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Explained: Why Is There No End In Sight For DMRC-Reliance Infra Dispute Despite Court Orders?

Sofi Ahsan
3 March 2023 11:39 AM GMT
Explained: Why Is There No End In Sight For DMRC-Reliance Infra Dispute Despite Court Orders?

Delhi Metro Rail Corporation (DMRC) and Reliance Infra-owned Delhi Airport Metro Express Private Limited (DAMEPL) are engaged in a long-drawn battle over an arbitral award which attained finality in 2021 when Supreme Court ruled in favour of the latter. DMRC, which is owned by both the union government and Delhi government, has failed to pay the award money to DAMEPL despite multiple orders in the execution petition pending before the Delhi High Court. At this stage, it seems even the hands of court are tied to an extent.

The Case

In 2008, the DMRC and DAMPEL entered into an agreement for design, installation, commissioning, operation and maintenance of Airport Metro Express Line from New Delhi Railway Station To Dwarka Sector 21 via the Indira Gandhi International Airport. Some of the obligations of the contract were to fulfilled by the DMRC.

In 2012, issues arose in relation to the project and DAMEPL issued a notice terminating the contract as it alleged that defects pointed out by it were not cured in the civil structure. DMRC invoked the arbitration clause under the Concession Agreement. Meanwhile, the Metro Line continued to face issues and was being run on a reduced speed. DAMEPL in June 2013 stopped the operations and handed over the line to DMRC.

The Arbitral Tribunal in 2017 ruled in favour of DAMEPL and awarded a total amount of Rs 2782.33 crore along with further interest. DMRC’s petition against the award was dismissed by a single bench of Delhi High Court in March 2018. DMRC succeeded in appeal and the award was partly set aside. The matter then reached the Supreme Court.

In 2021, the Supreme Court set aside the division bench ruling and upheld the award passed by the tribunal.


It was in September, 2021 that the DAMEPL approached the Delhi High Court for enforcement of the 2017 award. The DMRC was required to pay Rs 7045.41 crores upto September 10, 2021, as per DAMEPL. Around Rs 1000 crore was deposited by DMRC in an ESCROW account in September 2021. With regard to the rest of the payment, the DMRC in December 2022 told the court that it has only an amount of Rs 1642.69 crores in the bank account. It said the other funds available with it are earmarked for projects or for salary, medical and post retiral benefits of the employees.

It initially offered to take over the Reliance Infra’s liabilities of the bank and other financial institutions to the extent of amount due under the Award. However, DAMEPL told the court that it does not wish to settle the matter in this fashion. Meanwhile, the Supreme Court asked the high court to take up the matter at the earliest and dispose of the Execution Application without any further delay.

On February 21, 2022, the DMRC told the court that an amount of Rs 600 crore shall be deposited by it within two days. On March 10, 2022, the high court said the 2017 award cannot be allowed to remain a paper award and the DMRC is duty bound to either divert its funds after seeking permission of the central government or should raise loans to satisfy the award.

However, the DMRC only paid a total of Rs 166.64 crores to DAMEPL after the decision. It led to another round of litigation. DAMEPL claimed a payment of Rs 4427.41 crores as on May 10, 2022, by attachment of bank accounts and fixed deposit of the DMRC. In October 2022, Attorney General for India R. Venkatramani himself started appearing in the matter.

In November 2022, the court was told that DMRC’s two shareholders - Union Ministry of Housing and Urban Affairs and the Delhi government, have decided to examine the proposal of bearing 50 percent of the total arbitration award.

On November 18, 2022, the High Court adjourned the hearing to December 12 at the request of Attorney General for India. It was indicated that the two equity partners might be able to do a "next round of meeting" till then.

Aggrieved by the order, DAMEPL moved an SLP before Supreme Court which was disposed of by directing the single judge to proceed further with the execution of arbitral award expeditiously.

Subsequently, an affidavit was filed by DMRC before the High Court on January 4 stating that the Delhi Government was not inclined to pay towards the unpaid dues of DMRC.

DMRC then requested both its stakeholders to provide “interest free subordinate debt” for payment of its unpaid dues. The corporation also showed its inability to raise money from open market because of its “adverse financial position”.

On February 14, 2022, the unpaid amount stood at Rs 8009.38 crores - Rs 1678.42 crores were paid by the DMRC. DAMPEL last month told the court that the unpaid amount along with interest now stands at Rs 6330.96 Crores. On Friday, the DMRC told the court that a total of Rs 2600 crore has been paid to the DAMEPL till date.

Why Can't DMRC's assets be attached to pay DAMEPL?

With such continuous non-compliance of the orders for payment of dues to DAMEPL, a court usually would have ordered attachment of assets of the judgment debtor. However, two factors have prevented the court from taking the extreme step — legal bar under Section 89 of the Metro Railways (Operation and Maintenance) Act and the fact that Delhi Metro is used by lakhs of people daily to travel within the National Capital Region.

Under Section 89 of the 2002 Act, only earnings of the metro could be attached. “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,” according to the provision.

Only earnings of the metro railway administration can be attached by the court in execution of a decree or order.

The union government considered the question of grant of sanction on orders of the high Court. The sanction for the attachment of properties cannot be accorded by the union government since that would result in closure of DMRC and bring the city of Delhi to halt, the court was told on Thursday.

“Such a situation will cause significant inconvenience to the public and impact law and order in the city,” said the government.

Corporate Veil

With no end in sight to the dispute, DAMEPL has now argued before the court that it would be justified in lifting the corporate veil of the DMRC and proceed against the shareholders for the purposes of the execution of the Award. Both union government and GNCTD must be held liable to make good the monies payable under the Award, Senior Advocate Kapil Sibal told the court on February 17.

The Union Government has objected to the prayer and said it cannot be made liable for the amount in its capacity as a shareholder of DMRC. It has also said that DMRC's request for subordinate debt and equity from the Government of India is under examination. Meanwhile, a curative petition has also been filed by the Union Government before the Supreme Court in the matter.

The clock is ticking in the matter. The Supreme Court in December 2022 asked the Delhi High Court to decide the matter within a period of three months. The matter is now listed on March 07 before Justice Yashwant Varma for arguments with regard to the suggestion for lifting the corporate veil.

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