HC asks DMRC to settle immediate debts owed to banks by DAMEPL

HC asks DMRC to settle immediate debts owed to banks by DAMEPL
29/03/2018 , by , in News/Views

The Delhi High Court’s justice Vibhu Bakhru, on March 27, 2018, asked the Delhi Metro Rail Corporation (DMRC) to ascertain the immediate amount that Reliance Infrastructure’s (Rinfra’s) subsidiary, DAMEPL, has to pay to 11 banks and to make the payment before March 28, 2018. The court passed the order, while observing that the accounts of Delhi Airport Metro Express Private Ltd (DAMEPL) in the 11 banks, cannot be allowed to become non-performing assets (NPAs), despite having an arbitral award in its favour.

The direction came on an interim plea by DAMEPL, claiming it has to pay over Rs 1,882 crores to the banks, to prevent its accounts with them from being categorised as NPAs. According to DAMEPL’s plea, the 11 banks, to whom immediate payments have to be made, are Axis Bank, UCO Bank, Punjab and Sind Bank, Andhra Bank, Central Bank of India, Dena Bank, Allahabad Bank, Canara Bank, Bank of India, IIFC UK and Canara Bank London.

The interim plea was raised by the company, in its petition seeking the enforcement of an arbitral award of Rs 5,164.79 crores, including interest of over Rs 2,000 crores, granted in its favour by a tribunal, in connection with the Airport Express premium corridor. The award was upheld by the high court, which on March 6, 2018, had given DMRC four weeks’ time to pay the amount.

DMRC, on the other hand, had contended that the immediate need of the company to service the debt, was only around Rs 186.76 crores and not Rs 1,882 crores, as claimed by DAMEPL. Taking note of the stand taken by DMRC, the court directed it to send its officials to all the banks to ascertain ‘the immediate amount required to avoid the petitioner’s (DAMEPL) account with the bank concerned, to be classified as a NPA and if the account has already been classified as such, the minimum amount necessary to be paid to the bank, for the account to be removed from the category of the NPA’. “DMRC shall ensure that the amounts so ascertained, are paid to the credit of the petitioner on or before March 28,” the court added.

On March 6, 2018, while dismissing DMRC’s plea against the Arbitral Tribunal’s May 2017 order, asking it to make payments to DAMEPL, the court had allowed a separate plea of the Rinfra subsidiary, for an early payment of 75 per cent of the arbitral award in its favour. According to the DAMEPL’s earlier plea, the concession agreement was signed by the two parties on August 25, 2008. Under the agreement, DMRC was to carry out the civil works, excluding at the depot and the bal

ance, including the project system works, were to be executed by DAMEPL.

The Airport Express line was commissioned on February 23, 2011, after an investment of Rs 2,885 crores, funded by the DAMEPL’s promoters’ fund, banks and financial institutions. DAMEPL had said it had terminated the concession agreement, as DMRC had not cured certain defects in the Airport Express line within 90 days of a notice issued by it. It had also said the agreement had come to effect from January 1, 2013 and the project was handed over to DMRC on June 30, 2013. Till the handing over of the project, DAMEPL had operated the line as a deemed agent of DMRC, it had said.

The arbitration was entered into in August 2013, after efforts to amicably resolve the issue did not yield any result. DAMEPL is a joint venture of Rinfra and a Spanish construction company – Construcciones Y Auxiliar De Ferrocarriles – with a shareholding of 95 and five per cent, respectively.

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