DAMEPL v. DMRC: High Court Asks Centre, Delhi Govt To Make Submissions On Payment Of Unpaid Arbitral Award To Reliance Infra

The Delhi High Court on Friday issued notice to the Union of India and Delhi Government in the ongoing case concerning payment of unpaid dues of arbitral award to Reliance Infrastructure-promoted Delhi Airport Metro Express Private Ltd (DAMEPL) by Delhi Metro Rail Corporation (DMRC).

Justice Yashwant Varma impleaded Union of India through Ministry of Housing and Urban Affairs and Delhi Government through its Chief Secretary in DAMEPL’s petition seeking enforcement of the arbitration award dated May 11, 2017.

While a sum of Rs. 1678.42 crores of the arbitral award has been paid, DMRC is yet to pay Rs. 6330.96 crores.

“Undisputedly, the two essential stakeholders are Ministry of Housing and Urban Affairs and 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,” the court said.

The matter will now be heard on February 20.

The development came after DMRC last month told court that it has requested the Central Government and Delhi Government to provide “interest free subordinate debt” for payment of unpaid dues of arbitral award.

The decision was taken in view of the disinclination shown earlier by Delhi Government in contributing towards the dues and also inability of DMRC to raise money from open market because of its “adverse financial position”.

During the course of hearing today, Attorney General for India R. Venkataramani appearing for DMRC requested the court to make both the stakeholders as party to the proceedings asking them about their stand to proceed further in the matter.

Senior Advocate Kapil Sibal appearing for DAMEPL referred to the judgments passed by Bombay High Court and Supreme Court to submit that in light of the present position, the court would be justified in lifting corporate veil of DMRC and proceeding further against the stakeholders for execution of arbitral award which has attained finality.

Hearing the parties, the court said: “Let the Ministry of Housing and Urban Affairs and GNCTD through Chief Secretary be impleaded as parties in the present proceedings.”

Earlier, the Delhi Government, while refusing to provide money to DMRC, in its communication had said that the shareholders cannot be held liable for payments arising out of contractual defaults. DMRC had then told court that it may raise money from Open Market or through externally aided Funds or loan from Government of India to meet this liability.

In 2008, DMRC had signed a contract with DAMEPL, related to "the design, installation, commissioning, operation and maintenance of the line". 

Due to certain disputes, the matter went into arbitration in 2012 - the DMRC invoked the arbitration after DAMEPL terminated the agreement on certain grounds. The award in favour of DAMEPL was upheld by the Supreme Court.

The DMRC had sought Rs 3500 Crore each from both Centre and Delhi government.

Case Title: Delhi Airport Metro Express Private Limited v. Delhi Metro Rail Corporation Ltd.