Explained: Why Delhi Metro Needs To Pay ₹4,800 crore To Anil Ambani-led Reliance Infrastructure After Today's SC Ruling

by Swarajya Staff - Sep 9, 2021 05:16 PM
Explained: Why Delhi Metro Needs To Pay ₹4,800 crore To Anil Ambani-led Reliance Infrastructure After Today's SC RulingAnil Ambani (Satyabrata Tripathy/Hindustan Times via Getty Images)
Snapshot
  • The Supreme Court today (September 9) today ruled that Delhi Airport Metro Express Private Limited (DAMEPL), a subsidiary of Anil Ambani-led Reliance Infrastructure will get ₹2,800 crore arbitral award from Delhi Metro Rail Corporation (DMRC) as damages.

    Trouble began in 2012 with Reliance Infrastructure announcing the suspension of the metro line citing public safety over concerns on defective bearings and girders.

The Supreme Court today (September 9) ruled that Delhi Airport Metro Express Private Limited (DAMEPL), a subsidiary of Anil Ambani-led Reliance Infrastructure, will get ₹2,800 crore arbitral award from Delhi Metro Rail Corporation (DMRC) as damages. The total amount including interest is estimated to be ₹ 4,800 crore.

Anil Ambani-led Reliance Group had challenged in the Supreme Court an earlier 2019 judgment by the division bench of Delhi High Court setting aside the arbitral award won against Delhi Metro.

The division bench had overturned an earlier judgement in 2018 by a single judge bench (Justice Sanjeev Sachdeva) upholding Reliance Infrastructure ’s plea for payment of 75% of the arbitral award in its favour to pay off project lenders and promoters, who had financed the project. In May 2017, a tribunal ruled in favour of Reliance Infrastructure, and directed Delhi Metro to pay ₹ 2,950 crore as compensation along with interest.

The dispute pertains to the 23-km-long Airport Metro Express Line (also called Orange line), which runs between New Delhi Railway state and Dwarka via IGI Airport’s Terminal 3. The Metro Express line was formed as a Public Private Partnership (PPP) between the Delhi Metro and Reliance Infrastructure. This was the first PPP agreement signed by Delhi Metro.

Trouble began in 2012 with Reliance Infrastructure announcing the suspension of the metro line citing public safety over concerns on defective bearings and girders. As per the agreement between the two entities, Delhi Metro was responsible for land acquisition and civil construction while Reliance Infrastructure will manage operation, maintenance and other activities. Reliance Infrastructure was supposed to run the line for 30 years.

A joint inspection committee (JIC), consisting of experts from Delhi Metro, the Indian Railways and Reliance Infrastructure, was constituted to investigate the defects in the civil structure. The committee established the prevalence of serious flaws in the construction. As per its report, 91 per cent of the bearings were defective or dislocated, 32 per cent of the bearings had cracks, were torn or bulged. The committee noted that the cracks had appeared in 7 per cent of the girders holding the track.

Reliance Infrastructure subsequently terminated the concession agreement claiming that Delhi Metro did not some defects in the express line within 90 days of the notice issued by it. After handling over the line to the Delhi Metro on July 1, 2013, Reliance Metro asked the Delhi Metro to give the Termination Payment as per the Concession Agreement.

Delhi Metro charged that Reliance Infrastructure pulled out of the project as it was not yielding profits. It also alleged that Reliance Infrastructure had delayed a proper, timely inspection of the civil structure and that inspection

After efforts to amicably resolve the issues did not yield results, both parties went into arbitration.

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