DMRC is not liable to pay Rs 8,000 crore to Reliance Infra, says SC
The Supreme Court (SC) on Wednesday quashed its own order three years ago and exempted the Delhi Metro Rail Corporation (DMRC) from paying an arbitration award of around Rs 8,000 crore to a subsidiary of Anil Ambani-controlled Reliance Infrastructure.
The DMRC had filed a curative petition challenging an order of two judges of the apex court pronounced in 2021. The division bench had upheld the arbitral award in favor of Delhi Airport Metro Express Private Ltd. (DAMEPL) – a branch of Dependency Infrastructure.
In 2019, the Delhi High Court had quashed the verdict following which the DAMEPL moved the apex court.
While referring to its 2021 verdict, the apex court on Wednesday observed that it was “a grave miscarriage of justice by interfering with a decision of the Division Bench of the Delhi High Court”.
A three-judge bench headed by Chief Justice of India DY Chandrachud said the verdict was “perverse and patently illegal”. He read out a sentence reserved for February 20.
The bench, comprising CJI Chandrachud and Justices BR Gavai and Surya Kant, asked the company to refund the amount already received.
“Any amount paid by DMRC as part of coercive measures should be refunded and the execution proceedings for the judgment should be stayed,” the report said.
This comes as a big relief to DMRC, which sought financial support from the central government to pay for the arbitration award. The airport metro line in question is currently operated by DMRC after Reliance Infra exited the project, following the arbitration case.
Meanwhile, Reliance Infrastructure on Wednesday said the court order did not impose any liability on the company. Although DAMEPL is a subsidiary of Reliance Infrastructure, it is a separate entity and liability falls on it.
DMRC and DAMEPL have been at loggerheads ever since the latter withdrew from the operations of the Delhi Metro Airport Line citing safety concerns due to structural defects. An arbitral tribunal ruled in favor of the Reliance Infra company in 2017 and asked DMRC to pay the arbitration award.
Reliance Infra had moved the Supreme Court against DMRC on December 2, 2022, seeking payment of Rs 4,500 crore in dues of the entire arbitral award to DAMEPL.
On December 14, 2022, the SC gave DMRC three months to pay dues and sent the case back to the Delhi High Court for hearing.
The prior liability, along with interest and other charges, exceeds Rs 8,000 crores as of today.
The case involved a dispute over a concession agreement between DAMEPL and DMRC in respect of the Delhi Airport Express Line.
In September 2021, DMRC deposited Rs 1,000 crore into an ESCROW account. And after DMRC released Rs 1678.42 crore of the total amount, DAMEPL informed the court in February 2023 that the outstanding amount then stood at a whopping amount of Rs 6330.96 crore.
In a statement filed with the stock exchange, Reliance Infrastructure said, “Hon’ble Supreme Court today allowed the curative petition filed by Delhi Metro Rail Corporation (DMRC) against Delhi Airport Metro Express Private Limited (“DAMEPL”). Reliance Infrastructure wishes to clarify that the order dated April 10, 2024 passed by the Hon’ble Supreme Court does not impose any liability on Reliance Infrastructure and the company has not received any money from DMRC/DAMEPL pursuant to the arbitral award.”
Commenting on the award, Smita Paliwal, Partner, King Stubb & Kasiva, Advocates and Advocates, said: “This award has a huge impact in all circles of arbitration, with great doctrinal and express caution from the bench comprising CJI DY Chandrachud, Justice BR Gavai and Justice Surya Kant say that review or curative jurisdiction should not be used to open floodgates to create a fourth or fifth stage of court intervention in an arbitral award.”
Aaushi Doshi, Associate Partner, IndiaLaw LLP, said: “This judgment reaffirms the law that there must be a valid justification for an appellate court to interfere with the findings of an order where they are evident from the record and not based on an incorrect appreciation of the law or the facts.”
First print: April 11, 2024 | 00:00 IST