DMRC vs DAMEPL: A Classic Case Of Flip Flop Interference By Indian Courts With Arbitration Awards

In its judgment delivered allowing the curative petition filed by Delhi Metro Rail Corporation, the Supreme Court cautioned itself that its curative jurisdiction should not be adopted as a matter of ordinary course.

“The curative jurisdiction should not be used to open the floodgates and create a fourth or fifth stage of court intervention in an arbitral award, under this Court’s review jurisdiction or curative jurisdiction, respectively“, the bench of CJI DY Chandrachud, Justice BR Gavai and Justice Surya Kant observed.

The Supreme Court has itself noted that the statutory scheme under Section 34 of the Arbitration Act, 1996 is in keeping with the UNCITRAL Model Law and the legislative policy of minimal judicial interference in arbitral awards. But the history of this case will show that this is a classic case of ‘flip flop’ interference by Indian Courts with Arbitration Awards.

In this case, the Arbitration Award was passed on 11th May, 2017.

DMRC filed an application for setting aside the Award. This application was dismissed by the Single Judge of the Delhi High Court. “The Arbitral Tribunal has in great detail examined and assessed the material and evidence placed before it and has analysed the relevant clauses of the contract and taken a view, which is plausible. I find no infirmity in the view taken by the Arbitral Tribunal so as to interfere with the award, in exercise of powers under Section 34 of the Act.”, Justice Sanjeev Sachdeva observed.

Later, DMRC’s appeal under Section 37 of the Act was allowed by the Division Bench of the Delhi High Court which then partly set aside the Award describing the same as ‘perverse’. 

DMEPL filed Special Leave Petition which was admitted and later converted to Civil Appeal. This appeal was allowed by the Supreme Court bench of Justice L. Nageswara Rao and Justice S. Ravindra Bhat and thus the Award was restored. The Review Petition filed by DMRC was also dismissed.

DMRC then filed Curative Petition. As per the Supreme Court Rules, a curative petition has to come before a Bench of the three senior­most judges and the judges who passed the judgment complained of, if available. Presently, CJI DY Chandrachud, Sanjiv Khanna J and BR Gavai J are the three seniormost judges. As it was Sanjiv Khanna J who authored the Delhi HC (Division Bench) judgment in this case, this Curative Petition was heard by a bench of CJI DY Chandrachud, Justice BR Gavai and Justice Surya Kant. The judges who passed the judgment complained of (Justice L. Nageswara Rao and Justice S. Ravindra Bhat) were not available, as they retired.

While allowing the Curative Petition, the three judges bench observed that the interference by the Court has resulted in restoring a patently illegal award. “This has caused a grave miscarriage of justice. We have applied the standard of a ‘grave miscarriage of justice’ in the exceptional circumstances of this case where the process of arbitration has been perverted by the arbitral tribunal to provide an undeserved windfall to DAMEPL.”

There are other recent instances of such flip-flops by Supreme Court on issues related with Arbitration.

In December, last year, a seven-judge bench of the Supreme Court observed that unstamped or inadequately unstamped arbitration agreements do not become void or void ab initio or unenforceable.This judgment overruled a five judges bench decision in in N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. which was also a judgment delivered last year.

In February, this year, the Supreme Court  referred to larger bench the issue whether the powers of the Court under Section 34 and 37 of the Arbitration and Conciliation Act, 1996, will include the power to modify an arbitral award. A bench of Justice Dipankar Datta, Justice K.V. Viswanathan and Justice Sandeep Mehta observed, “Whether or not the Courts in exercise of power under sections 34 or 37 of the Arbitration and Conciliation Act, 1996 are empowered to modify an arbitral award is a question which frequently arises in proceedings not only before this Court but also before the High Courts and the District Courts. While one line of decisions of this Court has answered the aforesaid question in the negative, there are decisions which have either modified the awards of the arbitral tribunals or upheld orders under challenge modifying the awards. It is, therefore, of seminal importance that through an authoritative pronouncement clarity is provided for the guidance of the Courts which are required to exercise jurisdiction under the aforesaid sections 34 and 37, as the case may be, day in and day out”.

Leave a Comment

Your email address will not be published. Required fields are marked *