DMRC not required to pay Rs 8,000 crore to Reliance Infra arm – SC


06:04 AM

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DMRC not required to pay Rs 8,000 crore to Reliance Infra arm – SC Blog Image

What’s in today’s article?

● Why in News?

● What is Curative petition?

● Background of the case

● Key highlights of the recent judgement by SC

Why in News?

While hearing a curative petition, the Supreme Court has overturned its own decision from 2021 about a case involving the Delhi Metro Rail Corporation (DMRC) and Delhi Airport Metro Express Private Limited (DAMEPL).

Originally, DMRC was told to pay Rs 2,782.33 crore plus interest to DAMEPL, which is owned by Anil Ambani's Reliance Infrastructure. This was regarding their work on the Airport Metro Express Line project in Delhi. This has been set aside by the SC in its latest judgement.

What is Curative petition?

  • About
    • Curative petition is the last constitutional remedy available to a person whose review petition has been dismissed by the Supreme Court.
    • Though the Constitution explicitly speaks about the review power of the Supreme Court under Article 137, it is silent about 'curative power'.
  • Origin of curative Petition – an Innovative use of Art 142
    • The Supreme Court evolved the idea of curative petitions in the landmark judgment of Rupa Ashok Hurra vs. Ashok Hurra.
    • The five-judge bench observed that Article 142 of the Constitution empowers the Supreme Court to act in whatever manner they may deem fit to establish complete justice.
  • Article 142 provides a unique power to the Supreme Court, to do complete justice between the parties, where at times law or statute may not provide a remedy.
    • Therefore, to protect the substantive rights of the litigant, the Constitution Bench came up with the theory of a curative petition.
  • Grounds on which curative petition is entertained
    • Curative petition will be entertained on strong grounds only e.g.
      • Violation of principles of natural justice.
      • Where the judge has a bias
    • It has to be certified by a senior advocate. If the bench finds that the petition is vexatious and without any merit it may impose exemplary costs on the petition.

Background of the case

Journey of dispute
  • DMRC entered into a public-private partnership with DAMEPL
    • In 2008, the DMRC entered into a public-private partnership with DAMEPL, a consortium led by Reliance Infrastructure Ltd.
    • This partnership was for the construction, operation, and maintenance of the Delhi Airport Metro Express.
    • While DMRC acquired the land and bore the cost of construction, the consortium was to design, install, and commission the railway systems in two years.
    • Thereafter, until 2038, DAMEPL was to maintain the line and manage its operations, while paying a concession fee to DMRC.
  • Rise of dispute
    • A year after the line became operational, the consortium asked DMRC if it could defer payment of the concession fee.
    • Among the reasons cited were delays in providing access to the stations by DMRC, and that retail activity had not picked up on the line.
  • This triggered a dispute between the consortium and the Union Ministry of Urban Development.
    • Later, the line was shut following a complaint from DAMEPL that it was unsafe to operate.
    • The consortium triggered a termination of its agreement alleging there were technical problems in the civil structure of the Metro corridor, for which DMRC was responsible as per the agreement.
    • As a result, a battle was started between DMRC and Reliance before an arbitration tribunal for losses due to cancellation of the agreement.
  • Rulings of courts

Ruling by arbitration panel

  • In 2017, the panel of three arbitrators decided in favour of Reliance and ordered DMRC to pay nearly Rs 8,000 crore.

Ruling by single judge Bench of the HC

  • Against the orders of the panel of arbitrators, DMRC moved the Delhi High Court. A single judge Bench of the HC refused to interfere with the award.

Ruling by two-judge (division) Bench of the High Court

  • In 2019, the division Bench overturned the arbitral award, ruling in favour of DMRC.
  • The Bench held that the tribunal had not considered some key facts, and had left some ambiguity in interpreting when the termination of the agreement took place.

Ruling by the Supreme Court

  • The SC heard the case, and in September 2021 reversed the HC verdict.
  • The SC bench underlined that courts must exercise restraint when interfering with arbitral awards.
  • This is crucial, since arbitration is an institutionalised alternative form of dispute resolution.
  • It is devised and regulated by a 1996 statute to ensure speedy disposal of cases, especially commercial matters which suffer due to delays in the judicial system.

Subsequent review petition and curative petition

  • In November 2021, the SC dismissed a review petition against its judgment.
  • Later, DMRC filed a curative writ petition, the last resort to correct a judgment of the Supreme Court.

Key highlights of the recent judgement by SC

  • SC observed that there was no valid basis for the apex court to interfere under Article 136 of the Constitution (Special leave to appeal by the Supreme Court).
  • The apex court said its interference resulted in restoring a patently illegal award.
  • The earlier decision of the Supreme Court didn't show any good reason for overturning the judgment of the Division Bench under Section 37 of the Arbitration Act.
  • This placed a heavy financial burden on a public utility, leading to a serious injustice.
  • The SC said that using the power under Article 142 of the Constitution is necessary to address this injustice.

Q.1. What is public-private partnership (PPP)?

A public-private partnership (PPP) is a long-term collaboration between a government agency and a private-sector company to finance, build, and operate projects. PPPs are often used for public infrastructure projects like parks, convention centers, public transportation networks, airports, power plants, and telecommunications systems. 

Q.2. What is Article 137 of the Indian Constitution?

Article 137 of the Constitution provides that subject to provisions of any law and rule made under Article 145 the Supreme Court of India has the power to review any judgement pronounced (or order made) by it.

Source: SC sets aside Rs 8,000-cr arbitral award to RInfra

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