Delhi HC directs DMRC to pay Rs 60 cr to DAMEPL for interest payments

Interest payment and invested capital caused financial crunch for DAMEPL while benefiting DMRC

The Delhi High Court on Tuesday directed the Delhi Metro Rail Corporation (DMRC) to pay Rs 60 crore as interest on loans taken by the former concessionaire of the airport express line, in accordance with the August 25, 2008 agreement signed between the two companies. 

Justice Vibhu Bhakru passed the interim order, directing the DMRC to make the payment towards interest on the outstanding loans for next three months, in response to a suit filed by the Delhi Airport Metro Express Private Limited (DAMEPL) seeking early realisation of 75 per cent of the Rs 4,670 crore arbitration award granted in favour of the company on May 11. 

As part of the order, DAMEPL is to furnish a bank guarantee of Rs 65 crore in favour of the DMRC to secure the amount that is to be paid, in case the respondent company eventually prevails in the ongoing matter. 

DAMEPL, a subsidiary of Reliance Infrastructure, had approached the court in a bid to secure the Rs3,502 crore amount in line with the September 5, 2016 NITI Aayog guidelines according to which public sector undertakings (PSUs) are liable to pay 75 per cent of an arbitral determination, even if they propose to challenge the award. 

The DMRC has opposed the applicability of these guidelines, which it has said can come into effect only after the 90-day period given to challenge an award has expired. The company has also stated that the guidelines cannot be used to seek any immediate relief and only apply to enforcement proceedings that are kept pending for long periods.

As part of its plea, DAMEPL had highlighted that it had been paying around Rs18-20 crore a month as interest on the debt undertaken to facilitate the construction of the airport line since July 2013, totalling Rs 1,070 crore with the initial capital still remaining outstanding. The company has stated that the payment of interest for four years, in addition to the capital invested, has caused a financial crunch for DAMEPL while benefiting the DMRC greatly. 

According to DAMEPL, the 2008 concession agreement signed between the two companies required the DMRC to carry out civil works (excluding the depot), while DAMEPL was to undertake the other activities including the project system work. The airport express line was finally commissioned on February 23, 2011 after an investment of Rs 2,885 crore undertaken by DAMEPL through its promoters fund, banks and other financial institutions.

However, in January 2013, the company terminated the agreement and handed the project to the DMRC alleging certain defects in the line. The dispute resulted in arbitration proceedings initiated in August 2013, after the issue could not be settled amicably. 

The court has fixed the next date of hearing on July 19.