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

- **Citation:** 2024 INSC 292
- **Court:** Supreme Court of India
- **Decided:** 2024-04-10
- **Bench:** Dr Dhananjaya Y Chandrachud, B R Gavai, Surya Kant
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/delhi-metro-rail-corporation-ltd-v-delhi-airport-metro-express-pvt-ltd-37585
- **Pages:** 33

## Headnote

(i) Whether the curative petition is maintainable; and (ii) Whether
this Court (two-judge Bench) 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.
Headnotes
Curative Petition - Curative Jurisdiction may be invoked if
there is a miscarriage of justice:
Held: The Supreme Court laid down an overarching principle in
Rupa Hurra v. Ashok Hurra [2002] 2 SCR 1006 that the Court may
entertain a curative petition to (i) prevent abuse of its process; and
(ii) to cure a gross miscarriage of justice - The enumeration of
the situations in which the curative jurisdiction can be exercised
is not intended to be exhaustive - The Court went on to lay down
certain procedural requirements to entertain a curative petition
such as a certificate by a Senior Advocate about fulfilling of the
requirements. [Paras 33 and 34]
Arbitration and Conciliation Act 1996 - s.34 - Scope of
interference of courts with arbitral awards:
Held: Section 34 of the Arbitration Act delineates the grounds for
setting aside an arbitral award - In addition to the grounds on
which an arbitral award can be assailed laid down in section 34(2),
there is another ground for challenge against domestic awards,
such as the award in the present case - Under Section 34(2-A)
of the Arbitration Act, a domestic award may be set aside if the
474
[2024] 4 S.C.R.
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Court finds that it is vitiated by 'patent illegality' appearing on the
face of the award. [Paras 36, 37]
Arbitration and Conciliation Act 1996 - s.34 - Setting aside
of domestic award - Ground of patent illegality:
Held: The ground of patent illegality is available for setting aside
a domestic award, if the decision of the arbitrator is found to be
perverse, or so irrational that no reasonable person would have
arrived at it; or the construction of the contract is such that no fair
or reasonable person would take; or, that the view of the arbitrator
is not even a possible view - A 'finding' based on no evidence
at all or an award which ignores vital evidence in arriving at its
decision would be perverse and liable to be set aside under the
head of 'patent illegality' - An award without reasons would suffer
from patent illegality - The arbitrator commits a patent illegality by
deciding a matter not within his jurisdiction or violating a fundamental
principle of natural justice. [Para 40]
Constitution of India - Art.136 - Arbitration and Conciliation
Act 1996 - ss. 34, 37 - Remedy u/Art. 136 against a decision
rendered in appeal u/s. 37 of 1996 Act:
Held: In the statutory scheme of the Arbitration Act, a recourse to
s.37 is the only appellate remedy available against a decision u/s.
34 - The Constitution, however, provides the parties with a remedy
u/Art. 136 against a decision rendered in appeal u/s. 37 - This
is the discretionary and exceptional jurisdiction of the Supreme
Court to grant Special Leave to Appeal - While adjudicating the
merits of a Special Leave Petition and exercising its power u/Art.
136, this Court must interfere sparingly and only when exceptional
circumstances exist, justifying the exercise of this Court's discretion
- The Court must apply settled principles of judicial review such
as whether the findings of the High Court are borne out from the
record or are based on a misappreciation of law and fact - In
particular, this Court must be slow in interfering with a judgement
delivered in exercise of powers u/s. 37 unless there is an error in
exercising of the jurisdiction by the Court u/s. 37. [Paras 42 and 43]
Curative Petition - The petitioner-DMRC and DAMEPL (a
special purpose vehicle incorporated by a consortium)
entered into the Concession Agreement (2008 agreement) -
DAMPEL was to undertake among other things, the design,
supply, installation, testing and commissioning of railway
[2024] 4 S.C.R.
475
Delhi Metro Rail Corporation Ltd. v.
Delhi Airport Metro Expres

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* Author
[2024] 4 S.C.R. 473 : 2024 INSC 292
Delhi Metro Rail Corporation Ltd.
v.
Delhi Airport Metro Express Pvt. Ltd.
Curative Petition (C) Nos.108-109 of 2022
In
Review Petition (C) Nos.1158-1159 of 2021
In
(Civil Appeal Nos 5627-5628 of 2021)
10 April 2024
[Dr Dhananjaya Y Chandrachud,* B R Gavai and
Surya Kant, JJ.]
Issue for Consideration
(i) Whether the curative petition is maintainable; and (ii) Whether
this Court (two-judge Bench) 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.
Headnotes
Curative Petition - Curative Jurisdiction may be invoked if
there is a miscarriage of justice:
Held: The Supreme Court laid down an overarching principle in
Rupa Hurra v. Ashok Hurra [2002] 2 SCR 1006 that the Court may
entertain a curative petition to (i) prevent abuse of its process; and
(ii) to cure a gross miscarriage of justice - The enumeration of
the situations in which the curative jurisdiction can be exercised
is not intended to be exhaustive - The Court went on to lay down
certain procedural requirements to entertain a curative petition
such as a certificate by a Senior Advocate about fulfilling of the
requirements. [Paras 33 and 34]
Arbitration and Conciliation Act 1996 - s.34 - Scope of
interference of courts with arbitral awards:
Held: Section 34 of the Arbitration Act delineates the grounds for
setting aside an arbitral award - In addition to the grounds on
which an arbitral award can be assailed laid down in section 34(2),
there is another ground for challenge against domestic awards,
such as the award in the present case - Under Section 34(2-A)
of the Arbitration Act, a domestic award may be set aside if the
474
[2024] 4 S.C.R.
Digital Supreme Court Reports
Court finds that it is vitiated by 'patent illegality' appearing on the
face of the award. [Paras 36, 37]
Arbitration and Conciliation Act 1996 - s.34 - Setting aside
of domestic award - Ground of patent illegality:
Held: The ground of patent illegality is available for setting aside
a domestic award, if the decision of the arbitrator is found to be
perverse, or so irrational that no reasonable person would have
arrived at it; or the construction of the contract is such that no fair
or reasonable person would take; or, that the view of the arbitrator
is not even a possible view - A 'finding' based on no evidence
at all or an award which ignores vital evidence in arriving at its
decision would be perverse and liable to be set aside under the
head of 'patent illegality' - An award without reasons would suffer
from patent illegality - The arbitrator commits a patent illegality by
deciding a matter not within his jurisdiction or violating a fundamental
principle of natural justice. [Para 40]
Constitution of India - Art.136 - Arbitration and Conciliation
Act 1996 - ss. 34, 37 - Remedy u/Art. 136 against a decision
rendered in appeal u/s. 37 of 1996 Act:
Held: In the statutory scheme of the Arbitration Act, a recourse to
s.37 is the only appellate remedy available against a decision u/s.
34 - The Constitution, however, provides the parties with a remedy
u/Art. 136 against a decision rendered in appeal u/s. 37 - This
is the discretionary and exceptional jurisdiction of the Supreme
Court to grant Special Leave to Appeal - While adjudicating the
merits of a Special Leave Petition and exercising its power u/Art.
136, this Court must interfere sparingly and only when exceptional
circumstances exist, justifying the exercise of this Court's discretion
- The Court must apply settled principles of judicial review such
as whether the findings of the High Court are borne out from the
record or are based on a misappreciation of law and fact - In
particular, this Court must be slow in interfering with a judgement
delivered in exercise of powers u/s. 37 unless there is an error in
exercising of the jurisdiction by the Court u/s. 37. [Paras 42 and 43]
Curative Petition - The petitioner-DMRC and DAMEPL (a
special purpose vehicle incorporated by a consortium)
entered into the Concession Agreement (2008 agreement) -
DAMPEL was to undertake among other things, the design,
supply, installation, testing and commissioning of railway
[2024] 4 S.C.R.
475
Delhi Metro Rail Corporation Ltd. v.
Delhi Airport Metro Express Pvt. Ltd.
system - Dispute arose between the parties - DAMEPL
alleged that the line was unsafe to operate - Operations were
stopped - DAMEPL issued a notice to DMRC listing defects
attributable to faulty construction and deficient designs
which affected project safety - DMRC was requested to
cure the defects within 90 days from the date of this notice
- Thereafter, DAMPEL issued another notice terminating the
2008 agreement as defects were not cured within 90 days -
Arbitral Tribunal passed award in favour of DAMPEL - Single
Judge of the High Court dismissed the petition filed u/s. 34
of 1996 Act - Division Bench of the High Court allowed the
appeal u/s. 37 of 1996 Act in part - DAMEPL moved a SLP
u/Art. 136 of the Constitution - A two-judge bench of the
Supreme Court allowed the appeal, and restored the award
- Correctness:
Held: Commissioner of Metro Railway Safety (CMRS), after inquiry
and inspection had issued sanction for running of the metro line
- In the instant case, the Division Bench of the High Court found
the award to be perverse, irrational and patently illegal since it
ignored the vital evidence of CMRS certification in deciding the
validity of termination - It underlined the significance of the CMRS
sanction under the Metro Railways (Operation and Maintenance)
Act, 2002 - Also, clause 29.5.1(i) of the 2008 agreement entitles
the concessionaire to terminate the agreement if DMRC "failed to
cure such breach or take effective steps for curing such breach"
within the cure period - Pertinently, the clause uses two separate
phrases, "cure" and "effective steps to cure" - The Tribunal found
that since certain defects remained after the cure period, this was
indicative of the fact that the defects were not cured and that no
effective steps were taken - The Tribunal fails to explain what
amounts to an 'effective step' and how the steps taken by DMRC
were not effective, within the meaning of the phrase - Parties
clearly intended that once a cure notice was served on a party, it
would be open to them to either cure defects or to initiate effective
steps, even if they could not culminate into the complete curing of
defects within the cure period - Incremental progress, even if it
does not lead to complete cure, is an acceptable course of action
to prevent termination according to the 2008 Agreement - The
decisions of the Single Judge of the High Court and this Court
(two-judge bench) are similarly silent on the aspect of "effective
steps" - The judgment of this Court also never tested the relevance
476
[2024] 4 S.C.R.
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of the CMRS certificate vis-à-vis "effective steps" - Admittedly,
some of the defects were cured in their entirety and steps were
taken by DMRC to cure the remainders - DMRC did take certain
steps to alleviate DAMEPL's concerns so as to warrant this change
of position - There is no explanation forthcoming in the award
about why none of these steps initiated during the cure period
were 'effective steps' - This gap in reasoning stems from the
arbitral tribunal wrongly separating the issue of termination and
the CMRS certificate - The structure and safety of the project,
as certified by the CMRS, were thus relevant before the Tribunal,
making the CMRS certificate a vital piece of evidence in deciding
the issue - The CMRS certificate was relevant evidence about
the safety of the structure - The arbitral tribunal erroneously
rejected the CMRS sanction as irrelevant - The Division Bench
correctly held that the arbitral tribunal ignored vital evidence on
the record, resulting in perversity and patent illegality, warranting
interference - The conclusions of the Division Bench are, thus, in
line with the settled precedent including the decisions in Associate
Builders and Ssangyong - The judgment of the two-judge Bench
of this Court, which interfered with the judgment of the Division
Bench of the High Court, has resulted in a miscarriage of justice
- Thus, Curative Petitions allowed. [Paras 44, 48, 49, 50, 53,
54, 58, 67, 68]
Case Law Cited
Rupa Hurra v. Ashok Hurra [2002] 2 SCR 1006 : 2002
4 SCC 388; Associate Builders v. Delhi Development
Authority [2014] 13 SCR 895 : 2015 3 SCC 49;
Ssangyong Engineering & Construction Co. Ltd. v. NHAI
[2019] 7 SCR 522 : 2019 15 SCC 131 - relied on.
List of Acts
Arbitration and Conciliation Act 1996; Arbitration and Conciliation
(Amendment) Act, 2015; Metro Railways (Operation and
Maintenance) Act, 2002.
List of Keywords
Curative Petition; Arbitral awards; Miscarriage of justice; Patent
illegality; Special leave to appeal by the Supreme Court; Concession
Agreement; Arbitration; Defects; Faulty construction; Deficient
designs; Cure; Effective steps to cure; Vital evidence on record.
[2024] 4 S.C.R.
477
Delhi Metro Rail Corporation Ltd. v.
Delhi Airport Metro Express Pvt. Ltd.
Case Arising From
INHERENT JURISDICTION: Curative Petition(C) Nos. 108-109 of
2022
In
Review Petition(C) Nos. 1158-1159 of 2021
In
Civil Appeal Nos. 5627-5628 of 2021
From the Judgment and Order dated 23.11.2021 in R.P.(C) No. 1158
and 1159 of 2021 and dated 09.09.2021 in C.A. No. 5627 and 5628
of 2021 of the Supreme Court of India
Appearances for Parties
R. Venkataramani, AG., K.K. Venugopal, Parag P Tripathi, Maninder
Singh, Sr. Advs., Tarun Johri, Ankur Gupta, Vishwajeet Tyagi,
Srinivasan Ramaswamy, Chitvan Singhal, Ms. Ashita Chawla, Ankur
Talwar, Ms. Arushi Mishra, Ameyavikrama Thanvi, Kartikey Aggarwal,
Advs. for the Petitioner.
Harish N Salve, Kapil Sibal, J.J. Bhatt, Prateek Seksaria, Sr. Advs.,
Mahesh Agarwal, Rishi Agrawala, Shri Venkatesh, Megha Mehta
Agarwal, Pranjit Bhattacharya, Ms. Madhavi Agarwal, Suhael Buttan,
Vineet Kumar, Ms. Manisha Singh, Nishant Chothani, E.C. Agrawala,
Advs. for the Respondent
Judgment / Order of the Supreme Court
Judgment
Dr Dhananjaya Y Chandrachud, CJI
Table of Contents*
A.
Factual Background............................................................ 3
B.
DMRC's claim and the Tribunal's findings......................... 7
C.
Decisions of the High Court............................................... 10
D.
Judgment of this Court in appeal....................................... 11
E.
Issues in the Curative Petition........................................... 12
* Ed. Note: Pagination as per the original Judgment.
478
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F.
Submissions........................................................................ 12
G.
Analysis............................................................................... 16
I. Curative Jurisdiction may be invoked if there is a
miscarriage of justice..................................................... 16
II. Scope of interference of courts with arbitral awards..... 19
III. The award was patently illegal....................................... 24
i. Interpretation of the termination clause by the
Tribunal was unreasonable.................................... 26
ii. The award overlooked vital evidence and
matters on the record............................................ 29
H.
Conclusion........................................................................... 37
1.
The curative jurisdiction of this Court under Article 142 of the
Constitution has been invoked in regard to its decision in Delhi Airport
Metro Express Private Limited vs. Delhi Metro Rail Corporation
Ltd.1. The judgment remained undisturbed in the exercise of the
review jurisdiction of this Court.2
A.
Factual Background
2.
The petitioner, Delhi Metro Rail Corporation3 is a state-owned
company wholly owned by the Government of India and the National
Capital Territory of Delhi. The respondent, Delhi Airport Metro
Express Private Limited4 is a special-purpose vehicle incorporated
by a consortium comprising of Reliance Infrastructure Limited
and Construcciones Y Auxiliar de Ferrocarriles SA, Spain. The
consortium bagged the contract for the construction, operation and
maintenance of the Delhi Airport Metro Express Ltd5 in 2008. The
Concession Agreement6 envisaged a public-private partnership
1
(2022) 1 SCC 131.
2
Review Petition (C) Nos. 1158-1159/2921.
3
"DMRC"
4
"DAMEPL"/" Concessionaire"
5
"AMEL"
6
"2008 Agreement"
[2024] 4 S.C.R.
479
Delhi Metro Rail Corporation Ltd. v.
Delhi Airport Metro Express Pvt. Ltd.
for providing metro rail connectivity between New Delhi Railway
Station and the Indira Gandhi International Airport and other points
within Delhi.
3.
Under the 2008 Agreement, DAMEPL was granted exclusive rights,
license and authority to implement the project and concession in
respect of AMEL. This included the right to manage and operate
the Project as a commercial enterprise. DMRC was to undertake
clearances and bear costs relating to land acquisition, and civil
structures, while DAMEPL was to undertake among other things,
the design, supply, installation, testing and commissioning of railway
systems. DAMEPL was to complete the work in two years, and
thereafter, to maintain AMEL until August 2038.
4.
In April 2012, DAMEPL sought a deferment of the concession fee,
citing delays in providing access to the stations by DMRC. DAMEPL
stated that while AMEL had been running without a glitch since 23
February 2011, the retail activity had not picked pace. DAMEPL
urged DMRC to extend their support, to this first-of-its-kind publicprivate partnership by deferring the concession fee payable by
DAMEPL.
5.
There was an exchange of correspondence between the parties
which ultimately led the Ministry of Urban Development to convene
a meeting of stakeholders in July 2012. A Joint Inspection Committee
was set up to inspect the defects alleged by DAMEPL.
6.
Meanwhile, DAMEPL expressed its intention to halt operations,
alleging that the line was unsafe to operate. Operations were stopped
on 08 July 2012. On 09 July 2012, DAMEPL issued a notice to DMRC
containing a 'non-exhaustive' list of eight defects which according to
them, affected the performance of their obligations under the 2008
Agreement7. The notice stated that the defects were attributable to
faulty construction and deficient designs which affected project safety.
7.
DAMEPL stated that the defects caused a "material adverse effect"
on the performance of the obligations by it to operate, manage and
maintain the project. DMRC was therefore requested to cure the
defects within 90 days from the date of this notice, failing which
it stated that it would be considered that a "Material Breach" and
7
"Cure Notice"
480
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a "DMRC Event of Default" had occasioned, entitling DAMEPL to
terminate the 2008 agreement.
8.
On 8 October 2012, DAMPEL issued a notice terminating the 2008
agreement.8 The termination notice stated that as 90 days had
elapsed since the cure notice in spite of which the defects had not
been cured within the 'cure period', DAMEPL as Concessionaire
was terminating the agreement in terms of clause 29.5.1 of the
2008 agreement.
9.
DMRC initiated conciliation under clause 36.1 of the 2008 Agreement.
Since conciliation did not succeed, DMRC initiated arbitration
proceedings on 23 October 2012 under clause 36.2 of the 2008
agreement.
10. On 30 June 2013, DAMEPL halted operations and handed over the
line to DMRC. Before this, on 19 November 2012, both parties made
a joint application to the Commissioner of Metro Railway Safety9
for re-opening of AMEL for public carriage of passengers. Enclosed
with the application, was an administrative note jointly signed by
representatives of both DAMEPL and DMRC, which we shall avert
to in the course of the judgment.
11. Following this application, after inquiry and inspection, the CMRS
issued sanction on 18 January 2013. This sanction was subject to
certain conditions including speed restrictions. Specifically, the metro
was to be run at a speed of 50kmph, and an increase in speed beyond
50kmph up to 80kmph was to be authorized in steps of 10kmph at
a time. For an increase in speed beyond 80kmph, DMRC was to
approach the Commissioner for sanction with a justification as to
the improvements carried out by it.
12. Consequently, on 22 January 2013, AMEL operations were
commenced by DAMEPL. On 30 June 2013, the project assets were
handed over by DAMEPL to DMRC. After that, from 01 July 2013,
DMRC continued AMEL operations.
13. In August 2013, the arbitral tribunal comprising Mr AP Mishra, Mr
SS Khurana and Mr HL Bajaj was constituted.10 On 11 May 2017,
8
"Termination Notice"
9
"CMRS"/"Commissioner"
10
"Tribunal"
[2024] 4 S.C.R.
481
Delhi Metro Rail Corporation Ltd. v.
Delhi Airport Metro Express Pvt. Ltd.
the three-member Tribunal passed a unanimous award in favour of
DAMEPL11.
14. The award held that DAMEPL was entitled first, to the termination
payment of Rs. 2782.33 Crores plus interest in terms of the
concession agreement; second, to expenses incurred in operating
AMEL from 07 January 2013 to 30 June 2013 and debt service made
by DAMEPL during this period, of Rs 147.52 Crores plus interest at
11% per annum from the date of payment of stamp duty; third, to
the refund of the bank guarantee amounting to Rs 62.07 Crores plus
interest at 11% p.a. which had been encashed; fourth, to security
deposits with the service providers, amounting to Rs 56.8 Lakhs
plus interest at 11% p.a.; and that DMRC was entitled to Rs 46.04
Crores as Concession fee for the period from 23 February 2012 to
7 January 2013.
15. Assailing the award, DMRC instituted an application under Section
34 of the Arbitration and Conciliation Act 199612 before the Delhi High
Court. The Single-Judge of the High Court dismissed the petition13.
This gave rise to an appeal under Section 37 before a Division Bench
of the High Court. The appeal was partly allowed.14
16. Against the decision of the Division Bench of the High Court, DAMEPL
moved a Special Leave Petition under Article 136 of the Constitution.
A two-judge bench of this Court allowed the appeal, and restored
the award. The review petition assailing this decision was dismissed.
Thus, the curative petition.
B.
DMRC's claim and the Tribunal's findings
17. Before the Tribunal, DMRC claimed that - (i) 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; (ii) that the real reason
for the termination notice was that DAMPL had ceased to find the
project financially viable. DMRC sought, inter alia, quashing of the
11
"Award"
12
"Arbitration Act".
13
OMP (COMM) 307/2017 & OMP (I) (COMM) 200/2017 ('Single Judge')
14
FAO(OS)(COMM) 58/2018 & CM Nos. 13434/2018 ('Division Bench')
482
[2024] 4 S.C.R.
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termination notice; and a direction to the respondent to resume the
performance of its obligations under the 2008 agreement. DAMEPL,
on the other hand, 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.
18. The Tribunal was required to adjudicate on the validity of the
termination notice. It framed the following issues:
"Were there any defects in the civil structure of the airport
metro line?
If there were defects, did such defects have a material
adverse effect on the performance of the obligation of
DAMEPL under CA?
If there were defects in the civil structure, which had
a material adverse effect on the performance of the
obligations under the CA by DAMEPL, have such defects
been cured by DMRC and/or have any effective steps been
taken within a period of 90 days from the date of notice
by DAMEPL to cure the defects by DMRC and thus, were
DMRC in breach of the CA as per 29.5.1 (i)?"
19. The Tribunal undertook an analysis of the defects in the structure
and whether they had been cured or effective steps taken during
the cure period. It noted that 72% of the girders were affected by
cracks; the cause of the cracks was uncertain; the depth of the
cracks was not reliably determined; and that the inspection for
repairs carried out at the instance of DMRC was 'non-serious'.
Further, it noted that there were twists in about 80 girders and
gaps between the shear key and the girders which were not cured
by DMRC in the cure period. Taken together, these defects were
considered to have compromised the integrity of the structure. This,
the Tribunal held, amounted to a breach of DMRC's obligations
under the 2008 agreement resulting in a material adverse effect
on the concessionaire.
20. The Tribunal framed the legal issues that arose for its consideration.
The issue about the validity of the termination agreement was framed
in the following terms:
[2024] 4 S.C.R.
483
Delhi Metro Rail Corporation Ltd. v.
Delhi Airport Metro Express Pvt. Ltd.
"D. Was DAMEPL entitled to or justified in termination of
the CA, since the cost of repairs of the alleged defects was
only approximately Rs.14 crores as compared to the total
costs of the project of approximately Rs. 5700 crores?"
21. The issue pertaining to the CMRS certificate was framed as follows:
"H. Did the issuance of certificate by CMRS show that the
defects were duly cured?"
22. Both these issues were answered in the negative by the Tribunal. On
Issue 'D' about the validity of the termination, it was held that since
the Tribunal had found that there were defects in the civil structure,
which remained uncured during the cure period, the amount incurred
by DMRC in repairs compared to the overall cost of the project was
irrelevant.15 On issue 'H', about the CMRS certificate, the tribunal
found that the CMRS sanction mandated rigorous monitoring of
operations of the line and imposed a speed restriction. Since the
purpose of the line was to serve as a high-speed line, the tribunal found
that the speed restrictions meant that this purpose was not served
and therefore, the CMRS certificate or the subsequent operation of
the line were not relevant in deciding the issues before it.16
C.
Decisions of the High Court
23. The Single Judge of the High Court17, deciding the Section 34
application, upheld the award, observing that so long as the award
was reasonable and plausible, considering the material before the
Tribunal no interference was warranted, even if an alternate view
was possible. It was held that the Tribunal, in this case, had analysed
material and evidence in great detail, and arrived at a plausible
conclusion.
24. The Division Bench of the High Court18 partly set aside the award
as perverse and patently illegal, for the following reasons:
24.1. On the validity of the termination, ex-facie, the termination
which was effective immediately from the date of termination
15
The Award, para 93.
16
ibid, paras 105-108.
17
"Single Judge".
18
"Division Bench".
484
[2024] 4 S.C.R.
Digital Supreme Court Reports
was invalid. There was some ambiguity on the relevant date
of termination. The award did not interpret clause 29.5.1(i)
of the concession agreement regarding the duration of the
cure period;
24.2. The speed restrictions were not stated as the reason for
termination in the cure or termination notices and there was no
deliberation on this being a justification for termination before
the Tribunal. Thus, the award was silent and unreasoned on
this issue; and
24.3. Underlining the significance of the CMRS sanction under the
Act of 2002, the findings of the tribunal on this issue were
incorrect because (i) the award overlooked the legal effect
of the CMRS certificate which was binding on the tribunal;
and (ii) the award erroneously treated the CMRS certificate
as irrelevant to the issue of the validity of the termination by
wrongly separating the issue of defects and material adverse
effects from the issue of the certificate.
D.
Judgment of this Court in appeal
25. This Court set aside the decision of the Division Bench and restored
the arbitral award on the following grounds:
25.1. There was no ambiguity in the date of termination and even
if a different view from that of the tribunal were possible,
construction of the provisions of the contract was within the
exclusive domain of the tribunal;
25.2. The award was not perverse. The finding of the tribunal that
the defects were not cured was a finding of fact, not warranting
interference;
25.3. DMRC had not contended before the Tribunal that the
certificate was binding and conclusive of the fact that the
defects were cured or that effective steps had been taken; and
25.4. The Division Bench of the High Court was in error in
holding that the issue of the CMRS certificate was wrongly
separated from the issue of defects. It held that dealing with
the certificate separately from the validity of termination did
not render the tribunal's findings on the latter erroneous. The
Tribunal comprised of engineers and the award could not
[2024] 4 S.C.R.
485
Delhi Metro Rail Corporation Ltd. v.
Delhi Airport Metro Express Pvt. Ltd.
be scrutinised in the same manner as an award drawn by a
legally trained mind.
26. The review petition against the above judgment of this Court was
dismissed on 23 November 2021.
E.
Issues in the Curative Petition
27. The issues that arise for our consideration are (i) whether the
curative petition is maintainable; and (ii) 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.
F.
Submissions
28. We have heard Mr R Venkataramani, Attorney General for India
and Mr K K Venugopal, Mr Parag Tripathi, and Mr Maninder Singh
senior counsel on behalf of the petitioners. They made the following
submissions:
28.1. Considering the definition of 'material adverse effect' under the
concession agreement, the defects had no material adverse
effect on DAMEPL's performance of obligations under the
agreement, as is apparent from the running of the metro
line. The purpose of the agreement was fully subserved, as
evinced by the continuous running of the line;
28.2. The purpose of the cure notice was to demand cure
compliance from DMRC. As long as 'effective steps' were
taken by DMRC, culminating in cure compliance under the
statutory process under the Metro Railways (Operation
and Maintenance) Act, 200219, the termination notice was
invalid;
28.3. Clause 29.5.1 of the agreement shows that the termination
ought to have been effected after 90 days from the cure notice
plus 90 days in addition. Termination was thus effective only
on 07 January 2013 and on this date, none of the defects
were pending to be rectified by DMRC;
19
The 2002 Act
486
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28.4. The sanction/certificate granted by CMRS was issued on a
joint application by both the parties after thorough inspection
of the operations. The terms of the agreement and the
provisions relating to the CMRS process under the 2002 Act
are intrinsically connected;
28.5. The Tribunal should have considered the binding effect of the
CMRS sanction as the issue of speed was neither raised, nor
deliberated before it and was irrelevant to the termination;
28.6. The line has been running since 1 July 2013. The speed
of operations was sanctioned at 50kmph, and has been
progressively increased to 60 kmph in January 2013, 80 kmph
in August 2013, 90 kmph in July 2019, and ultimately 100
kmph and then 110 kmph in 2023. The metro was running
at 80 kmph prior to the termination of the agreement. It is
currently running at 120kmph for which a fresh sanction was
obtained from the CMRS. The smooth operation of the metro
line for five and a half years, until the date of the award was
entirely ignored by the Tribunal, making the award perverse;
28.7. The running of the metro line shows that even if there were
defects, they did not render the metro unviable nor did they
interfere with DAMEPL's obligations under the agreement.
Thus, the award is perverse and patently illegal;
28.8. The tribunal ignored vital evidence, warranting the High
Court's interference under Section 37 of the Arbitration Act.
The miscarriage of justice principle is informed by the scheme
of the Arbitration Act;
28.9. The High Court's interference with the patent illegality was
justified and this Court under Article 136 ought to have been slow
to interfere with the decision of the Division Bench of the high
Court. Miscarriage of justice in terms of the decision in Rupa
Hurra vs. Ashok Hurra20 is linked with patent illegality. The High
Court's interference under Section 37 was justified because the
exercise of jurisdiction under Section 34 was erroneous; and
28.10. The issue of the fitness of the line was a matter falling under
the 2002 Act under which the Commissioner was the final
20
[2002] 2 SCR 1006 : 2002 4 SCC 388
[2024] 4 S.C.R.
487
Delhi Metro Rail Corporation Ltd. v.
Delhi Airport Metro Express Pvt. Ltd.
authority to decide on the safety of the metro. The certificate
could not have been substituted by the Tribunal's finding on
safety of the line.
29. We have heard Mr Harish Salve, Mr Kapil Sibal, Mr JJ Bhatt and Mr
Prateek Seksaria, learned senior counsel for the respondent. They
have made the following submissions:
29.1. The curative petition is not maintainable as this Court cannot
revisit the conclusions arrived at by the Tribunal;
29.2. DMRC has taken over the project and has been operating
it since 01 July 2012 without having paid for its operation
between 01 January 2013 till 30 June 2013, except for a
small fraction of the total awarded amount;
29.3. Till early March 2023, the trains were running at 90kmph,
as opposed to the speed of 120kmph at which they ought to
have been running;
29.4. The issue about the relevance of the CMRS certificate has
been squarely addressed by the Single Judge and this Court.
The arbitrator is the sole judge of the quality and the quantity
of evidence;
29.5. The award was made after 68 hearings and after consideration
of 35,000 pages of documents and oral evidence. It has been
two and a half years since this Court restored the award on
09 September 2021 and the review against this decision was
dismissed on 23 November 2021;
29.6. According to the decision in Rupa Hurra (supra), the court is
not supposed to sit over a judgment like a court of appeal. The
scope of the review jurisdiction is narrow in itself and does
not warrant rehearing and correction of a judgment. Curative
proceedings cannot be treated as a second review; and
29.7. DAMEPL is not unjustly enriching itself. DAMEPL completed
the project with an investment of Rs 2802 Crores comprising
of debt and equity contributions and it continued to service
the debt even after handing over the line to DMRC. DMRC on
the other hand, has paid the decretal amount of Rs 2599.18
Crores while Rs 5088 Crores under the decree is outstanding
as on 31 January 2024.
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G.
Analysis
I.
Curative Jurisdiction may be invoked if there is a
miscarriage of justice
30. Senior Counsel for the respondent set forth preliminary objections
challenging the maintainability of the Curative Petition, in view of the
scope of that jurisdiction delineated inter alia in the decision in Rupa
Hurra (supra) We will first lay down the contours of the jurisdiction
of this Court to entertain a curative petition in exercise of its inherent
powers under Article 142.
31. In Rupa Hurra (supra), a Constitution Bench of this Court dwelt on
whether any relief is available against a final judgement of this Court
after the dismissal of a petition seeking review of the judgement.
Two opinions were authored. The main judgment was by Justice
Syed Shah Quadri (on behalf of Chief Justice S P Bharucha, Justice
Variava, Justice Shivraj Patil and himself). A concurring opinion was
authored by Justice U C Banerjee.
32. Justice Quadri observed that the concern of the Court for rendering
justice in a cause cannot be considered less important than the
principle of finality. There are certain situations, the opinion observed,
which would require reconsideration of a final judgement even after
the review has been dismissed to set right a miscarriage of justice.
Such circumstances, the court held, are those where declining to
reconsider the judgement would be oppressive to judicial conscience
and cause the perpetuation of irremediable injustice. Justice Quadri
observed:
"42. ... the duty to do justice in these rarest of rare cases
shall have to prevail over the policy of certainty of judgment
as though it is essentially in the public interest that a final
judgment of the final court in the country should not be
open to challenge, yet there may be circumstances, as
mentioned above, wherein declining to reconsider the
judgment would be oppressive to judicial conscience
and would cause perpetuation of irremediable
injustice."
(emphasis supplied)
33. This Court laid down an overarching principle that the Court may
entertain a curative petition to (i) prevent abuse of its process; and
[2024] 4 S.C.R.
489
Delhi Metro Rail Corporation Ltd. v.
Delhi Airport Metro Express Pvt. Ltd.
(ii) to cure a gross miscarriage of justice.21 The Court provided
examples of such circumstances, such as a violation of the principles
of natural justice; or a situation where the Judge fails to disclose his
connection with the subject matter or the parties, giving scope for
an apprehension of bias. However, the Court observed that it is not
possible to exhaustively enumerate the grounds on which a curative
petition may be entertained. The Court noted as follows:
"50. The next step is to specify the requirements to entertain
such a curative petition under the inherent power of this
Court so that floodgates are not opened for filing a second
review petition as a matter of course in the guise of a
curative petition under inherent power. It is common ground
that except when very strong reasons exist, the Court
should not entertain an application seeking reconsideration
of an order of this Court which has become final on
dismissal of a review petition. It is neither advisable nor
possible to enumerate all the grounds on which such
a petition may be entertained.
51. Nevertheless, we think that a petitioner is entitled to
relief ex debito justitiae if he establishes (1) violation of the
principles of natural justice in that he was not a party to
the lis but the judgment adversely affected his interests or,
if he was a party to the lis, he was not served with notice
of the proceedings and the matter proceeded as if he had
notice, and (2) where in the proceedings a learned Judge
failed to disclose his connection with the subject-matter or
the parties giving scope for an apprehension of bias and
the judgment adversely affects the petitioner."
34. The enumeration of the situations in which the curative jurisdiction
can be exercised is thus not intended to be exhaustive. The Court
went on to lay down certain procedural requirements to entertain a
curative petition such as a certificate by a Senior Advocate about
fulfilling of the requirements.
35. In his concurring opinion, Justice Banerjee also laid down a similar
test of 'manifest injustice' to exercise the jurisdiction of this Court
21
Rupa Hurra, para 49.
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under Article 142 while entertaining a curative petition. In essence, the
jurisdiction of this Court, while deciding a curative petition, extends
to cases where the Court acts beyond its jurisdiction, resulting in
a grave miscarriage of justice. We now proceed to lay down the
scope of jurisdiction of this Court and the competent courts below
while dealing with cases arising out of an application to set aside
an arbitral award under Section 34 of the Arbitration Act.
II.
Scope of interference of courts with arbitral awards
36. Section 34 of the Arbitration Act delineates the grounds for setting
aside an arbitral award. The provision, as amended by the Arbitration
and Conciliation (Amendment) Act, 2015 reads as follows:
"34. Application for setting aside arbitral award.-
...
(2) An arbitral award may be set aside by the Court only if-
...
(b) the Court finds that--
(i) the subject-matter of the dispute is not capable of
settlement by arbitration under the law for the time being
in force, or
(ii) the arbitral award is in conflict with the public policy
of India.
Explanation 1. --For the avoidance of any doubt, it is
clarified that an award is in conflict with the public policy
of India, only if,--
(i) the making of the award was induced or affected by
fraud or corruption or was in violation of section 75 or
section 81; or
(ii) it is in contravention with the fundamental policy of
Indian law; or
(iii) it is in conflict with the most basic notions of morality
or justice.
Explanation 2. --For the avoidance of doubt, the test as
to whether there is a contravention with the fundamental
[2024] 4 S.C.R.
491
Delhi Metro Rail Corporation Ltd. v.
Delhi Airport Metro Express Pvt. Ltd.
policy of Indian law shall not entail a review on the merits
of the dispute.
(2A) An arbitral award arising out of arbitrations other
than international commercial arbitrations, may also
be set aside by the Court, if the Court finds that the
award is vitiated by patent illegality appearing on the
face of the award:
Provided that an award shall not be set aside merely on
the ground of an erroneous application of the law or by
reappreciation of evidence."
(emphasis supplied)
37. The contours of the power of the competent court to set aside an
award under Section 34 has been explored in several decisions of
this Court. In addition to the grounds on which an arbitral award
can be assailed laid down in Section 34(2), there is another ground
for challenge against domestic awards, such as the award in the
present case. Under Section 34(2-A) of the Arbitration Act, a domestic
award may be set aside if the Court finds that it is vitiated by 'patent
illegality' appearing on the face of the award.
38. In Associate Builders vs. Delhi Development Authority22, a twojudge Bench of this Court held that although the interpretation of a
contract is exclusively within the domain of the arbitrator, construction
of a contract in a manner that no fair-minded or reasonable person
would take, is impermissible. A patent illegality arises where the
arbitrator adopts a view which is not a possible view. A view can be
regarded as not even a possible view where no reasonable body of
persons could possibly have taken it. This Court held with reference
to Sections 28(1)(a) and 28(3), that the arbitrator must take into
account the terms of the contract and the usages of trade applicable
to the transaction. The decision or award should not be perverse
or irrational. An award is rendered perverse or irrational where the
findings are (i) based on no evidence; (ii) based on irrelevant material;
or (iii) ignores vital evidence. Patent illegality may also arise where
the award is in breach of the provisions of the arbitration statute, as
when for instance the award contains no reasons at all, so as to be
22
[2014] 13 SCR 895 : 2015 3 SCC 49.
492
[2024] 4 S.C.R.
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described as unreasoned. A fundamental breach of the principles
of natural justice will result in a patent illegality, where for instance
the arbitrator has let in evidence behind the back of a party. In the
above decision, this Court observed:
"31.