Centre Moves To End Possibility Of Attachment Of Metro Rail Assets In DMRC-RInfra Case

The Centre has proposed an amendment in Metro Rail (Operation and Maintenance) Act to eliminate any possibility of attachment of assets, properties or bank accounts of any Metro Rail administration, even in case of any court order.

Delhi Metro Rail Corporation (DMRC) is in a long legal battle with a subsidiary of Anil Ambani-owned Reliance Infrastructure (RInfra).

The Housing and Urban Affairs Ministry, after a warning from the judiciary, has moved to amend the Metro Railways Act to protect DMRC’s assets from being attached.

The Ministry has issued a draft bill to amend Section 89 of the Act, the sub-section that allows courts to attach properties of Metro corporations.

On 17 March, the Delhi High Court handed down an order to ensure the payment of an arbitral award, due for over five years. The court said, in case DMRC failed to clear its dues, it (the court) reserved the right to give directions to the Ministry and the Delhi government.

In a background note for the amendment, the Ministry said the court’s order necessitated the change in law, adding that such a course could result in the closure of Delhi Metro, bringing the city to a halt and putting law and order at risk.

"The central government, being a custodian of the public good, cannot allow such a lethal situation to arise,” the Ministry said.

DMRC, which owes Delhi Airport Metro Express Private Ltd (DAMEPL) nearly Rs 4,700 crore, was earlier told by the court to ensure payment to the company or face the risk of having its assets attached.

"The Central government is being asked to give sanction to attach the properties of DMRC to pay a company which abandoned/deserted the service of the airport metro line in the first few years of a 30-year contract," Union Minister Hardeep Puri had told the court in an affidavit earlier this month.

The Ministry has removed from the Act, the paragraph that allows the Central government to provide sanction for attaching assets.

In the 17 March order, the centre was given two options: to either provide interest-free subordinate debt to DMRC along with the Delhi government, or repatriate all money received by it from DMRC after 10 March 2022. The money will then be sent to an escrow account for paying the award.

The proposed provisions of the Act will apply to all Metro corporations in the country, an official said.

In what is being seen as a reflection on India’s efforts to be an international arbitration hub, DMRC has been unable to pay the award despite instructions from multiple courts.

RInfra had moved the Supreme Court on 2 December, 2022, against DMRC, seeking the payment of the award. On 14 December, the apex court gave DMRC three months to pay the dues and sent the matter back to the Delhi High Court.

In June last year, the urban transporter had written to 18 banks, seeking a credit facility for Rs 2,700 crore to meet its obligations. However, it later told the court that opting for such debt would push it into a debt trap.

The two companies have been in dispute since DAMEPL pulled out of operating the Delhi Metro Airport Line, due to safety issues on account of structural defects.

An arbitral court in 2017 had ruled in favour of RInfra, asking DMRC to pay DAMEPL the amount it had borrowed from 11 banks.

The amendment proposal comes days after the ministry submitted to the Delhi high court about its decision to “refrain” from giving any sanction to attach the moveable and immovable assets of DMRC, to pay the arbitration award amount to Reliance Infrastructure-led DAMEPL in the Airport Express Line case.

Subsequently, Union Minister Hardeep Singh Puri had directed officials to revisit the provision of attachment in the Metro Rail Act to ensure no properties or bank accounts of such entities can be attached ever.

The proposed change in the law, if passed by Parliament or as an ordinance, will prove to be a big relief for Metro Rail entities across the country.

The Ministry has circulated the proposed amendments in section-89 of the Act, among different ministries and has sought their feedback within a fortnight, sources said.

The proposed amendment says that, “No stock, metro railway tracks, machinery, plant, tools, fittings, materials or effects used or provided by metro railway administration for the purpose of traffic on its railway, or its stations or workshops, or offices or earnings or any parcel of land held by Metro Rail Administration shall be liable to be taken in execution of any decree or order of any court or any local authority or person having by law the power to attach or distrain property or otherwise to cause the property to be taken in execution”.

The current provision says that attachment of any Metro Rail property requires the sanction of the central government.

“This change in the law will ensure no attachment of Metro Rail assets (including financial assets) pursuant to any execution processes carried out by any court in the country,” a source said.

The inclusion of “earnings or any parcel of land”, which is currently not in the Act, will give further protection to Metro Rail entities, which are at present, unable to generate enough revenue for running the services.

The government proposes to do away with section 89(2) in the current Act, which says that earnings of Metro Rail entities could be attached by a court in execution.

While refusing to give the sanction for attachment of DMRC properties, the Ministry had informed the high court that such a decision would result in “closure of DMRC, bringing the entire city to a halt.”

It had said such a situation would not only cause the gravest of public inconvenience but also lead to “alarming situation where law and order in the city could be at stake”.

“The central government being a custodian of public good cannot allow a lethal situation like this to arise,” it added.