May 21, 2024


Does the SC’s DMRC vs DAMEPL ruling set a good precedent?

(Image credit: Delhi Metro Rail Corporation, CC BY-SA 4.0, via Wikimedia Commons)

A Supreme Court case involving the Delhi metro not paying its dues to an Ambani-owned Reliance infrastructure company might not sound like a headline-grabber. But this one’s different. The court’s ruling in favour of the Delhi Metro Rail Corporation (DMRC) surprised many.

For starters, it put the Delhi Metro back on track for its continued expansion. But delving deeper, the ruling has outlined some rules specifically on the roles and responsibilities of arbitration tribunals and how they handle future cases. The question is, does the ruling set a good or bad precedent?


The DMRC is a public utility. Over a decade back, it proposed an express metro line to Delhi’s international airport through a public-private partnership with the Delhi Airport Metro Express Pvt. Ltd. (DAMEPL). The latter was called the concessionaire.

Under the agreement, signed in 2008, DMRC would design and construct the civil structures. DAMEPL would finance, design, procure, and install all the necessary systems. Post delays and extensions, a safety clearance was sought from the Commissioner of Metro Railway Safety (CMRS). The clearance was awarded with caveats, including reduced speed and mandatory periodical inspections.

DAMEPL wanted a joint inspection of the viaduct and its bearing since there were complaints about their quality and designs. Upon inspection, there were defects that the DMRC admitted. A Joint Inspection Committee was formed, and an interim report was submitted.

Following this, DAMEPL ceased operations and asked the DMRC to fix things within 90 days. Once this period expired, the DAMEPL issued a notice to terminate the contract in 2012, following which the DMRC invoked arbitration.

Based on an analysis of the defects, a tribunal concluded that there were over 1,500 cracks in 367 girders. It said these were tended to by the DMRC in the specified period. The tribunal also said the safety certificate from the CMRS was immaterial since the Airport metro line was meant to be a high-speed service. The ruling was a breach of contract by the DMRC and that the DAMEPL was owed about ₹7,500 crore.

A division bench reserved the tribunal’s ruling, and the DAMEPL went to the Supreme Court. The apex court upheld the tribunal ruling in favour of DAMEPL. However, once the DMRC came to the Supreme Court, it stated that the tribunal didn’t distinguish between “curing” the defects and “taking effective steps to cure” the defects. The court overturned the award, and DMRC didn’t have to pay anything.

The apex court’s ruling essentially overturned its own from a few years back. The court has set a precedent that is likely to significantly impact similar arbitration cases that might make their way to it.

VIEW: Correcting errors

When the DAMEPL approached the Supreme Court against the High Court verdict, the apex court reversed the High Court’s verdict. The bench underlined that courts should be careful when interfering with arbitral awards. What the Supreme Court has done now is known as curative jurisdiction. It’s not prescribed in the Constitution since it’s a judicial innovation designed to correct any grave injustice in a top court’s ruling.

The question to be asked here is if there was a miscarriage of justice, can and should the court still correct it? On the one hand, the case was settled, but on the other is rendering true justice. The court rightly pointed out that the latter should not be deemed less important.

The good news is that curative writ petitions, like the one filed by the DMRC, aren’t common. They’re mostly used in cases involving the death penalty. In this case, it was seen as the DMRC’s last resort. The court saw this as a “grave miscarriage of justice” in this particular exceptional circumstance that saddled a public corporation with a hefty financial liability. The court’s ruling points out the necessity of tribunals to carefully examine agreements and clauses and will set a good precedent for several pending arbitrations, specifically concerning infrastructure projects.

COUNTERVIEW: A sticky wicket

To attract foreign investors, you need a lot of things in place. That includes a proper dispute mechanism. Any reasonable investor will look for this since they’re putting money into that country. They’ll look at how courts approach certain cases and issues. If there does come a dispute, an investor will want the framework to be effective since no one wants an expensive and prolonged litigation process.

The arbitration regime in India hasn’t always been the most robust. It’s why the 2015 Arbitration Amendment Act was enacted to reduce the courts’ interference in arbitral awards. The government wanted India to become an arbitration hub and help ease investors’ concerns. The Supreme Court’s ruling goes against this by quashing the tribunal’s ruling. Courts will now be emboldened to interfere with arbitral awards.

The court’s ruling will impact any future tribunal awards under challenge. However, the more serious implication will be for tribunals of non-professionals like engineers who aren’t well-versed in the intricacies of arbitration law. The DMRC’s counsel argued that this miscarriage of justice was linked with patent illegality. However, patent illegality was never an objective standard. Throw in miscarriage of justice into that mix, and that nebulous standard only becomes more nebulous.

Reference Links:

  • A cure without a disease: The Delhi Metro Rail Case – Supreme Court Observer
  • Delhi Metro vs Anil Ambani firm — why SC overruled its own judgment citing ‘miscarriage of justice’ – The Print
  • DMRC vs DAMEPL: SC broadens scope of court intervention in arbitral awards – Business Standard
  • Deciphering the Supreme Court’s Verdict on DMRC v. DAMEPL — The “Cure” to Longstanding Legal Battle – SCC Times
  • Supreme Court has just put the Delhi metro on track – and given a roadmap – The Indian Express
  • DMRC vs DAMEPL: The fallout of Supreme Court’s judgement – Moneycontrol

What is your opinion on this?
(Only subscribers can participate in polls)

a) The SC’s DMRC vs DAMEPL ruling sets a good precedent.

b) The SC’s DMRC vs DAMEPL ruling sets a bad precedent.


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