Gurgaon Metro: HC orders CAG to audit debt due

The Punjab and Haryana High Court has directed the Comptroller and Auditor General (CAG) to audit within 30 days the "debt due" in operations of the Gurgaon Rapid Metro.

The court through its order on September 20 also directed subsidiaries of bankruptcy-hit IL&FS to continue the operations of the Gurgaon Rapid metro for 30 days, effective from September 16.

The court of judges Rakesh Kumar Jain and Arun Kumar Tyagi was hearing the matter related to termination of service contract between Haryana Urban Development Authority (HUDA) and Rapid Metro Rail Gurgaon Limited (RMGL) and Rapid Metro Rail Gurgaon South Limited (RMGSL), the two special purpose vehicles (SPVs) floated by IL&FS.

The Gurgaon Metro is the country's first fully privately developed project which was built by IL&FS, which is now facing bankruptcy proceedings in the NCLAT, putting the rail service at risk of closure.

"As far as 'debt due' as defined under the concession contract is concerned, direction is issued to the CAG to appoint a team of auditor/auditors for the financial audit of the 'debt due'," the court said in its order.

"It is needless to say that the CAG shall complete the aforesaid audit within a period of 30 days," it added.

Both the parties have also requested to appoint two retired judges of the High Court on payment of suitable remuneration to supervise the transfer of control and management of operation, and maintenance of both the metro links with effect from September 23.

HUDA has suggested the name of Justice Kailash Gambhir (retd) and IL&FS has suggested the name of Justice V K Gupta (retd).

Any dispute arising during the transfer of control and management of operations can be further taken up through arbitration, the court said.

The parties had earlier agreed to a termination of contract payment of at least 80 per cent to be given to RMGL/RMGSL by HUDA.

This would amount to nearly Rs 1,800 crore in payment to IL&FS, according to sources.

The IL&FS subsidiaries had served a 90-day termination notice to HUDA over "breach of contract" which came to end on September 7.

HUDA had gone to HC on September 6 challenging the validity of termination notice and sought courts directions on continuity of public utility by these two SPVs operating the metro link.

The Rapid Metro is a fully-elevated rapid transit system with stations at Cyber City, DLF Phase 2, DLF Phase 3, NH-8 and Golf Course Road up to Sector 55-56, among others and provides connectivity to the Delhi Metro from Sikanderpur Station.