The Delhi High Court directed the Delhi Metro Rail Corporation (DMRC) to deposit the amount as stated in the arbitral award. The decision of the High Court was in favour of Reliance Infrastructure.
“If permission be accorded to the DMRC, it shall proceed to deposit the entire amount payable under the award along with interest within one month. If the Union Ministry or GNCTD declines the request, the Union shall at the end of two weeks, revert and repatriate all moneys received by it from DMRC post 10 March 2022.”
DMRC had sought for extension of sovereign guarantee or interest-free debt for clearing arbitral award dues. Noting that the DMRC is alter ego of the two shareholders, the Centre and State Government, the Court directed Governments to cater to DMRC’s request so that DMRC is able to liquidate the liabilities as per the award.
“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 GNCTD must be recognized in law as being in absolute control and the directing mind. They cannot hide behind the veil of corporate personality especially when it comes to the discharge of binding obligations owed by the DMRC. In any case, public policy demands that the veil be lifted and they be commanded to take appropriate steps to enable the DMRC to meet the obligations flowing from the award.”
In Hon’ble Justice Yashwant Varma’s opinion, the sovereign governments exercise control over DMRC and because of their contributions in terms of equity and debt (Both Central and State Governments each hold 50% shares), DMRC is able to carry out the functions. Therefore, the sovereign entities could not be allowed to escape their responsibilities and act in violation of judgements, decrees and awards.
The Court went on to direct that in case DMRC fails to deposit the payable amount along with interest in the escrow, the entire amount would be attached. The Court said it reserves the right to even further take appropriate actions against the Union Ministry and GNCTD.
“In case DMRC fails to clear all outstanding amounts despite the directions above, the Court reserves the right to frame appropriate directions against the Union Ministry and the GNCTD consequent to the corporate veil having been duly lifted as per the findings recorded herein above.”
The Delhi Airport Metro Express Private Limited (DAMEPL), owned by Reliance Infra had filed an execution petition seeking execution of the arbitration award dated May 11, 2017.
The High Court had issued multiple orders directing the DMRC to pay the amount as stated in the award, however, the dues remained uncleared.
The dispute arose between the parties out of an agreement to develop the orange line of the Delhi Metro connecting Indira Gandhi International Airport Terminal-3 to Dwarka Sector 21.
The order of the High Court directing DMRC to pay the amount to DAMEPL was upheld by the Hon’ble Supreme Court as well in December 2022. The Top Court had further asked the High Court to dispose of the matter within 3 months.
The unpaid amount by DMRC was approximately Rs. 6330 crores because of which DAMEPL had to approach the High Court again.
The Delhi High Court expanded on the principle of the corporate veil and opined that the doctrine can be applied even when legal obligations are being escaped or in the interest of public policy, public interest and justice.
Case Title: Delhi Airport Metro Express Private Limited v. Delhi Metro Rail Corporation
Coram: Hon’ble Justice Yashwant Varma
Case No.: OMP (ENF.) (COMM) 145/2021
Advocate for Decree Holder(DAMEPL): Advs. Mr. Kapil Sibal, Mr. Mahesh Agarwal, Mr. Rishi Agarwal, Mr. Shri Venkatesh, Ms. Megha Mehta, Ms. Niyati Kohli, Mr. Pranjit Bhattacharya, Mr. Vineet Kumar, Ms. Manavi Agarwal, Ms. Manisha Singh
Advocate for Judgement Debtor(DMRC): Advs. Mr. Tarun Johri, Mr. Vishwajeet Tyagi, Mr. Ankur Gupta, Mr. Sanjay V. Kute, Mr. Chetan Sharma, Mr. Apoorv Kurup, Mr. Amit Gupta, Ms. Nidhi Mittal, Ms. Ojaswa Pathal, Mr. R.V. Prabhat, Mr. Vinay Yadav, Mr. Suresh Tripathi, Mr. Parag P. Tripathi, Mr. Manish Vahsisht, Mr. Santosh Tripathi, Mr. Udit Malik, Mr. Arun Panwar, Ms. Rachita Garg, Ms. Astha Gupta
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