Delhi High Court to Central Government: Take A Decision on Granting Sanction To Attach DMRC's Assets For Payment Of Unpaid Dues to Reliance Infra

Delhi High Court to Central Government: Take A Decision on Granting Sanction To Attach DMRC's Assets For Payment Of Unpaid Dues to Reliance Infra

The Delhi High Court while hearing in the matter of Delhi Airport Metro Express Private Limited v. Delhi Metro Rail Corporation Ltd. ordered the Central Government to take a decision whether it proposes to accord sanction under Section 89 of Delhi Metro Railway (Operation And Maintenance) Act, 2002, for attachment of the movable and immovable assets of Delhi Metro Rail Corporation Ltd (DMRC) for satisfaction of the amounts payable under a 2017 arbitral award to Reliance Infrastructure-promoted Delhi Airport Metro Express Private Ltd (DAMEPL).

On 17th February, 2023 the single judge Justice Yashwant Varma had impleaded the Union of India through the Ministry of Housing and Urban Affairs and Delhi Government through its Chief Secretary in DAMEPL's petition seeking enforcement of the arbitration award.

The Additional Solicitor General (ASG) Chetan Sharma, representing the Centre, at the outset said that the union government was not a party to the arbitration and is not liable to pay under law.

The DMRC has already paid Rs. 1678.42 crores of the arbitral award and is yet to pay Rs. 6330.96 crores to DAMEPL. Appearing for DAMEPL, Senior Advocate Kapil Sibal had previously argued that the Court can lift the corporate veil in the matter and proceed against the shareholders- Government of India and Delhi Government.

According to ASG, lifting of the corporate veil is not warranted by law in such a case. "We are 50 percent shareholders. I have no liability to pay the decretal amount in law," said the ASG.

ASG said the Union has a shareholding in almost all the public sector undertakings. "This may set a new precedent even if it is by way of an invention innovativeness. This will create havoc," said Sharma.

The Court was of the view that Section 89 is not an absolute bar and it empowers the union government to give consent. "So, what is the stand of the Union?" inquired Justice Varma.

Section 89 in The Delhi Metro Railway (Operation and Maintenance) Act, 2002 provides-

Restriction on execution against metro railway property-

No rolling stock, metro railway tracks, machinery, plant, tools, fittings, materials or effects used or provided by a metro railway administration for the purpose of traffic on its railway, or its stations or workshops, or offices shall be liable to be taken in execution of any decree or order of any court or of any local authority or person having by law the power to attach or distrain property or otherwise to cause the property to be take in execution, without the previous sanction of the Central Government.

ASG answered that the decision has been taken on cogent grounds. "So, place on record the material. Let's see your decision is based on what to refuse consent, your decision is based on what to refuse consent," said the Court in response.

However, the ASG replied that the decision has not been taken under Section 89 yet. "Take the decision. Let's go step by step," said the Court, adding it has to complete proceedings before 15th March in the matter due to the Supreme Court.

Observing that before it proceeds to deal with the objections pertaining to limited liability principal and on the issue of whether circumstances warrant lifting of the corporate veil, the Court said, "it would appear expedient to call upon the government to take a decision whether it proposes to accord sanction for the attachment of movable and immovable assets of the corporation for the purposes of satisfaction of the amounts payable under the award."

To enable the competent authorities in the union government to take that decision and place the same on the record of the proceedings, the Court listed the matter to 2nd March.