DMRC Case: Supreme Court Overturns Rs 8000 Crore Liability Ruling Against DMRC in DAMEPL Case

Landmark Decision Relieves DMRC (Delhi Metro Rail Corporation) of Hefty Financial Burden in Arbitration Dispute

In a significant decision, the Supreme Court has overturned its 2021 judgment, relieving the Delhi Metro Rail Corporation (DMRC) of a hefty liability amounting to approximately Rs 8000 crores. This ruling sets aside the arbitral award previously won by the Delhi Airport Metro Express Private Limited (DAMEPL), a subsidiary of Reliance Infrastructure.

The original arbitral award, issued in 2017, amounted to Rs 7200 crores, with additional interest and charges pushing the total liability past Rs 8000 crores as of the current date.

The Supreme Court’s decision comes after the DMRC filed a curative petition, arguing that the earlier judgment erred in overturning the 2019 Delhi High Court ruling, which had set aside the arbitral award against the DMRC. The bench, comprising Chief Justice DY Chandrachud and Justices BR Gavai and Surya Kant, noted that interfering with the Delhi High Court’s judgment resulted in an unjust burden on a public utility, constituting a miscarriage of justice.

By allowing the curative petition, the Supreme Court has effectively revoked its 2021 judgment and reinstated the parties to their positions at the time of the Delhi High Court’s ruling. Consequently, the DMRC’s deposited amounts are to be refunded, and any payments made under coercive measures must be returned, while execution proceedings for the award are to be halted.

Background:

The dispute stems from the DMRC’s failure to pay termination fees to DAMEPL, despite terminating their contract for the airport metro line prematurely. The arbitration tribunal ruled in favor of DAMEPL in 2017, awarding them a significant sum along with interest. While the DMRC initially challenged the award, the Delhi High Court’s single-judge bench upheld it in 2018, only for the decision to be overturned on appeal.

After the Supreme Court’s 2021 ruling in favor of DAMEPL, execution proceedings began, with the DMRC depositing funds to comply with the award. However, ongoing discussions between key stakeholders and subsequent developments led to further legal maneuvers, including the filing of the curative petition by the DMRC.

The latest ruling by the Supreme Court signifies a major development in this long-standing legal battle, impacting both the DMRC and DAMEPL, as well as highlighting broader issues surrounding contractual disputes and arbitration in public infrastructure projects.