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In a significant relief to the Delhi Metro Rail Corporation (DMRC), the Supreme Court on Wednesday set aside the Rs 8,000 crore arbitral award in favour of Anil Ambani-owned Reliance Infrastructure's metro arm, Delhi Airport Metro Express Private Limited (DAMEPL).
The top court upheld the High Court's division bench decision, citing patent illegality in the arbitral award.
"The amounts deposited by DMRC shall be refunded. Any amount paid by the petitioner as part of coercive action has to be refunded," a bench led by Chief Justice of India (CJI) DY Chandrachud said.
Reserving the verdict, the Supreme Court permitted DMRC to file a curative petition. The bench cautioned, however, that this should not be used to open floodgates for such petitions. "In the specific facts and circumstances of the case, interference by the Supreme Court had led to a grave miscarriage of justice," the bench said.
In February, the SC bench had reserved its verdict on DMRC's curative plea against dismissing its review petition challenging the arbitral award of Rs 8,000 crore in favour of DAMEPL.
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DMRC-DAMEPL saga
The DMRC-DAMEPL saga began in 2008 when both parties signed an agreement for the design, installation, commissioning, operation, and maintenance of the Airport Metro Express Line, running from New Delhi Railway Station to Sector 21 Dwarka for a 30-year term. This line was to run through the Delhi Airport.
While DMRC handled the construction of all civil structures, DAMEPL was responsible for all system works. However, in July 2012, DAMEPL suspended operations due to defects found in the viaduct and issued a notice to DMRC, the party in charge of this aspect, to fix the problem.
In October 2012, DAMEPL then served a termination notice, leading to authorities conducting inspections in November 2012. Subsequently, the line was cleared for operations in January 2013.
Although DAMEPL restarted the line in January, it withdrew from the project within five months, in June 2013. This prompted DMRC to invoke the arbitration clause in the contract.
The arbitral tribunal later ruled in favour of DAMEPL, instructing DMRC to pay Rs 2,782.33 crore in 2017.
After this, DMRC moved the Delhi High Court, where a single bench initially dismissed the petition. However, a division bench later overturned the arbitral tribunal's decision, deeming it 'in conflict with the public policy of India.'
Subsequently, the Anil Ambani-led company's arm approached the Supreme Court. In 2021, the SC ruled that arbitral tribunal awards are not subject to challenge and upheld the award.
It is after this ruling that the DMRC filed a curative petition, which the apex court granted on April 10, 2024.
The original arbitral award had grown to Rs 7,045.41 crore by the end of 2021, when DAMEPL asked Delhi HC to enforce the 2017 order. By then, DMRC had paid Rs 1,000 crore and informed the court that it was unable to pay the full arbitral award, suggesting that the Delhi government and the Ministry of Housing and Urban Affairs should pay.
As of today, the amount has increased to Rs 8,000 crore.
