The Delhi Metro Rail Corporation (DMRC) emerged victorious as the Supreme Court quashed 8,000 crore rupee arbitral award against Delhi Metro.
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| DMRC |
The recent Supreme Court judgment in the Delhi Metro Rail Corporation (DMRC) case has
significant implications for public-private partnerships (PPPs) and investor
confidence. Let’s delve into the details of this legal saga, explore the role
of Article 142 of the Indian Constitution.
Background
The dispute between Delhi Metro Rail Corporation (DMRC) and Delhi Airport Metro Express Private Limited (DAMEPL) dates back to 2008 when they entered into a PPP agreement for the Delhi Airport Metro Express project. DAMEPL, a corporation led by Reliance Infrastructure Ltd, was responsible for various systems, including rolling stock, power supply, signalling, and more. However, disputes arose, leading to the termination of the agreement by DAMEPL in 2013.
The
Arbitral Award and Legal Battles
1. Arbitration Tribunal Award: In 2017, an
arbitration tribunal ruled in favor of DAMEPL, awarding damages to the tune
of Rs 2,800 crore along with interest. DMRC challenged this
ruling in the Delhi High Court, which overturned the arbitral award
in 2019.
2. Supreme Court’s Reversal: DAMEPL appealed to the Supreme
Court, which, in September 2021, reversed the High Court’s
decision and upheld the arbitral award. The award, including interest,
exceeded Rs 8,000 crore.
Article
142: A Tool for Complete Justice
- Article 142 of the Indian Constitution grants
the Supreme Court discretionary powers to ensure complete justice. It
allows the Court to pass decrees or make orders necessary for justice in
any pending cause or matter.
- Curative Petition: DMRC filed a curative petition invoking Article 142. The Court held that its previous judgment had a “fundamental error,” resulting in a “great miscarriage of justice.” It restored the parties to their position as of the Delhi High Court’s judgment.
Bench : Three Judge bench of Chief Justice of India D.Y. Chandrachud, Justice B.R. Gavai and Justice Surya Kant.
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| Hon'ble Supreme Court |
The Ruling: In this recent judgment, the Supreme Court ruled in favor of DMRC, stating that there was a “fundamental error” in its previous judgment. The Court set aside the arbitral award in favour of DAMEPL, by this, DMRC got relived from a huge liability of approximately Rs 8,000 crore. It was also held that the Supreme Court made mistake in setting aside the Delhi High Court’s judgment, which had previously set aside the arbitral award against DMRC. The court found the arbitral award as “a patently illegal award,” which is, “saddling a public utility with an exorbitant liability.”
Chief Justice D.Y. Chandrachud said DMRC had suffered a "grave miscarriage of justice" from the arbitral award of 2017.
By restoring the parties to their position as of the date of the Delhi High Court’s judgment, the Court directed that the amounts deposited by DMRC shall be refunded, and any amount paid by DMRC as part of coercive action must be refunded. The court also ordered for discontinuation of execution proceedings for enforcing the arbitral award.
Implications
and Significance
1. Correcting Injustices: Curative petitions are
sparingly used and are permitted only on narrow grounds. The Supreme Court’s
commitment to justice underscores the importance of such petitions.
2. PPP Clarity: The decision provides clarity
for future PPPs in infrastructure projects. PPPs play a crucial role in
development, but disputes can arise. The ruling sets a precedent for similar
projects.
3. Investor Confidence: The Court’s exercise of
curative jurisdiction demonstrates its willingness to correct errors. This
boosts investor confidence in India’s legal system and encourages investment in
infrastructure projects.
Conclusion
The DMRC
case demonstrates the delicate balance between public and private interests in
infrastructure projects. As the legal landscape evolves, Article 142 remains a
powerful tool for ensuring justice and maintaining investor trust.
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