In a protracting legal dispute between Delhi Metro Rail Corporation and the Delhi Airport Metro Rail Corporation regarding the termination of a concession agreement for the Airport Metro Express Line Project, the Apex Court has rendered a ruling that marks a significant milestone in the Indian arbitral saga. This article delves into the verdict of the Apex Court in the curative petition filed by DAMEPL, wherein the Apex Court has deviated from the norm and opened the barricades set previously concerning the interference with an Arbitral Award.

Brief Factual Matrix:
A Concession Agreement was entered into by Delhi Metro Rail Corporation (“DMRC”) and Delhi Airport Metro Express Private Limited (“DAMEPL”) for the design, construction, commissioning, operation and maintenance of the Airport Metro Express Line Project at New Delhi. As per the terms of the Concession Agreement, DAMEPL was obligated to complete the project within a span of 2 years, followed by the maintenance period up to August 2038. However, in view of delays and alleged defects, DMRC initiated arbitration proceedings following DAMEPL’s termination of the agreement. The Award was in favour of DAMEPL, which was subsequently challenged before the Delhi High Court.

Proceedings before the Delhi High Court:
When the Award was challenged under Section 34 of the Arbitration and Conciliation Act,1996, the Single Bench of the High Court upheld the Award, stating that the Award demanded no interference even if an alternative perspective existed. However, the Division Bench of the High Court partially set aside the Award, deeming it perverse and blatantly illegal. It was held that the termination which was effective from the date of termination, was invalid and the speed and safety restrictions mandated by CMRS were not relied upon by DAMEPL. Moreover, CMRS certificates were overlooked by the Arbitral Tribunal, which were binding upon the DAMEPL. The aforesaid decision of the High Court was challenged in Appeal before the Apex Court.

The Apex Court’s Perspective:
The Apex Court set aside the decision of the Division Bench and restored the Award. The Review Petition filed by DMRC was also dismissed in November 2021. In a Curative Petition filed by DMRC, a few moot points came up for consideration, including the maintainability of the Petition and the restoration of the Award by the Apex Court.

The Bench comprising of Justices D.Y. Chandrachud, B.R. Gavai and Surya Kant, while drawing inference from the case of Rupa Hurra v. Ashok Hurra, (2002) 4 SCC 388, held that while curative petitions are exceptional, they are warranted in cases of abuse of process and gross miscarriage of justice. The Bench reiterated the test of “manifest injustice” wherein a curative petition could be entertained in the rarest of rare cases where a prima facie case was made out of grave miscarriage of justice.In regard to the limited scope of interference of Courts with Arbitral Awards, the Bench, while referring to the landmark judgements of Associate Builders v. DDA, (2015) 3 SCC 49 and Ssangyong Engg. and Construction v. NHAI, (2019) 15 SCC 131 opined that although the interpretation of a contract is exclusively within the domain of the arbitrator, the construction of a contract in a manner that no fair-minded or reasonable person would take is impermissible. Therefore, the decision of the Arbitral Tribunal must not be perverse or irrational i.e. where the findings are based on ignorance of evidence or facts.

Concluding remarks:
The Apex Court’s decision has a multi-fold impact on DMRC, one of which was dealing with financial strain, skyrocketed by the COVID-19 pandemic. In addition to the same, an adverse judgement could have driven the organization to the pinnacle of its already degrading financial situation. The sole discretion of the Apex Court to entertain a Curative Petition is also significant, wherein such cognizance is taken in exceptional cases where a clear miscarriage of justice is evident. Therefore, by becoming the exception to the rule and overturning the Award through a Curative Petition, the Supreme Court has shown its’ pivotal role in striking a balance between legal principles and equitable considerations and ensuring the integrity of a contract by maintaining the realm of the arbitral principles. From another perspective, it is pertinent to note that such interference cannot be a precedent for Courts to constantly go into the merits of an Award. As pointed out by the Apex Court previously, the curative jurisdiction should be sparingly exercised and must not open the floodgates or create a fourth or fifth stage of court intervention. This calls for a level-headed approach in Indian Arbitral jurisprudence. In future, this case shall stand as a beacon of legal clarity amidst the intricacies of public-private partnerships, guiding future arbitrators and acting as a glaring sample for upholding the integrity of arbitration while exercising caution in judicial intervention.

By - Swetalana Rout