Airport Metro Arbitral award: DMRC seeks review of HC verdict on execution plea by DAMEPL

DMRC has sought review of the Delhi High Court's March 17 order by which it has directed the Centre and the city government to attend to DMRC's request for extension of sovereign guarantees or subordinate debt to enable it to make payment of dues of an arbitral award passed in favour of DAMEPL, saying the sovereign governments cannot shirk from their liability to abide by binding judgements and decrees.

The court had said the decision on sovereign guarantees and subordinate debt has to be taken by the Union Ministry of Housing and Urban Affairs and the Delhi government within two weeks and if the permission is accorded to the DMRC, it will deposit the entire amount payable under the award along with up-to-date interest within a period of one month.

The high court's verdict had come on an execution petition filed by DAMEPL against DMRC over payment of dues of an arbitral award passed in its favour.

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.

In February, 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.

During the hearing on Thursday, the judge asked Attorney General R Venkataramani, representing DMRC, regarding "any hope of impasse being resolved".

The law officer responded, "Something is happening. Till today morning, I have not got into thick of the matter but I also want to ensure that this process does not become pothole process." In its judgment, the high court had said the orders passed in the execution petition operate and bind both the Union Ministry and Delhi government, which are the principal shareholders of DMRC, and the circumstances clearly mandate and warrant the corporate veil being lifted and torn apart as the two governments are in complete and total control of the affairs of the Delhi Metro.

"If the Union ministry or Delhi government decline the request for providing sovereign guarantees or subordinate debt, the Union ministry shall forthwith or at the end of two weeks revert and repatriate all monies received by it from DMRC post March 10, 2022 so as to ensure that the credit balance of the DMRC, total project and total other funds reflects the balance as it existed on March 10, 2022," the high court said.

In the review plea, the DMRC said the findings rendered in the March 17 judgement was contrary to the March 3, 2022 order passed in the same case in which the court had chosen not to attach the amount committed to the salary, medical expenses and post retiral benefits of employees as well as the security deposit on smart cards, that is, statutory expenses, which is refundable to the commuters, under the head, 'Total DMRC Funds'.

"Directions as given in... of the judgment dated March 17 are required to be reviewed, recalled and modified with directions to the effect that the liability of the review petitioner (DMRC) towards salary, medical expenses, post retiral benefits of employees, security deposit on smart cards... required for smooth functioning of the metro operations, would stand exempted from attachment of the amount standing to the credit of 'Total DMRC Funds'," it said.

DMRC has taken 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.

The high court, in its verdict, said once it receives the money from the Union ministry, the DMRC will transfer the amount to the escrow account equal to the total amount payable in terms of the award along with interest.

"In case of a failure on the part of the parties to proceed in terms of the above directions, the entire amount standing to the credit of DMRC, total project and total other funds as of today shall stand attached forthwith without reference to court," the judge made clear.

The high court said if DMRC fails to clear the outstanding amount payable in terms of the award, the court reserves the right to frame further directions against the Union ministry and the Delhi government to ensure that the liabilities flowing from the award are duly discharged.

It said the DMRC must necessarily be recognised as being a mere alter ego of those two shareholders  Centre and Delhi government.

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

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

In its verdict, the high court also took strong note of the fact that the "Total DMRC Funds" have drastically reduced between the period of March 10, 2022 and May 13, 2022 as they were repatriated to the Centre by the DMRC.

"The 'Total DMRC Funds', 'Total Project Funds' and 'Total Other Funds' as existing on March 10, 2022 thus could not have been either touched, diverted, or repatriated post the passing of that order. March 10, 2022 would thus, for all purposes, be liable to be declared to be the decisive, determinative and crucial date," it said.