HC Reserves Order on DAMEPL’s Petition for Execution of Arbitral Award Against DMRC

 The high court reserved its verdict on Friday on an execution petition filed by Delhi Airport Metro Express Private Limited (DAMEPL) against Delhi Metro Rail Corporation (DMRC) over payment of dues of an arbitral award passed in its favour.

Justice Yashwant Varma of the Delhi High Court heard the arguments on behalf of DMRC, DAMEPL, the Centre and the city government and said they may file written submissions by Monday.

An arbitral tribunal had, in May 2017, ruled in favour of DAMEPL, which had pulled out of running the Airport Express metro line over safety issues, and accepted its claim that running the operations on the line was not viable due to structural defects in the viaduct through which the train would pass.

Earlier, the court had noted that the total amount of the award with interest till February 14, 2022 was Rs 8,009.38 crore. Of this, a sum of Rs 1,678.42 crore has been paid by DMRC and an amount of Rs 6,330.96 crore is still due.

DMRC took a stand that it has no funds and despite efforts, the two stakeholders — the Centre and the Delhi government — have been unable to arrive at a consensus on the ways and means by which the amount payable under the award may be liquidated.

Thereafter, in February, the court had issued notices to the Union Ministry of Housing and Urban Affairs and the Delhi government, the two essential stakeholders in DMRC, to apprise it of how the unpaid arbitral award would be paid. The two governments were impleaded as parties in the execution proceedings.

The counsel for the Centre and the Delhi government submitted that they were not liable to pay the arbitral award to DAMEPL.

The Delhi government’s counsel said a shareholder cannot he held liable for a company’s liabilities except in a case of fraud and it is not the case of DAMEPL that there is any element of fraud for which the city government can be held liable in the execution proceedings.

The Centre’s counsel had earlier said admittedly, the Union government was not a party to the arbitration between DMRC and DAMEPL.

He had said the Centre is a 50-per cent equity shareholder in DMRC and has no liability to pay the decretal amount in law.

On February 27, the court asked the Centre to take a decision on whether it proposes to grant sanction for the attachment of movable and immovable assets of DMRC for paying the arbitral award.

In pursuance of the court’s earlier direction, the Centre had submitted that it had taken a decision on March 1 and refrained from according sanction for the attachment of properties of DMRC.

In January, DMRC had told the court it had requested the Centre and the city government to pay more than Rs 3,500 crore each as interest-free subordinate debt for the repayment of the unpaid arbitral award.

It had said though this step of interest-free subordinate debt put an additional financial burden on the Delhi Metro, the less bothersome option of issuance of equity shares, which was explored earlier, had failed to materialise.

The DAMEPL’s lawyer had said in light of the position as it prevailed, the court would be justified in lifting the corporate veil of the corporation and proceeding further against the stakeholders for the purpose of execution of the award, which undisputedly has attained finality.

DMRC had said if any adverse orders were passed against it at this point of time, millions of commuters will be simply told that they cannot use the Delhi Metro.

On March 10 last year, the high court directed DMRC to pay the more than Rs 4,600 crore arbitral award, along with interest, to DAMEPL in two equal installments within two months.

The first and second installments were to be paid on or before April 30, 2022 and May 31, 2022 respectively.

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