High Court Asks IL&FS SPVs to Continue Running Gurgaon Rapid Metro till 17th September
Moneylife Digital Team 10 September 2019
In a relief to commuters, the Punjab and Haryana High Court has asked Rapid Metro Rail Gurgaon Ltd (RMGL) and Rapid Metrorail Gurgaon South Ltd (RMSGL), the two special purpose vehicles (SPVs) of scam-hit Infrastructure Leasing & Financial Services (IL&FS) to continue to operate and manage the Rapid Metro Rail on both lines till 17 September 2019. However, the cost will end up being borne by the Haryana Urban Development Authority (HUDA). 
A bench comprising Justices Rakesh Kumar Jain and Arun Kumar Tyagi said, "Till the next date of hearing 17th September, the respondent shall operate and manage the Rapid Metro Rail at Gurgaon (now Gurugram) on both the lines but subject to reimbursement of the insurance and operation and maintenance cost by the petitioners in this period." The court will further hearing into the matter on 17th September.
The High Court decision is crucial in connection with the operational continuity of the Gurgaon Metro, the country's first fully privately built rapid rail system. Further, IL&FS, which built it is now facing bankruptcy proceedings before the NCLAT, thus putting the Gurgaon Rapid Metro service at risk of closure.
The HC order came after the expiry of 90-day termination notice served by RMGL and RMGSL, the two SPVs floated by IL&FS for the rail project. The notice was served on HUDA on 7th June. Gurgaon Metro is a crucial public utility carrying nearly 60,000 passengers every day and it is commonly referred as 'Millennium City's daily commute lifeline.
Last week, HUDA had moved the High Court challenging the validity of termination notice. The development authority had sought courts directions in connection with the continuity of public utility by these two SPVs operating the metro link.
The High Court observed that the dispute between the parties may be resolved by negotiation for which they both would require some time and, therefore, the hearing of this case was deferred to 17th September. The order of stay granted last week is also extended till midnight of 17th September.
Chetan Mittal, counsel for Haryana Mass Rapid Transport Corp Ltd (HMRTCL) told the court that Justice DK Jain, appointed by National Company Law Appellate Tribunal (NCLAT) to oversee the processes, had given the nod to transfer assets, handing over the possession and to negotiate for operation and maintenance.
This is pursuant to the NCLAT order of 8 August 2019 where - RMGL and RMGSL - being red entities were required to seek prior approval from Justice (retd) Jain, former Supreme Court judge, mandated to oversee the IL&FS resolution process, before selling, transferring, encumbering, alienating, dealing with or creating any third party right, title or interest on any movable or immovable assets.
Justice Jain, in the order, has also said that HUDA shall be free to engage the services of RMGL at mutually discussed charges to run the Metro Link till such time appropriate or alternate arrangements are made to run the same, a report from IANS says.
Mr Mittal told the HC that the contract between RMGSL and HMRTCL stood terminated from both the sides. "Some disputes relating to transfer of assets would take some time. But they are ready to go ahead, whatever be the operational costs as its continuation is in larger public interest," he said.
The project, he said, has earned Rs4 crore profit during three-month period. The total earnings were about Rs18 crore, while the cost of operations were around Rs14 crore. Besides they were in touch with Delhi Metro Rail Project and other agencies.
In the last hearing, Mr Mittal had said the HMRTCL and the respondent had entered into an agreement, whereby the concessionaire was required to develop, operate and maintain metro link from Delhi Metro Sikandarpur Station on MG Road to Sector 56, Gurugram.
As pointed out by Moneylife, the spanking world-class Rapid Metro, which became operational in Gurgaon (now Gurugram) in 2013, had certainly added lustre to the modern township built by DLF. But the project was based entirely on fraudulent and fabricated ridership claims, to get government sanctions, right of way for land use and other benefits. The metro project was conceived by DLF, the realty giant, and mid-wifed by the scandal-hit IL&FS. (Read: IL&FS Scam: Gurgaon’s Rapid Metro Was Based on Entirely Fraudulent Numbers)
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