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Amazing That Govt Set-Up DMRC Has No Money To Pay Arbitral Award To DAMEPL: Delhi HC

Delhi High Court on Thursday said it was amazing that two elected governments have set up Delhi Metro Rail Corporation (DMRC) which now says it has no money to pay the arbitral award to the Reliance Infrastructure-owned Delhi Metro Express Private Limited (DAMEPL).

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Entrance of Delhi High Court.
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The Delhi High Court on Thursday said it was "amazing" that two elected governments have set up Delhi Metro Rail Corporation (DMRC) which now says it has no money to pay the arbitral award to the Reliance Infrastructure-owned Delhi Metro Express Private Limited (DAMEPL).The court asked the competent authority of DMRC to attend the proceedings so that a holistic view can be taken regarding the funds available with the corporation."I have before me two sovereign and elected governments who have set up this corporation and we are told that it has no money to honour the award," Justice Yashwant Varma said while listing the matter for further hearing on Friday.

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The high court was hearing an execution petition filed by DAMEPL against the DMRC over the arbitral award passed in its favour on May 11, 2017. An arbitral tribunal had ruled in favour of DAMEPL, which had pulled out of running the Airport Express metro line over safety issues, and accepted its claim that running the operations on the line was not viable due to structural defects in the viaduct through which the train would pass.Hearing the submissions advanced by the counsel for Central and Delhi government, which are stakeholders in DMRC, that they are not liable to pay the arbitral award of the corporation, the high court said imagine the message being sent outside.

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"It is amazing that there are two elected governments who have set up this corporation and today we are told the law. The corporation set up by two governments has no money and it is defunct. Let us not distance ourselves so far which is untenable in law. Imagine what message you are conveying outside that there is a government corporation which is refusing to deal with an award," the judge said.The central and Delhi governments were invited to participate in the proceedings because DMRC's stand was that it has no funds, the court said.In pursuance to court's earlier direction, the Centre submitted that it has taken a decision on March 1 and has refrained from according sanction for the attachment of properties of DMRC.


"Sanction for attachment of the properties of DMRC cannot be accorded by the answering respondent (Centre) since that would result in closure of DMRC and bring the city of Delhi to a halt. "Such a situation will cause significant inconvenience to the public and impact law and order in the city. The answering respondent, being the custodian of the public good, cannot permit such circumstances to ensue," the Ministry of Housing and Urban Affairs said in an affidavit filed in the court. The court, however, said deposition by an officer was not enough and it wanted to know who has taken the decision of not granting sanction for attachment of properties of DMRC and that that the file containing the formal order be placed before it.

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"Counsel for DMRC is directed to place all requisite records as also direct the competent authority of DMRC to attend to these proceedings so that a holistic view can be taken with respect to present funds available with the corporation," it said. Delhi government's counsel contended that merely being the shareholder of DMRC, it cannot be asked to contribute to the unpaid award to DAMEPL.On February 27, the court had asked the Centre to take a decision on whether it proposes to grant sanction for the attachment of movable and immovable assets of DMRC for paying the arbitral award.Earlier, the court had noted the total amount of the award with interest till February 14, 2022 was Rs 8009.38 crore. Out of this, a sum of Rs 1678.42 crore has been paid so far by the DMRC and Rs 6330.96 crore is still due to be paid.

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On February 17, the high court had issued notices to the Union Ministry of Housing and Urban Affairs and Delhi government, the two essential stakeholders in the DMRC, to apprise it of how the unpaid arbitral award will be paid. The two governments were impleaded as parties in the execution proceedings.It had asked the Centre and the AAP government to make an endeavour to speedily resolve the impasse over the unpaid arbitral award, saying there was a need to protect the Delhi Metro which constitutes the lifeline for the residents of the national capital.DMRC had informed the high court that despite making requisite efforts, the two stakeholders have been unable to arrive at a consensus on the ways and means by which the amount payable under the award may be liquidated.

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In January, the DMRC had told the court it has requested the Centre and the city government for paying over Rs 3,500 crore each as interest free subordinate debt for repayment of the unpaid arbitral award.It had said though this step of interest free subordinate debt lay more financial burden on the Delhi Metro, the less bothersome option of issue of equity shares which was explored earlier failed to materialise.Senior advocate Kapil Sibal, appearing for DAMEPL, had said in light of the position as it prevailed, the court would be justified in lifting the corporate veil of the corporation and proceeding further against the stakeholders for the purposes of execution of the award which undisputedly has attained finality.

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The DMRC had informed the court that meetings were held with the Centre, Delhi government and other stakeholders to discuss the modalities for payment of the balance arbitral award to DAMEPL. The metro rail had said if any adverse orders were passed against it at this point of time, millions of commuters will be simply told they cannot use the Delhi Metro. On March 10 last year, the high court had directed the DMRC to pay the over Rs 4,600 crore arbitral award along with interest to DAMEPL in two equal installments within two months. The first and second installments were to be paid on or before April 30, 2022 and May 31, 2022, respectively.

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