HC stays Gurugram Rapid Metro move to terminate operations

A division bench directed the company to continue operations on both its lines till Monday.

Chandigarh: The Punjab and Haryana High Court on Friday stayed a move by Rapid Metro Rail Gurgaon Ltd for terminating the operation of the Rapid Metro Rail Project in Gurugram from September 9.

A division bench directed the company to continue operations on both its lines till Monday.

The order by the division bench headed by Justice R.K. Jain came on a petition of the state-run Haryana Mass Rapid Transport Corporation Ltd and Haryana Shehri Vikas Pradhikaran, formerly Haryana Urban Development Authority, fixed on Friday for urgent hearing.

India's first fully privately-financed metro system, the Rapid Metro has been facing a funds crunch six years after it started commercial operations on November 14, 2013, say insiders.

According to the petition, Rapid Metro Rail Gurgaon Ltd invoked the termination clause through the impugned notice dated June 7.

However, in view of the order dated February 4, passed by the National Company Law Appellate Tribunal (NCLAT), Delhi, the respondent was required to take permission from Justice D.K. Jain (retd), who has been appointed to supervise the operation of the resolution process pertaining to IL&FS

Infrastructure and its group companies, including Rapid Metro Rail Gurgaon Ltd.

Rapid Metro Rail Gurgaon Ltd has filed an application before the authority which is being contested by the present petitioners, including the validity of the termination notice and also for initiation of termination process by the petitioner as well.

The final order is yet to be passed by the said authority, however, the operation of the Rapid Metro Rail Project, as per the impugned termination notice of the respondent, will come to an end on September 8, said the petitioners.

They have made requests to the Rapid Metro Rail Gurgaon Ltd and to the competent authority to extend this date, however, the respondent has not communicated any decision to that effect.

As such, the petitioners said they were left with no alternative but to approach the High Court to impugn the said termination notice dated June 7 to that extent as the same is totally illegal, arbitrary, and against the larger public interest.

Also, it was against the true intent of the orders passed by the NCLAT as the same can only come in operation after the requisite permission is granted for handing over and taking over of the operations by the competent authority, the petition added.

In 2008, Haryana Urban Development Authority is desirous of developing a Metro Rail Link from Delhi Metro's Sikanderpur Station on MG Road to National

Highway 8 had issued a request for qualification and request for proposal inviting potential bidders.

IL&FS Transportation and Network Ltd, ITNL Enso Rail Systems Ltd and DLF Metro Ltd formed a consortium and submitted their bid.

After evaluating the bids, it accepted the bid of the consortium and issued a letter of award on July 16, 2009, to the consortium with a condition that a concession agreement would be executed within 60 days of the issuance of the letter of award.

The petition says several meetings were held between the representatives of the petitioners and the respondent between November 5, 2018, and March 4, 2019, to discuss the modalities of taking over of the project by the petitioners in an amicable manner.

However, no amicable resolution could be arrived at and the respondent continued to be in breach of the said agreement.

In July 2018, the road arm of IL&FS was facing difficulty in making repayments due on its bonds.

Further, in early September 2018, one of the subsidiaries of IL&FS Group was unable to repay a short-term loan of Rs 1,000 crore taken from Small Industries Development Bank of India.

Also, certain group companies, says the petition, defaulted in repayments of various short and long-term deposits, inter-corporate deposits, and commercial papers.

IL&FS failed continuously to service its debt and the imminent possibility of a contagion effect in the financial market led the Union of India to move an application under Sections 241 and 242 of the Companies Act, 2013, before the NCLAT, Mumbai Bench, wherein it sought the immediate suspension of the

Board of Directors of IL&FS and the appointment of specified new directors, on grounds of massive mismanagement of public funds by the erstwhile board, says the petition.

It was also alleged that the affairs of the company were being conducted in a manner prejudicial to the public interest, it says.

On December 6, 2018, the Economic Offences Wing of Delhi Police filed a case against IL&FS Limited, IL&FS Transportation Ltd, Ravi Parthasarathy, Hari Sankarant and 18 others for siphoning off funds worth Rs 154.07 crore, the petition added.