SC DMRC Judgement: Impact Of The Apparent Errors

Businessworld first unraveled the 22 errors that were apparent in the Supreme Court (SC) of India's judgement over the Curative Petition filed by DMRC (Delhi Metro) in a commercial dispute versus DAMEPL (Delhi Airport Metro Line). The matter has been one of India's most talked about and scrutinised cases in the history of arbitration laws, where the SC set an ugly precedent by not only entertaining a Curative Petition (sixth layer of appeal) in a commercial dispute but even overturned the final judgement of its own division bench. While the critical analysis of the SC judgement on DMRC versus DAMEPL has so far looked into every possible angle including how it has unsettled a settled law on arbitration and how such precedents can turn the jurisprudence on arbitration upside down... the study of the impact of the Apparent Errors also presents an interesting picture of how the SC may have erred.

DAMEPL had won the arbitration and also the subsequent appeal against the arbitration in the Delhi High Court in front of the single bench. When the division bench ruled in favour of DMRC, DAMEPL approached the SC and again won the matter in front of the division bench of the SC. The review petition of DMRC too was rejected by the SC, thereby cementing the finality of its judgement. But after the SC judges who had rejected the review petition retired, the DMRC pressed the larger bench of the SC to again reopen the case through a Curative Petition - unheard of in commercial disputes anywhere in the world. Finally, the judgement over the Curative Petition went in favour of DMRC.

What is the impact of the errors in the SC judgement? The arbitration and other court case documents reveal the following:

DAMEPL originally signed a concession agreement with DMRC, a 50:50 joint venture between the Indian government and the government of the National Capital Territory of Delhi, in 2008 for the construction, operation and maintenance of a "high tech" 22.7 km Delhi Airport Metro Express Line, connecting New Delhi railway station with Indira Gandhi International Airport. As per the original agreement, the trains were supposed to run at a speed of 120 km per hour. DMRC was responsible for land acquisition, site clearance, civil works and all associated costs. DAMEPL was responsible for the design, supply, installation, testing and commissioning of railway systems, as well as operations and maintenance.

DAMEPL sought deferment of the concession fee payable to DMRC in 2012 owing to delays in providing access to stations by DMRC. Operations were stopped by DAMEPL in July 2012 and arbitration proceedings began in October of that year.

SC Judgement and the impact of the errors

1) The para 5 of SC's judgement dated April 10, 2024 gives an incorrect inference that the meeting of the stakeholders called by MoUD (Ministry of Housing And Urban Affairs) on July 2, 2012 was pursuant to the sequence of events arising out of letter dated April 20, 2012 of DAMEPL seeking deferment of the Concession Fee.

Impact Of The Error
Read with para 4 of the Curative Judgement, para 5 benefits DMRC, which had abdicated its responsibility to attend to the defects, by painting it in a positive light.

2) By conveying that the application to CMRS was a joint one, the Curative Judgement incorrectly portrays that even DAMEPL was convinced that the defects had been addressed by DMRC substantially by the date of such application. This helps the Curative Judgement arrive at the incorrect finding that at least effective steps had been taken by DMRC to cure the defects, although what was relevant inter alia was that such effective steps were to be taken within the Cure Period of 90 days and not in an indefinite period.

3) In Para 17 states that DMRC had claimed before the Arbitral Tribunal that DMRC inter alia took steps for “convening meetings with the MoUD." The statement is factually incorrect as it was DAMEPL which had to escalate the issue to MoUD on June 22, 2012, as DMRC did not show any seriousness in addressing the defects in DMRC Works. Thereafter, MoUD on its own monitored the issue till the defects were claimed to be addressed by DMRC. IMPACT OF THE ERROR: The incorrect statement builds up on the earlier incorrect inference in para 5. The result is that DMRC is portrayed in a positive light, that it was serious in attending to the defects, when the fact was that DMRC was avoiding action persistently, which forced DAMEPL to escalate the issue to MoUD.

Error 4
Para 22 states, referring to para 93 of the (Arbitration) Award, that “On Issue ‘D’ about the validity of the termination, it was held that since the Tribunal had found that there were defects in the civil structure, which remained uncured during the cure period, the amount incurred by DMRC in repairs compared to the overall cost of the project was irrelevant.”

Fact
Para 93 of the Award actually states “93. Finding and Conclusion: In view of our conclusions that there were defects which caused material breach of the CA and all the defects have not been cured nor have effective steps been taken during the cure period, it is not relevant that only a small amount in comparison to the overall cost of the project has been spent in the process of curing the defects.” Clearly, para 22 of the Curative Judgement is selectively citing a part of para 93 of the Award, and what is omitted forms the basis of the Curative Judgement later (to the effect that the AT has allegedly not dealt with the effectiveness of the steps taken, if any, by DMRC to cure the defects during the Cure Period).


IMPACT OF THE ERROR:
The incomplete extraction of the Award (which is also not a verbatim extract) leads to an incorrect inference that the Tribunal had failed to consider whether DMRC took effective steps to cure the defects, which is one of the principal grounds for setting aside the SLP judgement.

 
Error 5
Para 28.2 (extract of submissions of DMRC) states “As long as ‘effective steps’ were taken by DMRC, culminating in cure compliance under the statutory process under the Metro Railways (Operation and Maintenance) Act, 2002, the termination notice was invalid.”

Fact
Article 29.5.1 of the Concession Agreement does not indicate anything to this effect and conveys that either the defects need to be cured within the Cure Period of 90 days or effective steps need to be taken to cure the defects within the Cure Period. Para 28.2 indicates improvement of the case of DMRC at the Curative stage, as such assertion was never made by DMRC before the Tribunal or at any other stage thereafter till the Review Petition.

IMPACT OF THE ERROR:
The permission to DMRC to improve its case by making an absolutely new argument at the stage of the Curative Petition amounts to gross miscarriage of justice against DAMEPL.

Error 6
Para 49 incorrectly concludes that “The Tribunal found that since certain defects remained after the cure period, this was indicative of the fact that the defects were not cured and that no effective steps were taken”.

Explanation
This is a factually incorrect inference drawn by the Curative Judgement and such was never the finding of the Tribunal in regard to any defect at all. A plain reading of the discussions in the Award, leading to the conclusions of the Tribunal in regard to each defect, would bear this out. Based on such incorrect inference, the Curative Judgement develops the incorrect premise that “Effectively, the Tribunal considered that in-progress steps that had not yet culminated into completely cured defects were not “effective steps” to offset termination.”

IMPACT OF THE ERROR:
The aforesaid finding in the Curative Judgement evidences that the relevant portions of the Award were not read at all, while arriving at the aforesaid finding, which amounts to gross abuse of the process against DAMEPL. This is the primary reason for the SC to come to its mistaken finding that the Award suffered from perversity and patent illegality.

Error 7
The Curative Judgement hence incorrectly concludes in para 51 that “The Tribunal did not appreciate the individual import of the two phrases separately from each other.” The Curative Judgement overlooks facts clearly recorded in the Award and holds that “We must clarify that Tribunal could have still arrived at the conclusion that the steps taken during the cure period were not effective within the meaning of the clause for certain reasons. However, such discussion and reasoning is conspicuously absent”.

Explanation
Experts say, this amounts to ignoring facts as recorded in the Award, and not mere extrapolation or conjecture in the Curative Judgement. Coupled with the other factually incorrect finding in the Curative Judgement (on the sanctity of CMRS certification), this finding accelerates the conclusion that the Award was patently illegal, without any such evidence or basis for such conclusion.

IMPACT OF THE ERROR:
As the SC did not read the relevant portions of the Award (which gives detailed reasoning and findings to the contrary) while arriving at the aforesaid finding, such a finding is without basis and amounts to a conjecture. This amounts to gross miscarriage of justice against DAMEPL.

 

Error 8

The Curative Judgement notes in para 52 that “Issue H framed by the Tribunal- “Did the issuance of certificate by CMRS show that the defects were duly cured” similarly glosses over the effective steps aspect of the clause. Given this framing, the issue was bound to be answered in the negative since the CMRS certificate does not conclude that the defects were completely cured.”


Explanation

 This could be an incorrect understanding of the issue by the Curative Judgement as the Tribunal merely framed the said issue to arrive at a clear finding on DMRC’s assertion, that the CMRS certification implied that the defects had been cured if not in the Cure Period then at least before the date of effect of termination (January 07, 2013). The issue framed could not have been “Did the issuance of certificate by CMRS show that the defects were duly cured or effective steps had been taken to cure them”, as CMRS is not expected or mandated under the O&M Act 2002 to give a finding or an opinion as to the effectiveness of the steps to cure the defects.

The CMRS was to only give an opinion as to whether the Line was in a condition so as to permit safe resumption of operations, irrespective of the existence of defects.

IMPACT OF THE ERROR:
The import of CMRS certificate has been misconstrued by the SC to the effect that any CMRS permission (to open a metro line) automatically implies absence of defects. The role of CMRS has been misconstrued by the SC as the final arbiter of the absence of defects in a metro line, while the Metro Railways (O&M) Act 2002 conveys nothing of this sort. This is the second principal reason for the SC to reverse the SLP judgement.

Error 9
The Curative Judgement notes in para 53 that “The decisions of the Single Judge and this Court are similarly silent on the aspect of “effective steps”. In paragraphs 31 to 34 of its judgment, this Court noted that since the defects were not cured in 90 days, the termination was valid. Impliedly, this Court found that the defects ought to have been fully cured within the cure period in order to avoid termination.”

Fact
It is to be noted that para 31 to 34 of the SLP judgement inadvertently record that the Tribunal has construed that the defects were not cured in the Cure Period (and hence the termination was to be held as valid), while the findings in the Award as extracted hereinbefore clearly evidence that the Tribunal has specifically considered steps to cure as well as effectiveness of the steps.

IMPACT OF THE ERROR:
The aforesaid finding in the Curative Judgement affirms that the SC had not read the relevant portions of the Award while arriving at the aforesaid finding, and had merely gone through the SLP judgement and perfunctorily closed the issue. This amounts to an abuse of process of the Curative, to provide undeserved windfall to DMRC, by setting aside the SLP judgement which had come to a just finding in favour of DAMEPL.

Further, DMRC’s pleaded case so far was that DMRC had 90 plus 90 days to rectify the defects and not whether the Tribunal had incorrectly decided about the effectiveness of its actions to cure the defects. In view of this, though the section 34 judgement extensively cites from the Award (on the lack of effective steps by DMRC to cure the defects within the Cure Period), there was no occasion for the SLP judgement to consider the same. The finding is thus not based on facts on record of the Court.

It may be noted that the issue of 90 plus 90 days was argued at length even during the hearing of DMRC’s Curative and was decided against DMRC, however, the said arguments and the related finding are conspicuously missing from the Curative Judgement.

Error 10
The Curative Judgement notes in para 54 that “The judgment of this Court also never tested the relevance of the CMRS certificate vis-à-vis “effective steps”. This Court accepted a reading of the termination clause by the Arbitral tribunal and the Single Judge that was not even a possible view and could not have been arrived at on any objective assessment. This Court not only overlooked the plain words of the clause but also rendered the phrase “effective steps” otiose.”


Fact
The inference is factually incorrect since the tribunal has rendered findings of fact for each defect as to whether the defects had been cured or effective steps had been taken by DMRC to cure the defects in the Cure Period. Further, as regards the relevance of the CMRS certificate, the tribunal has considered the same and arrived at a clear finding that the CMRS certificate itself implied that the defects had not been cured, as several conditions were imposed for resumption of operations. Two of the three arbitrators were from Indian Railways background and were fully aware of the relevance of CMRS certification as that relating to only safety of operations. In any case, as stated hereinbefore, it was not even DMRC’s case that CMRS certificate implied absence of defects or effective steps having been taken to cure the defects within the Cure Period.


IMPACT OF THE ERROR:
As DMRC’s pleaded case was not this, there was no occasion for the SLP judgement to consider the effectiveness of the steps taken by DMRC to cure the defects in the light of the CMRS certificate. The role of CMRS, as stated hereinbefore, was restricted to granting the statutory permission to open the Line if it was safe to do so, and not to audit the effectiveness of DMRC’s steps to repair the defects, which was correctly construed by the Tribunal and hence endorsed by the SLP judgement.

DMRC had maintained all along, prior to the Curative stage, that it had ultimately cured the defects before the operations were resumed, post the CMRS certificate dated 18.01.2013, and hence the termination was invalid. This was the premise of DMRC’s 90 plus 90 day ‘supposed’-Cure Period (which was negated during the hearing of the Curative Petition). DMRC was trying to fit in the latter 90 days (after the Termination Notice) as a continuation of the Cure Period, without any contractual basis.

Error 11
The Curative Judgement notes in para 55 that “The erroneous and misleading framing of the issue as noted above led to the ignoring of vital evidence relevant to the issue of termination. The arbitral tribunal held that since the Commissioner imposed conditions of inspection and speed restrictions, this meant that the defects were not fully cured.”


Fact
There is no such finding anywhere in the Award. The second sentence in this para of the Curative Judgement is hence without any basis and is factually incorrect. Instead of rendering a positive finding that the conditions imposed by CMRS meant that the defects were not fully cured, the tribunal has held that “As such, the CMRS certificate does not support the contention of DMRC.” The tribunal had to render a finding on whether DMRC cured the defects within the Cure Period or took effective steps to cure them within the Cure Period. In this context, the tribunal held that DMRC’s contention was not accepted.


IMPACT OF THE ERROR:
The role of the CMRS is restricted to a safety related permission to commence or resume operations and hence the aforesaid finding in the Curative Judgement is without basis. The CMRS has nothing to do regarding the contractual obligations of the parties. As stated elsewhere in this document, the CMRS is within his statutory powers to deny permission to commence or resume operations, if he is of the view that it would be unsafe to do so, even if there are no defects reported. Hence, the Curative Judgement misconstrues the role of the CMRS.

 

Error 12
The Curative Judgement notes in para 56 that “Certainly, the imposition of conditions shows that the defects were not cured completely, to warrant an unconditional sanction for full speed operations. However, as the Division Bench of the High Court correctly observed, the separation of the validity of termination and relevance of the CMRS certificate was the reason for this erroneous finding. Since the ‘effective steps’ aspect was overlooked, the CMRS certificate was erroneously deemed to be irrelevant.”

Explanation
The conclusion in the Curative Judgement is incorrect as the Tribunal had correctly framed the issue H, as considered relevant in view of the mandate of CMRS under the O&M Act 2002. The CMRS has no mandate to decide on the effectiveness of the steps to cure the defects, though he does go through the assertions made in the application seeking permission to resume operations. The CMRS only decides whether in his view the Line is fit for resumption of services and if so at what maximum speed and what conditions are to be observed. Two out of three arbitrators had held the top posts in Indian Railways, one as the Chairman Railway Board (the topmost position in Indian Railways) and the other as Member Engineering of Railway Board (immediate next to the Chairman Railway Board) and they had a thorough understanding of the technical and procedural issues before them, and they had the relevant experience to interpret the role and mandate of the CMRS.

CMRS is within his powers to permit resumption of operations, despite the existence of any defects, in public interest. Similarly, the CMRS could deny permission for commencement or resumption of operations even if there are no known defects if, in his subjective view, it is unsafe to do so. Hence, the Tribunal has correctly considered the relevance of the CMRS certificate and came to the conclusion as stated in the Award. By making such interpretation, the Curative Judgement is venturing into a technical arena which is best left to the technical experts, who have the mandate to decide the technical issues before them.


IMPACT OF THE ERROR:
The finding is misconstrued as the role of CMRS was restricted to the safety perspective alone. What was not pleaded by DMRC at the earlier stages has been allowed to be pleaded at the Curative stage, which amounts to a gross abuse of process and hence a miscarriage of justice against DAMEPL.

 

Error 13
The Curative Judgement notes in para 57 that “On 19 November 2012, a joint application was made by the parties to the Commissioner under the 2002 Act. Significantly, the annexure to the application which was jointly signed by the parties states as set out below” and “Train trials after repairs by DMRC have been completed successfully and all systems have been checked for correct functioning at various speeds Including at speed of 120 kmph.”

Arbitration Recorded
As stated earlier, the application to CMRS was made by DMRC and not jointly by the parties. Factually, even after seeing the entire record, the CMRS was satisfied to grant permission for resumption of operations only at a peak operating speed of 50 kmph.

IMPACT OF THE ERROR:
The finding is without basis and in fact contrary to the record of the Court.

Error 14

The Curative Judgement notes in para 58 that “Admittedly, some of the defects were cured in their entirety and steps were taken by DMRC to cure the remainders, based on which the parties had jointly sought permission under the 2002 Act. The parties stated that the repairs had been inspected by an independent engineer; an analysis of the cracks revealed that the integrity of the girders was intact and there was no cause of concern. Further, the parties stated that the train trials “after repairs by DMRC have been completed successfully and all systems have been checked for correct functioning at various speeds including the speed of 120kmph”. It is apparent on the face of the record that certain repairs were completed by DMRC and the trials had been completed at full speed as on the date of application, 19 November 2012.”

Explanation

The entire paragraph is factually incorrect and an inference based on no evidence. DAMEPL had never admitted anywhere that the defects had been cured by DMRC or effective steps had been taken to cure them within the Cure Period. The Award makes it sufficiently clear that DAMEPL’s unequivocal stand was that DMRC neither cured the defects nor took effective steps to cure them within the Cure Period. The parties had never applied jointly to CMRS, for resumption of operations. The application to CMRS was made by DMRC only and DAMEPL had merely certified that the railway systems constructed/ commissioned by DAMEPL were fit for resumption of services, without commenting on or taking the responsibility of DMRC Works as to whether they were in good condition for resumption of services.

The inferences drawn in para 58 of the Curative Judgement are based solely on DMRC’s version as stated in DMRC’s application dated November 19, 2012 to the CMRS. All the attributions or references to “both” parties may be factually incorrect as the same are merely DMRC’s version of the events.

IMPACT OF THE ERROR:
The finding is without basis and in fact contrary to the record of the Court.

Error 15
The Curative Judgement notes in para 59 that “On 9 July 2012, about four months before the date of the joint application, DAMEPL had averred in the cure notice that the project was not ‘safe for operations’ and that it posed a threat to life and property. The arbitral tribunal was correct in concluding that the joint application does not constitute a waiver of the termination, but this evidence was vital considering the change in DAMEPL’s position on the safety of the line from the date of the cure notice to the date of the joint application. DMRC did take certain steps to alleviate DAMEPL’s concerns so as to warrant this change of position. There is no explanation forthcoming in the award about why none of these steps initiated during the cure period were ‘effective steps’. This gap in reasoning stems from the arbitral tribunal wrongly separating the issue of termination and the CMRS certificate.”

Explanation
When an application was made by DMRC to CMRS on November 19, 2012, DMRC had stated that it had attended to the defects and that it was confident of receiving CMRS’ permission for resumption of services. DAMEPL cannot have any issue with such assertion of DMRC. DAMEPL’s contention was that it had terminated the agreement since DMRC neither cured the defects nor took effective steps to cure them within the Cure Period. DAMEPL had no quarrel with DMRC on its application to CMRS for resumption of services, as the issue of termination of the agreement had no connection with such application.

CMRS was within his statutory rights to grant permission for resumption of services irrespective of whether DAMEPL was within its rights to terminate the CA.

Contrary to the assumption/inference in para 59, DAMEPL had not changed its position while assisting DMRC in its application to the CMRS. The inference drawn in para 59 of the Curative Judgement is thus without any basis. As rightly held in the Award, DMRC did not attend to several defects during the Cure Period. For example, the defects “Gaps between girders and between girders and shear key” and “Inaccessible bearings” were not addressed at all during the Cure Period, as explained hereinbefore. Incidentally, these two defects have a limited safety dimension, as they are largely construed as hindrances in operation and maintenance tasks. As they have limited safety dimension, the CMRS would not even consider these as a determinant while considering grant of permission for resumption of operations. Hence, the Tribunal was right in its approach in holding that, irrespective of the CMRS permission for resumption of operations, DMRC had failed to cure some of the defects nor took effective steps to cure them within the Cure Period.

IMPACT OF THE ERROR:
The finding is based on an incorrect assumption of the role of CMRS, who merely declares whether the Line is fit to be opened for commercial operations, irrespective of whether any defects exist. It is a matter of record that DAMEPL had issued the Termination Notice on 08.10.2012 while DMRC applied to CMRS for permission for resumption of operations on 19.11.2012. The Tribunal had come to a categorical finding in respect of several defects that DMRC neither cured them nor took effective steps to cure them within the Cure Period of 90 days (which ended on 07.10.2012). Hence, there was nothing amiss in the findings of the Tribunal. Coupled with the fact that DMRC had all along pleaded that the Cure Period was 90 plus 90 days (which was rightly rejected by the Tribunal and also in the Curative stage arguments), there was no occasion for the Tribunal to come to a different finding. The Tribunal had duly considered the respective pleadings and submissions of the parties in detail before coming to its specific findings on several defects, that DMRC had failed to take effective steps to cure the said defects within the Cure Period of 90 days.

Error 16
The Curative Judgement notes in para 60 that “Besides the effective steps aspect, there is another reason why the CMRS certificate ought to have been treated as relevant. The Tribunal treats the cure notice as a crucial document. At paragraph 26 of the award, it noted that “since the cure notice dated 9th July 2012 is a crucial document in this case, it is useful to quote certain paragraphs of the said letter”. The cure notice, in turn, was heavily premised on the safety of operations. Interestingly, at paragraph 27 of the cure notice, DAMEPL avers that the trains can only be operated once the defects are cured to the satisfaction of the stakeholders about the safety of operations.”

Explanation
The inference drawn in this para of the Curative Judgement could be misleading as the services could be resumed only if it was safe to do so, but that did not mean that the obligations under the agreement could be complied with at the same time. DAMEPL never meant that it would be willing to resume operations irrespective of whether DMRC complied with its obligations to cure the defects within the Cure Period. The phrase “can only be operated” in this para should not mean “shall only be operated”. Hence, CMRS permission was a necessary but not a sufficient condition for the resumption of operations.

IMPACT OF THE ERROR:
The finding is misconstrued as the Cure Notice was admittedly largely citing the issue of safety, but that was not the sole aspect. The possibility of fulfilment of contractual obligations of the parties was a necessary determinant of whether the defects could be treated as cured. Merely because the CMRS permitted the Line to operate in a degraded manner cannot be construed to mean that no defects existed anymore and that the contractual obligations of the parties would be possible to be fulfilled as per the contract.

Error 17
The Curative Judgement notes in para 63 that “The structure and safety of the project, as certified by the CMRS, were thus relevant before the Tribunal, making the CMRS certificate a vital piece of evidence in deciding the issue. The CMRS certificate was relevant evidence about the safety of the structure. Considering the statutory scheme of the 2002 Act, especially Section 15, the Tribunal erred in deeming the sanction irrelevant to its central issue – which was the validity of the termination, which, according to the cure notice, was premised on safety.”

Explanation
 The inference drawn in this para is misleading and the Tribunal has correctly distinguished the relevance of the CMRS certification. CMRS certificate is necessary but not sufficient for operating the Line. If such an inference is to be treated as logical, DMRC could junk any of its obligations under the CA and insist on DAMEPL to operate the Line as it was safe to do so! The Tribunal has arrived at findings of fact that DMRC failed to cure some defects and also failed to take effective steps to cure them within the Cure Period. This was sufficient for the Tribunal to conclude that the Termination Notice was valid as per Article 29.5.1 of the CA. This is a logical and a plausible conclusion. CMRS is not mandated to look for the compliance of the obligations of the CA by either of the parties, and CMRS only sees if the Line is safe to operate with some conditions. Accordingly, the Tribunal never contested the CMRS certification that the DMRC Works were rendered safe for operations, as the Tribunal was not going into the specific question of the safety of the Line. The Termination Notice did not say that DAMEPL was terminating the CA merely because of safety issues. The Termination Notice was premised on the failure of DMRC to cure the defects or in taking effective steps to cure the defects within the Cure Period. The termination cannot be held as invalid just because DMRC had taken steps to make the Line safe for operations again, without complying with its contractual obligations under the CA.

IMPACT OF THE ERROR:
The role of the CMRS has been misconstrued by the SC. The role is restricted to a permission to commence/resume commercial operations based on the subjective satisfaction of the CMRS, irrespective of whether any defects are reported or discovered at any stage till the grant of permission. The termination was a consequence of DAMEPL exercising its contractual rights, which had no connection with the CMRS certificate, which in any case came on 18.01.2013 while the termination had become effective from 07.01.2013.

Error 18
The Curative Judgement notes in para 64 that “Overall, the cure notice places great emphasis on the safety of the passengers, which, they claimed stood compromised by defects, justifying discontinuation of operations. This issue falls directly within the domain of the Commissioner under the scheme of the 2002 Act.”

Explanation
While it is correct to say that the defects in DMRC Works led to safety issues but, at the same time, it is needed to be considered that DAMEPL was exercising its contractual right to terminate the CA as DMRC failed to cure or take effective steps to cure the defects within the Cure Period.

The inference drawn in para 64 is that, so long as DMRC was able to cure the defects in an indefinite period, disregarding the time frame provided in the CA for cure of the defects, DAMEPL was bound to not terminate the CA. Such a construction would be contrary to the Contract Act itself. As stated hereinbefore, CMRS certification could not be treated as proof of compliance with the provisions of the CA by DMRC.

IMPACT OF THE ERROR:
The role of the CMRS has been misconstrued by the SC.

Error 19
The Curative Judgement notes in para 65 that “Rather than considering the vital evidence of the CMRS certificate towards safety and effective steps, the arbitral tribunal focussed on the conditions imposed by the Commissioner on speed and regarding inspections. While the Division Bench correctly noted that the certificate was relevant for the issue of the validity of termination, this Court held that safety was not in issue, even though DAMEPL insisted on discontinuing operations citing safety concerns. We respectfully disagree with this Court’s re-assessment of the Division Bench’s interpretation. The cure notice was relevant for the reasons stated above. Moreover, the fact that DAMEPL premised it on safety could not have been overlooked by the Tribunal. In doing so, it overlooked vital evidence pertaining to an issue that goes to the root of the matter. The cure notice was obviously on the record and merited consideration for its contents bearing on vital elements of safety.”

Explanation
 The inference drawn in para 65 is incorrect as the Tribunal was not undertaking the task of second-guessing the CMRS as to whether the Line was safe to operate. The Tribunal was undertaking the task of deciding whether DAMEPL was within its contractual rights to terminate the CA, as DMRC had failed to cure the defects or take effective steps to cure them within the Cure Period. For arriving at its findings, the Tribunal relied upon the restrictions imposed by CMRS, which only implied that things were not as good as they were at the Commercial Operations Date, which is only logical. The Division Bench too fixated itself in this inference, which was rightly discarded by the SLP Judgement. The relevance of the CMRS certificate was only to see if the Line could somehow be operated under specified conditions and not if there was an absence of defects or any non-compliance of contractual obligations by either party to the CA. The suspension of operations by DAMEPL was certainly premised on safety concerns, but the validity of the termination was not related to a determination whether the Line was again safe to operate.

IMPACT OF THE ERROR:
The role of the CMRS has been misconstrued by the SC, especially when the CMRS certificate was issued after the termination had already become effective.

Error 20
The Curative Judgement notes in para 66 that “The cure notice, which contains statements bearing on the safety of the line and other material indicating that the line was running uninterrupted are matters of record. While the cure notice contains allegations about the line not being operational, there is evidence on the record indicating that the line was in fact running. Even if we were to accept that the finding of the arbitral tribunal that the defects were not completely cured during the cure period is a factual finding incapable of interference, it is clear from the record that DMRC took steps towards curing defects which led to the eventual resumption of operations. The award contains no explanation as to why the steps which were taken by DMRC were not ‘effective steps’ within the meaning of the termination clause.”

Explanation
It may not be questioned that the Line is operating from 22.01.2013, after the repair works were undertaken by DMRC, post the suspension of operations from 08.07.2012. However, that itself would not imply that the defects complained of have been cured or effective steps having been taken to cure. For example, the defects “Gaps between girders and between girders and shear key” and “Inaccessible bearings” would not require substantial stoppage of operations, as they impact the process of maintenance of the Line and cause hardship to the party undertaking maintenance of the related works. Such hardship affects the contractual right of the affected party, which is within its rights to take recourse to the contractual provisions for remedy.

The inference drawn in para 65 would imply that the affected party would not have any recourse against DMRC, for insisting on deliverables under the agreement, if DMRC could somehow show that the Line is capable of being operated. The second sentence in para 65 is contradictory in itself, as the operations were under suspension from 08.07.2012 till 21.01.2013. The Tribunal has analysed the voluminous evidence before it and rendered clear findings that DMRC did not take effective steps to cure the defects within the Cure Period. A plain reading of the paragraphs of the Award referred to above makes this clear. The inference in para 65 is in direct contradiction to the discussion in the Award leading to the specific conclusions.

IMPACT OF THE ERROR:
The finding in the Curative Judgement contradicts the legal position that the Tribunal has the last word on the findings of fact. The SC had all along maintained this premise in several case laws. It is for a contractually wronged party to take a call on terminating a contract under the applicable provisions, and the defaulting party does not get any leeway to avoid termination except in accordance with the applicable law. The issue of effectiveness of the steps taken by DMRC has been detailed in the Award, for each of the defects, which is a finding of fact, and which seems to have been missed by the SC, as submitted earlier in this document.

Error 21
The Curative Judgement notes in para 67 that “In essence, therefore the award is unreasoned on the above important aspects. It overlooks vital evidence in the form of the joint application of the contesting parties to CMRS and the CMRS certificate. The arbitral tribunal ignored the specific terms of the termination clause. It reached a conclusion which is not possible for any reasonable body of persons to arrive at. The arbitral tribunal erroneously rejected the CMRS sanction as irrelevant. The award bypassed the material on record and failed to reconcile inconsistencies between the factual averments made in the cure notice, which formed the basis of termination on the one hand and the evidence of the successful running of the line on the other. The Division Bench correctly held that the arbitral tribunal ignored vital evidence on the record, resulting in perversity and patent illegality, warranting interference. The conclusions of the Division Bench are, thus, in line with the settled precedent including the decisions in Associate Builders (supra) and Ssangyong (supra).”

Explanation
 The conclusions drawn in the Curative Judgement are based on a misconception of the facts as recorded in detail in the Award. Some of these conclusions arise out of a non-reading of the Award itself which has clearly laid down the basis for its conclusions.

IMPACT OF THE ERROR:
The Curative Judgement appears to have been issued in gross ignorance of the findings and discussions contained in the Award, which amounts to a miscarriage of justice against DAMEPL.