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Case Details: Delhi Metro Rail Corporation Ltd. v. Delhi Airport Metro Express (P.) Ltd. - [2024] 161 taxmann.com 618 (SC)

Judiciary and Counsel Details

• • Dr Dhananjaya Y Chandrachud, CJI. B R Gavai & Surya Kant, JJ.

Facts of the Case

In the instant case, the petitioner/DMRC was a state-owned company wholly owned by the Government of India and the National Capital Territory of Delhi. The DMRC entered into an agreement with respondent/DAMEPL for the construction, operation and maintenance of Airport Metro Express Ltd (AMEL) in 2008.

The Delhi Airport Metro Express Pvt. Ltd. (DAMEPL) issued a notice to DMRC informing that there were defects in the civil structure of the metro line and requested the DMRC to cure defects within 90 days, failing which it stated that it would be considered that a “Material Breach”.

The notice stated that defects were attributable to DMRC’s faulty design. The “DMRC Event of Default” had occasioned, entitling the DAMEPL to terminate the agreement. The DAMPEL issued a notice terminating the 2008 agreement. The DMRC initiated the arbitration proceedings.

The DAMEPL halted operations and handed over the line to DMRC. The Arbitral Tribunal passed an award in favour of DAMEPL. The Single-Judge of the High Court upheld the award. The Division Bench of the High Court partly set aside the award as perverse and patently illegal.

According to the Division Bench, some defects were cured in their entirety and steps were taken by the DMRC to cure the remainder, based on which the parties had jointly sought permission from the Commissioner of Metro Railway Safety (CMRS) to sanction the re-opening of AMEL for the public carriage of passengers. After a thorough inspection of operations, CMRS sanction the same subject to certain conditions.

The Division Bench further held that the award overlooked statutory certification deeming it irrelevant without reasons. Thereafter, an appeal was made before the Supreme Court.

Supreme Court Held

The Supreme Court held that the judgement of the Division Court provided more than adequate reasons to come to the conclusion that the arbitral award suffered from perversity and patent illegality.

Thus, the Supreme Court was not justified in restoring the arbitral award whose judgment remained undisturbed in the exercise of review jurisdiction of the Supreme Court. Therefore, the instant curative petition was to be allowed.