India News | HC Directs Centre, Delhi Govt to Help DMRC in Paying Arbitral Award to DAMEPL
Get latest articles and stories on India at LatestLY. The Delhi High Court Friday 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 Delhi Airport Metro Express Private Limited, saying the governments cannot shirk from their liability to abide by judgements and decrees.
New Delhi, Mar 17 (PTI) The Delhi High Court Friday 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 Delhi Airport Metro Express Private Limited, saying the governments cannot shirk from their liability to abide by judgements and decrees.
The high court's verdict came on an execution petition filed by Reliance Infrastructure-owned DAMEPL against the Delhi Metro Rail Corporation (DMRC) over payment of dues of an arbitral award passed in its favour.
It said the orders passed in the execution petition operate and bind both the Union Ministry and Delhi government – 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.
Justice Yashwant Varma, in a 133-page judgement, 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.
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"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.
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 this year, 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.
The high court, in its verdict, said once it receives the money from the Union ministry, the DMRC will transfer it 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 they pay the award money.
It said the DMRC must necessarily be recognised as being a mere alter ego of those two shareholders – Centre and Delhi government.
"The two sovereign entities exercise control over the DMRC by virtue of the composition of its Board. It is their equity and debt contributions which enables the DMRC to carry out its functions and discharge its statutory obligations.
"Both by virtue of the capital invested in the corporation as well as the control vested and exercised by them over its affairs, the Union Ministry and the Delhi government must be recognised in law as being in absolute control and the directing mind," it said.
The judge said they cannot hide behind the veil of corporate personality especially when it comes to the discharge of binding obligations owed by the DMRC.
Public policy demands that the corporate veil be lifted and they be commanded to take appropriate steps to enable the DMRC to meet the obligations flowing from the award, the court said.
Corporate veil is a legal concept which separates the actions of an individual from a company.
The court said the two shareholders are not mere individuals having a business interest in a corporate venture but sovereign governments in their own right and the governments cannot shirk from their liability to abide by binding judgments, decrees, and awards.
It said if such a situation was permitted to hold, the very structure of the adjudicatory and judicial system would "falter and crumble."
The court observed that a decree or judgement of a competent court must necessarily be enforced and courts of justice would be failing in their duty if a decree were left to be a "mere dead letter."
"If decrees and judgments of courts were to be rendered inexecutable and courts were to simply be forced to stand on the sideline, it would clearly shake the confidence of the people in the legal system and its very efficacy.
"An obligation which flows from a decree or an award must not only be duly recognized but also enforced in accordance with law. Taking any other view would render the entire adjudicatory process meaningless and an exercise in futility," it said.
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.
(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)