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Economy Business ILFS to run Gurgaon Metro till Sept 17; HUDA...

ILFS to run Gurgaon Metro till Sept 17; HUDA to bear cost

The ILFS is now facing bankruptcy proceedings in the National Company Law Appellate Tribunal, putting the rail service at risk of closure

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Gurgaon: The Gurgaon Metro will be operated and maintained by ILFS (technically called IL&FS) till 17 September midnight as a licensee while its operational cost will be borne by the Haryana Urban Development Authority, the Punjab and Haryana High Court ruled on Monday.

The court set 17 September also as the next date of hearing in the matter related to the termination of the service contract between HUDA, Rapid Metro Rail Gurgaon Limited (RMGL) and Rapid Metro Rail Gurgaon South Limited (RMGSL), the two special purpose vehicles (SPVs) floated by the ILFS.

The Gurgaon Metro is the country’s first fully privately-developed project which was built by the Infrastructure Leasing & Financial Services (ILFS).

The ILFS is now facing bankruptcy proceedings in the National Company Law Appellate Tribunal, putting the rail service at risk of closure.

Till the next date of hearing on 17 September, the respondent (RMGL) shall operate and manage the Rapid Metro Rail at Gurgaon on both the lines but subject to reimbursement of the insurance and operation and maintenance cost by the petitioners (HUDA) of this period, the high court said in its order.

The court also stated that RMGL would not act as a concessionaire and would rather act as an agent, even as the counsel for HUDA submitted that the respondent can act as a licensee.

The parties have also agreed to a termination of the contract payment of at least 80% to be given to RMGL/RMGSL by HUDA, the order said.

This would amount to nearly Rs 1,800 crore in payment to ILFS, according to sources.

The Gurgaon Metro is the country’s first fully privately-developed project

The court said it has found that the dispute between the parties may be resolved by negotiation for which they both would require some time and, accordingly, it deferred the hearing of the to 17 September.

The two parties also agreed to a time-bound handover of the project by ILFS to HUDA, with the court seeking detailed modalities of how the transfer would work out between them.

The development came after the expiry of the 90-day termination notice served by RMGL and RMGSL to HUDA on 7 June, which came to end on 7 September.

HUDA had moved the high court on 6 September, challenging the validity of the termination notice and sought courts directions on continuity of the public utility by these two SPVs operating the metro link.

While some sources said the two ILFS SPVs decided to terminate operations for financial reasons, the company has said it served termination notice to HUDA over the ‘breach of terms” as per the concession agreement.

The RMGL and RMGSL had on Friday last got approval from Justice (retd) D K Jain, appointed by the NCLAT to oversee ILFS resolution process, to transfer the Gurgaon Metro Link to HUDA on 9 September.

The Rapid Metro is a fully-elevated rapid transit system with stations at Cyber City, DLF Phase 2, DLF Phase 3, NH-8 and Golf Course Road up to Sector 55-56, among others and provides connectivity to the Delhi Metro from Sikanderpur Station.

The metro witnesses an average daily ridership of around 60,000 passengers.

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