Requested Centre, Delhi Govt To Provide 'Interest Free Subordinate Debt' For Payment Of Dues To Reliance Infra: DMRC To High Court

The Delhi Metro Rail Corporation (DMRC) has told High Court that it has requested the Central Government and Delhi Government to provide “interest free subordinate debt” for payment of its unpaid dues of arbitral award to Reliance Infrastructure-promoted Delhi Airport Metro Express Private Ltd (DAMEPL).

In its affidavit filed on January 18, DMRC has informed court that it has written two letters requesting both the equity partners, Delhi Government and Ministry of Housing and Urban Affairs, to contribute a sum of Rs. 3565.64 crores each as interest free subordinate debt for complying with directions of the Supreme Court.

“DMRC has also requested for an early action, as the delay has already occurred in the matter,” the affidavit says.

The court has been informed that 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”.

“Though this step of interest free subordinate debt brings more financial burden on DMRC, however, the less financial burdensome option of issue of Equity Shares, which was explored earlier, failed to materalise,” the response adds.

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.

The matter, which was listed today before Justice Yashwant Varma, was adjourned due to non availability of Attorney General for India R. Venkataramani.

The court is dealing with a petition filed by DAMEPL seeking enforcement of the arbitration award dated May 11, 2017. 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.

According to DMRC, it owes Rs.7,010.08 Crore to the Reliance subsidiary as on September 06, 2022. Till now, a sum of Rs.2,599.17 Crore has been paid to DAMEPL. 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.