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Govt moves to end possibility of attachment of DMRC's assets in RInfra case

On March 17, the Delhi High Court handed down an order to ensure the payment of an arbitral award due for over five years

DMRC, Delhi metro

Photo: DMRC twitter

Dhruvaksh Saha New Delhi

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After a warning from the judiciary, the Centre has moved to amend the Metro Railways Act to protect Delhi Metro Rail Corporation’s (DMRC’s) assets from being attached.
 
DMRC is in a long, legal battle with a subsidiary of Anil Ambani-owned Reliance Infrastructure (RInfra).
 
The Ministry of Housing and Urban Affairs has issued a draft Bill to amend Section 89 of the Act, excising the sub-section that allows courts to attach properties of Metro corporations. On March 17, the Delhi High Court handed down an order to ensure the payment of an arbitral award due for over five years.
 
The court said in case DMRC failed to clear its dues, it (the court) reserved the right to give directions to the ministry and the Delhi government.
 
In a background note for the amendment, the ministry said the court’s order necessitated the change in law, adding that such a course could result in the closure of Delhi Metro, bringing the city to a halt and putting law and order at risk.
 
“The Central government, being a custodian of the public good, cannot allow such a lethal situation to arise,” the ministry said.
DMRC, which owes Delhi Airport Metro Express Private Ltd (DAMEPL) nearly Rs 4,700 crore, was earlier told by the court to ensure payment to the company or face the risk of having its assets attached.
 
“The Central government is being asked to give sanction to attach the properties of DMRC to pay a company which abandoned/deserted the service of the airport metro line in the first few years of a 30-year contract,” Union Minister Hardeep Puri had told the court in an affidavit earlier this month.
 
The ministry has removed from the Act the part that allows the Central government to provide sanctions for attaching assets.
 
In the March 17 order, the Centre was given two options: To either provide interest-free subordinate debt to DMRC along with the Delhi government, or repatriate all money received by it from DMRC after March 10, 2022. The money will then be sent to an escrow account for paying the award.
 
The proposed provisions of the Act will apply to all Metro corporations in the country, an official said.
 
In what is being seen as a reflection on India’s efforts to be an international arbitration hub, DMRC has been unable to pay the award despite instructions from multiple courts.
 
“It is amazing that there are two elected governments who have formed this corporation and now we’re being told that this corporation has no money. Imagine what message you are conveying to the outside world — a government corporation which is refusing to deal with an award,” Justice Yashwant Varma orally remarked during a hearing on March 2.
 
RInfra had moved the Supreme Court on December 2, 2022, against DMRC, seeking the payment of the award. On December 14, the apex court gave DMRC three months to pay the dues and sent the matter back to the Delhi High Court.
 
In June last year, the urban transporter had written to 18 banks, seeking a credit facility for Rs 2,700 crore to meet its obligations. However, it later told the court that opting for such debt would push it into a debt trap.
 
The two companies have been in dispute since DAMEPL pulled out of operating the Delhi Metro Airport Line due to safety issues on account of structural defects. An arbitral court in 2017 had ruled in favour of the RInfra, asking DMRC to pay DAMEPL the amount it had borrowed from 11 banks.

Brief history
 
Feb 28, 2023: Delhi HC seeks Centre’s sanction to attach Delhi Metro’s assets to pay Rs 4,700 cr arbitral award to RInfra
Mar 3: Centre denies sanction citing risk to law and order
Mar 3: Union Minister Puri reportedly directs officials to revisit provisions of Metro Railways Act to protect assets
Mar 17: Delhi HC passes order, tells Centre and Delhi govt to ensure pay­m­ent of arbitral award or face action
Mar 23: DMRC seeks review of HC’s order

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First Published: Mar 28 2023 | 8:51 PM IST

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