The Supreme Court on Wednesday sought response from the Delhi Airport Metro Express Pvt Ltd (DAMEPL), the managing director (MD) of the Reliance Infrastructure subsidiary and the Axis Bank and its managing director as to why contempt proceedings should not be initiated against them for failing to refund more than Rs 4,500 crore, including interest, to the Delhi Metro Rail Corporation (DMRC), as directed by the apex court in April.
A Bench led by Justice Surya Kant issued notice to DAMEPL and its MD and the Axis Bank and its MD on a DMRC contempt petition against DAMEPL and the Axis Bank for “wilfully disobeying” the court’s order to refund the amount that the Corporation had deposited in an escrow account.
However, the top court, as of now, exempted the top brass from personal appearance before it.
The apex court had in April set aside an arbitration award of about Rs 8,000 crore that DAMEPL had won against state-run DMRC in May 2017. It had also ordered refund of the amount that the corporation had deposited against the arbitral award as directed by the Delhi High Court.
The Supreme Court on Wednesday sought a response from Delhi Airport Metro Express Pvt Ltd (DAMEPL), its managing director, Axis Bank’s managing director, and others regarding why contempt proceedings should not be initiated for failing to refund over Rs 4,500 crore, including interest, to the Delhi Metro Rail Corporation (DMRC).
DMRC now wants a direction to the parties, including Axis Bank and its managing director, to refund more than Rs 4,500 crore, including interest, that it had deposited in the escrow account maintained by the bank. Apart from refund of Rs 2,599.17 crore, the corporation wants interest amounting to Rs 1,935 crore, and a further interest of 2% on Rs 2,599 crore till the actual date of deposit, according to the contempt petition.DMRC in its plea told the SC that pursuant to the April judgement, it had written to Axis Bank and DAMPEL for refund of the amount. In May, the firm that was led by Anil Ambani said it had forwarded the letter to its lenders who had withdrawn or received the given amount. Axis Bank said it was examining relevant documents and sought time to respond. However, no amount has been refunded so far, DMRC said.
In April, the SC said the execution proceedings before the HC for enforcing the arbitral award must be discontinued. “The part of the awarded amount, if any, paid by DMRC as a result of coercive action is liable to be restored in its favour,” it had stated.
While the principal amount to be paid under the arbitration award was about Rs 2,782.33 crore, with interest it had then swelled to more than Rs 8,000 crore.
DAMEPL and its promoter company have been in financial stress and this arbitration award would have helped the beleaguered group repay its debts.
Texmaco Rail has reignited its insolvency case against Delhi Airport Metro Express. The Supreme Court recently overturned an arbitration ruling. This ruling favored DAMEPL. DAMEPL was to receive a substantial payout. Texmaco claims DAMEPL now lacks funds to settle debts. The original dispute stemmed from a terminated contract and alleged structural defects in the Delhi Airport Metro Express project.
DAMEPL in a press statement on Wednesday said that “DMRC has on various occasions paid approximately Rs 2600 crore into the escrow account maintained with Axis Bank” and payments were made to the lenders, including 10 PSU banks like Canara Bank, UCO Bank, Bank of Baroda, etc.
“DMRC is in possession of the Airport Express Metro Line since last 11 years and all profits, revenues accrue solely to DMRC,” the statement said, adding that “…the money is with the lenders and the refund has to be made by the banks to DMRC and due to this DMRC has impleaded Axis Bank MD and Axis Bank in the SC…”
Case File
DAMEPL operated the national capital’s airport metro service under a contract with DMRC. In 2013, the company cancelled the contract with DMRC citing safety issues and invoked arbitration.
The arbitral tribunal in its May 2017 award accepted DAMEPL’s 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. DAMEPL then moved the high court to recover about Rs 3,000 crore toward enforcement of an arbitration award.
While the Supreme Court upheld the arbitration award, including interest, in favour of DAMEPL in September 2021, it dismissed a review petition filed by DMRC in November 2021. Later, in August 2022, DMRC filed a curative petition.
On March 17, 2023, the high court directed the Centre and the Delhi government during the execution proceedings to attend to the request of DMRC for extension of sovereign guarantee and subordinate debt, enabling the metro operator to liquidate its liabilities under the award payment to DAMEPL.
