Recent Strides in Curative Jurisdiction of the Supreme Court

The curative jurisdiction conferred upon the Supreme Court by Article 142 of the Constitution of India empowers the Apex Court to pass such decree or make such order as is necessary for doing complete justice which comes as an extraordinary legal recourse to the litigants. The Supreme Court only exercises its curative jurisdiction in extraordinary cases where, prima facie, there are any glaring errors or legal violations in any of its judgments.

This article attempts to summarise a recent judgment of the Apex Court dated April 10, 2024 in Curative Petition (C) No.108/2022 (?Judgment?) vide which a curative petition filed by the Delhi Metro Rail Corporation Ltd. (DMRC) against Delhi Airport Metro Express Pvt. Ltd. (DAMEPL), was allowed, and its earlier judgment dated September 9, 2021, passed in the case of DAMEPL v. DMRC Ltd was overturned, which in the authors? perspective, may have a significant ramification in the realm of arbitration law.

Brief Facts

The judgment arose from a dispute between DMRC and DAMEPL relating to a Concession Agreement of 2008 executed for the construction, operation, and maintenance of the Delhi Metro Airport Express Line until August 2038. The said Agreement was terminated by DAMEPL in 2012 citing structural deficiencies in the construction of the Airport Line by DMRC that posed safety risks to passengers and impacted DAMEPL's ability to meet its contractual obligations. Subsequently, DMRC to challenge the validity of the termination notice, initiated arbitral proceedings which were concluded in 2017 with an award passed in favour of DAMEPL. 

DMRC challenged the said award under Section 34 of the Arbitration and Conciliation Act, 1996 (Act) before the High Court of Delhi, which was dismissed. Thereafter, the said decision was assailed under Section 37 of the Act before the Division Bench which partly allowed the said appeal. DAMEPL successfully challenged the said decision by way of a Special Leave Petition under Article 136 of the Indian Constitution before the Supreme Court which restored the award passed by the Arbitral Tribunal in 2017. The said decision was challenged by way of a review petition by DMRC, which came to be dismissed on November 23, 2021. The said order passed in the review proceedings was further challenged by way of the curative petition, which culminated into the judgment. 

Issues

The apex court framed two issues:

1. Whether the curative petition was maintainable? and;

2. Whether the Supreme Court was justified in overturning the judgment of the High Court?

Observations of the Court

Firstly, the Court considered the question of maintainability of a curative petition. The Court while referring to the dictum laid down in Rupa Hurra v. Ashok Hurra examined the avenues in which challenges can be entertained against the dismissal of a review petition. The Court also laid emphasis on the principles and the procedural requirements to be fulfilled both by the litigant and the Court while exercising the curative jurisdiction. The Court held that curative jurisdiction is not to be exercised in ordinary course but only in cases where the Court has acted beyond its jurisdiction which might have resulted in a grave miscarriage of justice.

Secondly, the Court examined the scope of interference of the courts in an arbitral award. The Court reiterated the principles to be fulfilled while setting aside an arbitration award under Section 34(2-A) of the Act. The Court while referring to Associate Builders v. DDA and Ssangyong Engineering and Construction Co. Ltd v. NHAI, held that while entertaining appeals under Section 34 and 37 of the Act, filed on grounds of ?patent illegality?, courts should interfere only with those Arbitral Awards which are so irrational or are devoid of such reason(s) that no reasonable person would reach the same conclusion. The Court stressed the importance of arbitrators adhering to fundamental principles and considering relevant evidence and observed that awards which lack evidence or are passed in ignorance of vital evidence may be considered perverse and liable to be set aside. The Court, also observed that while a decision under Section 37 of the Act is not appealable, the Act does not take away the constitutional right guaranteed under Article 136 to challenge the said decision. However, the Court also held that the jurisdiction of the Court under Article 136 is to be exercised sparingly, and only when exceptional circumstances exist, and that a petition under Article 136 cannot be treated as an appeal under Section 34 or 37 of the Act, which are akin to each other.

Thirdly, the Court examined the patent illegality in the arbitral award passed in favour of DAMEPL. The Court's examination of the arbitral award revealed critical flaws, including the tribunal's failure to consider essential evidence and the erroneous interpretation of the termination clause in the agreement. The Court observed that the judgment of the High Court's Division Bench, under Section 37 of the Act had provided adequate reasons to conclude that the arbitral award suffered from perversity and patent illegality, and that its interference with the said judgment under Article 136 had caused a miscarriage of justice. Hence, it was held that intervention under Article 142 was necessary, and accordingly, while setting aside its earlier decision passed by its two judges? bench, the Supreme Court upheld the decision of the Division Bench.

Conclusion

Allowing the curative petition, the Court underscored the importance of upholding the integrity of arbitration proceedings and rectifying unjust outcomes. The Court's ruling in the judgment reaffirms the judiciary's role in rectifying manifest injustice and curing of grave miscarriages of justice while bringing about a significant development in arbitration law.

According to the authors, the judgment reiterates the importance of curative jurisdiction as a safeguard against judicial errors and the judiciary's commitment to fairness and equity in dispute resolution. The Court emphasized that the situations in which curative jurisdiction can be invoked are not exhaustive, thus reiterating the need for a flexible approach to address instances where the court exceeds its jurisdiction, leading to serious miscarriages of justice.

About the authors: Ishwar Ahuja is a Principal Associate and Bhairavi SN is a Senior Associate at Saga Legal. Ishaan Aggarwal, Intern, assisted on this article.

Disclaimer: The views and opinions expressed in this article are those of the author(s) alone and meant to provide the readers with the understanding of the judgment passed in Delhi Metro Rail Corporation Ltd v. Delhi Airport Metro Express Pvt. Ltd. The contents of the aforesaid article do not necessarily reflect the official position of Saga Legal. The readers are suggested to obtain specific opinions/ advice with respect to their individual case(s) from professionals/ experts and not to use this article in place of expert legal advice.