Can’t Give Sanction To Attach DMRC’s Properties For Payment Of Unpaid Dues To Reliance Infra, Would Bring Delhi To Halt: Centre To High Court

The Union Government has told the Delhi High Court that it cannot give sanction for attachment of properties of Delhi Metro Rail Corporation (DMRC) for payment of unpaid dues under a 2017 arbitral award to Reliance Infrastructure-promoted Delhi Airport Metro Express Private Ltd (DAMEPL) as it would bring the national capital to a halt.

The submission has been made in an affidavit filed by Joint Secretary of the Ministry of Housing and Urban Affairs after the court last week directed the union government to take a decision whether it proposes to accord sanction under section 89 of Delhi Metro Railway (Operation And Maintenance) Act, 2002, for attachment of movable and immovable assets of DMRC.

The provision provides that "no rolling stock, metro railway tracks, machinery, plant, tools, fittings, materials or effects used or provided by a metro railway administration for the purpose of traffic on its railway, or its stations or workshops, or offices shall be liable to be taken in execution of any decree or order of any court or of any local authority or person having by law the power to attach or distrain property or otherwise to cause the property to be take in execution, without the previous sanction of the Central Government."

In its response, the Central Government has said that giving sanction for attachment of DMRC’s assets will cause significant inconvenience to the public and impact law and order in Delhi.

“It is submitted that sanction for attachment of the properties of DMRC cannot be accorded by the Answering Respondent since that would result in closure of DMRC and bring the city of Delhi to a halt. Such a situation will cause significant inconvenience to the public and impact law and order in the city. The Answering Respondent, being the custodian of the public good, cannot permit such circumstances to ensue,” the affidavit states.

During the course of hearing today, Delhi Government’s counsel insisted that the GNCTD, merely being the shareholder of DMRC, cannot be asked to contribute to its unpaid dues to DAMEPL.

“Let them make good that on what principles that on what principles of fact and law would a case be made out prima facie that non parties to the arbitration agreement or execution proceedings are essential parties because of lifting of corporate veil? Supreme Court has laid down tests and none of them are satisfied,” the counsel said.

As the counsel submitted that the Delhi Government is only a shareholder and does not have any role to play in DMRC’s day to day operations, Justice Yashwant Varma orally remarked:

“I cannot countenance such submissions….it’s amazing that there are two elected sovereign governments who set up the corporation and this corporation has no money, where it is defunct. Let us not distant ourselves so far which is untenable in law. Imagine what message we are sending outside. Government corporation refusing to deal with an award.”

The court thus directed the competent authority of DMRC to attend the proceedings tomorrow so that a “holistic view” can be taken with respect to the funds available with the corporation.

The court also asked the counsel for Union Government to place on record the formal order passed by it deciding not to accord the sanction for attachment of properties.

The matter has been adjourned for March 03.

The court on February 17 had impleaded the Union of India through the Ministry of Housing and Urban Affairs and Delhi Government through its Chief Secretary in DAMEPL’s petition seeking enforcement of the arbitration award.

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

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

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.

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