The Supreme Court on Thursday admitted a special leave petition (SLP) filed by Delhi Airport Metro Express Pvt Ltd (DAMEPL) challenging the judgment of the Delhi High Court that had set aside the arbitral award of Rs 5,800 crore to be paid by Delhi Metro Rail Corporation (DMRC).
The apex court also dismissed a plea by DMRC contesting an order of a Delhi High Court division bench on the issues of grant of interest, waiver of the termination notice due to DAMEPL’s conduct of operating the project for more than five months.
DAMEPL is a special purpose vehicle of Reliance Infrastructure (RInfra) which signed a contract with DMRC in 2008, to operate the country’s first private city rail project until 2038.
Following disagreements over fees and operations in 2012, RInfra ceased operations of the Capital’s airport metro project and filed an arbitration complaint against Delhi Metro, alleging contract violations and seeking a termination fee.
“The victory comes at a good time for Ambani, who is now in bankruptcy, and the money could be used to pay off loans owed to the Anil Ambani-led Reliance group,” Sonam Chandwani, the Managing Partner at KS Legal & Associates said. RInfra’s consolidated debt was Rs 14,260 crore and standalone debt was Rs 3,808 crore as of March, 2021. Recently, it raised Rs 550 crore from the promoter group and VSFI Holding Pte – an affiliate of Varde Investment Partners, LLP.
The apex court also issued a notice to DMRC on the Airport Express’ plea for interim to continue servicing the debt of the SPV pending Supreme Court’s disposal of the petition.
The SPV borrowed over Rs 1,600 crore from 11 banks, including Axis Bank, UCO Bank, Punjab & Sind Bank, Andhra Bank, and Central Bank of India. The amount including interest has touched Rs 5,000 crore.
The Delhi High Court in March 2018 asked DMRC to service all debt liabilities of the SPV company and make necessary payments to banks to avoid the account from turning into a non-performing asset.
The SPV company moved the apex court after a division bench of the Delhi High Court set aside an order of a single judge bench upholding the arbitral award in favour of the Delhi Airport Express.
DAMEPL was awarded the execution of 22.7-km high speed metro rail line in 2008.
It was decided to develop the project by engaging a concessionaire for financing, design, procurement, installation of all systems (including but not limited to rolling stock, overhead electrification, track, signaling and telecommunication, ventilation and air conditioning, automatic fare collection, baggage check-in and handling, depot and other facilities).
DMRC had to undertake design and construction of basic civil structure for the project, which was in the nature of a public private partnership.
The SPV in 2012 left the contract stating that the operations of the express line were not viable on account of defects in the civil structures which was constructed by DMRC.
The case hearings went on for four years after which the arbitral tribunal, in May 2017, ruled in favour of DAMEPL.