Asked Centre, Delhi for funds to pay debt to DAMEPL, DMRC tells HC

The Delhi Metro Rail Corporation (DMRC) has informed the High Court that it has requested the Centre and Delhi governments for interest-free subordinate debt of Rs 3,565.64 crore from each for repaying of its unpaid arbitral award to Delhi Airport Metro Express Private Ltd (DAMEPL), owned by Reliance Infrastructure.

“The DMRC, following the decision of its Board of Directors, have approached its shareholders, that is, Government of India and Delhi government, and had written letters dated January 18, 2023 to Ministry of Housing and Urban Affairs and Delhi government that a sum of Rs 3,565.64 crore may please be provided as interest-free subordinate debt at an early date so that the Supreme Court directions may be complied with,” the DMRC’s affidavit read.

Dealing with the matter, Justice Yashwant Varma was informed that the decision was taken as the city government earlier refused to contribute money and because of the DMRC’s financial inefficiency, it was not able to raise funds from open market.

The Delhi government, in its communication, had said that the shareholders cannot be held liable for payments arising out of contractual defaults.

According to the DMRC, the Delhi Metro is under increased financial strain as a result of this “interest-free subordinate debt”, and earlier, the less burdensome alternative of issuing equity shares did not work out.

Justice Varma listed the matter for next hearing on January 31.

On January 4, the DMRC had notified the HC that the city government is not inclined to contribute towards the payment of unpaid dues of arbitral award to the DAMEPL.

The Delhi government had claimed that it is not inclined to offer Rs 3,565.64 crore towards equity for payment of the arbitral sum with interest, according to the affidavit filed by the DMRC.

The Centre and the DMRC, represented by Attorney General R. Venkataramani, had informed the court that the issue is being actively considered and deliberated by the relevant authorities, and that they anticipate a resolution by January 16 and the court then listed the hearing for Thursday.

The DMRC had informed the court that it may obtain funding to cover this liability through the open market, externally aided funds, or a loan from the Centre.

The Supreme Court on December 14, 2022, also told Venkataramani, “we should not repeat again that on one hand, you give speeches everywhere that India should be a model arbitration hub”, as it pulled up Centre for its failure to pay an arbitral award for Rs 4,500 crore following a lawsuit filed by Reliance Infra against the DMRC.

20230119-213002

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