DMRC-DAMEPL matter: Delhi HC impleads Centre and GNCTD as party; seeks response

New Delhi [India], February 17 : The Delhi High Court on Friday impleaded Centre Government and Delhi Government as parties in the ongoing case of unpaid dues in the arbitral award of Rs 7,200 crore won by the Delhi Airport Metro Express Private Limited (DAMEPL) run by Reliance Infrastructure against DMRC.
The Bench of Justice Yashwant Varma sought responses from the Ministry of Housing and Urban Affairs and the Delhi Government in DAMEPL's petition seeking enforcement of the arbitration award.
The bench while seeking the response of Centre and Delhi Government stakeholders of DMRC said that both stakeholders be placed formally on notice and let them made submissions in regards to how the unpaid arbitral award, passed in favour of Reliance Infrastructure-owned Delhi Metro Express Private Limited (DAMEPL) and against Delhi Metro Rail Corporation (DMRC), would be paid.
Court said, the newly impleaded respondents shall address submissions in
light of what stands recorded hereinabove. The Court hopes and trusts that the shareholders shall bear in mind that the impasse which exists needs to be resolved expeditiously bearing in minding the peremptory directions of the Supreme Court as well as the need to protect and
preserve the DMRC which not only represents a project of immense public importance but also constitutes the lifeline for the residents of the NCT.
The bench fixed the matter for February 20, 2023, for the next hearing.
Recently, the Delhi Metro Rail Corporation (DMRC) told the Delhi High Court that a request have been made to its shareholders, Ministry of Housing and Urban Affairs (MOHUA) and Delhi Government a sum of Rs. 3565.64 Crore may please be provided as interest-free subordinate debt at an early date.
The affidavit filed by DMRC stated that "the decision of its Board of Directors, have approached its shareholders, i.e., GOI and GNCTD and had written letters dated January 18, 2023, to MOHUA and GNCTD, in which DMRC requested to MOHUA and GNCTD that a sum of Rs. 3565.64 crore may please be provided as interest-free subordinate debt at an early date so that the Supreme Court directions may be complied with.
In December 2022, the Supreme Court had directed the Delhi High Court to execute within three months the arbitral award of Rs 7,200 crore won by the Delhi Airport Metro Express Private Limited (DAMEPL) run by Reliance Infrastructure against DMRC.
The affidavit stated that this matter was discussed in the 148th Board Meeting of DMRC, held on 16.01.2023 and in view of GNCTD's disinclination and also in view of the inability of DMRC to raise money from the open market because of its adverse financial position, it was decided to approach both the shareholders i.e. GOI and GNCTD to share the total awarded amount of Rs. 7,131.28 Crore in equal proportion as interest-free subordinate debt.
Though this step of interest-free subordinate debt brings more financial burden on DMRC, however, the less financial burdensome option of issue of Equity Shares, which was explored earlier, failed to materalise, stated DMRC
The matter was listed in Delhi High Court on Thursday, but later got adjourned for January 31, 2023, because of the non-availability of the Attorney General in the matter.
Earlier, the government of NCT Delhi (GNCTD) have informed DMRC that "it is not inclined to provide money for payments arising out of disputes or contractual defaults to the Reliance Infrastructure subsidiary's Delhi Airport Metro Express Private Limited (DAMEPL).
GNCTD said that "Shareholders cannot be held liable for payments arising out of disputes or contractual defaults. It is further submitted that DMRC may raise money from Open Market or through
externally aided Funds or loan from the Government of India to meet this liability."
The Court earlier made clear that if the amount is not paid within time, the Court shall be constrained to call the appearance of the Managing Director of the DMRC before this Court.
The Delhi High Court earlier had directed DMRC to provide details of funds in its bank account in connection with a Reliance Infrastructure subsidiary's (DAMEPL) plea for the execution of an arbitral award against it.
The Reliance Infrastructure subsidiary Delhi Airport Metro Express Pvt Ltd (DAMEPL) had filed an application requesting Delhi High Court to direct Delhi Metro Rail Corporation Limited (DMRC) to deposit Rs 6,208 crores available in its various bank accounts into the project escrow account without any delay.
DAMEPL, in its application, had rejected any out-of-court negotiations/ settlement or assignment of debt to the DMRC. DAMEPL plea states, "The Decree Holder is not agreeable to settling the matter out of the Court. Accordingly, no alternate proposal by DMRC is acceptable to Decree Holder and it presses for the execution on merits at the earliest."
The plea further stated that the delay in payment by DMRC is causing immense prejudice to DAMEPL and its Promoter, Reliance Infrastructure Limited. In case the reliefs as sought for are not granted, the Decree Holder shall suffer irreparable loss and injury.
The Supreme Court (SC), on 7 September 2021, had upheld the arbitration award of Rs 7,200 crores in favour of DAMEPL.
In 2008, DAMEPL had entered into a contract with DMRC for running the airport metro line till 2038. As disputes arose between the parties, DAMEPL stopped operating the metro on the airport line and invoked the arbitration clause against DMRC alleging violation of contract, and sought a termination fee.