* Author
[2024] 4 S.C.R. 473 : 2024 INSC 292
Delhi Metro Rail Corporation Ltd.
v.
Delhi Airport Metro Express Pvt. Ltd.
Curative Petition (C) Nos.108-109 of 2022
In
Review Petition (C) Nos.1158-1159 of 2021
In
(Civil Appeal Nos 5627-5628 of 2021)
10 April 2024
[Dr Dhananjaya Y Chandrachud,* B R Gavai and
Surya Kant, JJ.]
Issue for Consideration
(i) Whether the curative petition is maintainable; and (ii) Whether
this Court (two-judge Bench) 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.
Headnotes
Curative Petition – Curative Jurisdiction may be invoked if
there is a miscarriage of justice:
Held: The Supreme Court laid down an overarching principle in
Rupa Hurra v. Ashok Hurra [2002] 2 SCR 1006 that the Court may
entertain a curative petition to (i) prevent abuse of its process; and
(ii) to cure a gross miscarriage of justice – The enumeration of
the situations in which the curative jurisdiction can be exercised
is not intended to be exhaustive – The Court went on to lay down
certain procedural requirements to entertain a curative petition
such as a certificate by a Senior Advocate about fulfilling of the
requirements. [Paras 33 and 34]
Arbitration and Conciliation Act 1996 – s.34 – Scope of
interference of courts with arbitral awards:
Held: Section 34 of the Arbitration Act delineates the grounds for
setting aside an arbitral award – In addition to the grounds on
which an arbitral award can be assailed laid down in section 34(2),
there is another ground for challenge against domestic awards,
such as the award in the present case – Under Section 34(2-A)
of the Arbitration Act, a domestic award may be set aside if the
474 [2024] 4 S.C.R.
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Court finds that it is vitiated by ‘patent illegality’ appearing on the
face of the award. [Paras 36, 37]
Arbitration and Conciliation Act 1996 – s.34 – Setting aside
of domestic award – Ground of patent illegality:
Held: The ground of patent illegality is available for setting aside
a domestic award, if the decision of the arbitrator is found to be
perverse, or so irrational that no reasonable person would have
arrived at it; or the construction of the contract is such that no fair
or reasonable person would take; or, that the view of the arbitrator
is not even a possible view – A ‘finding’ based on no evidence
at all or an award which ignores vital evidence in arriving at its
decision would be perverse and liable to be set aside under the
head of ‘patent illegality’ – An award without reasons would suffer
from patent illegality – The arbitrator commits a patent illegality by
deciding a matter not within his jurisdiction or violating a fundamental
principle of natural justice. [Para 40]
Constitution of India – Art.136 – Arbitration and Conciliation
Act 1996 – ss. 34, 37 – Remedy u/Art. 136 against a decision
rendered in appeal u/s. 37 of 1996 Act:
Held: In the statutory scheme of the Arbitration Act, a recourse to
s.37 is the only appellate remedy available against a decision u/s.
34 – The Constitution, however, provides the parties with a remedy
u/Art. 136 against a decision rendered in appeal u/s. 37 – This
is the discretionary and exceptional jurisdiction of the Supreme
Court to grant Special Leave to Appeal – While adjudicating the
merits of a Special Leave Petition and exercising its power u/Art.
136, this Court must interfere sparingly and only when exceptional
circumstances exist, justifying the exercise of this Court’s discretion
– The Court must apply settled principles of judicial review such
as whether the findings of the High Court are borne out from the
record or are based on a misappreciation of law and fact – In
particular, this Court must be slow in interfering with a judgement
delivered in exercise of powers u/s. 37 unless there is an error in
exercising of the jurisdiction by the Court u/s. 37. [Paras 42 and 43]
Curative Petition – The petitioner-DMRC and DAMEPL (a
special purpose vehicle incorporated by a consortium)
entered into the Concession Agreement (2008 agreement) –
DAMPEL was to undertake among other things, the design,
supply, installation, testing and commissioning of railway
[2024] 4 S.C.R. 475
Delhi Metro Rail Corporation Ltd. v.
Delhi Airport Metro Express Pvt. Ltd.
system – Dispute arose between the parties – DAMEPL
alleged that the line was unsafe to operate – Operations were
stopped – DAMEPL issued a notice to DMRC listing defects
attributable to faulty construction and deficient designs
which affected project safety – DMRC was requested to
cure the defects within 90 days from the date of this notice
– Thereafter, DAMPEL issued another notice terminating the
2008 agreement as defects were not cured within 90 days –
Arbitral Tribunal passed award in favour of DAMPEL – Single
Judge of the High Court dismissed the petition filed u/s. 34
of 1996 Act – Division Bench of the High Court allowed the
appeal u/s. 37 of 1996 Act in part – DAMEPL moved a SLP
u/Art. 136 of the Constitution – A two-judge bench of the
Supreme Court allowed the appeal, and restored the award
– Correctness:
Held: Commissioner of Metro Railway Safety (CMRS), after inquiry
and inspection had issued sanction for running of the metro line
– In the instant case, the Division Bench of the High Court found
the award to be perverse, irrational and patently illegal since it
ignored the vital evidence of CMRS certification in deciding the
validity of termination – It underlined the significance of the CMRS
sanction under the Metro Railways (Operation and Maintenance)
Act, 2002 – Also, clause 29.5.1(i) of the 2008 agreement entitles
the concessionaire to terminate the agreement if DMRC “failed to
cure such breach or take effective steps for curing such breach”
within the cure period – Pertinently, the clause uses two separate
phrases, “cure” and “effective steps to cure” – The Tribunal found
that since certain defects remained after the cure period, this was
indicative of the fact that the defects were not cured and that no
effective steps were taken – The Tribunal fails to explain what
amounts to an ‘effective step’ and how the steps taken by DMRC
were not effective, within the meaning of the phrase – Parties
clearly intended that once a cure notice was served on a party, it
would be open to them to either cure defects or to initiate effective
steps, even if they could not culminate into the complete curing of
defects within the cure period – Incremental progress, even if it
does not lead to complete cure, is an acceptable course of action
to prevent termination according to the 2008 Agreement – The
decisions of the Single Judge of the High Court and this Court
(two-judge bench) are similarly silent on the aspect of “effective
steps” – The judgment of this Court also never tested the relevance
476 [2024] 4 S.C.R.
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of the CMRS certificate vis-à-vis “effective steps” – Admittedly,
some of the defects were cured in their entirety and steps were
taken by DMRC to cure the remainders – DMRC did take certain
steps to alleviate DAMEPL’s concerns so as to warrant this change
of position – There is no explanation forthcoming in the award
about why none of these steps initiated during the cure period
were ‘effective steps’ – This gap in reasoning stems from the
arbitral tribunal wrongly separating the issue of termination and
the CMRS certificate – The structure and safety of the project,
as certified by the CMRS, were thus relevant before the Tribunal,
making the CMRS certificate a vital piece of evidence in deciding
the issue – The CMRS certificate was relevant evidence about
the safety of the structure – The arbitral tribunal erroneously
rejected the CMRS sanction as irrelevant – The Division Bench
correctly held that the arbitral tribunal ignored vital evidence on
the record, resulting in perversity and patent illegality, warranting
interference – The conclusions of the Division Bench are, thus, in
line with the settled precedent including the decisions in Associate
Builders and Ssangyong – 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
– Thus, Curative Petitions allowed. [Paras 44, 48, 49, 50, 53,
54, 58, 67, 68]
Case Law Cited
Rupa Hurra v. Ashok Hurra [2002] 2 SCR 1006 : 2002
4 SCC 388; Associate Builders v. Delhi Development
Authority [2014] 13 SCR 895 : 2015 3 SCC 49;
Ssangyong Engineering & Construction Co. Ltd. v. NHAI
[2019] 7 SCR 522 : 2019 15 SCC 131 – relied on.
List of Acts
Arbitration and Conciliation Act 1996; Arbitration and Conciliation
(Amendment) Act, 2015; Metro Railways (Operation and
Maintenance) Act, 2002.
List of Keywords
Curative Petition; Arbitral awards; Miscarriage of justice; Patent
illegality; Special leave to appeal by the Supreme Court; Concession
Agreement; Arbitration; Defects; Faulty construction; Deficient
designs; Cure; Effective steps to cure; Vital evidence on record.
[2024] 4 S.C.R. 477
Delhi Metro Rail Corporation Ltd. v.
Delhi Airport Metro Express Pvt. Ltd.
Case Arising From
INHERENT JURISDICTION: Curative Petition(C) Nos. 108-109 of
2022
In
Review Petition(C) Nos. 1158-1159 of 2021
In
Civil Appeal Nos. 5627-5628 of 2021
From the Judgment and Order dated 23.11.2021 in R.P.(C) No. 1158
and 1159 of 2021 and dated 09.09.2021 in C.A. No. 5627 and 5628
of 2021 of the Supreme Court of India
Appearances for Parties
R. Venkataramani, AG., K.K. Venugopal, Parag P Tripathi, Maninder
Singh, Sr. Advs., Tarun Johri, Ankur Gupta, Vishwajeet Tyagi,
Srinivasan Ramaswamy, Chitvan Singhal, Ms. Ashita Chawla, Ankur
Talwar, Ms. Arushi Mishra, Ameyavikrama Thanvi, Kartikey Aggarwal,
Advs. for the Petitioner.
Harish N Salve, Kapil Sibal, J.J. Bhatt, Prateek Seksaria, Sr. Advs.,
Mahesh Agarwal, Rishi Agrawala, Shri Venkatesh, Megha Mehta
Agarwal, Pranjit Bhattacharya, Ms. Madhavi Agarwal, Suhael Buttan,
Vineet Kumar, Ms. Manisha Singh, Nishant Chothani, E.C. Agrawala,
Advs. for the Respondent
Judgment / Order of the Supreme Court
Judgment
Dr Dhananjaya Y Chandrachud, CJI
Table of Contents*
A. Factual Background............................................................ 3
B. DMRC’s claim and the Tribunal’s findings......................... 7
C. Decisions of the High Court............................................... 10
D. Judgment of this Court in appeal....................................... 11
E. Issues in the Curative Petition........................................... 12
* Ed. Note: Pagination as per the original Judgment.
478 [2024] 4 S.C.R.
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F. Submissions........................................................................ 12
G. Analysis............................................................................... 16
I. Curative Jurisdiction may be invoked if there is a
miscarriage of justice..................................................... 16
II. Scope of interference of courts with arbitral awards..... 19
III.The award was patently illegal....................................... 24
i. Interpretation of the termination clause by the
Tribunal was unreasonable.................................... 26
ii. The award overlooked vital evidence and
matters on the record............................................ 29
H. Conclusion........................................................................... 37
1. 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.
1
. The judgment remained undisturbed in the exercise of the
review jurisdiction of this Court.2
A. Factual Background
2. The petitioner, Delhi Metro Rail Corporation3 is a state-owned
company wholly owned by the Government of India and the National
Capital Territory of Delhi. The respondent, Delhi Airport Metro
Express Private Limited4
is a special-purpose vehicle incorporated
by a consortium comprising of Reliance Infrastructure Limited
and Construcciones Y Auxiliar de Ferrocarriles SA, Spain. The
consortium bagged the contract for the construction, operation and
maintenance of the Delhi Airport Metro Express Ltd5
in 2008. The
Concession Agreement6 envisaged a public-private partnership
1 (2022) 1 SCC 131.
2 Review Petition (C) Nos. 1158-1159/2921.
3 “DMRC”
4 “DAMEPL”/” Concessionaire”
5 “AMEL”
6 “2008 Agreement”
[2024] 4 S.C.R. 479
Delhi Metro Rail Corporation Ltd. v.
Delhi Airport Metro Express Pvt. Ltd.
for providing metro rail connectivity between New Delhi Railway
Station and the Indira Gandhi International Airport and other points
within Delhi.
3. Under the 2008 Agreement, DAMEPL was granted exclusive rights,
license and authority to implement the project and concession in
respect of AMEL. This included the right to manage and operate
the Project as a commercial enterprise. DMRC was to undertake
clearances and bear costs relating to land acquisition, and civil
structures, while DAMEPL was to undertake among other things,
the design, supply, installation, testing and commissioning of railway
systems. DAMEPL was to complete the work in two years, and
thereafter, to maintain AMEL until August 2038.
4. In April 2012, DAMEPL sought a deferment of the concession fee,
citing delays in providing access to the stations by DMRC. DAMEPL
stated that while AMEL had been running without a glitch since 23
February 2011, the retail activity had not picked pace. DAMEPL
urged DMRC to extend their support, to this first-of-its-kind publicprivate partnership by deferring the concession fee payable by
DAMEPL.
5. There was an exchange of correspondence between the parties
which ultimately led the Ministry of Urban Development to convene
a meeting of stakeholders in July 2012. A Joint Inspection Committee
was set up to inspect the defects alleged by DAMEPL.
6. Meanwhile, DAMEPL expressed its intention to halt operations,
alleging that the line was unsafe to operate. Operations were stopped
on 08 July 2012. On 09 July 2012, DAMEPL issued a notice to DMRC
containing a ‘non-exhaustive’ list of eight defects which according to
them, affected the performance of their obligations under the 2008
Agreement7
. The notice stated that the defects were attributable to
faulty construction and deficient designs which affected project safety.
7. DAMEPL stated that the defects caused a “material adverse effect”
on the performance of the obligations by it to operate, manage and
maintain the project. DMRC was therefore requested to cure the
defects within 90 days from the date of this notice, failing which
it stated that it would be considered that a “Material Breach” and
7 “Cure Notice”
480 [2024] 4 S.C.R.
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a “DMRC Event of Default” had occasioned, entitling DAMEPL to
terminate the 2008 agreement.
8. On 8 October 2012, DAMPEL issued a notice terminating the 2008
agreement.8 The termination notice stated that as 90 days had
elapsed since the cure notice in spite of which the defects had not
been cured within the ‘cure period’, DAMEPL as Concessionaire
was terminating the agreement in terms of clause 29.5.1 of the
2008 agreement.
9. DMRC initiated conciliation under clause 36.1 of the 2008 Agreement.
Since conciliation did not succeed, DMRC initiated arbitration
proceedings on 23 October 2012 under clause 36.2 of the 2008
agreement.
10. On 30 June 2013, DAMEPL halted operations and handed over the
line to DMRC. Before this, on 19 November 2012, both parties made
a joint application to the Commissioner of Metro Railway Safety9
for re-opening of AMEL for public carriage of passengers. Enclosed
with the application, was an administrative note jointly signed by
representatives of both DAMEPL and DMRC, which we shall avert
to in the course of the judgment.
11. Following this application, after inquiry and inspection, the CMRS
issued sanction on 18 January 2013. This sanction was subject to
certain conditions including speed restrictions. Specifically, the metro
was to be run at a speed of 50kmph, and an increase in speed beyond
50kmph up to 80kmph was to be authorized in steps of 10kmph at
a time. For an increase in speed beyond 80kmph, DMRC was to
approach the Commissioner for sanction with a justification as to
the improvements carried out by it.
12. Consequently, on 22 January 2013, AMEL operations were
commenced by DAMEPL. On 30 June 2013, the project assets were
handed over by DAMEPL to DMRC. After that, from 01 July 2013,
DMRC continued AMEL operations.
13. In August 2013, the arbitral tribunal comprising Mr AP Mishra, Mr
SS Khurana and Mr HL Bajaj was constituted.10 On 11 May 2017,
8 “Termination Notice”
9 “CMRS”/”Commissioner”
10 “Tribunal”
[2024] 4 S.C.R. 481
Delhi Metro Rail Corporation Ltd. v.
Delhi Airport Metro Express Pvt. Ltd.
the three-member Tribunal passed a unanimous award in favour of
DAMEPL11.
14. The award held that DAMEPL was entitled first, to the termination
payment of Rs. 2782.33 Crores plus interest in terms of the
concession agreement; second, to expenses incurred in operating
AMEL from 07 January 2013 to 30 June 2013 and debt service made
by DAMEPL during this period, of Rs 147.52 Crores plus interest at
11% per annum from the date of payment of stamp duty; third, to
the refund of the bank guarantee amounting to Rs 62.07 Crores plus
interest at 11% p.a. which had been encashed; fourth, to security
deposits with the service providers, amounting to Rs 56.8 Lakhs
plus interest at 11% p.a.; and that DMRC was entitled to Rs 46.04
Crores as Concession fee for the period from 23 February 2012 to
7 January 2013.
15. Assailing the award, DMRC instituted an application under Section
34 of the Arbitration and Conciliation Act 199612 before the Delhi High
Court. The Single-Judge of the High Court dismissed the petition13.
This gave rise to an appeal under Section 37 before a Division Bench
of the High Court. The appeal was partly allowed.14
16. Against the decision of the Division Bench of the High Court, DAMEPL
moved a Special Leave Petition under Article 136 of the Constitution.
A two-judge bench of this Court allowed the appeal, and restored
the award. The review petition assailing this decision was dismissed.
Thus, the curative petition.
B. DMRC’s claim and the Tribunal’s findings
17. Before the Tribunal, DMRC claimed that – (i) it took steps to cure
the defects immediately after it received the cure notice, including
approaching SYSTRA -the original design consultant and convening
meetings with the Ministry of Urban Development and that DAMEPL
actively participated in all of these steps; (ii) that the real reason
for the termination notice was that DAMPL had ceased to find the
project financially viable. DMRC sought, inter alia, quashing of the
11 “Award”
12 “Arbitration Act”.
13 OMP (COMM) 307/2017 & OMP (I) (COMM) 200/2017 (‘Single Judge’)
14 FAO(OS)(COMM) 58/2018 & CM Nos. 13434/2018 (‘Division Bench’)
482 [2024] 4 S.C.R.
Digital Supreme Court Reports
termination notice; and a direction to the respondent to resume the
performance of its obligations under the 2008 agreement. DAMEPL,
on the other hand, claimed that there were defects attributable to
DMRC’s faulty design; that these defects were not cured and no
effective steps were taken to cure them within the 90-day cure
period, resulting in material adverse effects to DAMEPL, entitling it
to terminate the concession agreement.
18. The Tribunal was required to adjudicate on the validity of the
termination notice. It framed the following issues:
“Were there any defects in the civil structure of the airport
metro line?
If there were defects, did such defects have a material
adverse effect on the performance of the obligation of
DAMEPL under CA?
If there were defects in the civil structure, which had
a material adverse effect on the performance of the
obligations under the CA by DAMEPL, have such defects
been cured by DMRC and/or have any effective steps been
taken within a period of 90 days from the date of notice
by DAMEPL to cure the defects by DMRC and thus, were
DMRC in breach of the CA as per 29.5.1 (i)?”
19. The Tribunal undertook an analysis of the defects in the structure
and whether they had been cured or effective steps taken during
the cure period. It noted that 72% of the girders were affected by
cracks; the cause of the cracks was uncertain; the depth of the
cracks was not reliably determined; and that the inspection for
repairs carried out at the instance of DMRC was ‘non-serious’.
Further, it noted that there were twists in about 80 girders and
gaps between the shear key and the girders which were not cured
by DMRC in the cure period. Taken together, these defects were
considered to have compromised the integrity of the structure. This,
the Tribunal held, amounted to a breach of DMRC’s obligations
under the 2008 agreement resulting in a material adverse effect
on the concessionaire.
20. The Tribunal framed the legal issues that arose for its consideration.
The issue about the validity of the termination agreement was framed
in the following terms:
[2024] 4 S.C.R. 483
Delhi Metro Rail Corporation Ltd. v.
Delhi Airport Metro Express Pvt. Ltd.
“D. Was DAMEPL entitled to or justified in termination of
the CA, since the cost of repairs of the alleged defects was
only approximately Rs.14 crores as compared to the total
costs of the project of approximately Rs. 5700 crores?”
21. The issue pertaining to the CMRS certificate was framed as follows:
“H. Did the issuance of certificate by CMRS show that the
defects were duly cured?”
22. Both these issues were answered in the negative by the Tribunal. On
Issue ‘D’ about the validity of the termination, it was held that since
the Tribunal had found that there were defects in the civil structure,
which remained uncured during the cure period, the amount incurred
by DMRC in repairs compared to the overall cost of the project was
irrelevant.15 On issue ‘H’, about the CMRS certificate, the tribunal
found that the CMRS sanction mandated rigorous monitoring of
operations of the line and imposed a speed restriction. Since the
purpose of the line was to serve as a high-speed line, the tribunal found
that the speed restrictions meant that this purpose was not served
and therefore, the CMRS certificate or the subsequent operation of
the line were not relevant in deciding the issues before it.16
C. Decisions of the High Court
23. The Single Judge of the High Court17, deciding the Section 34
application, upheld the award, observing that so long as the award
was reasonable and plausible, considering the material before the
Tribunal no interference was warranted, even if an alternate view
was possible. It was held that the Tribunal, in this case, had analysed
material and evidence in great detail, and arrived at a plausible
conclusion.
24. The Division Bench of the High Court18 partly set aside the award
as perverse and patently illegal, for the following reasons:
24.1. On the validity of the termination, ex-facie, the termination
which was effective immediately from the date of termination
15 The Award, para 93.
16 ibid, paras 105-108.
17 “Single Judge”.
18 “Division Bench”.
484 [2024] 4 S.C.R.
Digital Supreme Court Reports
was invalid. There was some ambiguity on the relevant date
of termination. The award did not interpret clause 29.5.1(i)
of the concession agreement regarding the duration of the
cure period;
24.2. The speed restrictions were not stated as the reason for
termination in the cure or termination notices and there was no
deliberation on this being a justification for termination before
the Tribunal. Thus, the award was silent and unreasoned on
this issue; and
24.3. Underlining the significance of the CMRS sanction under the
Act of 2002, the findings of the tribunal on this issue were
incorrect because (i) the award overlooked the legal effect
of the CMRS certificate which was binding on the tribunal;
and (ii) the award erroneously treated the CMRS certificate
as irrelevant to the issue of the validity of the termination by
wrongly separating the issue of defects and material adverse
effects from the issue of the certificate.
D. Judgment of this Court in appeal
25. This Court set aside the decision of the Division Bench and restored
the arbitral award on the following grounds:
25.1. There was no ambiguity in the date of termination and even
if a different view from that of the tribunal were possible,
construction of the provisions of the contract was within the
exclusive domain of the tribunal;
25.2. The award was not perverse. The finding of the tribunal that
the defects were not cured was a finding of fact, not warranting
interference;
25.3. DMRC had not contended before the Tribunal that the
certificate was binding and conclusive of the fact that the
defects were cured or that effective steps had been taken; and
25.4. The Division Bench of the High Court was in error in
holding that the issue of the CMRS certificate was wrongly
separated from the issue of defects. It held that dealing with
the certificate separately from the validity of termination did
not render the tribunal’s findings on the latter erroneous. The
Tribunal comprised of engineers and the award could not
[2024] 4 S.C.R. 485
Delhi Metro Rail Corporation Ltd. v.
Delhi Airport Metro Express Pvt. Ltd.
be scrutinised in the same manner as an award drawn by a
legally trained mind.
26. The review petition against the above judgment of this Court was
dismissed on 23 November 2021.
E. Issues in the Curative Petition
27. The issues that arise for our consideration are (i) whether the
curative petition is maintainable; and (ii) 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.
F. Submissions
28. We have heard Mr R Venkataramani, Attorney General for India
and Mr K K Venugopal, Mr Parag Tripathi, and Mr Maninder Singh
senior counsel on behalf of the petitioners. They made the following
submissions:
28.1. 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;
28.2. 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, 200219, the termination notice was
invalid;
28.3. Clause 29.5.1 of the agreement shows that the termination
ought to have been effected 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;
19 The 2002 Act
486 [2024] 4 S.C.R.
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28.4. 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;
28.5. The Tribunal should have considered the binding effect of the
CMRS sanction as the issue of speed was neither raised, nor
deliberated before it and was irrelevant to the termination;
28.6. The line has been running since 1 July 2013. The speed
of operations was sanctioned at 50kmph, and has been
progressively increased to 60 kmph in January 2013, 80 kmph
in August 2013, 90 kmph in July 2019, and ultimately 100
kmph and then 110 kmph in 2023. The metro was running
at 80 kmph prior to the termination of the agreement. It is
currently running at 120kmph for which a fresh sanction was
obtained from the CMRS. The smooth operation of the metro
line for five and a half years, until the date of the award was
entirely ignored by the Tribunal, making the award perverse;
28.7. The running of the metro line shows that even if there were
defects, they did not render the metro unviable nor did they
interfere with DAMEPL’s obligations under the agreement.
Thus, the award is perverse and patently illegal;
28.8. The tribunal ignored vital evidence, warranting the High
Court’s interference under Section 37 of the Arbitration Act.
The miscarriage of justice principle is informed by the scheme
of the Arbitration Act;
28.9. The High Court’s interference with the patent illegality was
justified and this Court under Article 136 ought to have been slow
to interfere with the decision of the Division Bench of the high
Court. Miscarriage of justice in terms of the decision in Rupa
Hurra vs. Ashok Hurra20 is linked with patent illegality. The High
Court’s interference under Section 37 was justified because the
exercise of jurisdiction under Section 34 was erroneous; and
28.10. The issue of the fitness of the line was a matter falling under
the 2002 Act under which the Commissioner was the final
20 [2002] 2 SCR 1006 : 2002 4 SCC 388
[2024] 4 S.C.R. 487
Delhi Metro Rail Corporation Ltd. v.
Delhi Airport Metro Express Pvt. Ltd.
authority to decide on the safety of the metro. The certificate
could not have been substituted by the Tribunal’s finding on
safety of the line.
29. We have heard Mr Harish Salve, Mr Kapil Sibal, Mr JJ Bhatt and Mr
Prateek Seksaria, learned senior counsel for the respondent. They
have made the following submissions:
29.1. The curative petition is not maintainable as this Court cannot
revisit the conclusions arrived at by the Tribunal;
29.2. 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;
29.3. 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;
29.4. 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;
29.5. 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;
29.6. According to the decision in Rupa Hurra (supra), 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; and
29.7. DAMEPL is not unjustly enriching itself. DAMEPL completed
the project with an investment of Rs 2802 Crores comprising
of debt and equity contributions and it continued to service
the debt even after handing over the line to DMRC. DMRC on
the other hand, has paid the decretal amount of Rs 2599.18
Crores while Rs 5088 Crores under the decree is outstanding
as on 31 January 2024.
488 [2024] 4 S.C.R.
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G. Analysis
I. Curative Jurisdiction may be invoked if there is a
miscarriage of justice
30. Senior Counsel for the respondent set forth preliminary objections
challenging the maintainability of the Curative Petition, in view of the
scope of that jurisdiction delineated inter alia in the decision in Rupa
Hurra (supra) We will first lay down the contours of the jurisdiction
of this Court to entertain a curative petition in exercise of its inherent
powers under Article 142.
31. In Rupa Hurra (supra), a Constitution Bench of this Court dwelt on
whether any relief is available against a final judgement of this Court
after the dismissal of a petition seeking review of the judgement.
Two opinions were authored. The main judgment was by Justice
Syed Shah Quadri (on behalf of Chief Justice S P Bharucha, Justice
Variava, Justice Shivraj Patil and himself). A concurring opinion was
authored by Justice U C Banerjee.
32. Justice Quadri observed that the concern of the Court for rendering
justice in a cause cannot be considered less important than the
principle of finality. There are certain situations, the opinion observed,
which would require reconsideration of a final judgement even after
the review has been dismissed to set right a miscarriage of justice.
Such circumstances, the court held, are those where declining to
reconsider the judgement would be oppressive to judicial conscience
and cause the perpetuation of irremediable injustice. Justice Quadri
observed:
“42. … the duty to do justice in these rarest of rare cases
shall have to prevail over the policy of certainty of judgment
as though it is essentially in the public interest that a final
judgment of the final court in the country should not be
open to challenge, yet there may be circumstances, as
mentioned above, wherein declining to reconsider the
judgment would be oppressive to judicial conscience
and would cause perpetuation of irremediable
injustice.”
(emphasis supplied)
33. This Court laid down an overarching principle that the Court may
entertain a curative petition to (i) prevent abuse of its process; and
[2024] 4 S.C.R. 489
Delhi Metro Rail Corporation Ltd. v.
Delhi Airport Metro Express Pvt. Ltd.
(ii) to cure a gross miscarriage of justice.21 The Court provided
examples of such circumstances, such as a violation of the principles
of natural justice; or a situation where the Judge fails to disclose his
connection with the subject matter or the parties, giving scope for
an apprehension of bias. However, the Court observed that it is not
possible to exhaustively enumerate the grounds on which a curative
petition may be entertained. The Court noted as follows:
“50. The next step is to specify the requirements to entertain
such a curative petition under the inherent power of this
Court so that floodgates are not opened for filing a second
review petition as a matter of course in the guise of a
curative petition under inherent power. It is common ground
that except when very strong reasons exist, the Court
should not entertain an application seeking reconsideration
of an order of this Court which has become final on
dismissal of a review petition. It is neither advisable nor
possible to enumerate all the grounds on which such
a petition may be entertained.
51. Nevertheless, we think that a petitioner is entitled to
relief ex debito justitiae if he establishes (1) violation of the
principles of natural justice in that he was not a party to
the lis but the judgment adversely affected his interests or,
if he was a party to the lis, he was not served with notice
of the proceedings and the matter proceeded as if he had
notice, and (2) where in the proceedings a learned Judge
failed to disclose his connection with the subject-matter or
the parties giving scope for an apprehension of bias and
the judgment adversely affects the petitioner.”
34. The enumeration of the situations in which the curative jurisdiction
can be exercised is thus not intended to be exhaustive. The Court
went on to lay down certain procedural requirements to entertain a
curative petition such as a certificate by a Senior Advocate about
fulfilling of the requirements.
35. In his concurring opinion, Justice Banerjee also laid down a similar
test of ‘manifest injustice’ to exercise the jurisdiction of this Court
21 Rupa Hurra, para 49.
490 [2024] 4 S.C.R.
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under Article 142 while entertaining a curative petition. In essence, the
jurisdiction of this Court, while deciding a curative petition, extends
to cases where the Court acts beyond its jurisdiction, resulting in
a grave miscarriage of justice. We now proceed to lay down the
scope of jurisdiction of this Court and the competent courts below
while dealing with cases arising out of an application to set aside
an arbitral award under Section 34 of the Arbitration Act.
II. Scope of interference of courts with arbitral awards
36. Section 34 of the Arbitration Act delineates the grounds for setting
aside an arbitral award. The provision, as amended by the Arbitration
and Conciliation (Amendment) Act, 2015 reads as follows:
“34. Application for setting aside arbitral award.—
…
(2) An arbitral award may be set aside by the Court only if—
…
(b) the Court finds that--
(i) the subject-matter of the dispute is not capable of
settlement by arbitration under the law for the time being
in force, or
(ii) the arbitral award is in conflict with the public policy
of India.
Explanation 1. --For the avoidance of any doubt, it is
clarified that an award is in conflict with the public policy
of India, only if,--
(i) the making of the award was induced or affected by
fraud or corruption or was in violation of section 75 or
section 81; or
(ii) it is in contravention with the fundamental policy of
Indian law; or
(iii) it is in conflict with the most basic notions of morality
or justice.
Explanation 2. --For the avoidance of doubt, the test as
to whether there is a contravention with the fundamental
[2024] 4 S.C.R. 491
Delhi Metro Rail Corporation Ltd. v.
Delhi Airport Metro Express Pvt. Ltd.
policy of Indian law shall not entail a review on the merits
of the dispute.
(2A) An arbitral award arising out of arbitrations other
than international commercial arbitrations, may also
be set aside by the Court, if the Court finds that the
award is vitiated by patent illegality appearing on the
face of the award:
Provided that an award shall not be set aside merely on
the ground of an erroneous application of the law or by
reappreciation of evidence.”
(emphasis supplied)
37. The contours of the power of the competent court to set aside an
award under Section 34 has been explored in several decisions of
this Court. In addition to the grounds on which an arbitral award
can be assailed laid down in Section 34(2), there is another ground
for challenge against domestic awards, such as the award in the
present case. Under Section 34(2-A) of the Arbitration Act, a domestic
award may be set aside if the Court finds that it is vitiated by ‘patent
illegality’ appearing on the face of the award.
38. In Associate Builders vs. Delhi Development Authority22, a twojudge Bench of this Court held that although the interpretation of a
contract is exclusively within the domain of the arbitrator, construction
of a contract in a manner that no fair-minded or reasonable person
would take, is impermissible. A patent illegality arises where the
arbitrator adopts a view which is not a possible view. A view can be
regarded as not even a possible view where no reasonable body of
persons could possibly have taken it. This Court held with reference
to Sections 28(1)(a) and 28(3), that the arbitrator must take into
account the terms of the contract and the usages of trade applicable
to the transaction. The decision or award should not be perverse
or irrational. An award is rendered perverse or irrational where the
findings are (i) based on no evidence; (ii) based on irrelevant material;
or (iii) ignores vital evidence. Patent illegality may also arise where
the award is in breach of the provisions of the arbitration statute, as
when for instance the award contains no reasons at all, so as to be
22 [2014] 13 SCR 895 : 2015 3 SCC 49.
492 [2024] 4 S.C.R.
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described as unreasoned. A fundamental breach of the principles
of natural justice will result in a patent illegality, where for instance
the arbitrator has let in evidence behind the back of a party. In the
above decision, this Court observed:
“31. The third juristic principle is that a decision which is
perverse or so irrational that no reasonable person would
have arrived at the same is important and requires some
degree of explanation. It is settled law that where:
(i) a finding is based on no evidence, or
(ii) an Arbitral Tribunal takes into account something
irrelevant to the decision which it arrives at; or
(iii) ignores vital evidence in arriving at its decision,
such decision would necessarily be perverse.
…
42.2. (b) A contravention of the Arbitration Act itself
would be regarded as a patent illegality — for example
if an arbitrator gives no reasons for an award in
contravention of Section 31(3) of the Act, such award
will be liable to be set aside.”
(emphasis supplied)
39. In Ssangyong Engineering & Construction Co. Ltd. vs. NHAI23,
a two-judge bench of this Court endorsed the position in Associate
Builders (supra), on the scope for interference with domestic awards,
even after the 2015 Amendment:
“40. The change made in Section 28(3) by the Amendment
Act really follows what is stated in paras 42.3 to 45 in
Associate Builders, namely, that the construction of the
terms of a contract is primarily for an arbitrator to decide,
unless the arbitrator construes the contract in a manner
that no fair-minded or reasonable person would; in
short, that the arbitrator’s view is not even a possible
view to take. Also, if the arbitrator wanders outside the
23 [2019] 7 SCR 522 : 2019 15 SCC 131
[2024] 4 S.C.R. 493
Delhi Metro Rail Corporation Ltd. v.
Delhi Airport Metro Express Pvt. Ltd.
contract and deals with matters not allotted to him,
he commits an error of jurisdiction. This ground of
challenge will now fall within the new ground added
under Section 34(2-A).
41. … Thus, a finding based on no evidence at all or
an award which ignores vital evidence in arriving at its
decision would be perverse and liable to be set aside
on the ground of patent illegality. Additionally, a finding
based on documents taken behind the back of the parties
by the arbitrator would also qualify as a decision based
on no evidence inasmuch as such decision is not based
on evidence led by the parties, and therefore, would also
have to be characterised as perverse.”
(emphasis supplied)
40. In essence, the ground of patent illegality is available for setting
aside a domestic award, if the decision of the arbitrator is found to
be perverse, or so irrational that no reasonable person would have
arrived at it; or the construction of the contract is such that no fair
or reasonable person would take; or, that the view of the arbitrator
is not even a possible view.24 A ‘finding’ based on no evidence at all
or an award which ignores vital evidence in arriving at its decision
would be perverse and liable to be set aside under the head of
‘patent illegality’. An award without reasons would suffer from patent
illegality. The arbitrator commits a patent illegality by deciding a
matter not within his jurisdiction or violating a fundamental principle
of natural justice.
41. A judgment setting aside or refusing to set aside an arbitral award
under Section 34 is appealable in the exercise of the jurisdiction
of the court under Section 37 of the Arbitration Act. It has been
clarified by this Court, in a line of precedent, that the jurisdiction
under Section 37 of the Arbitration Act is akin to the jurisdiction of
the Court under Section 34 and restricted to the same grounds of
challenge as Section 34.25
24 Patel Engineering Limited vs North Eastern Electric Power Corporation Limited (2020) 7 SCC 176.
25 MMTC Ltd. v. Vedanta Ltd, (2019) 4 SCC 163, para 14; Konkan Railways v. Chenab Bridge Project
Undertaking, 2023 INSC 742, para 14.
494 [2024] 4 S.C.R.
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42. In the statutory scheme of the Arbitration Act, a recourse to Section
37 is the only appellate remedy available against a decision under
Section 34. The Constitution, however, provides the parties with a
remedy under Article 136 against a decision rendered in appeal under
Section 37. This is the discretionary and exceptional jurisdiction of
this Court to grant Special Leave to Appeal. In fact, Section 37(3) of
the Arbitration Act expressly clarifies that no second appeal shall lie
from an order passed under Section 37, but nothing in the section
takes away the constitutional right under Article 136. Therefore, in
a sense, there is a third stage at which this court tests the exercise
of jurisdiction by the courts acting under Section 34 and Section 37
of the Arbitration Act.
43. While adjudicating the merits of a Special Leave Petition and
exercising its power under Article 136, this Court must interfere
sparingly and only when exceptional circumstances exist, justifying
the exercise of this Court’s discretion.26 The Court must apply settled
principles of judicial review such as whether the findings of the High
Court are borne out from the record or are based on a misappreciation
of law and fact. In particular, this Court must be slow in interfering
with a judgement delivered in exercise of powers under Section 37
unless there is an error in exercising of the jurisdiction by the Court
under Section 37 as delineated above. Unlike the exercise of power
under Section 37, which is akin to Section 34, this Court (under
Article 136) must limit itself to testing whether the court acting under
Section 37 exceeded its jurisdiction by failing to apply the correct
tests to assail the award.
III. The award was patently illegal
44. In the case at hand, the Division Bench found the award to
be perverse, irrational and patently illegal since it ignored the
vital evidence of CMRS certification in deciding the validity of
termination. This, the Division Bench held, overlooked the statutory
certification deeming it irrelevant without reasons and thus the
award was patently illegal according to the test in Associate
Builders (supra).27
26 Chandi Prasad Chokhani v. State of Bihar, AIR 1961 SC 1708; Pritam Singh v. State, 1950 SCC 189.
27 Division Bench, paras 98-99.
[2024] 4 S.C.R. 495
Delhi Metro Rail Corporation Ltd. v.
Delhi Airport Metro Express Pvt. Ltd.
45. This Court in appeal against the judgment of the Division Bench
of the High Court held that the award was not perverse. Factual
findings such as the finding that the cure period was 90 days and
that DAMEPL was entitled to terminate the contract, could not, it was
held, be interfered with.28 On the CMRS Certificate, this Court held
that the arbitral tribunal was deciding whether there was a breach
of the agreement and whether the defects were cured within the
cure period; hence the safety of the line was not an issue before
the tribunal. This Court held that the Commissioner may be the
competent authority to determine the safety of the project but the
certificate itself did not show that the defects were cured within 90
days. This Court disagreed with the Division Bench and held that the
CMRS certificate had no bearing on the validity of the termination.
46. There is a fundamental error in the manner in which this Court dealt
with the challenge to the decision of the High Court. This jurisdiction
of this Court was invoked under Article 136 of the Constitution. The
Court was exercising its jurisdiction over a decision rendered by the
Division Bench of the High Court in appeal under Section 37. The
Division Bench had held that the award overlooked crucial facts and
evidence on record that were crucial to the determination of the issues
before the arbitral tribunal. This led to the award being perverse and
patently illegal within the parameters of Section 34 as explained
in the judgments of this Court in Associate Builders (supra) and
Ssangyong (supra). The award overlooked the express terms of
clause 29.5.1(i) which stipulated that if “effective steps” were taken
during the cure period by DMRC, the contractual power to terminate
could not be exercised. This Court incorrectly considered the CMRS
certificate to be irrelevant to the validity of the termination.
i. Interpretation of the termination clause by the Tribunal was
unreasonable
47. Interference with an arbitral award cannot frustrate the ‘commercial
wisdom behind opting for alternate dispute resolution’, merely because
an alternate view exists.29 However, the interpretation of a contract
cannot be unreasonable, such that no person of ordinary prudence
would take it. The contract, which is a culmination of the parties’
28 Civil Appeal, para 31.
29 Dyna Technologies Private Limited v. Crompton Greaves Limited, (2019) 20 SCC 1, paras 24, 25.
496 [2024] 4 S.C.R.
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agency, should be given full effect. If the interpretation of the terms
of the contract as adopted by the tribunal was not even a possible
view, the award is perverse.30
48. Clause 29.5.1(i) entitles the concessionaire to terminate the
agreement if DMRC “failed to cure such breach or take effective
steps for curing such breach” within the cure period. Pertinently,
the clause uses two separate phrases, “cure” and “effective steps
to cure”. The clause reads as follows:
“29.5.1 The Concessionaire may after giving 90 (ninety)
days’ notice in writing to DMRC terminate this Agreement
upon the occurrence and continuation of any of the following
events (each a “DMRC Event of Default”), unless any
such DMRC Event of Default has occurred as a result
of Concessionaire Event of Default or due to a Force
Majeure Event.
(i) DMRC is in breach of this Agreement and such breach
has a Material Adverse Effect on the Concessionaire and
DMRC has failed to cure such breach or take effective
steps for curing such breach within 90 (ninety) days of
receipt of notice in this behalf from the Concessionaire;”
(emphasis supplied)
49. The Tribunal found that since certain defects remained after the
cure period, this was indicative of the fact that the defects were not
cured and that no effective steps were taken. However, logically,
the fact that defects existed at the end of the cure period relates
to one aspect of the termination clause – that the defects were not
completely cured. It does not explain whether effective steps were
taken within the cure period. Effectively, the Tribunal considered that
in-progress steps that had not yet culminated into completely cured
defects were not “effective steps” to offset termination. This places
the two components i.e. ‘curing of defects’ and ‘taking effective steps
to cure defects’ at par, to mean that only the completed curing of
defects is relevant. The Tribunal fails to explain what amounts to an
‘effective step’ and how the steps taken by DMRC were not effective,
within the meaning of the phrase.
30 Konkan Railway Corporation Limited v. Chenab Bridge Project Undertaking, 2023 9 SCC 85.
[2024] 4 S.C.R. 497
Delhi Metro Rail Corporation Ltd. v.
Delhi Airport Metro Express Pvt. Ltd.
50. Evidently, this could not have been the intention of the parties,
because they have clearly agreed to include the phrase “effective
steps”. They clearly intended that once a cure notice was served
on a party, it would be open to them to either cure defects or to
initiate effective steps, even if they could not culminate into the
complete curing of defects within the cure period. Incremental
progress, even if it does not lead to complete cure, is an acceptable
course of action to prevent termination according to the 2008
Agreement.
51. The Tribunal did not appreciate the individual import of the two
phrases separately from each other. This was not a matter of mere
“alternate interpretation” of the clause, but an unreasonable and
uncalled for interpretation of the clause, which frustrated the very
provision, and which no reasonable person would have accepted
considering the terms of the clause. We must clarify that Tribunal
could have still arrived at the conclusion that the steps taken during
the cure period were not effective within the meaning of the clause
for certain reasons. However, such discussion and reasoning is
conspicuously absent.
52. Issue H framed by the Tribunal- “Did the issuance of certificate by
CMRS show that the defects were duly cured” similarly glosses
over the effective steps aspect of the clause. Given this framing,
the issue was bound to be answered in the negative since
the CMRS certificate does not conclude that the defects were
completely cured.
53. The decisions of the Single Judge and this Court are similarly silent
on the aspect of “effective steps”. In paragraphs 31 to 34 of its
judgment, this Court noted that since the defects were not cured in
90 days, the termination was valid. Impliedly, this Court found that
the defects ought to have been fully cured within the cure period
in order to avoid termination.
54. The judgment of this Court also never tested the relevance of the
CMRS certificate vis-à-vis “effective steps”. This Court accepted a
reading of the termination clause by the Arbitral tribunal and the
Single Judge that was not even a possible view and could not
have been arrived at on any objective assessment. This Court not
only overlooked the plain words of the clause but also rendered the
phrase “effective steps” otiose.
498 [2024] 4 S.C.R.
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ii. The award overlooked vital evidence and matters on the record
55. The erroneous and misleading framing of the issue as noted above led
to the ignoring of vital evidence relevant to the issue of termination.
The arbitral tribunal held that since the Commissioner imposed
conditions of inspection and speed restrictions, this meant that the
defects were not fully cured.
56. Certainly, the imposition of conditions shows that the defects were
not cured completely, to warrant an unconditional sanction for full
speed operations. However, as the Division Bench of the High Court
correctly observed, the separation of the validity of termination and
relevance of the CMRS certificate was the reason for this erroneous
finding. Since the ‘effective steps’ aspect was overlooked, the CMRS
certificate was erroneously deemed to be irrelevant.
57. On 19 November 2012, a joint application was made by the parties
to the Commissioner under the 2002 Act. Significantly, the annexure
to the application which was jointly signed by the parties states as
set out below:
“f) The repairs have been Inspected by an Independent
Engineer M/s TUV, engaged by
DMRC to conduct the technical check on the quality
of work and to ensure that the repairs are carried out
as per the approved repair methodology. The copies
of the certificates obtained from TUV are enclosed as
Annexures xvii.
g) Cracks in soffit of some ‘U’ girders were also observed
and, therefore, inspection of all the girders have been
done and mapping of the cracks have been undertaken
accordingly (Annexure-xviii). Cracks have beery noticed
in 367 girders. These cracks were analysed by M/s
SYSTRA and their report is, enclosed as Annexure xix.
They have concluded that there is no effect on the
integrity of the girders and that there is no reason
to-be further worried. M/s SYSTRA have also given
the repair methodology for these cracks from the point of
view of durability and to avoid permeation of water during
the service life of girders, (Included in Annexure-xvi).
Accordingly, the cracks wider than 0.2 mm have been
[2024] 4 S.C.R. 499
Delhi Metro Rail Corporation Ltd. v.
Delhi Airport Metro Express Pvt. Ltd.
Injected with epoxy resin and cracks less than 0.2 mm
have been sealed with epoxy sealant.
h) Train trials after repairs by DMRC have been
completed successfully and all systems have been
checked for correct functioning at various speeds
Including at speed of 120 kmph. Track recording was
done with OMS-2000 during these trials and no peak of
value ≥ 0.15g was recorded upto 120 Kmph (results of
OMS 2000 are enclosed in Annexure XIV)”
(emphasis supplied)
58. Admittedly, some of the defects were cured in their entirety and
steps were taken by DMRC to cure the remainders, based on which
the parties had jointly sought permission under the 2002 Act. The
parties stated that the repairs had been inspected by an independent
engineer; an analysis of the cracks revealed that the integrity of the
girders was intact and there was no cause of concern. Further, the
parties stated that the train trials “after repairs by DMRC have been
completed successfully and all systems have been checked for correct
functioning at various speeds including the speed of 120kmph”. It is
apparent on the face of the record that certain repairs were completed
by DMRC and the trials had been completed at full speed as on the
date of application, 19 November 2012.
59. On 9 July 2012, about four months before the date of the joint
application, DAMEPL had averred in the cure notice that the project
was not ‘safe for operations’ and that it posed a threat to life and
property. The arbitral tribunal was correct in concluding that the joint
application does not constitute a waiver of the termination, but this
evidence was vital considering the change in DAMEPL’s position
on the safety of the line from the date of the cure notice to the date
of the joint application. DMRC did take certain steps to alleviate
DAMEPL’s concerns so as to warrant this change of position. There
is no explanation forthcoming in the award about why none of these
steps initiated during the cure period were ‘effective steps’. This gap
in reasoning stems from the arbitral tribunal wrongly separating the
issue of termination and the CMRS certificate.
60. Besides the effective steps aspect, there is another reason why the
CMRS certificate ought to have been treated as relevant. The Tribunal
treats the cure notice as a crucial document. At paragraph 26 of the
500 [2024] 4 S.C.R.
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award, it noted that “since the cure notice dated 9th July 2012 is a
crucial document in this case, it is useful to quote certain paragraphs
of the said letter”. The cure notice, in turn, was heavily premised on
the safety of operations.31 Interestingly, at paragraph 27 of the cure
notice, DAMEPL avers that the trains can only be operated once
the defects are cured to the satisfaction of the stakeholders about
the safety of operations.
61. Reference may be made to the 2002 Act under which the CMRS is
the relevant statutory stakeholder whose satisfaction about the safety
of operations is necessary for running of the metro. The relevant
provisions of the Act may be adverted to here:
“14. Sanction of Central Government to the opening
of metro railway.—The metro railway in the the National
Capital Region, metropolitan city and metropolitan area shall
not be opened for the public carriage of passengers except
with the previous sanction of the Central Government.
15. Formalities to be complied with before giving
sanction to the opening of metro railway.—(1) The
Central Government shall, before giving its sanction to the
opening of the metro railway under Section 14, obtain a
report from the Commissioner that—
(a) he has made a careful inspection of the metro railway
and the rolling stock that may be used thereon;
(b) the moving and fixed dimensions as laid down by
the Central Government have not been infringed;
(c) the track structure, strength of bridges, standards of
signalling system, traction system, general structural
character of civil works and the size of, and maximum
gross load upon, the axles of any rolling stock, comply
with the requirements laid down by the Central
Government; and
(d) in his opinion, metro railway can be opened for the
public carriage of passengers without any danger to
the public using it.
31 Cure Notice paras 18,21,26, and 27.
[2024] 4 S.C.R. 501
Delhi Metro Rail Corporation Ltd. v.
Delhi Airport Metro Express Pvt. Ltd.
(2) If the Commissioner is of the opinion that the metro
railway cannot be opened without any danger to the
public using it, he shall, in his report, state the grounds
therefor, as also the requirements which, in his opinion,
are to be complied with before sanction is given by the
Central Government.
(3) The Central Government, after considering the report
of the Commissioner, may sanction the opening of the
metro railway under Section 14 as such or subject to such
conditions as may be considered necessary by it for the
safety of the public.
18. Power to close metro railway opened for public
carriage of passengers.—Where, after the inspection
of the metro railway opened and used for the public
carriage of passengers or any rolling stock used thereon,
the Commissioner is of the opinion that the use of the
metro railway or of any rolling stock will be attended with
danger to the public using it, the Commissioner shall send
a report to the Central Government who may thereupon
direct that—
(i) the metro railway be closed for the public carriage
of passengers; or
(ii) the use of the rolling stock be discontinued; or
(iii) the metro railway or the rolling stock may be used
for the public carriage of passengers subject to such
conditions as it may consider necessary for the safety
of the public.
21. Delegation of powers.—The Central Government
may, by notification, direct that any of its powers or
functions under this chapter, except power to make rule
under Section 22, shall, in relation to such matters and
subject to such conditions, if any, as may be specified in
the notification, be exercised or discharged also by the
Commissioner.”
62. In essence, the scheme of the 2002 Act, provides that no metro
line will operate except with the previous sanction of the Central
502 [2024] 4 S.C.R.
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Government.32 Before granting the sanction, the Central Government
has to obtain a report from the Commissioner that (inter alia) the
latter has carefully inspected the metro railway, the general structure
of civil works and that in their opinion, the metro railway can be
opened for passengers without any danger to the public.33 The
Central Government may sanction the opening of the line as such or
subject to conditions it considers necessary for public safety.34 If the
Commissioner is of the opinion that the use of the metro will “attend
danger to the public using it”, they may send a report to the Central
Government, which may in turn direct that the metro be closed or
may be open for public carriage only subject to certain conditions.35
The powers of the Central Government may be delegated to the
Commissioner.36
63. The structure and safety of the project, as certified by the CMRS,
were thus relevant before the Tribunal, making the CMRS certificate
a vital piece of evidence in deciding the issue. The CMRS certificate
was relevant evidence about the safety of the structure. Considering
the statutory scheme of the 2002 Act, especially Section 15, the
Tribunal erred in deeming the sanction irrelevant to its central issue
– which was the validity of the termination, which, according to the
cure notice, was premised on safety.
64. Overall, the cure notice places great emphasis on the safety of the
passengers, which, they claimed stood compromised by defects,
justifying discontinuation of operations. This issue falls directly within
the domain of the Commissioner under the scheme of the 2002 Act.
65. Rather than considering the vital evidence of the CMRS certificate
towards safety and effective steps, the arbitral tribunal focussed on
the conditions imposed by the Commissioner on speed and regarding
inspections. While the Division Bench correctly noted that the
certificate was relevant for the issue of the validity of termination, this
Court held that safety was not in issue, even though DAMEPL insisted
on discontinuing operations citing safety concerns. We respectfully
32 Section 14, Metro Railways (Operations and Maintenance) Act 2002.
33 Section 15, ibid.
34 Section 15(3), ibid.
35 Section 18, ibid.
36 Section 21, ibid.
[2024] 4 S.C.R. 503
Delhi Metro Rail Corporation Ltd. v.
Delhi Airport Metro Express Pvt. Ltd.
disagree with this Court’s re-assessment of the Division Bench’s
interpretation. The cure notice was relevant for the reasons stated
above. Moreover, the fact that DAMEPL premised it on safety could
not have been overlooked by the Tribunal. In doing so, it overlooked
vital evidence pertaining to an issue that goes to the root of the
matter. The cure notice was obviously on the record and merited
consideration for its contents bearing on vital elements of safety.
66. The cure notice, which contains statements bearing on the safety
of the line and other material indicating that the line was running
uninterrupted are matters of record. While the cure notice contains
allegations about the line not being operational, there is evidence
on the record indicating that the line was in fact running. Even if we
were to accept that the finding of the arbitral tribunal that the defects
were not completely cured during the cure period is a factual finding
incapable of interference, it is clear from the record that DMRC took
steps towards curing defects which led to the eventual resumption
of operations. The award contains no explanation as to why the
steps which were taken by DMRC were not ‘effective steps’ within
the meaning of the termination clause.
67. In essence, therefore the award is unreasoned on the above important
aspects. It overlooks vital evidence in the form of the joint application
of the contesting parties to CMRS and the CMRS certificate. The
arbitral tribunal ignored the specific terms of the termination clause. It
reached a conclusion which is not possible for any reasonable body
of persons to arrive at. The arbitral tribunal erroneously rejected the
CMRS sanction as irrelevant. The award bypassed the material on
record and failed to reconcile inconsistencies between the factual
averments made in the cure notice, which formed the basis of
termination on the one hand and the evidence of the successful
running of the line on the other. The Division Bench correctly held
that the arbitral tribunal ignored vital evidence on the record, resulting
in perversity and patent illegality, warranting interference. The
conclusions of the Division Bench are, thus, in line with the settled
precedent including the decisions in Associate Builders (supra)
and Ssangyong (supra).
H. Conclusion
68. 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
504 [2024] 4 S.C.R.
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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 (supra).
69. The Curative petitions must be and are accordingly allowed. The
parties are restored to the position in which they were on the
pronouncement of the judgement of the Division Bench. The execution
proceedings before the High Court for enforcing the arbitral award
must be discontinued and the amounts 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 High Court in the course of the execution
proceedings for enforcing the arbitral award are set aside.
70. Before concluding, we clarify that the exercise of the curative
jurisdiction of this Court should not be adopted as a matter of ordinary
course. The curative jurisdiction should not be used to open the
floodgates and create a fourth or fifth stage of court intervention in
an arbitral award, under this Court’s review jurisdiction or curative
jurisdiction, respectively.
71. 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 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 Division Bench provided more than
[2024] 4 S.C.R. 505
Delhi Metro Rail Corporation Ltd. v.
Delhi Airport Metro Express Pvt. Ltd.
adequate reasons to come to the conclusion that the arbitral award
suffered from perversity and patent illegality. There was no valid
basis for this Court to interfere under Article 136 of the Constitution.
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
undeserved windfall to DAMEPL.
72. The curative petitions are allowed in the above terms.
73. Pending applications, if any, stand disposed of.
Headnotes prepared by: Ankit Gyan Result of the case:
Curative petitions allowed.
