Delhi Metro to deposit ₹1,000 crore in escrow over arbitration case with Rinfra

DMRC also offered to take over any bank debts of the subsidiary — to the extent of the total ₹4,600 crore award money

The Delhi high court on Monday permitted the Delhi Metro Rail Corporation (DMRC) to deposit ₹1,000 crore in an escrow account within 48 hours, towards the arbitral award of around ₹4,600 crore that was won by a consortium headed by Reliance Infrastructure Limited, which previously operated the Delhi Airport Express Line.

The court was hearing DAMEPL’s execution plea for the arbitral award won against the Delhi Metro. (Sanchit Khanna/HT Archive)

Solicitor general Tushar Mehta told justice Suresh Kait that DMRC would be able to pay only ₹1,000 crore to Delhi Airport Metro Express Private Limited (DAMEPL), a subsidiary of Reliance Infrastructure Limited, as the Delhi Metro was facing a “financial crunch” and undertaking a “sudden liability” would impact the public interest.

The SG also offered to take over any bank debts of the subsidiary — to the extent of the award money ( ₹4,600 crore, as per DMRC calculations).

Mehta said authorities were working on a solution, adding that as per their calculation, the amount liable to be paid was approximately ₹5,000 crore, way lesser than the DAMEPL’s claim of ₹7,163 crore.

“We are working out possibilities….Even if we have to pay, we may have to borrow (from banks). If it can be looked into, we can take over your (DAMEPL) debt (and) we will take care of the banks. DMRC can take over the debt and we will deal with the banks,” Mehta said.

The court was hearing DAMEPL’s execution plea for the arbitral award won against the Delhi Metro.

The DAMEPL terminated the concession agreement in October 2012, citing a failure of the DMRC to cure defects in the structure supporting the Airport Metro Express Line. DMRC invoked the arbitration clause in its contract with the consortium.

As per the contract signed on August 25, 2008, the DMRC was to carry out the civil works, excluding the depot, and the balance, including the project system works, were to be executed by DAMEPL, a joint venture of Anil Ambani-owned Reliance Infra and a Spanish construction company Construcciones Y Auxiliar de Ferrocarriles.

In 2017, the arbitral tribunal awarded damages to Reliance Infra, a ruling that was upheld by a single judge bench of the Delhi high court in 2018. Later, in 2019, a division bench of the high court set aside the award after which Reliance Infra approached the Supreme Court.

In September this year, the apex court set aside the division bench judgment of January 15, 2019, and upheld the arbitral award in favour of DAMEPL, saying there was a “disturbing tendency of courts setting aside arbitral awards”. In November, the Supreme Court also dismissed the DMRC’s plea seeking a review of its judgment.

On Monday, senior advocate Rajiv Nayar, appearing for DAMEPL, argued that the DMRC must first deposit 50% of the total award amount with the court.

Mehta said it was “not possible” for DMRC to deposit half the awarded amount. “Anything beyond ₹1,000 crore, we may have to borrow from the banks,” he said.

The court then directed that the DMRC deposit ₹1,000 crore in an escrow account within 48 hours and asked the counsels for DAMEPL and DMRC to take instructions on the final payable amount under the award. The case will next be heard on December 22.