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SC Directs Delhi Metro To Pay Rs. 60 Crore As Interest To Reliance Infra Unit DAMEPL [Read Order]

Apoorva Mandhani
21 Jun 2017 5:41 AM GMT
SC Directs Delhi Metro To Pay Rs. 60 Crore As Interest To Reliance Infra Unit DAMEPL [Read Order]
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The Supreme Court on Monday refused to interfere with the Delhi High Court order directing the Delhi Metro Rail Corporation (DMRC) to pay Rs. 60 crore as interim payment to Delhi Airport Metro Express Private Limited (DAMEPL), a Reliance Infrastructure Subsidiary.A vacation Bench comprising Justice D.Y. Chandrachud and Justice S.K. Kaul, however, extended by a week, the time for complying...

The Supreme Court on Monday refused to interfere with the Delhi High Court order directing the Delhi Metro Rail Corporation (DMRC) to pay Rs. 60 crore as interim payment to Delhi Airport Metro Express Private Limited (DAMEPL), a Reliance Infrastructure Subsidiary.

A vacation Bench comprising Justice D.Y. Chandrachud and Justice S.K. Kaul, however, extended by a week, the time for complying with the Delhi HC order.

DMRC had challenged the Delhi HC’s June 7 order, wherein it was asked to pay Rs. 60 crore as three months interest to a lender of DAMEPL, a former concessionaire for airport express line. The High Court had then upheld an order passed by a single Judge, who had on May 30, directed DMRC to deposit three months interest amount within 10 days directly into DAMEPL’s loan account with Axis Bank, the main lender, after DAMEPL had sought early payment of Rs. 3, 502 crore, which is 75% of the arbitral award of Rs. 4, 670 crore, granted in its favour on May 11.

This was in furtherance with the guidelines approved by the Cabinet Committee on Economic Affairs (CCEA) issued by Niti Ayog last year, which mandate PSUs to pay 75 per cent of the award amount against bank guarantee even if they propose to challenge the arbitral award.

“We find no grounds to interfere in the impugned order passed by the learned Single Judge, firstly, for the reason that order dated 30.05.2017 is an interim order by which the appellant herein has been directed to deposit Rs.60 crores out of an award in favour of the respondent in the sum of Rs.4670 crores; secondly, for the amount to be deposited, the respondent has been directed to provide the bank guarantee of Rs.65 crores which would cover the interest on Rs.60 crores to be deposited by the appellant herein; and thirdly, this amount is to be paid directly to the Axis Bank keeping in view the large sums of interest to be paid by the respondent (Rs.65 lakh per day/Rs.20 crores per month) and also for the reason that all the grounds sought to be urged have been kept open to be decided by the learned Single Judge. Accordingly, the present appeal as well as the application is dismissed,” the High Court Bench comprising Justice G.S. Sistani and Justice Vinod Goel had observed.

The award was granted in favor of RInfra, on the basis of termination provisions of the concession agreement, which was entered into between the two on August 25, 2008. Under the agreement the DMRC was to carry out the civil works, excluding at the depot, and the balance, including the project system works, were to be executed by DAMEPL. The Airport Express line was commissioned on February 23, 2011 after an investment of Rs 2,885 crore funded by DAMEPL’s promoters’ fund, banks and financial institutions.

DAMEPL had, however, terminated the concession agreement as the DMRC had not cured some defects in the line within 90 days of the notice issued by it. The Agreement was terminated with effect from January 1, 2013 and the project was handed over to the DMRC on June 30, 2013. Till handing over of the project, the DAMEPL had operated the line as a deemed agent of DMRC. Arbitration was resorted to in August, 2013, after failure of efforts to amicably resolve the issues.

Read the Order here.
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