Supreme Court issues contempt notice to Axis Bank, Reliance Infra arm over ₹4,500 cr refund to DMRC
- The sought a response from the Reliance Infrastructure subsidiary and Axis Bank on why contempt proceedings should not be initiated against them for failing to refund more than ₹4,500 crore to the Delhi Metro Rail Corp.
The Supreme Court on Wednesday issued a contempt notice to the managing directors of Reliance Infrastructure’s subsidiary, Delhi Airport Metro Express Pvt. Ltd (DAMEPL), and Axis Bank, among others, for failing to refund over ₹4,500 crore, including interest, to the Delhi Metro Rail Corp. (DMRC) as part of an arbitral award that was set aside by the court in April.
The three-judge bench led by Justice Surya Kant sought a response from the Reliance Infrastructure subsidiary and Axis Bank on why contempt proceedings should not be initiated against them for failing to refund more than ₹4,500 crore, including interest, to the Delhi Metro Rail Corporation (DMRC), as directed by the apex court in April.
However, the court exempted the alleged contemnors from personal appearance before the court.
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This contempt notice was issued in response to a plea by DMRC, which had moved a contempt petition against DAMEPL, the managing director of the Reliance Infrastructure subsidiary, and others for “wilfully disobeying” the court’s order to refund the amount deposited in an escrow account by the DMRC.
It is noted that the first contempt plea was placed before a bench comprising Justices B.R. Gavai and K.V. Vishwanathan. However, Justice Vishwanathan recused himself as he had appeared in the matter as a lawyer sometime back.
In April, the Supreme Court set aside an arbitration award of about ₹8,000 crore that DAMEPL had won against a state-run entity.
The three-judge bench headed by then chief justice D.Y. Chandrachud, allowed DMRC’s curative petition and noted that the reversal of the Delhi High Court’s January 2019 decision had led to a “grave miscarriage of justice.”
A spokesperson for Axis Bank said that the copy of the contempt petition has not been served on the bank.
“We will review the contempt petition on receipt and take appropriate legal recourse in consultation with consortium lenders. We wish to clarify that all amounts received by consortium lenders were as per their contractual entitlements,” the spokesperson said.
History of the Legal Dispute
The DMRC-DAMEPL saga began in 2008 when both parties signed an agreement for the design, installation, commissioning, operation, and maintenance of the Airport Metro Express Line, running from New Delhi Railway Station to Sector 21 Dwarka for a 30-year term.
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This line was to run through the Delhi Airport. While DMRC handled the construction of all civil structures, DAMEPL was responsible for all system works.
However, in July 2012, DAMEPL suspended operations due to defects found in the viaduct and issued a notice to DMRC—the party in charge of this aspect—to fix the problem.
In October 2012, DAMEPL served a termination notice, prompting authorities to conduct inspections in November 2012.
The line was cleared for operations in January 2013, but DAMEPL withdrew from the project within five months in June 2013. This led DMRC to invoke the arbitration clause in the contract.
The arbitral tribunal ruled in favor of DAMEPL in 2017, instructing DMRC to pay ₹2,782.33 crore. DMRC then moved to the Delhi High Court, where a single bench initially dismissed the petition.
However, a division bench later overturned the arbitral tribunal’s decision, ruling that it was “in conflict with the public policy of India.”
The Anil Ambani-led company’s arm subsequently approached the Supreme Court.
In 2021, the SC ruled that arbitral tribunal awards are not subject to challenge and upheld the award. Following this ruling, DMRC filed a curative petition, which the apex court granted on 10 April 2024.
The original arbitral award, which had grown to ₹7,045.41 crore by the end of 2021, was when DAMEPL asked the Delhi High Court to enforce the 2017 order.
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At that time, DMRC had paid ₹1,000 crore and informed the court that it was unable to pay the full arbitral award, suggesting that the Delhi government and the Ministry of Housing and Urban Affairs should pay. As of today, the amount has increased to ₹8,000 crore.
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Business NewsIndustrySupreme Court issues contempt notice to Axis Bank, Reliance Infra arm over ₹4,500 cr refund to DMRC
First Published:11 Dec 2024, 07:26 PM IST
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