Finality and justice: On the  Delhi Metro Rail Corporation case

DMRC dispute flags need for arbitrators to be more mindful of fact and law

April 12, 2024 12:15 am | Updated 08:51 am IST

The Supreme Court of India has used its extraordinary powers to set aside its own judgment of 2021 and relieve the Delhi Metro Rail Corporation (DMRC) of an exorbitant burden of ₹7,687 crore in a dispute with a former concessionare. The verdict vindicates the existence of the Court’s curative jurisdiction on the one hand, and flags, on the other, a possible conflict between finality in litigation and the need for substantive justice. In this case, an arbitral tribunal had ruled in 2017 in favour of Delhi Airport Metro Express Private Ltd. (DAMEPL), which got the contract to construct, maintain and operate the line from New Delhi railway station to Delhi airport. DAMEPL had invoked the termination clause in its agreement in October 2012, citing the DMRC’s alleged failure to cure some defects. While the DMRC invoked the arbitration clause, DAMEPL halted operations in June 2013 and handed over the line to the DMRC. Meanwhile, based on a joint application, the Commissioner of Metro Rail Safety (CMRS) issued a certificate of safety that helped revive the metro’s operations. On appeal, a single judge of the Delhi High Court upheld the arbitration award against DMRC, but a Division Bench set it aside, holding that the award suffered from perversity and patent illegality. In 2021, a two-judge Bench of the Supreme Court restored the award, reversing the High Court Bench’s findings in favour of the DMRC. A review petition was also rejected.

A curative petition is an extraordinary remedy, as it is filed after the apex Court refuses to review its judgment. There are only two main grounds for entertaining such a petition: to prevent abuse of process and to prevent gross miscarriage of justice, although it is not possible to enumerate all the circumstances that warrant it. It is founded on the principle that the court’s concern for justice is no less important than the principle of finality. Under India’s arbitration law, an award can be set aside only on limited grounds. It is normally inexpedient for arbitration issues to have many levels of litigation — in this case there was a statutory appeal to the High Court, and appeals to a Bench, the apex Court, a review petition and a curative petition. In the ultimate analysis, the DMRC case appears to have been rightly decided as the earlier two-judge Bench was ruled to have erred in setting aside the Delhi High Court Bench’s view that the CMRS certificate was a vital piece of evidence. The outcome only underscores the importance of arbitrators and judges sitting on appeal over awards getting both fact and law right, lest commercial litigants be discouraged from arbitration due to the constant stretching of the idea of finality. Not all disputants can go up to the level of a curative petition.

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