Provide interest-free subordinate debt at an early date: DMRC requests Centre, GNCTD

New Delhi [India], January 19 : The Delhi Metro Rail Corporation (DMRC) on Thursday told the Delhi High Court that a request has been made to its shareholders, Ministry of Housing and Urban Affairs (MOHUA) and Delhi Government to provide a sum of Rs 3565.64 crore as interest-free subordinate debt at an early date.
The fresh affidavit filed by DMRC stated that "the decision of its Board of Directors, has approached its shareholders, i.e., GOI and GNCTD and had written letters dated 18.01.2023 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 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 January 16, 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 financially burdensome option of issue of Equity Shares, which was explored earlier, failed to materialise," 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) 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, "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 loans 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 are not granted, the Decree Holder shall suffer irreparable loss and injury.
The Supreme Court on September 7 2021, upheld the arbitration award of Rs 7,200 crores in favour of DAMEPL.
In 2008, DAMEPL 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.