Reliance Infrastructure subsidiary DAMEPL, which pulled out from running the Airport Express metro line, today agreed in the Delhi High Court not to enforce the Rs 5,164 crore arbitration award in its favour till the pendency of the DMRC appeal.
The Delhi Metro Rail Corporation (DMRC), on its part, said it will take over the liability of Rs 1,617 crore debt owed to banks by the private company.
The assurances from DMRC and Delhi Airport Metro Express Private Ltd (DAMEPL) were made before a bench of Justices Sanjiv Khanna and Chander Shekhar which listed the matter for day-to-day hearing from July 25.
Taking the assurances on record in its interim order, the court also said that if DMRC's appeal is dismissed, it would be burdened with the liability of the Rs 2,501 crore that DAMEPL had borrowed from promoters and other financial institutions to infuse in the Airport Express line project.
The court was hearing DMRC's appeal against a March 6 order of a single judge upholding the May 2017 arbitral award in favour of DAMEPL.
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DMRC has also challenged the single judge's direction to deposit within four weeks 75 per cent of the award amount in an escrow account maintained with the banks which had loaned money to the Rinfra subsidiary.
The bench said the issues that need to be decided in the instant case were whether DAMEPL abandoned the project, as claimed by DMRC, and how much of the debt owed to the banks is to be paid by the public sector undertaking (PSU).
Under the agreement between the two, if the contract was terminated due to DAMEPL's fault, then DMRC would have to pay 80 per cent of the debt, while if it was the metro's fault, then the PSU would have to pay 100 per cent of the debt and 130 per cent of the equity.
DMRC, represented by Additional Solicitor General P S Narasimha, told the court that it will take over servicing of the debt that DAMEPL owed to the banks.
The submission came following the court's query yesterday whether the DMRC was willing to pay or take over the Rs 1,617 crore owed by DAMEPL to 11 banks -- Axis Bank, UCO Bank, Punjab and Sind Bank, Andhra Bank, Central Bank of India, Dena Bank, Allahabad Bank, Canara Bank, Bank of India, IIFC UK and Canara Bank London.
DAMEPL, represented by senior advocates P Chidambaram and Kapil Sibal, told the court today that the debt owed to the banks alone, with interest till April 9, came to Rs 3,325 crore and DMRC should at the least pay 80 per cent -- Rs 2,660 crore -- of that.
DMRC, on the other hand, said that after DAMEPL abandoned the project, under the substitution agreement, it had to run the Airport Express line as a receiver and the only alternative it had was to shut down the operations.
The court had yesterday said that according to the agreement between the two, DMRC cannot shy away from paying minimum 80 per cent of the debt owed by DAMEPL to the banks.
In its plea, DMRC has contended that there was a "patent illegality" in the arbitral decision as it did not consider that the Commissioner for Metro Rail Safety (CMRS) had certified the line as viable for operations.
It said it has been running the airport line since June 2013 when DAMEPL had "abandoned" the project despite repairs of structural defects in November 2012.
The arbitral tribunal in its award had accepted DAMEPL's claim that the running of operations on the line was not viable due to structural defects in the viaduct through which the train would run.
DAMEPL, on the other hand, has claimed that the CMRS certificate was granted with the conditions that the trains have to be run at reduced speeds and frequency, which would make the operations commercially unviable for it.
The Rinfra subsidiary has already moved a plea for execution of the award and also seeking attachment of DMRC's bank accounts for not depositing 75 per cent of the amount within the given time.
On March 23, the high court had directed DMRC to settle the immediate amounts that DAMEPL owes the banks for the airport metro project, so that its accounts are not termed non-performing assets (NPAs).
Pursuant to the court's direction, DMRC had deposited Rs 306 crore.
The concession agreement between the two was signed on August 25, 2008. Under the agreement, 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 Airport Express line was commissioned on February 23, 2011 after an investment of over Rs 2,885 crore, funded by the DAMEPL's promoters' fund, banks and financial institutions.
DAMEPL had told the single judge that it had terminated the concession agreement as DMRC had not cured certain defects in the Airport Express line within 90 days of a notice issued by it. It had also said the agreement had come to effect from January 1, 2013 and the project was handed over to DMRC on June 30, 2013.
Till the handing over of the project, DAMEPL had operated the line as a deemed agent of DMRC, it had said.
The arbitration was entered into in August, 2013 after efforts to amicably resolve the issue did not yield any result.
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.
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