting aside arbitral awards,” the Court had passed an order quashing the Delhi High Court order that had set aside the arbitration award in favor of Anil Ambani's DAMEPL.
On the impugned judgment, court has said that the judgment of the two-judge Bench has resulted in a miscarriage of justice.
"This Court failed, while entertaining the Special Leave Petition under Article 136, to justify its interference with the well-considered decision of the Division Bench of the High Court. The decision of this Court fails to adduce any justification bearing on any flaws in the manner of exercise of jurisdiction by the Division Bench under Section 37 of the Arbitration Act. By setting aside the judgement of the Division Bench, 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...", a CJI Chandrachud led bench has noted.
The bench also comprising Justices BR Gavai and Surya Kant has added that the execution proceedings before the High Court for enforcing the arbitral award must be discontinued and the amounts deposited by the petitioner pursuant to the judgment of this Court shall be refunded.
Notably, court has clarified 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, under this Court’s review jurisdiction or curative jurisdiction, respectively", the judgment adds.
In the 2021 decision the division bench comprising Justice L. Nageswara Rao and Justice S. Ravindra Bhat hadupheld the 2017 arbitration award of Rs. 2,800 crores plus interest in favor of DAMEPL in relation to a dispute over the Delhi Airport Express Line. Including the interest, the award is worth over Rs. 4,600 crore.
The case pertains to a 2008 concession agreement that DMRC entered into with DAMEPL for design, installation, commissioning, operation, and maintenance of the Airport Metro Express Line on a Build–Operate–Transfer (BOT) basis, where DMRC itself undertook design and construction of basic civil structure for the project.
After completion of work, safety clearance was obtained from the Commissioner of Metro Railway Safety (CMRS) and commercial operations ensued in February 2011. However, after a little while, defects emerged in the civil structure constructed by DMRC.
Consequently, DAMEPL terminated the concession agreement on Oct 8, 2012, citing defects in the metro line. DAMEPL stated that despite being pointed out by DAMEPL, the same were allegedly not cured by DMRC within 90 days, resulting in an "event of default" under the agreement.
Case Title: Delhi Metro Rail Corporation Ltd. vs. Delhi Airport Metro Express Pvt. Ltd.
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