The Delhi Metro Rail Corporation (DMRC) has decided to move the Delhi High Court against the R 2,950-crore arbitration award to the Anil Ambani-owned Reliance Infrastructure Ltd. (Rinfra) in connection with the tussle over the airport express metro.
“DMRC has decided to seek legal remedies under the Arbitration Act 1996 and decided to file an objection petition before the High Court of Delhi on this matter under Section 34 of the Arbitration Act,” said Anuj Dayal, executive director, corporate communication, DMRC.
The DMRC says the termination notice issued by Delhi Airport Metro Express Line (DAMEPL), a Rinfra subsidiary, was legally untenable and was against the provisions of the concessionaire agreement.
The arbitration was decided by a three-member committee after more than three years of hearing.
After Rinfra pulled out of line in 2013, the three-member committee was formed for an ‘out- of-court settlement,’ sources said. Rinfra wanted back the money invested in the project but DMRC’s contention was ‘who was at fault’.
The 22.7-km line connects the New Delhi railway station with airport terminal T3 and was jointly developed by DAMEPL and DMRC as public a private partnership (PPP) project.
Its operations were suspended in July 2012 after DAMEPL complained of construction defects in the rail lines built by DMRC. In 2013, DAMEPL terminated the agreement and the tussle ended in arbitration.
“We welcome the award and hope it will encourage the private sector to participate in the nation-building process,” said a Rinfra spokesperson.
Under the guidelines approved by the Cabinet Committee on Economic Affairs and issued by Niti Ayog last year, DMRC is expected to pay 75% of the award amount against a bank guarantee even if they challenge the order.
“Therefore, RInfra is expected to get Rs 2,210 crore as per the guidelines against bank guarantee in case DMRC proposes to challenge the award,” the company statement said.
Sources in the company said DMRC will also have to pay interest charges, which may take the compensation to Rs 4,800 crore.
Experts have long pointed out the challenges of developing metro rails through the PPP model, as the cost of development is high and the return on investment is low because ticket prices are subsidised.
E Sreedharan, the man behind Delhi Metro, had warned against the delay in the Hyderabad metro project and bearing that may have on a private company.