The Delhi High Court has directed the Centre and the Delhi Government to attend to the requests of the Delhi Metro Rail Corporation for extension of sovereign guarantees/subordinate debt enabling it to liquidate its liabilities under the Arbitral Award passed in favor of the Delhi Airport Metro Express Private Limited.

The bench of Justice Yashwant Varma further directed that if permission is accorded to the DMRC in respect of either of the two modes as suggested by it, it shall proceed to deposit the entire amount payable under the Award along with up-to-date interest in terms thereof within one month.

“If the Union Ministry or the GNCTD decline the request for providing sovereign guarantees or subordinate debt, the Union Ministry shall forthwith and at the end of two weeks, revert and repatriate all moneys received by it from DMRC post 10 March 2022 pursuant to its directives so as to ensure that the credit balance in the Total DMRC Funds, Total Project Funds and Total Other Funds reflects the balance as it existed on 10 March 2022.”, the Court added.

The Court has directed that upon receipt of the aforesaid moneys, DMRC shall transfer to the escrow account, an amount equivalent to the total amount payable in terms of the Award along with interest.

The Court noted that both the Union Ministry and Delhi Government are the principal shareholders of the DMRC. The Court also noted that the two shareholders are not mere individuals having a business interest in a corporate venture but sovereign governments in their own right.

“The two sovereign entities exercise control over the DMRC by virtue of the composition of its Board. It is their equity and debt contributions which enables the DMRC to carry out its functions and discharge its statutory obligations. 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 recognised in law as being in absolute control and the directing mind.”, it said.

The Court added that they cannot hide behind the veil of corporate personality especially when it comes to the discharge of binding obligations owed by the DMRC.

“Governments cannot shirk from their liability to abide by binding judgments, decrees and awards. If such a situation were permitted to hold, the very structure of the adjudicatory and judicial system would falter and crumble.”, the Court observed.

Senior Advocate Kapil Sibal appeared for DAMEPL whereas Advocate Tarun Johri appeared for DMRC. CGSC Apoorv Kurup appeared for Union of India and Senior Advocate Parag P. Tripathi appeared for Delhi Government.

The Court was dealing with an execution petition filed by Reliance Infrastructure owned DAMEPL against the Delhi Metro Rail Corporation over the payment of unpaid dues of an arbitral award passed in its favor.

Last year, the High Court had directed DMRC to pay more than Rs 4600 Crore arbitral award with interest to the DAMEPL in two instalments. In December 2022, the Supreme Court had directed High Court to proceed with the matter expeditiously.

The High Court observed that Courts would be failing in their duty if a decree were left to be a mere dead letter.

“A decree or judgment of a competent court must necessarily be enforced. Courts of justice would be failing in their duty if a decree were left to be a mere dead letter. If decrees and judgments of courts were to be rendered inexecutable and courts were to simply be forced to stand on the sideline, it would clearly shake the confidence of the people in the legal system and its very efficacy. An obligation which flows from a decree or an award must not only be duly recognized but also enforced in accordance with law.”, the Court held.

The Court also noted that a corporate veil in any case should not come in the way of execution of a binding and well settled legal obligation.

“The circumstances of the present case thus clearly mandates and warrants the corporate veil being lifted and torn apart and for the Court recognising the GNCTD as well as the Union Ministry being in complete and total control of the affairs of the DMRC.”, the Court observed.

Cause Title- Delhi Airport Metro Express Private Limited v. Delhi Metro Rail Corporation Ltd. (Neutral Citation Number- 2023:DHC:1902)

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