Summary
The Court restored the arbitral award favouring Delhi Airport Metro Express, holding that the Division Bench exceeded the limited scope of arbitral review. The tribunal’s conclusions on contractual termination, the significance of the safety certificate and computation of adjusted equity were supported by evidence and possible contractual interpretations. Patent illegality could not justify reassessing those matters. DAMEPL’s appeal was allowed; DMRC’s cross-appeal concerning waiver, specific performance and interest was dismissed.
Issues
- Whether the Division Bench exceeded Sections 34 and 37 review by disturbing the tribunal’s termination and adjusted-equity findings.
- Whether the safety certificate conclusively established timely cure of contractual defects.
- Whether DMRC’s objections concerning waiver, specific performance and contractual interest warranted relief.
Provisions considered
- Sections 34(2)(b), 34(2A) and 37, Arbitration and Conciliation Act, 1996Review is confined to statutory grounds. Patent illegality must go to the root; an alternative possible view or reappraisal of evidence cannot support setting aside an award. (¶¶ 20, 21, 22, 23, 24, 25, 26, 35, 36, 46)
- Section 28(3), Arbitration and Conciliation Act, 1996The tribunal’s reasonable contractual interpretation of equity and termination payment could not be displaced merely because the court preferred another interpretation. (¶¶ 25, 41, 42)
Held
- Patent illegality requires a defect going to the root, rather than mere erroneous application of law. An impossible contractual interpretation, jurisdictional departure, absence of reasons, findings based on no evidence, disregard of vital evidence or reliance on undisclosed material can warrant intervention. Reappreciating evidence under that label is impermissible. (¶¶ 22, 23, 24, 25)
- The award clearly distinguished the cure period, termination notice and effective termination date. Its interpretation requiring cure or effective curative steps within ninety days of the initial notice was possible under the agreement and could not be displaced even if another reading was available. (¶¶ 30, 31)
- The safety commissioner’s competence to authorize safe operations was undisputed. The subsequent certificate did not by itself establish that contractual defects had been cured within the specified period. The tribunal considered its restrictions and monitoring conditions; the High Court wrongly treated the award as ignoring it or as perverse. (¶¶ 32, 33, 34, 35, 36)
- The tribunal’s inclusion of Rs 611.95 crore advanced by the promoter in contractual equity was a reasonable possible interpretation of the agreement’s defined terms. It considered the board resolution and evidence; company-law characterization did not displace the express contractual definition. The termination-payment computation was upheld. (¶¶ 37, 38, 41, 42)
- Without-prejudice participation in reconciliation and continued operations did not establish waiver under the tribunal’s findings, which the Division Bench properly left undisturbed. Specific performance required no adjudication because the refusal had not been challenged before the High Court. The contractual interest award also warranted no interference. (¶¶ 43, 44, 45)
- DAMEPL’s appeal was allowed and the Division Bench judgment set aside. DMRC’s appeal arising from its separate special-leave petition was dismissed. (¶ 46)
Result
DAMEPL appeal allowed and Division Bench judgment set aside, restoring the arbitral award; DMRC’s appeal dismissed.