Delhi HC dismisses DMRC appeal to pay Rs 60 crore interest payment

DAMEPL had approached the court for early realisation of Rs 3,502 crore

A division bench of the Delhi High Court on Wednesday dismissed an appeal by Delhi Metro Rail Corporation (DMRC) challenging a May 30 order directing the public sector undertaking (PSU) to pay Rs 60 crore as interest payments for outstanding loans taken by Delhi Airport Metro Express Private Limited (DAMEPL) for the construction of the Delhi airport express line. The single judge order had come on a plea by DAMEPL seeking the early payment of 75 per cent of the Rs 4,670 crore arbitration award passed in favour of the company on May 11 in the aftermath of the failed August 25, 2008 agreement between the two companies.

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

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

DAMEPL, a subsidiary of Reliance Infrastructure, had approached the court for early realisation of Rs 3,502 crore in line with the September 5, 2016, NITI Aayog guidelines — according to which PSUs are liable to pay 75 per cent of an arbitral determination, even if they propose to challenge the award.

DMRC had opposed the applicability of these guidelines, which it had said can come into effect only after the 90-day period given to challenge an award has expired. The company had 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 before the single judge, DAMEPL had highlighted that it had been paying around Rs 18-20 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 had stated that the payment of interest for four years, in addition to the capital invested, has caused a financial crunch for DAMEPL while benefiting DMRC greatly.

After considering DAMEPL’s submissions, Justice Vibhu Bhakru had on May 30 passed an interim order directing DMRC to furnish Rs 60 crore as interest payments on the outstanding loans taken by DAMEPL to facilitate the 2008 agreement. As part of the order, DAMEPL is to furnish a bank guarantee of Rs 65 crore in favour of DMRC to secure the amount that is to be paid, in case the PSU eventually prevails in the matter.