Delhi HC orders DMRC to pay arbitral dues to Rinfra within a month

Tells DMRC to seek permission from Centre, Delhi govt within two weeks to pay up

The Delhi High Court on Friday ordered the Delhi Metro Rail Corporation (DMRC) to pay the 2017 arbitral award dues with interest to Reliance Infrastructure (RInfra) arm, Delhi Airport Metro Express (DAMEPL), within a month.

In a 133-page judgment, the court directed the Centre and the Delhi government to attend to DMRC’s request for extension of sovereign guarantees or subordinate debt to help it pay its liabilities under the award. The Central and Delhi governments each hold 50 per cent shares in the DMRC.

“The Union Ministry (of Housing and Urban Development) and GNCTD (Government of National Capital Territory of Delhi) shall forthwith attend to the requests of the DMRC for extension of sovereign guarantees/subordinate debt enabling it to liquidate its liabilities under the award. The aforesaid decision will be taken within two weeks from today,” Justice Yashwant Varma said while reading out the operative part of the order.

He added that if permission is given to DMRC it should deposit the entire amount payable along with interest within a month.

The court said if the Union government or GNCTD decline the request, the Union government shall at the end of two weeks repatriate all money received from DMRC after March 10, 2022, to ensure that the credit balance in the DMRC’s funds reflects what it was on that date.

According to a reply filed by DMRC last year, the central government had received Rs 1,546.52 crore from it in the first week of May 2022, while the GNCTD had received Rs 1,216.84 crore, Noida Metro Rs 245.53 crore, and Patna Metro Rs 123 crore.

The court also said in case DMRC fails to clear all arbitral dues despite the directions, the HC reserves the right to frame appropriate directions against the Union housing and urban development ministry and GNCTD.

This is because the judge said the Centre and Delhi government cannot hide behind the veil of corporate personality, a legal concept that separates the actions of an individual from a company. “Both by virtue of the capital invested in the corporation as well as the control vested and exercised by them over its affairs, the Union Ministry and the Delhi government must be recognised in law as being in absolute control and the directing mind,” the judge said.

History

DMRC and DAMEPL have been at odds ever since the latter pulled out of the Delhi Metro Airport Line operations due to safety issues arising from structural defects. An arbitral court ruled in favour of the RInfra in 2017, asking DMRC to pay the arbitral award of Rs 7,200 crore. The order was later upheld by the Supreme Court.

On March 10, 2022, the Delhi High Court had directed DMRC to pay the arbitral award of over Rs 4,600 crore, along with interest, to DAMEPL in two equal instalments on or before April 30, 2022, and May 31, 2022, respectively.

RInfra had moved the Supreme Court (SC) on December 2, 2022, against DMRC, seeking payment of the dues to DAMEPL. On December 14, the SC gave DMRC three months to pay the dues and sent the matter back to Delhi High Court for disposal.

In February this year, the court had noted that the total amount of the award with interest till February 14, 2022, was Rs 8,009.38 crore. Of this, Rs 1,678.42 crore had been paid by DMRC and Rs 6,330.96 crore was due.