Mammoth literature has been made available in just around two months on the Supreme Court (SC) of India's recent judgement involving the Curative Petition (CP) of Delhi Rail Metro Corporation (DMRC). Meticulous study of the literature in the news media shows that the opinion is massively tilted against the SC judgement and there could be hardly any expert who believes that the judgement was good in the spirit of commercial disputes and the legal jurisprudence concerning settlement of commercial disputes. But does the judgement also have errors apparent? Document trail makes startling revelations.
Consider the following
The Delhi Airport Metro Express Pvt Ltd (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" 22.5km Delhi Metro Airport 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 paid 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.
DAMEPL 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 DMRC, after the SC judges who had rejected the review petition retired, pressed the larger bench of the SC to again reopen the case through a Curative Petition (CP) - unheard of in commercial disputes. Finally, the judgement over the CP went in favour of DMRC. What are the possible errors in the CP related judgement of SC? The arbitration and other court case documents reveal the following:
Error 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.
Fact
The meeting was called by MoUD pursuant to DAMEPL’s letter dated June 22, 2012 requesting for intervention of MoUD to address the issue of defects on DMRC’s civil works, as DMRC was not responding.
Error 2
Para 10 gives an incorrect inference that “both parties” made a “joint application” to the Commissioner of Metro Railway Safety (CMR) for re-opening of AMEL (Airport Metro Express Line).
Fact
DMRC made the application to CMRS and the application required DAMEPL to sign on the certificates relating to performance of the railway systems constructed/ commissioned by DAMEPL, which DAMEPL was bound to provide to CMRS, without prejudice to DAMEPL’s stand that the CA had been terminated. It is to be noted that DAMEPL did not sign any of the certificates relating to the performance of DMRC’s Civil Works. It may also be noted that the finding in the DB judgement on the waiver issue is already in favour of DAMEPL.
Error 3
Para 17 states that DMRC had claimed before the Arbitral Tribunal that DMRC inter alia took steps for “convening meetings with the MoUD”.
Fact
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.
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).
Error 5
Para 25.3 notes that “DMRC had not contended before the Tribunal that the certificate was binding and conclusive of the fact that the defects were cured or that effective steps had been taken”.
Facts
DMRC factually never contended before the Tribunal that the CMRS certificate was conclusive of the fact that the defects were cured or that effective steps had been taken. DMRC improved upon its case later, while challenging the Award. This was the primary reason for DMRC to put up 8+2 witnesses before the Tribunal to prove DMRC’s case that the defects had been cured (or that DMRC had taken effective steps to cure the defects) in the Cure Period.
What was not DMRC’s case before the Tribunal has been used by the Curative Judgement to conclude that CMRS certificate meant that the defects had been cured or that at least effective steps have been taken to cure the defects in the Cure Period. The CMRS certificate never implied so, otherwise, DMRC would have to simply present the CMRS certificate and assert before the Tribunal that here was the proof that the defects had been cured.
Such interpretation could not have been missed by at least two of the three arbitrators, one a former Chairman of Railway Board and another a former Member-Engineering of Railway Board. The interpretation of technical arbitrators (that CMRS certification would not imply that defects have been cured) has been effectively overturned by the Curative Bench to propound a theory which is an impossibility in the Railway domain. The Curative Judgement could hereafter be used by unscrupulous officials in the Railway sector to assert that CRS (Commissioner of Railway Safety) certificate would mean that they have to presume that there are no defects and take avoidable risks for passengers and railway assets.
Para 28.2 indicates improvement of the case of DMRC, as such assertion was never made before the Tribunal.
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.” This was never the consideration or the thinking of the Tribunal. It is through the discussions leading to conclusions, on each defect, that the Tribunal emphatically concludes how DMRC has been regarded to have not taken effective steps to cure the defects.
For instance, in case of the defect “Cracks at the bottom of the girders”, the Tribunal notes in para 34 of the Award that:
“34. In view of the above, Arbitral Tribunal concludes that occurrence of such large numbers of cracks in the base slab of the pre-stressed concrete girders in about a year of train operation, tentative assessment of the cause of cracks, unreliable measurement of crack depth which in many cases extend to more than half of the depth of the bottom slab of the U Girder and non-serious inspection of the repairs by an agency appointed by DMRC impact adversely on the integrity of the structure. This leads to the conclusion that DMRC is in breach of the CA as effective steps were not taken within the cure period of 90 days to cure this defect which has caused Material Adverse Effect on the Concessionaire (DAMEPL).”
Hence, for this defect, the Tribunal gives specific reasons as to why it is to be concluded that DMRC did not take effective steps to cure. Such conclusion follows from the preceding discussion in para 33 of the Award.
Similarly, for the defect “Twist in the girders”, the Tribunal notes in para 41.15 of the Award that:
“From the above analysis it emerges that there are four girders in which there is possibility of permanent damage caused due to exceedance of stresses. One girder (P-16 - P-17 DN line) had a twist of 63.27mm i.e. nearly double of the permissible value of 32mm stated by Systra. No efforts were made to assess the permanent damage to the girder. Whereas DBR and Codes do not permit any twist, 138 girders having twist below 20 mm have been left in service as such without any correction.
In view of the above, Arbitral Tribunal concludes that effective steps were not taken to cure this defect in all the girders (twist up to 20 mm was left unattended) and girders of suspect integrity were allowed to remain in the network. This constitutes a DMRC Event of Default. DMRC is in breach of the CA and this breach has Material Adverse Effect on the Concessionaire.”
The aforesaid reasons are sufficient for arriving at the conclusion that effective steps were not taken. The Tribunal is not simply concluding that, just because the defect continues much later, that has to mean that steps taken were ineffective, as inferred in the Curative Judgement.
For the defect “Gaps between girders and between girders and shear key”, the Tribunal notes in para 46 and 47 of the Award that:
“46.2. During the entire cure period from 09th July 2012 to 08th October 2012, the issue of incorrect or inadequate gaps between the girders and girders and shear key was not addressed by DMRC and no documentary or oral evidence is led by DMRC to show that such issue is addressed or any effective steps were taken to address the issue of incorrect gaps.
"46.4. The records produced before the Tribunal show as aforesaid that there were a large number of locations where gaps were more than 25 mm. This is clear from the document of measurement of gaps produced by DMRC and annexed along with its letter No.DMRC/20/11/AP/2012/Pi(3S)/3998 dated 20thOctober, 2012 ( CD-61 of Additional Documents submitted by DMRC on 14April,2014. Pg 715-737). The said document apart from showing that even the measurement itself was undertaken after the notice of termination of CA by DAMEPL, also shows a major defect in the placement of the girders.
"47. As no action to cure this defect was taken by DMRC during the cure period (09.07.2012 to 08.10.2012) and also because gaps higher than 25 mm were not rectified, the Arbitral Tribunal concludes that this defect was neither cured nor were effective steps taken by DMRC to cure this defect. This constitutes a Material Breach on the part of DMRC and shall have Material Adverse Effect on the Concessionaire.”
For the defect “Inaccessible bearings”, the Tribunal notes in para 71 of the Award that:
“71.4. The issue of inaccessibility of bearings on jacketed cantilevered piers was discussed from time to time. In the meeting held in MoUD on 19th September 2012, DMRC stated that it was Systra's view that bearing on such girders could be replaced by lifting the girders up to 500mm, that being the best solution and "there is no other alternative"(RC-9. Pg 36 @ Pg 37and CD-23,Pg 240 of SOC)
Director (Works) DMRC in the meeting of September 19, 2012 in MoUD stated as under:
"The girder will have to be lifted 500mm. This is the best solution and there is no alternative."
Inspection of the bearings is to be done annually and inaccessibility of bearings would cause difficulty in inspection making it more time consuming and inaccurate. Replacement of bearings will be very time consuming, causing slowing down of the train operations for few days in the stretch where the repairs are carried out.
The Tribunal is of the view that the inaccessibility of the bearings is a violation of the DBR and is a permanent constraint in the system which was neither cured by DMRC nor were effective steps taken by them to cure the defect in the cure period and that it would cause Material Adverse Effect on the Concessionaire.”
In case of this defect, the Tribunal has concluded based on the evidence before it that DMRC did nothing to address this defect at all and has hence concluded that no steps (whether effective or not) were taken by DMRC. This is a finding of fact by the Tribunal.
For the defect “Location of bearings and extension of bearing pedestals”, the Tribunal notes in para 76 of the Award that:
“76.6. The said methodology of extension of pedestals prescribed by Systra was not furnished by DMRC as recorded in the minutes of the Tribunal dated April 10,2015 (26th Sitting) when the DMRC stated that they are searching for the same and, if found, furnish the same. This document does not appear in the list of documents furnished by DMRC to the Tribunal vide their letter No. DMRC/20/11/AP/2013/Termination/Ar/6680 dated 14-03-2017. Therefore, it appears that extension of pedestals was carried out without a methodology approved by Systra," Tribunal noted.
Thus, the evidence before the Tribunal guided the Tribunal to arrive at the aforesaid conclusion.
"For all the aforesaid defects, the Tribunal had come to the conclusions regarding the effectiveness of the steps taken by DMRC based on what evidence DMRC had placed before the Tribunal and not by merely observing that the defects persisted and only for such reason it was to be inferred that the steps taken by DMRC were not effective. Hence, the conclusion drawn in para 49 of the Curative Judgement (that “This places the two components i.e. ‘curing of defects’ and ‘taking effective steps to cure defects’ at par, to mean that only the completed curing of defects is relevant. The Tribunal fails to explain what amounts to an ‘effective step’ and how the steps taken by DMRC were not effective, within the meaning of the phrase”) is factually incorrect."
Error 8
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.”
Explanation
Experts say, 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”.
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.
Error 9
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 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 1, 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 resumption of operations, irrespective of the existence of defects.
Error 10
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. Merely because of a partial or inaccurate recording of the Tribunal findings in the SLP Judgement, whether the Curative Judgement ought to have held the same against DAMEPL is a question which begs an answer. Such a conclusion by the Curative Judgement amounts to miscarriage of justice for DAMEPL.
Error 11
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”.
Explanation
SC 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.” 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.
Error 12
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.
Error 13
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.
Error 14
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
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.
Error 15
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.
Error 16
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.”
It is submitted that, 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.
Explanation
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.
Error 17
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.
Error 18
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.
Error 19
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.” 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.
Explanation
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.
Error 20
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.
Error 21
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.” 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.
Explanation
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 make this clear. The inference in para 65 is in direct contradiction to the discussion in the Award leading to the specific conclusions.
Error 22
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.
