Anil Ambani Dragged to Court Again: Reliance Infrastructure Suffers

The Apex Court of India on Wednesday set aside a reward worth Rs.8000 crores for Delhi Airport Metro Express Private Limited (DAMEPL) about a legal battle with Delhi Metro Rail Corporation (DMRC) in a case dated back to 2008 by deciding in favour of DMRC, The Apex court has asked the DAMEPL to refund the funds which were paid to them.

The Complete Chronology:

The complete storyline goes back to 2012 when a conflict arose from DMRC to decide to terminate the contract of DAMEPL, which was building the Delhi Airport Export Metro Line due to safety issues related to structural defects. DAMEPL handed the line over to DMRC. 

Then the dispute went on to an arbitral tribunal in 2017 ruled in DAMEPL’s favour but in 2019 Delhi HC reversed the tribunal award. 

DAMEPL moved the case to the Supreme Court in 2021 and the Top Court, in 2021 reversed the High Court’s order. But on Wednesday The Apex Court set aside the Rs.8000 crore award and stated that “By setting aside the Delhi High Court judgement, this court [SC] restored a patently illegal award which saddled a public utility with an exorbitant liability” and the bench further said “the earlier SC verdicts in the case resulted in a “miscarriage of justice” and warranted it to exercise the curative jurisdiction.”

Impact on Reliance Infrastructure Stock:

Due to this verdict, the stock has fallen more than 30% – on the NSE and BSE. The Company’s market valuation eroded to Rs.7,810 crores. 

Reliance Infrastructure statement:

The statement from the company came, “Reliance Infrastructure wishes to clarify that the Order dated April 10, 2024, passed by the Supreme Court does not impose any liability on the company and the company has not received any money from DMRC / DAMEPL under the arbitral award,” the firm said in a stock exchange filing.” While DAMEPL is a subsidiary of Reliance Infrastructure, it is a separate entity and the liability falls on it.

Conclusion:

Till now DMRC has paid around Rs. 3300 crores to DAMEPL which is now to be refunded back to them. As DAMEPL is an arm of Reliance Infrastructure this impacted the stock significantly and the stock plunged around 20%. The stock has made a 52-week high of Rs.308 and a 52-week low level of Rs.131 which states that the market has negatively reacted to it.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.