The Delhi High Court (HC) on Friday issued a notice to the Centre and the Delhi government in a case related to Delhi Metro Rail Corporation (DMRC) repaying its unpaid arbitral award to Delhi Airport Metro Express Private Ltd (DAMEPL), owned by Reliance Infrastructure.
A single-judge bench of Justice Yashwant Varma initiated proceedings against the Ministry of Housing and Urban Affairs and the Arvind Kejriwal-led Delhi government in DAMEPL's petition seeking enforcement of the arbitration award dated May 11, 2017.
Justice Varma said: "Undisputedly, the two essential stakeholders in this case are Ministry of Housing and Urban Affairs and the Government of National Capital Territory Of Delhi (GNCTD). The ends of justice would thus warrant that the said stakeholders be placed formally on notice and invited to make submission for the means to make payment of arbitral award to the execution petitioner."
An amount of Rs 1,678.42 crore of the arbitral award has already been paid and Rs 6,330.96 crore is yet to be paid by DMRC. The court listed the matter for next hearing on February 20. Attorney General R. Venkataramani had on January 31 told the high court that if the Centre agrees to an interest-free subordinate debt on behalf of DMRC to pay Reliance Infra, Delhi government will follow suit.
Earlier in January this year, DMRC had informed the court that it has requested the Centre and Delhi government for interest-free subordinate debt of Rs 3,565.64 crore from each for repaying DAMEPL."
The DMRC, following the decision of its board of directors, had approached its shareholders, i.e., Government of India and Delhi government, and had written letters dated January 18, 2023 to the Ministry of Housing and Urban Affairs and Delhi government that a sum of Rs 3,565.64 crore may please be provided as interest-free subordinate debt at an early date so that the Supreme Court directions may be complied with," the DMRC's affidavit said.
Justice Varma was informed that the decision was taken as the state government had earlier refused to contribute money and because of DMRC's financial inefficiency, it was not able to raise funds from the open market.
The Delhi government, in its statement, had said that the shareholders cannot be held liable for payments arising out of contractual defaults. According to the DMRC, Delhi Metro is under increased financial strain as a result of this "interest-free subordinate debt", and earlier, the less burdensome alternative of issuing equity shares did not work out.
On January 4, the DMRC had notified the high court that the Delhi government is not inclined to contribute towards the payment of unpaid dues of arbitral award to DAMEPL. The Aam Aadmi Party (AAP) government had claimed that it is not inclined to offer Rs 3,565.64 crore towards equity for payment of the arbitral sum with interest, according to the affidavit filed by the DMRC.
The Centre and the DMRC, represented by Venkataramani, had informed the court that the issue is being actively considered and deliberated by the relevant authorities, and that they anticipated a resolution by January 16. The DMRC had informed the court that it may obtain funding to cover this liability through the open market, externally aided funds or a loan from the Centre.