10 April 2024 Arbitration Law >> Business & Commercial Law  

The Delhi Airport Metro line, a vital transport link in the national capital, has been embroiled in a legal tussle between the builder Delhi Airport Metro Express Private Limited (DAMEPL) and Delhi Metro Rail Corporation (DMRC). The dispute centers around alleged defects in construction and subsequent termination of operations by DAMEPL.

The Project and the Dispute:

DAMEPL, a private consortium, entered into a concession agreement with DMRC in 2008 to build and operate the high-speed metro line connecting the Indira Gandhi International Airport with other parts of Delhi. However, DAMEPL claimed the construction suffered from defects and terminated the concession in 2012, seeking compensation for termination costs and operational losses. DMRC contested these claims, arguing the alleged defects were not substantial enough to warrant termination.

Arbitration and Legal Challenges:

An arbitral tribunal ruled in favor of DAMEPL, awarding them compensation. DMRC challenged this award in a series of court battles. The Delhi High Court (Single Judge) upheld the award, but a Division Bench partly set it aside citing "patent illegality." DAMEPL then approached the Supreme Court, which restored the arbitral award in April 2024. Unwilling to concede defeat, DMRC filed a curative petition, a rarely used mechanism to challenge the Supreme Court's verdict in cases of "grave injustice."

Curative Petition Arguments:

DMRC argues the arbitral award suffers from "patent illegality" due to several reasons. They claim the alleged defects did not significantly impact operations, and the tribunal overlooked the importance of obtaining a safety certificate from the Commissioner of Metro Railway Safety (CMRS). DMRC further contends that the tribunal ignored crucial evidence presented by them.

DAMEPL, on the other hand, argues that the curative petition is not maintainable and the arbitral award is valid.

Key Legal Issues:

The case hinges on the limited scope of judicial intervention in arbitration awards and the definition of "patent illegality" in this context. Courts are generally reluctant to overturn arbitration awards, but exceptions exist in cases of extreme flaws. This case will determine the balance between upholding the finality of judgments and correcting potential miscarriages of justice.

Curative Jurisdiction - Used Sparingly:

The Supreme Court acknowledges its curative jurisdiction, meant to address "grave miscarriage of justice," should be used sparingly. This emphasizes the high bar DMRC must meet to have their petition succeed.

Uncertain Outcome and Lasting Impact:

The Supreme Court's decision on whether to entertain the curative petition and, if so, whether the arbitral award is "patently illegal" will significantly impact this case. The outcome will also set a precedent for resolving future disputes arising from public-private infrastructure projects.

Arbitration and Conciliation Act, 1996