Major relief to Delhi Metro Rail Corporation

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Major relief to Delhi Metro Rail Corporation

Thursday, 11 April 2024 | Pioneer News Service | New Delhi

Major relief to Delhi Metro Rail Corporation

In  a major relief to Delhi Metro Rail Corporation (DMRC), the Supreme Court on Wednesday set aside its own three-year-old judgment that awarded in favour of the Reliance Infrastructure’s subsidiary, Delhi Airport Metro Express Private Limited (DAMEPL) in a dispute with Delhi Metro and asked the company to return about `2,500 crore it had already received, holding that the previous verdict caused “grave miscarriage of injustice” to a public utility which was saddled with an exorbitant liability.

Allowing the curative plea of the DMRC against the 2021 judgement, a Special Bench headed by Chief Justice DY Chandrachud said the order of the Delhi High Court division bench was a “well-considered decision” and “there was no valid basis” for the Supreme Court to interfere with it. “...we have come to the conclusion that this court erred in interfering with the decision of the Division Bench of the High Court. The judgment of the Division Bench in the appeal under Section 37 of the Arbitration and Conciliation Act 1996 was based on a correct application of the test under Section 34 of the Act”.

“The judgment of the two-judge Bench of this court, which interfered with the judgment of the Division Bench of the High Court, has resulted in a miscarriage of justice.

“The Division Bench applied the correct test in holding that the arbitral award suffered from the vice of perversity and patent illegality. The findings of the Division Bench were borne out from the record and were not based on a misappreciation of law or fact. This court failed, while entertaining the SLP under Article 136, to justify its interference with the well-considered decision of the Division Bench of the High Court,” it said in its 39 pages order. The decision of this court fails to adduce any justification bearing on any flaws in the manner of exercise of jurisdiction by the high court’s division bench under the Arbitration Act, it said.

“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,” it said, adding that this warrants the exercise of the power under Article 142 in a curative petition, said the bench which also comprised justices BR Gavai and Surya Kant. Now, the amount paid by the DMRC to the Reliance Infrastructure firm in pursuance of the award has to be paid back to the PSU.

As per the arbitral award, DAMEPL was entitled to `2782.33 crore plus interest in terms of the concession agreement. This amount had swelled up to `8,009.38 crore by February 14, 2022. The apex court had on September 9, 2021 upheld the 2017 arbitration award enforceable against DMRC and said there was a disturbing tendency of courts setting aside such awards. It had quashed the Delhi High Court order that set aside the arbitration award in favour of DAMEPL which pulled out of an agreement to run the Airport Express metro line over safety issues.

Later on November 23, 2021, the top court had dismissed the DMRC’s plea seeking review of its September 9, 2021 judgement saying no case for review is made out. Aggrieved by this order, DMRC filed a curative plea, the last legal recourse in SC, in 2022 against the dismissal of the review petition.

The case pertains to a 2008 concession agreement between DAMEPL and DMRC for Delhi Airport Express on a Build-operate-transfer (BOT) basis.

DAMEPL terminated the agreement in 2012 citing various structural defects in the metro line which were allegedly not cured by DMRC despite being pointed out by DAMEPL.

DMRC invoked an arbitration clause seeking to initiate arbitration. The main issue that arose for determination before the arbitral tribunal constituted under the concession agreement was the validity of the termination notice dated October 8, 2012.

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