‘Grave miscarriage of justice’: In respite for DMRC, SC sets aside 2021 order on paying Rs 2,782 crore to Reliance Infra subsidiary

The bench also comprising Justices B R Gavai and Surya Kant said, “The decision of this court fails to adduce any justification bearing on any flaws in the manner in of exercise of jurisdiction by the Division Bench under Section 37 of the Arbitration Act. By setting aside the judgment 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 (of the Constitution).”

It added, “The curative petition must be and is accordingly allowed. The parties are restored to the position in which they were on the pronouncement of the judgment of the Division Bench. The execution proceedings before the HC for enforcing the arbitral award must be discontinued and the amount deposited by the petitioner pursuant to the judgment of this court shall be refunded. The part of the awarded amount if any paid by the petitioner as a result of coercive action is liable to be restored in favour of the petitioner. The orders passed by the HC in the course of the execution proceedings for enforcing the arbitral award are set aside.”

The Delhi Airport Metro Express Line. (File Photo)

The court also clarified that “the exercise of the creative jurisdiction of this court should not be adopted as a matter of ordinary course. Curative jurisdiction should not be used to open the flood gates and create a fourth or fifth stage of court intervention in an arbitral award under this court’s review jurisdiction or curative jurisdiction, respectively”.

It further said, “In the specific facts and circumstances of this case to which we have adverted in the course of the discussion, we have come to the conclusion that this court erred in interfering with decision of the division bench of the High Court. The judgment of the division bench….. was based on a correct application of the test under Section 34. The judgment of the division bench provided more than adequate reasons to come to the conclusion that the arbitral award suffered from perversity and patent legality. There was no valid basis for this court to interfere under Article 136. The interference by this court has resulted in restoring a patently illegal award.

This has caused a grave miscarriage of justice. We have applied the standard of a grave miscarriage of justice in the exceptional circumstances of this case where the process of arbitration has been perverted by the arbitral tribunal to provide an undesired win to DAMEPL.”

The DMRC had invoked arbitration after DAMEPL terminated the concession agreement on the ground that defects pointed out in the construction were not cured by DMRC within the stipulated 90 days.

As per the concession agreement between the two, all civil works as well as the appointment of consultants, land acquisition and other clearances from the government and other authorities were to be obtained by DMRC and the design, supply, installation, testing and commissioning of various systems like rolling stock, power supply, overhead equipment, signalling, track system, platform, screen doors, ventilation, architectural finishing etc. were to be provided by DAMEPL.

However, with flaws being noticed in the construction after it had begun operations, DAMEPL sent a notice to DMRC “to cure the defects” within 90 days.

The arbitral tribunal “undertook an in-depth analysis of the defects in the civil structure and steps taken for their repair/rectification” and “concluded that there were as many as 1551 cracks in 367 girders, i.e., 72 % of the girders were affected by such cracks” and that “these defects were neither cured nor effective steps taken by DMRC within the cure period up to 08.10.2012, constituting a material breach on the part of DMRC”.

The DMRC challenged this in the high court where a single judge upheld the award. But on appeal, a division bench reversed the single judge findings and partly set aside the arbitral award against which DAMEPL approached the Supreme Court.

Union minister Hardeep Singh Puri termed the SC judgment as “historic” and congratulated DMRC on achieving the landmark verdict.

सत्यमेव जयते!
Historic judgement by the Hon‘ble SC in the curative petition filed by @OfficialDMRC in the case pertaining to the Airport Metro Line.
Many congratulations to Team DMRC on achieving this landmark verdict.

Our public sector utilities are strong & resolute in… pic.twitter.com/P6t5HLm7cv

— Hardeep Singh Puri (मोदी का परिवार) (@HardeepSPuri) April 10, 2024

In a post on X, Puri said: “Our public sector utilities are strong and resolute in delivery of public service under the firm leadership of PM Narendra Modi and they remain steadfast in pursuit of fairness and justice.”