DMRC to HC: will pay Rs 1,000 cr to Reliance Infrastructure arm in 48 hours

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Highlights

  • After losing an arbitration case, DMRC wants time to calculate total liability
  • HC: Why does DMRC not pay half of the arbitration award at the moment? He can’t say he’s running out of funds

New Delhi: While agreeing to pay Rs. 1,000 crore to subsidiary of Reliance Infrastructure Delhi Airport Metro Express Private Limited (DAMEPL) within 48 hours, Delhi Metro Rail Corporation (DMRC) requested time from Delhi High Court to calculate the total amount of liability as well as the provision for payment. While setting December 22 as the next court date, the High Court questioned why DMRC needed more time after it had exhausted all legal remedies, with even its petition for review dismissed by the Supreme Court in the month. latest.

DMRC claims that it has to pay Rs. 5,000 crore according to the arbitration award, while DAMEPL claims that the total liability exceeds Rs. 7,000 crore and increases with each passing day. Single Judge Suresh Kumar Kait asked why DMRC could not pay half the amount of the arbitral award until both parties were able to calculate the exact amount, while refusing to consider the argument of the company on the lack of funds. While noting that the money will come into an escrow account in accordance with the arbitration award, the High Court asked DMRC why it called the enforcement of the arbitration award a “twist of the arms”?

Appearing for DMRC, Solicitor General Tushar Mehta raised issues with calculating the total amount and asked for time as the company worked on various solutions to overcome a financial crisis. Claiming that public functions will be affected if the full amount is paid all at once, he asked for time to organize the money from the banks to pay the arbitration award. Stating that DMRC was not contesting the award and was only trying to find a way out, DMRC offered to take over the debt from Reliance Infrastructure instead of paying the full arbitration liability.

However, DAMEPL opposed DMRC’s offer and refused to substitute the award for a debt transfer. Appearing for DAMEPL, senior lawyer Rajiv Nayyar argued that despite the award in favor of the company, the proceeds will go to banks anyway to reduce unpaid dues. Pointing out that the total liability of the bankrupt company is much more than the award amount, he argued that the money that will come from the government will go to public sector banks to reduce the company’s debt, and all delay will worsen the situation.

Context of the case:

On November 23, the highest court upheld its September 9 verdict which ordered the Delhi Metro Rail Corporation (DMRC) to pay Rs. 4,600 crore (Rs. 2,800 crore + interest) as part of an arbitration award of 2017 returned to Delhi Airport Metro Express Pvt Ltd (DAMEPL), a branch of Reliance Infrastructure. The two-judge bench of Judge L Nageswara Rao and Judge S Ravindra Bhat dismissed a request for review by DMRC, ruling: “We have reviewed the motions for review and related documents filed with them. In our opinion, no case of review of the order is. Requests for review are dismissed.

On September 9, the highest court had declared the arbitral award enforceable against DMRC, while noting a worrying tendency for courts to overturn arbitral awards. He had overturned the Delhi High Court order overturning liability imposed on DMRC after DAMEPL withdrew from operating the Airport Express metro line for security reasons.

The Supreme Court overturned the High Court’s decision which dealt with the Commissioner of Metro Railway Safety (CMRS) certificate separately from the court’s opinion on the validity of the termination notice. He had confirmed this view of the arbitral tribunal, ruling that the members of the tribunal had been appointed in accordance with a procedure agreed between the companies, and that the award prepared by engineers cannot be examined in the same way as similar awards. prepared by minds trained in law. In May 2017, the arbitral tribunal accepted DAMEPL’s arguments that it was unsafe to run trains on the route due to structural flaws.


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