Delhi Metro Rail Corporation Ltd. v. Delhi Airport Metro Express Pvt. Ltd.

Recently, the Supreme Court of India rendered a significant concept of curative petition maintainability in Arbitration. Basically, dispute raises from the disagreement over the termination of concession agreements. In this case, curative jurisdiction highlights the integrity of the Arbitral process and safeguards measures for efficiency and efficacy of the arbitration process.

FACTS:

In 2008, the Delhi Metro Rail Corporation Ltd. and Delhi Airport Metro Express Private Limited entered into a concession agreement. Under this agreement, DAMEPL will provide metro rail Connectivity between New Delhi Railway Station and the Indira Gandhi International Airport and other points within Delhi. DAMPEL was also given the design, construction, operation, and maintenance rights with exclusive rights, license, and authority to implement the project.

In July 2012. A Joint Inspection Committee was set up to inspect the defects alleged by DAMEPL. DAMEPL stopped operations due to safety concerns, and a notice was served to DMRC, listing the defects to be cured within 90 days. In October 2012, DAMEPL terminated the concession agreement, citing failure on the part of DMRC to rectify the Defects.

In Aug 2013, DMRC initiated Arbitral Proceedings, and where Arbitral Tribunal ruled in favor of DAMEPL, passing award in May 2017 with a substantial compensation amount of ₹7687 crore to be paid by DMRC.

Then DMRC Challenge the award in the Delhi High Court under sec 34 of A & C Act, 1996. Due to Application dismissed , file before division bench under sec 37. The division bench partialy allowed appeal and set aside the award. Then DAMEPL filed a special leave petition. 

ISSUES:

Whether the curative petition Is maintainable?

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?

Petitioner’s & Respondent Position:- 

DMRC claimed that , 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 and the real reason for the termination notice was that DAMPL had Ceased to find the project financially viable.

DAMEPL 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.

Decision & Analysis :

The supreme court upheld the maintainability of Curative petition Arbitration which is a judicial innovation which given by the supreme court restored arbitral award and  further said that the  court can reconsider its decision in the review petition . The court’s decision to allow a curative petition in this case adds another stage of judicial scrutiny, has the potential to undermine the efficiency and finality of the arbitration process.

Regardless of the merit of the DMRC case , the concept of reconsidering an arbitral award in a Curative petition also fail the purpose of sec 5 of the A & C Act, which provide for minimal intervention. Another which merit a  decision is that DMRC award was set aside on ground of patent illegality, which is badly affect India pro-arbitration status apply only in domestic Arbitration case not in international arbitration cases.

By setting aside an arbitral award in a Curative petition, the supreme court has opened an additional avenue for parties to keep assailing the arbitral award, ultimately undermining the efficiency and finality of Arbitration. The DMRC Decision concludes with a warning that the supreme court’s exercise of it’s inherent curative power ought not to be adopted as manner of ordinary course.

This article is authored by Vikash Kumar. He was among the Top 40 performers in the ADR Quiz Competition organized by Lets Learn Law.