The Delhi High Court Monday asked the Centre to take a decision on whether it proposes to grant sanction for the attachment of movable and immovable assets of Delhi Metro Rail Corporation (DMRC) for paying the arbitral award to the Reliance Infrastructure-owned Delhi Metro Express Private Limited (DAMEPL). The high court granted time to the competent authorities in the central government to take the decision in this regard and place it on record while listing the matter for further hearing on March 2. The high court said it would be expedient to take the decision on the issue before it proceeds further to deal with the objections taken by both the Centre and the Delhi government and which pertain to the limited liability principle.
"Before the court proceeds to rule on the issue of whether the circumstances warrant the corporate veil of the corporation (DMRC) be lifted, it would appear expedient to call upon the Union government to take a decision on whether it proposes to accord sanction for the attachment of the movable and immovable assets of the corporation for the purpose of the satisfaction of the amount payable under the award,” Justice Yashwant Varma said. The high court said, “In order to enable the competent authorities in the union government to take that decision and place the same on the record of the proceedings, let the matter be called again on March 2”.
The high court was hearing the execution petition filed by DAMEPL against the DMRC over the arbitration award passed in its favor on May 11, 2017. An arbitral tribunal had ruled in favor 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. Earlier this month, 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.
On February 17, the high court had issued notices to the Union Ministry of Housing and Urban Affairs and the 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.During the hearing, Additional Solicitor General Chetan Sharma, representing the Centre, said admittedly, the union government was not a party to the arbitration between DMRC and DAMEPL. He said the Central government is a 50 percent equity shareholder in the DMRC and it has no liability to pay the decretal amount in law.
The judge said as per the order of the Supreme Court, he has to complete all proceedings in this petition before March 15. “With all seriousness, this has to be taken up by your authorities at the top,” the high court said. Earlier, the high court had asked the Centre and AAP government to make an endeavor 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.
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 materialize. 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.
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.