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Airport Express Line case: DMRC asked to give all bank account details
DAMEPL was awarded an arbitral award of ₹4,600 crore over an agreement terminated in October 2012 on account of DMRC failing to resolve defects in the structure supporting the Airport Metro Express Line.
The Delhi high court on Wednesday directed Delhi Metro Rail Corporation (DMRC) to give details of all its bank accounts in connection with a plea by Delhi Airport Metro Express Private Limited (DAMEPL), a subsidiary of Reliance Infrastructure Limited, seeking execution of an arbitral award of ₹4,600 crore.
“The DMRC is directed to furnish the details of bank accounts... in Delhi or outside Delhi. It will also be mentioned in the affidavit, how much amount is lying in a particular account,” the court ordered.
The amount is the compensation awarded to DAMEPL over an agreement terminated in October 2012 on account of DMRC failing to resolve defects in the structure supporting the Airport Metro Express Line. The DMRC had earlier offered to accept DAMEPL’s liabilities to the extent of the award.
Noting that the DMRC has ₹1,642.69 crore available in its bank accounts, Justice Suresh Kait, however, said that if the DAMEPL does not want to accept the former’s offer of taking over its debts, the court can’t force it to do so.
“(DAMEPL says) if it has money in hand, in an escrow account, at least it can bargain with banks for restructuring etc. Suppose it passes on total liability to you, to pay to the lenders, it will lose the bargaining power... If your (DMRC’s) offer is accepted, no issues…But when it is not accepting that, this court can’t force it that you (DAMEPL) accept in this fashion,” the judge said.
The judge observed that though the attachment of the DMRC’s properties is not permitted, there is no such embargo with respect to its bank accounts.
The order comes after DAMEPL refused to accept DMRC’s offer to directly negotiate with the banks and repay the arbitral award money.
Appearing for DAMEPL, advocate Prateek Seksaria, informed that its lenders have rejected the DMRC’s proposal of taking care of its liabilities and contended that no special treatment can be given to the government in the present execution proceedings.
He argued that the government should “set an example” by paying the award instead, adding that even after the DMRC deposited ₹1,000 crore in the escrow account, over ₹6,000 crore was still due. He also submitted that DAMEPL is entitled to the amount awarded in the arbitration proceedings as well as the benefit of “any surplus” which may be utilised to restart its businesses.
He also relied on the DMRC’s affidavit to state that the corporation has nearly ₹5,800 crore in its bank accounts as on December 17 -- ₹1,642 crore earnings; ₹2,400 crore project allocation fund; and ₹1,700 crore deposit fund.
He sought that at least the admitted earnings of the DMRC should straightaway be appropriated towards execution of the award.
However, this was opposed by Solicitor General (SG) Tushar Mehta, appearing for the DMRC, who submitted that they have no informationwith respect to the banks rejecting the proposal, and reiterated that taking over DAMEPL’s debts to the extent of the award and negotiating with the lenders will be in public interest.
“The government says we are in negotiations with the bank. Reliance, the award holder… they come and say that banks are interested in we (DAMEPL) getting the money and they have rejected the government’s proposal. If this is so, this is very serious… Something needs to be examined by the banking division also,” Mehta stated.
Senior advocate Parag Tripathi, also appearing for DMRC, urged the court to grant it an opportunity to work out a solution and submitted that nobody will gain if the bank accounts are attached and Metro services are stopped.
“If Metro is stopped tomorrow, there will be a huge issue… I will work it out because as an instrumentality of the state, when I sit with the banks, the ability to get a rollover of the amount as a loan from the bank will be much greater,” Tripathi said.
The court was hearing DAMEPL’s execution plea for the arbitral award won against the corporation.
The consortium of Reliance Energy Limited (renamed as Reliance Infrastructure Limited) and M/s Construcciones y Auxiliar de Ferrocarriles, SA, terminated the concession agreement in October 2012 citing failure of DMRC to correct defects in the structure supporting the Airport Metro Express Line. DMRC invoked the arbitration clause of its contract with the consortium.
The concession agreement between the two was signed on August 25, 2008. Under the agreement, DMRC was to carry out the civil works, except at the depot, and the remaining work were to be executed by DAMEPL, a joint venture of Reliance Infra (95%) and a Spanish construction company M/s Construcciones Y Auxiliar De Ferrocarriles (5%).
In 2017, the arbitral tribunal awarded damages to Reliance Infra, and it was upheld by a single-judge bench of the Delhi high court in 2018. A division bench of the same court set aside the award in 2019 after which Reliance Infra approached the top court.
In September this year, the apex court set aside the division bench’s order January 15, 2019, and upheld the arbitral award in favour of DMRC, saying that there was a disturbing tendency of courts setting aside arbitral awards.
In November, the Supreme Court also dismissed DMRC’s plea seeking a review of its judgment.
On the last date, the DMRC had told the court that it would deposit ₹1,000 crore in favour of DAMEPL while suggesting taking over its debt to the extent of the award money.
DMRC had stated that since the corporation was facing a “financial crunch”, undertaking a “sudden liability” would impact public interest and authorities were, therefore, working out a solution. It had also claimed that the amount liable to be paid was approximately ₹5,000 crore which was lesser than DAMEPL’s claim.
