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In an affidavit filed before the Delhi High Court on Thursday, the Delhi Metro Rail Corp. (DMRC) has sought an “interest free subordinate debt" worth 3,500 crore from its two main shareholders, the Delhi government and Centre, to settle the arbitral award in favour of Reliance Infrastructure Ltd-owned Delhi Airport Metro Express Pvt. Ltd.

“It is requested that a sum of 3,565.64 crore may please be provided as interest-free subordinate debt at an early date so that Supreme Court’s directions may be complied with", DMRC said. Adding that a similar request is being made to the Centre. A copy of the affidavit was reviewed by Mint.

The HC is hearing the matter on enforcing an arbitration award of 7,200 crore to Delhi Metro Express. Out of the dues of 7,200 crore, 2,600 crore was paid by DMRC. It has outstanding dues of 4,500 crore.

On 4 January, the Delhi government in a letter to DMRC said it was not inclined to provide 3,565.64 crore towards equity, which was required as a part of the payment to Delhi Airport Metro Express’s arbitral award. Besides, DMRC’s attempt to raise money from the open market also failed.

Subsequently, on 16 January, the matter was discussed at the company’s 148th Board meeting after Delhi government declined to offer help. In fact, due to its financial position, it was decided that DMRC will approach both stakeholders to share the arbitral award worth 7, 131.28 crore in equal proportion as an interest-free subordinate debt. “Though interest-free subordinate debt brings more financial burden on the DMRC it is a less financial burden to equity shares that was explored, but failed," DMRC said in its affidavit.

Delhi Airport Metro Express is owned by Reliance Infrastructure, while Delhi Metro is a government-owned company. The Government of National Capital Territory (GNCTD) and Union Ministry of Housing and Urban Affairs (MoHUA) are the key shareholders in DMRC.

Earlier in January, the Govt had refused to extend any help to DMRC stating that “shareholders of DMRC cannot be held liable for payments arising out of disputes or contractual defaults". Adding that the company can raise money from the open market or through externally aided funds or seek loan from Government of India to meet its liabilities.

The matter will be taken up for further hearing on 31 January.

ABOUT THE AUTHOR

Priyanka Gawande

Priyanka Gawande is a senior legal correspondent at Mint. She has worked as legal reporter for four years with both television and digital mediums. Based in Mumbai, she reports on disputes across sectors including banking, corporates and finance. This also includes insolvency and bankruptcy cases and intellectual property rights (IPR) litigation. Her focus also comprises tracking capital markets and disputes relating to securities law. Previously, Priyanka worked with Informist Media for 2.5 years covering major insolvency and bankruptcy cases and corporate developments. She started her career in journalism with Business Television India (BTVi) where she reported on primary markets, banking, finance and insurance companies.
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