‘Act on DMRC request’: High court orders Delhi govt, Centre on DAMEPL payments
The Delhi high court’s ruling on Friday came on DAMEPL’s execution petition filed against DMRC concerning the arbitral award passed in its favour on May 11, 2017
NEW DELHI: The Delhi high court on Friday ordered the Union government and Delhi government to immediately act on the request of the Delhi Metro Rail Corporation (DMRC) to extend a sovereign guarantee and subordinate debt to pay the 2017 arbitral award to Delhi Airport Metro Express Private Limited (DAMEPL), a subsidiary of Anil Ambani-owned Reliance Infrastructure Limited (RInfra).
“Centre and Delhi govt shall forthwith attend to the request of the DMRC for extension of sovereign guarantee, subordinate debt enabling it to liquidate its liabilities under the award. This should be done within 2 weeks from today, “ justice Yashwant Varma said, deciding the DAMEPL’s execution plea in its favour.
DMRC, a 50:50 joint venture between the Government of India (GOI) and the Delhi government, terminated its contract with DAMEPL to operate the 22.7km Airport Metro Express line in October 2012.
An arbitral tribunal, in May 2017, ruled in favour of DAMEPL, which pulled out of running the Airport Express metro line over safety issues and awarded a total amount of ₹2782.33 crore along with interest. The award was upheld by the high court’s single-judge bench in 2018 but a two-judge bench set it aside in 2019. Reliance Infra appealed against the ruling in the Supreme Court, which upheld the initial verdict awarding damages to DAMEPL. In January 2022, the top court asked DMRC and DAMEPL to approach the high court for the execution of the arbitral award, saying that any further delay is detrimental to the interest of both parties.
The high court recently put the total amount of the award including interest till February 14, 2022, at ₹8,009.38 crore. Of this, DMRC paid ₹1,678.42 crore and an amount of ₹6,330.96 crore was outstanding on this date.
On Friday, the high court told the DMRC to deposit the entire award along with interest within a month if the government decides to extend the sovereign guarantee.
In case the Centre and Delhi government decline to provide sovereign guarantee or subordinate debt, the Centre shall within two weeks repatriate all monies received from the DMRC after 10 March 2022 to ensure that the total balance reflects the situation as on March 22, 2022.
“On the receipt of money, DMRC shall deposit the money in the escrow account, an amount payable equal to the money payable in terms of award with interest,” the court said.
The judge added that in case the parties don’t proceed in terms of the above direction, the DMRC’s total funds as of date shall stand attached without reference to the court.
“In case DMRC fails to clear all outstanding amount despite the directions set by the court, the court reserves the right to frame further appropriate directions against the Centre and the Delhi government consequent to the corporate veil duly lifted as per the findings recorded herein above, “the court said.
During the hearings, DMRC contended that it has no funds and despite efforts, the two stakeholders -- the Centre and the Delhi government -- have been unable to arrive at a consensus on how the money payable under the award may be liquidated.
In February, the high court issued notices to the Union ministry of housing and urban affairs and the Delhi government to apprise it of how the unpaid arbitral award would be paid.
The court also sought the Union government’s stand on the grant of sanction to attach DMRC’s properties to pay the unpaid arbitral amount. The Centre declined sanction, saying this would bring the national capital to a standstill and create law and order problem in the city.
To be sure, the court order prompted the union ministry to explore the possibility of amending the Metro (Operation and Maintenance) Act, 2002 to prevent any authority to seek attachment of its properties or assets in the future.