Exercise of the Curative Jurisdiction Should Not be Adopted as a Matter of Ordinary Course: SC Allows Curative Petition

The Supreme Court allowed the curative petition filed by Delhi Metro Rail Corporation Ltd. (DMRC), setting aside the previous judgment which upheld the arbitral award favoring Delhi Airport Metro Express Pvt. Ltd. (DAMEPL). The Court observed that the award was patently illegal and perverse, as it overlooked vital evidence and contained an erroneous interpretation of the termination clause.

Factual Background and Issues: The dispute arose from a concession agreement for the Delhi Airport Metro line, under which DAMEPL sought to terminate the agreement citing defects attributed to DMRC’s construction and designs. The Arbitral Tribunal awarded in favor of DAMEPL. However, DMRC challenged the award, asserting miscarriage of justice due to overlooked evidence, including the CMRS certificate, and erroneous contractual interpretation by the Tribunal.

Curative Jurisdiction: The Supreme Court emphasized the rare invocation of curative jurisdiction, stating it is to be used to prevent abuse of process and to cure a gross miscarriage of justice.

Patent Illegality of the Arbitral Award: The Court found that the Arbitral Tribunal’s interpretation of the termination clause and disregard for the CMRS certificate led to a patently illegal award. The Tribunal failed to consider DMRC’s effective steps during the cure period and misconstrued the importance of the CMRS certificate under the Metro Railways Act.

Termination Clause Interpretation: The Court highlighted that the Tribunal unreasonably interpreted the termination clause, failing to differentiate between the ‘curing of defects’ and ‘taking effective steps to cure defects.’

CMRS Certificate’s Significance: The Court underlined the critical role of the CMRS certificate, evidencing the safety of the metro operations, which the Tribunal had erroneously disregarded.

Decision: The Supreme Court allowed the curative petition, recognizing that the award failed to address the miscarriage of justice. The Court set aside the earlier judgment, restoring the status quo of the parties before the arbitral award, and directed the discontinuation of the execution proceedings.

Date of Decision: 10^th April 2024

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