DMRC-Hyundai case: AG may have advised against cancelling Rs 4,600 cr contract

The corporation has denied any communication from AG's office

In what could be a breather for the Phase-III expansion of Delhi Metro Rail Corporation (DMRC), its largest and most ambitious so far, Attorney-General Mukul Rohatgi is believed to have opined against cancellation of its controversial Rs 4,600-crore contract with Hyundai Rotem for supply of 486 coaches.

DMRC had sought the opinion of the country’s highest law officer after finding the South Korean major had, in violation of tender conditions, allegedly not disclosed information of being blacklisted by another Indian government agency, the Airports Authority of India (AAI).

The A-G is learnt to have opined that cancelling the contract at this stage might not be in public interest — though there are several provisions for Hyundai’s disqualification — as huge amounts, including Rs 670 crore against advance payments, have already been paid to the company, in addition to another Rs 177.64 crore. Besides, production is in full swing and the first train is likely to reach here in March. 

Rohatgi is also understood to have held DMRC as “blameless” in the matter. But a spokesperson for DMRC on Wednesday said Delhi Metro had so far not received any official communication from the A-G’s office. To a detailed questionnaire sent by Business Standard earlier this month, the spokesperson had said it had recently come to DMRC’s notice that Hundai Rotem had, in its tender submission to DMRC against the Rolling Stock tender related to the Phase-III project, concealed the fact that it had been barred by a government agency. 

“We immediately asked the company to submit a clarification in this regard. Suitable action will be taken against it, keeping in mind the interest of DMRC and public at large,” he said. AAI had in 2011 barred Hyundai Rotem from bidding for its contracts till December 13, 2014. DMRC awarded Hyundai Rotem the mega contract in April 2013.

The A-G was reportedly informed that cancelling this contract would mean non-use of capital assets to the tune of Rs 25,000 crore, including stations and tunnels, and the entire Phase-III of DMRC would be delayed; unutilised inventories would be prone to thefts, apart from huge inconvenience to the public. 

Earlier, the urban development ministry had also argued that cancelling the tender would delay the project by two years. Rules of the tender, as well as conditions laid down by the funding agency, Japan International Cooperation Agency (JICA), say the contract will be cancelled if at any stage it comes to light that a company had secured the contract by furnishing fraudulent information.

The Phase-III project is to add 140 km to Delhi Metro’s existing network and close to 1.5 million passengers to its daily users. When it becomes fully operational in the next two years, the Metro’s network will reach faraway areas like Badli, Bawana, Najafgarh, Bahadurgarh, Ghaziabad, Faridabad and Noida, apart from a few landmark destinations like the domestic terminal of the IGI Airport and the Red Fort.