Court orders DMRC, Hyundai Rotem to discuss blacklisting

The Delhi High Court has ordered Delhi Metro Rail Corporation (DMRC), which has blacklisted Hyundai Rotem from participating in tenders for five years, to provide the South Korean transport major a hearing.

DMRC last week blacklisted the company and the two sides are locked in a legal battle.

DMRC had in April 2013 awarded a Rs 4,600-crore contract to Hyundai Rotem for supply of 486 metro coaches. Last year, DMRC accused Hyundai Rotem of concealing the fact that it had been barred by a government agency earlier. DMRC, however, decided against cancelling the contract, which could have financial implications.

"It is clear the respondent (DMRC) is affording an opportunity of personal hearing to the petitioner (Hyundai Rotem). The petitioner is directed to appear before the respondent on August 3, 2015, and the respondent will pass an order within one week," the court said in its July 31 order.

"Hyundai Rotem will be ineligible for award of contracts by DMRC for the next five years with effect from July 15, 2015, either individually or as a member of a joint venture," DMRC said in response to an email questionnaire from Business Standard. The impact of the blacklisting on the supply of coaches would be "known and assessed during the execution of the contract", the company added.

DMRC confirmed the Hyundai Rotem issue was discussed in a board meeting on July 15. Asked if the two sides had met recently to discuss the issue, the DMRC spokesperson said, "The company is our working contractor and meetings are held with them from time to time."

DMRC had issued a notice to Hyundai Rotem on June 16. The South Korean company made a representation to DMRC on June 30 and sought a personal hearing on July 21. DMRC, however, sent a letter to Hyundai Rotem on July 29 blacklisting it for five years retrospectively from July 15.

Hyundai Rotem filed a petition in court the next day seeking quashing of both the notice and the blacklisting letter. Hyundai's counsel also argued DMRC did not provide an opportunity for a personal hearing despite three representations made in November and December last year and in June this year.

DMRC had sent a letter to Hyundai Rotem, received on July 30, after the petition was filed, allowing a personal hearing on July 31. The court will hear the matter next on August 14.