The Delhi Metro Rail Corporation (DMRC) on Thursday launched a rights issue to raise Rs 7,131 crore from its existing shareholders – the Centre and the Delhi government, which own 50 per cent of the company each – to put an end to its tussle with Reliance Infrastructure (RInfra).
The decision was taken at a meeting of the company’s board on Tuesday, a day after the Supreme Court cracked the whip on the urban transporter for repeatedly failing to pay Delhi Airport Metro Express (DAMEPL), a RInfra subsidiary, Rs 4,500 crore worth of arbitral award dues.
The issue will close on January 11, and DMRC has asked both its shareholders to subscribe equally to the equity share capital, which works out to Rs 3,565.64 crore each.
The development comes after both the Centre and the Delhi government refused to grant the amount to the urban transporter as capital expenditure. The Delhi government refused to bail DMRC out on the grounds that it did not have budgetary provisions to release the amount sought by the firm.
“This procedure (rights issue) is necessary for the purposes of getting the equity shareholders to discharge their respective liability even though meetings have already been held in the above regard,” DMRC told the apex court in an affidavit on Wednesday.
Seeking more time, the company said the two governments would incur non-budgeted financial outflows if they were to release funds for paying the dues. This would require passing an appropriation Bill.
If not granted additional time, DMRC told the court, its operations would come to a complete standstill, “which would be prejudicial to the public interest, considering that approximately 5.1 million journeys take place daily on the metro…”
The Supreme Court on Wednesday came down heavily on DMRC and the Centre, saying that the law with regard to the execution of arbitral award was no different for the government or its statutory corporations.
The court has directed the single judge Bench of the Delhi High Court, which is hearing DAMEPL’s execution petition, to proceed with the execution of the award expeditiously and take it to its logical end within three months. The matter will next be heard in the Delhi High Court on December 22.
DMRC had previously tried to raise Rs 2,700 crore through bank loans, but later informed the court that it didn’t find that option viable as it would make the urban transporter fall into a debt trap.
DMRC and DAMEPL have been at odds ever since the latter pulled out of the Delhi Metro Airport Line operations due to safety issues arising from structural defects. An arbitral court ruled in favour of the RInfra firm in 2017, asking DMRC to pay the arbitral award, which was later upheld by the Supreme Court.