The Supreme Court instructed the Attorney General to gather details of the individuals and their roles involved in the matter. The court warned that it would take strong action if necessary.
NEW DELHI: On Monday, The Supreme Court of India has warned that its decision on the Delhi Metro Rail Corporation (DMRC) and Delhi Airport Metro Express Private Limited (DAMEPL) dispute must be followed strictly. The court stated that if the ruling is not obeyed, it will take strict action against the officials of the private company and Axis Bank.
ALSO READ: Supreme Court | Commercial Curative Petitions: In DMRC vs. DAMEPL Case
A bench of Justices Surya Kant and N Kotiswar Singh addressed DAMEPL and Axis Bank, stating,
“What is the need to play hide and seek? When there is judgement, you need to comply with it in letter and spirit.”
Senior advocate Abhishek Singhvi, representing Axis Bank, argued that the bank was not involved in the dispute for six years. However, despite this, it has now received a contempt notice for payment. He clarified that the bank was only managing the escrow account related to the matter.
The Supreme Court bench made it clear that it was not concerned with any claims and counterclaims made by the bank.
The court has adjourned the case but advised the parties, including DAMEPL, to follow the ruling in its entirety. The Attorney General of India, R Venkataramani, appearing for DMRC, stated that orders were repeatedly issued against Axis Bank, making it incorrect for them to claim ignorance of the proceedings.
The Supreme Court then instructed the Attorney General to gather details of the individuals and their roles involved in the matter. The court warned that it would take strong action if necessary.
ALSO READ: Reliance Infra Stock Declines by 20% After SC Reverses Rs 8,000 Crore Award to DMRC
Background
In December 2023, the Supreme Court issued contempt notices to the directors of DAMEPL, a subsidiary of Reliance Infrastructure, and Axis Bank. The notices were issued due to their failure to return approximately Rs 2,500 crore to DMRC as per the court’s April 2023 verdict.
The dispute originates from an arbitral ruling in 2017, which required DMRC to pay nearly Rs 8,000 crore to DAMEPL. DMRC challenged the arbitration award twice in the Supreme Court, but both appeals were rejected in September 2021 and November 2021.
However, on April 10, 2023, the Supreme Court reversed its previous rulings after reviewing a curative petition filed by DMRC. This decision required DAMEPL to return DMRC’s deposit, which was held in an escrow account maintained by Axis Bank.
The case concerns the operation of Delhi’s Airport Express Metro line. DAMEPL was responsible for running the metro but terminated the contract in 2012, citing structural defects. The company then initiated arbitration proceedings, demanding Rs 8,000 crore as termination fees and other costs.
On April 10, 2023, the Supreme Court overturned its previous ruling from 2021, which had awarded Rs 8,000 crore to DAMEPL in its dispute with DMRC. The apex court ordered the company to return Rs 2,500 crore, stating that the earlier verdict had led to “grave miscarriage of injustice“ against a public utility that was burdened with excessive liability.
By allowing DMRC’s curative plea, the Supreme Court acknowledged that the Delhi High Court’s division bench had made a “well-considered decision“ and that there was “no valid basis“ for the Supreme Court to interfere earlier.
The court noted that its previous rulings had “resulted in restoring a patently illegal award.”
According to the arbitral award, DAMEPL was initially entitled to Rs 2,782.33 crore plus interest, bringing the total to Rs 8,009.38 crore by February 14, 2022.
On September 9, 2021, the Supreme Court upheld the 2017 arbitration award and ruled in favor of DAMEPL. The court expressed concern over the frequent tendency of courts to overturn arbitration rulings. As a result, it struck down a Delhi High Court judgment that had previously nullified the arbitration award.
On November 23, 2021, the Supreme Court rejected DMRC’s review petition, stating that no valid grounds for a review existed.
Dissatisfied with the outcome, DMRC filed a curative petition in 2022, the last possible legal recourse available in the Supreme Court.
It is extremely rare for the Supreme Court to reverse two of its previous decisions in commercial disputes through a curative petition. However, in this case, the court took the unprecedented step of setting aside its earlier judgments, bringing major financial and legal consequences for DAMEPL and Axis Bank.
