Delhi Metro Rail Corporation Ltd. [Petitioner] Vs. Delhi Airport Metro Express Pvt. Ltd.   [Respondent]

Curative Petition (C) Nos.108-109 of 2022

(3JB, D Y Chandrachud, B R Gavai and Surya Kant JJ., delivered by D Y Chandrachud CJ.)

Facts: The curative jurisdiction of this Court under Article 142 of the Constitution has been invoked in regard to its decision in Delhi Airport Metro Express Private Limited vs. Delhi Metro Rail Corporation Ltd. The judgment remained undisturbed in the exercise of the review jurisdiction of this Court.

Issue: Whether this Court was justified in restoring the arbitral award which had been set aside by the Division Bench of the High court on the ground that it suffered from patently illegality?

Arguments on behalf of counsel for petitioner:

Considering the definition of ‘material adverse effect’ under the concession agreement, the defects had no material adverse effect on DAMEPL’s performance of obligations under the agreement, as is apparent from the running of the metro line. The purpose of the agreement was fully subserved, as evinced by the continuous running of the line. The purpose of the cure notice was to demand cure compliance from DMRC. As long as ‘effective steps’ were taken by DMRC, culminating in cure compliance under the statutory process under the Metro Railways (Operation and Maintenance) Act, 2002, the termination notice was invalid. Clause 29.5.1 of the agreement shows that the termination ought to have been affected after 90 days from the cure notice plus 90 days in addition. Termination was thus effective only on 07 January 2013 and on this date, none of the defects were pending to be rectified by DMRC. The sanction/certificate granted by CMRS was issued on a joint application by both the parties after thorough inspection of the operations. The terms of the agreement and the provisions relating to the CMRS process under the 2002 Act are intrinsically connected.

Arguments on behalf of counsel for respondent:

The curative petition is not maintainable as this Court cannot revisit the conclusions arrived at by the Tribunal. DMRC has taken over the project and has been operating it since 01 July 2012 without having paid for its operation between 01 January 2013 till 30 June 2013, except for a small fraction of the total awarded amount. Till early March 2023, the trains were running at 90kmph, as opposed to the speed of 120kmph at which they ought to have been running. The issue about the relevance of the CMRS certificate has been squarely addressed by the Single Judge and this Court. The arbitrator is the sole judge of the quality and the quantity of evidence. The award was made after 68 hearings and after consideration of 35,000 pages of documents and oral evidence. It has been two and a half years since this Court restored the award on 09 September 2021 and the review against this decision was dismissed on 23 November 2021. According to the decision in Rupa Hurra, the court is not supposed to sit over a judgment like a court of appeal. The scope of the review jurisdiction is narrow in itself and does not warrant rehearing and correction of a judgment. Curative proceedings cannot be treated as a second review.

Held: The court allowed the present curative petition and held that, “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 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, in terms of Rupa Hurra.”