The Delhi High Court has imposed costs of Rs 5 lakh on the Delhi Metro Rail Corporation (DMRC) for misusing Section 33 of the Arbitration and Conciliation Act, 1996, by seeking substantive reconsideration of an arbitral award under the guise of correcting errors.
A Division Bench of Justice C Hari Shankar and Justice Om Prakash Shukla, in an order passed on August 17, held that DMRC’s application effectively sought re-adjudication of the dispute rather than correction of clerical, typographical or computational mistakes.
The Bench criticized the appellant’s petition as a clear abuse of Section 33, stating that a major organization could not claim ignorance of the provision’s fundamentals and likely filed it simply to secure additional time to challenge the substantive award. The Court, however, set aside the single judge’s decision dismissing DMRC’s challenge to the arbitral award as time-barred.
The Bench relied on recent Supreme Court judgments to hold that where a formal Section 33 application is filed within the prescribed period, the limitation period for challenging the award under Section 34 begins from the date on which the Section 33 application is disposed of. This would apply even where the application is frivolous or goes beyond the scope of Section 33.
The dispute arose from a February 2013 contract under which HCC Samsung Joint Venture was engaged to execute civil works for DMRC. The joint venture subsequently raised claims relating to variations in work and delays.
Following rejection of the claims by DMRC, the dispute went before a three-member arbitral tribunal. The majority award was issued on February 23, 2024, followed by a dissenting award on February 28.
On March 22, DMRC filed a Section 33 application seeking purported corrections to the majority award. The application, however, challenged substantive findings concerning issues including additional cross-passages, extended-stay expenses and revised minimum wages.
The tribunal rejected the application on June 3, 2024. DMRC thereafter approached the High Court under Section 34 on August 29, 2024, seeking to set aside the award. A single judge dismissed the challenge in February 2025, holding that the Section 33 application was an attempt to circumvent the limitation period.
The Division Bench disagreed, referring to the Supreme Court’s decisions in Geojit FinancialServices Ltd v Sandeep Gurav and National Highways Authority of India v T Younis. It held that a Section 34 challenge cannot be treated as time-barred by ignoring the period spent in disposing of a formally filed Section 33 application. Citing a complete lack of bona fides in DMRC’s Section 33 petition, the High Court imposed Rs 5 lakh in costs, payable to HCC Samsung JV within a 12-week timeframe.
The Court said it had moderated the quantum of costs considering that DMRC is a public sector undertaking and a higher amount would ultimately burden the public exchequer.
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