HC asks Centre to decide on attaching DMRC's assets for payment to RInfra

The Delhi High Court on Monday asked the Centre to decide whether it proposes to attach movable and immovable assets of Delhi Metro Rail Corporation (DMRC) for the paying of the arbitral award to Reliance Infrastructure’s arm-Delhi Metro Express Private Limited (DAMEPL).

“The Government of India has to immediately decide on sanction for attachment of DMRC's operational assets (to satisfy the award) and bring the said papers for the perusal of the Court by the next hearing on March 2 at 2:15 pm,” Justice Yashwant Varma said.

The court also made it clear that if the Centre refused the sanction, it has to disclose the reasons for the same, so that the Court could take a view thereon.

The Court asked the Government of National Capital Territory of Delhi(GNCTD) counsel to come back with its stance on helping DMRC arrange funds to satisfy the award.

When the Centre said that a shareholder is not liable for the company's liabilities, the Court said that it could then take a narrow view on the attachment of DMRC's accounts including salary accounts. “We have to dispose of the matter before March 14 as directed by the Supreme Court. If you(the Union government) throw an impasse, it compels us to become innovative and inventive,” the Court said.

The court said if it decides to peep behind the veil, it will not just be the Union, but also the GNCTD.

The High Court was hearing the execution petition filed by DAMEPL against the DMRC over the arbitration award passed in its favour on May 11, 2017.

Background

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.

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 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 per cent 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.

Earlier, the high court had asked the Centre and AAP government to 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.

In January, the DMRC had told the court it had 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 the court would be justified in lifting the corporate veil of the corporation and proceeding further against the stakeholders for the 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, millions of commuters will be simply told they cannot use the Delhi Metro.

On March 10 last year, the high court 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.