Rapid Metro case: SC orders HSVP to deposit ₹1,925 crore in escrow account

The Supreme Court on Friday, hearing a dispute over unpaid dues between the Rapid Metro concessionaire and Haryana Shahari Vikas Pradhikaran (HSVP), directed the authority to deposit ₹1,925 crore into an escrow account within three months

The Supreme Court on Friday, hearing a dispute over unpaid dues between the Rapid Metro concessionaire and Haryana Shahari Vikas Pradhikaran (HSVP), directed the authority to deposit ₹1,925 crore into an escrow account within three months.

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The concessionaire, IL&FS, moved the Supreme Court seeking termination payments from the HSVP, after the authority failed to pay an amount of ₹1,925 crore amounting to 80% of the “debt due” of ₹2,407 crore as per an audit done by the Comptroller and Auditor General of India (CAG) on the orders of the Punjab and Haryana high court. The HSVP had raised several objections to the CAG audit report.

“The Supreme Court order will go a long way in protecting the interest of investors in the infra sector,” a spokesperson for IL&FS said.

Officials of the HSVP said they have received the order and are studying it. “We are seeking a legal opinion in this matter and will take further action based on it,” said Ajit Balaji Joshi, chief administrator, HSVP.

The appropriation of any amount from the escrow account shall be subject to further orders of the National Company Law Appellate Tribunal (NCLAT) or other competent legal authority, the apex court held.

The Gurugram Rapid Metro project, which was developed by IL&FS through its subsidiary special purpose vehicles (SPVs) - Rapid Metro Rail Gurgaon Limited (RMGL) and Rapid Metro Rail Gurgaon South Limited (RMGSL), between 2009 and 2013.

The concession agreement was terminated in 2019 as HSVP failed to meet its obligations, following which the company demanded payments as per the agreement. The IL&FS company spokesperson said that agreements pertaining to advertising rights, construction of parking, real estate developments and several other revenue streams were not activated due to which the company decided to terminate the concession agreement.

However, HSVP refuted the contention of IL&FS SPVs and challenged the matter in the high court, according to IL&FS.

The high court ruled in September 2019 that operations and maintenance of the Metro link should be handed over to HSVP and directed the CAG to carry out a financial audit of total debt due. Following the audit, the HSVP was directed to deposit 80% of the debt due in an escrow account within 30 days of submission of the CAG report and directed that other disputes be settled through arbitration

The company officials said that the project was handed over to HSVP in October 2019, as per court orders. They stated that auditors appointed by CAG submitted their report on debt due and determined the same at ₹2,407 crore. The report was taken note of by the court on September 28, 2020.