HC rejects DMRC appeal against order to pay Rs 60 cr to DAMEPL

The Delhi High Court today dismissed the Delhi Metro's appeal against a single judge order directing it to pay Rs 60 crore as three months interest to a lender of its former concessionaire for the airport express line.
A bench of Justices G S Sistani and Vinod Goel said the amount of Rs 60 crore was "only a fraction" or a "drop in the ocean" compared to the award of Rs 4,670 crore.
The single judge's interim order of May 30 had come on a plea by the concessionaire Delhi Airport Metro Express Private Limited (DAMEPL) seeking early payment of Rs 3,502 crore, which is 75 per cent of the arbitral award of Rs 4,670 crore granted in its favour on May 11.

The single judge had passed the order "in view of the financial conditions and interest burden being borne" by DAMEPL which had claimed that it was paying Rs 65 lakh per day, coming to Rs 20 crore per month, as interest to its lender.
The Delhi Metro Rail Corporation (DMRC), in its appeal, has challenged the interim order saying it would amount to partial implementation of the award and would also be akin to dismissal of its objections against enforcement of the award.
Dismissing the appeal, the bench further said that it was not inclined to interfere with the May 30 order as it was an interim decision and the issues raised by the Delhi Metro have been kept open by the single judge.

During the hearing, the bench refused to accept the DMRC's argument that the interim order casts an unfair burden on it, saying "it cannot be a one way traffic".

The court also said the award not being challenged yet by DMRC makes the situation "worse".
DMRC also contended that the single judge order was "fundamentally erroneous" and that it cannot be compelled to pay the amount.
The bench, however, rejected the argument, saying "it (DMRC) should be compelled as it was difficult to get money out of you (Metro)" and therefore, "time has come when such things (the interim order) should happen".

The court also noted that the single judge had protected DMRC's interests by directing DAMEPL, a subsidiary of the Reliance Infrastructure (Rinfra), to furnish a bank guarantee of Rs 65 crore.
The single judge in his May 30 order had directed the DMRC to deposit the amount of Rs 60 crore, within 10 days, directly into DAMEPL's loan account with Axis Bank - the main lender.
DAMEPL, in its plea for early enforcement of the award, has claimed that under the guidelines issued by Niti Aayog on September 5, 2016, public sector undertakings (PSUs) are to pay 75 per cent of the award amount even if they propose to challenge the arbitral award.

The single judge had said he will look into the applicability of the Niti Aayog memorandum on the next date of hearing on July 19.
DMRC had argued before the single judge that the Niti Aayog guidelines would not apply in the matter as the award was of May 11 and it had 90 days to challenge the arbitral tribunal's decision.
It had said the guidelines would apply only after the PSU challenges the award.
The concessionaire had earlier told the single judge that it has been paying Rs 18-20 crore a month since July 2013 for servicing the debt and has already shelled out over Rs 1070 crore towards payment of interest with the initial capital still remaining as outstanding.

According to DAMEPL's plea, the concession agreement was entered into between the two on August 25, 2008. Under the agreement the DMRC was to carry out the civil works, excluding at the depot, and the balance, including the project system works, were to be executed by DAMEPL, the plea has said.
The Airport Express line was commissioned on February 23, 2011 after an investment of Rs 2,885 crore funded by DAMEPL's promoters' fund, banks and financial institutions.
DAMEPL has said it had terminated the concession agreement as the DMRC had not cured some defects in the line within 90 days of the notice issued by it.

According to its plea, the agreement was terminated with effect from January 1, 2013 and the project was handed over to the DMRC on June 30, 2013. Till handing over of the project, the DAMEPL had operated the line as a deemed agent of DMRC.
Arbitration was entered into in August 2013 after efforts to amicably resolve the issues did not yield results.
DAMEPL is a joint venture of Rinfra and a Spanish.Construction company -- Construcciones Y Auxiliar De Ferrocarriles, with a shareholding of 95 and five per cent respectively.
The concessionaire, in its plea, has claimed that "the payment of the interest to the lenders by it over the last four years in addition to the capital invested has enormously benefited DMRC and caused a financial crunch to DAMEPL".