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15 April 2024

Supreme Court Sets Aside Rs 8,000 Crore Arbitral Award in Landmark Decision

In a significant legal development, the Supreme Court delivered a groundbreaking verdict on Wednesday, April 10, relieving the Delhi Metro Rail Corporation (DMRC) of a substantial financial burden amounting to approximately Rs 8000 crores. This decision marks a pivotal moment in the ongoing dispute between the DMRC and the Delhi Airport Metro Express Private Limited (DAMEPL), a subsidiary of Reliance Infrastructure, dating back to a concession agreement formed in 2008.

The apex court's ruling stems from a curative petition filed by the DMRC, challenging a previous judgment upholding an arbitral award in favor of DAMEPL. The arbitral award, passed in 2017, had imposed significant financial liabilities on the DMRC, including interest and additional charges, totaling over Rs 8000 crores at present.

Chief Justice of India DY Chandrachud, along with Justices BR Gavai and Surya Kant, presiding over the bench, concluded that the Supreme Court erred in its earlier decision to uphold the arbitral award against the DMRC. The bench highlighted the importance of respecting the Delhi High Court's judgment, which had originally set aside the award, emphasizing that interference with such well-considered decisions could result in unjust outcomes.

Quoting the bench's observations, the court stated, "By setting aside the High Court judgment, this Court restored a patently illegal award which saddled a public utility with an exorbitant liability," underscoring the grave miscarriage of justice that ensued. This prompted the exercise of curative jurisdiction under Article 142 of the Constitution, leading to the setting aside of the previous judgment.

In its directive, the Supreme Court ordered the restoration of both parties to their positions as per the Delhi High Court's judgment, necessitating the refund of amounts deposited by the DMRC. Furthermore, any payments made by the DMRC under coercive measures were mandated to be refunded, and execution proceedings pertaining to the award were to be discontinued.

It is worth noting that the court clarified its stance on the judicious use of curative jurisdiction, emphasizing its application only in the most deserving cases, thus ensuring a balanced approach to legal remedies.

During the curative proceedings, legal luminaries including Attorney General for India R Venkataramani, Senior Advocate KK Venugopal, and Senior Advocate Harish Salve presented their arguments, representing the respective parties involved.

This legal saga originated from the non-payment of termination fees by the DMRC to DAMEPL, despite the termination of a contract related to the airport metro line. The dispute, spanning several years, culminated in arbitration, where the tribunal initially ruled in favor of DAMEPL, awarding substantial compensation.

While the legal battle unfolded, discussions between the stakeholders of the DMRC were ongoing, further complicating the resolution process. However, with the Supreme Court's latest decision, a significant chapter in this complex legal saga draws to a close, providing clarity on a long-standing dispute with far-reaching financial implications.

As the legal landscape continues to evolve, this landmark verdict serves as a testament to the judiciary's role in upholding justice and ensuring equitable resolutions to contentious disputes.