Supreme Court reverses its own verdict, restores High Court order in Rs 2782 crore arbitration

The Supreme Court took the unusual step of overturning its own judgment—because the arbitral award it had restored ignored a government safety certificate. On a Delhi afternoon in April 2024, a three-judge bench led by Chief Justice D.Y. Chandrachud did something courts rarely do: it looked at its own earlier order, called it a mistake, and reversed it. The case involved Rs 2782 crore, a metro line that never quite worked, and a statutory safety certificate that one side argued had been conveniently forgotten.

When the cracks appeared

Delhi Metro Rail Corporation (DMRC), a government company, entered into a public-private partnership with Delhi Airport Metro Express Pvt. Ltd. (DAMEPL), a consortium backed by Reliance Infrastructure. The deal was simple: DAMEPL would build and operate the Airport Metro Express line—the sleek train that connects New Delhi station to the airport. DMRC would handle the civil construction work—the tracks, the viaducts, the concrete skeleton on which the trains run.

But the skeleton had cracks. DAMEPL alleged that DMRC's civil construction was structurally defective. It issued a cure notice—a formal demand under the contract—giving DMRC 90 days to fix the problems. In the DMRC office, the 90-day deadline was marked in red on a calendar pinned to the wall, each passing day a silent pressure on engineers and lawyers alike. Engineers pored over reports, lawyers drafted responses, and the clock ticked down. When DMRC did not repair the defects to DAMEPL's satisfaction, DAMEPL terminated the agreement. DMRC went to arbitration.

The award that kept growing

A three-member arbitral tribunal ruled in DAMEPL's favour, awarding over Rs 2782 crore. The award document, signed by each arbitrator, ran to hundreds of pages—its weight in the tribunal room matched by the weight of the sum it ordered. DMRC challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996 (the provision that allows a court to set aside an arbitral award on limited grounds). A Single Judge of the Delhi High Court dismissed that challenge. DMRC appealed under Section 37 (the provision for appeals against orders under Section 34). The Division Bench of the Delhi High Court partly allowed the appeal, setting aside the award on the ground of patent illegality—a legal standard that means the award was so obviously wrong that it violated the fundamental policy of Indian law.

DMRC then filed a Special Leave Petition (SLP) under Article 136 of the Constitution (the Supreme Court's discretionary power to hear appeals from any court or tribunal). A two-judge bench of the Supreme Court allowed the SLP in September 2021 and restored the arbitral award. DMRC filed a review petition—it was dismissed in November 2021. That should have been the end.

The safety certificate that changed everything

But DMRC did not stop. It filed a curative petition—the rarest of rare remedies, reserved for cases where the Supreme Court's own judgment causes a grave miscarriage of justice. The curative jurisdiction was established by the Supreme Court itself in the 2002 case Rupa Hurra v. Ashok Hurra, and it is almost never granted. DMRC argued that the earlier Supreme Court judgment had restored a patently illegal award that ignored vital evidence—specifically, a statutory safety certificate issued by the Commissioner of Metro Rail Safety (CMRS).

Here is what that certificate meant. Under the Metro Railways (Operation and Maintenance) Act, 2002, no metro railway can be operated without a safety certificate from the CMRS. The CMRS had issued such a certificate for the Airport Metro Express line. DAMEPL's entire case was that the structural defects made the line unsafe. But the statutory safety authority had said the line was safe enough to run. The arbitral tribunal, DMRC argued, had simply ignored this certificate. The certificate itself—a formal document bearing the official seal of the competent authority—was presented in court, its pages carrying the weight of a statutory determination that the line could operate without endangering passengers. In the courtroom, the paper rustled as it was handed to the bench, a quiet but definitive counterpoint to the tribunal's silence on the matter.

The Division Bench of the Delhi High Court had found this to be patent illegality. The Supreme Court's earlier judgment, DMRC said, had reversed that finding without properly applying the law.

What the curative bench found

The CJI-led bench agreed. It held that the earlier Supreme Court judgment had improperly exercised its jurisdiction under Article 136. The court said that under Article 136, the Supreme Court must interfere sparingly with Section 37 judgments. The court's role is not to re-evaluate the arbitral award itself, but only to test whether the High Court exceeded its jurisdiction by failing to apply the correct legal tests.

The bench found that the Division Bench of the Delhi High Court had been correct. The arbitral tribunal had ignored the CMRS statutory certification—a piece of evidence that went to the very heart of the dispute. If the statutory safety authority said the line was safe, how could DAMEPL claim that structural defects made the line unsafe to the point of justifying termination? By ignoring this evidence, the tribunal had adopted an unreasonable interpretation of the termination clause in the contract. That made the award perverse—and perversity is a ground for setting aside an award as patently illegal under Section 34(2-A) of the Arbitration Act (the provision that allows courts to set aside domestic awards for patent illegality).

The bench also clarified the scope of curative jurisdiction. It is not limited to cases where there has been a violation of natural justice (the principle that both sides must be heard). It extends to cases where the court's earlier judgment results in restoring a patently illegal arbitral award, causing a grave miscarriage of justice. The court observed: "The curative jurisdiction under Article 142 may be exercised where this Court's earlier judgment results in restoring a patently illegal arbitral award, causing a grave miscarriage of justice. The test is not limited to natural justice violations but extends to manifest injustice."

On the scope of Article 136, the bench held: "Under Article 136, the Supreme Court must interfere sparingly with Section 37 judgments and limit itself to testing whether the court exceeded jurisdiction by failing to apply correct tests, rather than re-evaluating the award itself."

Addressing the patent illegality ground, the court stated: "An arbitral award that ignores vital evidence—such as a statutory certification by the competent authority—in arriving at its decision is perverse and liable to be set aside as patently illegal under Section 34(2-A)."

Why this matters for arbitration in India

This judgment sends a clear signal: the Supreme Court will not tolerate arbitral awards that ignore statutory evidence. A safety certificate from a government authority is not a piece of paper that a tribunal can conveniently set aside. It is a statutory determination that carries legal weight. An award that ignores it is not just wrong—it is patently illegal.

For practitioners, the lesson is this: when you have a statutory certification that supports your case, make sure the tribunal addresses it. If the tribunal ignores it, you have a strong ground for challenging the award under Section 34(2-A). And if the Supreme Court restores such an award, a curative petition may be your last—and only—recourse.

THE PLAY: When challenging an arbitral award, always flag any statutory certification that the tribunal ignored—it transforms a factual dispute into a ground for patent illegality.

The curative bench restored the Division Bench's judgment. The Airport Metro Express line still runs. The legal track it laid is now clearer than ever—and the safety certificate that once sat ignored in the tribunal's file now sits at the centre of Indian arbitration law.