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    HC pulls up Reliance Infra's DAMEPL for playing hide & seek, not coming with 'clean hands' in proceedings against DMRC

    Synopsis

    Senior advocate Parag Tripathi, representing DMRC, submitted that it was ready to take over the liabilities of Reliance Infrastructure subsidiary to the extent of the award money as it would be a better position to negotiate with the lender banks. However, the offer was turned down by DAMEPL.

    Reliance Infra set to get Rs 4,600 crore arbitration award from Delhi Metro Rail CorpThinkStock Photos
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    The Delhi High Court on Tuesday pulled up Reliance Infrastructure's subsidiary DAMEPL for playing "hide and seek" with the court and holding out-of-court communications with Delhi Metro Rail Corporation (DMRC) to settle the dispute relating to execution of the over Rs 4,600 crore arbitral award passed against the PSU. The high court said the decree holder, Delhi Airport Metro Express Private Limited (DAMEPL), was not coming to court with "clean hands" and asked it not to "waste" the judicial time.

    "Since the petitioner's (DAMEPL) counsel is making submission before the court and simultaneously communicating with the judgement debtor (DMRC) to settle the dispute in the manner... In this fashion the decree holder is not coming to court with clean hands. Therefore, renotify on March 29," Justice Suresh Kumar Kait said.

    "You (DAMEPL) are playing hide and seek with the court. Don't waste more time of the court," the Judge remarked, observing further that the company was not fair to the court despite having a decree in its favour.

    The court noted that pursuant to its December 22, 2021 order, DMRC has filed an affidavit furnishing the details of its bank accounts along with the balance amount.

    Senior advocate Parag Tripathi, representing DMRC, submitted that it was ready to take over the liabilities of Reliance Infrastructure subsidiary to the extent of the award money as it would be a better position to negotiate with the lender banks. However, the offer was turned down by DAMEPL.

    He informed the court about a December 30, 2021 letter written by DAMEPL to DMRC asking if it was ready to take over its debt which was to be paid by DAMEPL and Reliance Infrastructure to their lenders.

    DMRC responded to the letter saying that DAMEPL should first disclose the full amount of its liabilities, he submitted.

    To this, the judge said DAMEPL was taking a different stand in the court while it was writing letters to DMRC to settle the dispute.

    "If you are settling the dispute outside the court, why are you wasting the court's time. Don't communicate with them when the matter is before the court. If you want to, then withdraw the case. I will throw out your case," the judge said.

    Advocate Prateek Seksaria, appearing for DAMEPL, said the company was exercising its legal right in the court by seeking execution of the decree passed in its favour and claimed that DMRC was not disclosing the whole issue.

    "DMRC was calling and holding meetings with my lenders on outstanding loans to banks in my absence. You cannot meet my lenders behind my back. If you want to meet them then take over my entire liabilities and have meetings with the lenders. If we arrive at a settlement, we will inform the court. I was against the move that they met my lenders without informing me so I wrote a letter to DMRC," he argued.

    He also said the offer given by DMRC was not acceptable and DAMEPL does not want to settle the dispute in this fashion.

    The court was hearing an application by the Reliance Infrastructure's subsidiary which was filed in the ongoing proceedings before the high court, claiming that DMRC was deliberately trying to delay the execution of the over Rs 4,600 crore arbitral award against it, which was costing the taxpayer a daily interest of almost Rs 1.75 crore.

    The application said that DMRC was trying to defeat the process by making only a "limited disclosure of bank account details only with respect to Rs 1,642.69 crore" in spite of the order directing it to disclose all its bank account details and claimed that the PSU, in an affidavit filed in December 2021, had disclosed "total available funds" of Rs 5,800.93 crore.

    However, DMRC filed another affidavit in the court on Monday disclosing details of all its bank accounts having funds worth Rs 6,208 crore.

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

    The high court had earlier observed that while the attachment of DMRC's properties was not permitted under Section 89 of The Metro Railways (Operation and Maintenance) Act, 2002, there was no such embargo with respect to its bank accounts.

    In December last year, DAMEPL's counsel had told the court that as per DMRC's affidavit, it had over Rs 5,800 crore in its bank accounts as on December 17, 2021, with over Rs 1,642 crore being its earning and over Rs 2,400 crore and Rs 1,700 crore being its project allocation fund and deposit fund, respectively.

    DMRC had stated that since the corporation was facing a "financial crunch", undertaking a "sudden liability" would impact public interest and authorities were therefore working out a solution.

    It had earlier told the court that it would deposit Rs 1,000 crore in favour of DAMEPL in an escrow account.

    The award pertained to a concession agreement between the two entities, which was signed on August 25, 2008. Under the agreement, DMRC was to carry out the civil works, excluding at the depot, and the balance, including the project system works, were to be executed by DAMEPL, a joint venture of R-Infra and a Spanish construction company -- Construcciones Y Auxiliar De Ferrocarriles -- with a shareholding of 95 and five per cent respectively.

    The Airport Express line was commissioned on February 23, 2011, after an investment of over Rs 2,885 crore, funded by the DAMEPL promoters' fund, banks, and financial institutions.

    In November 2021, the Supreme Court had dismissed DMRC's plea seeking a review of its judgement which upheld the 2017 arbitration award in favour of DAMEPL, enforceable against it.


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