Today (10th April), Reliance Infrastructure’s stock declined by 20% following a Supreme Court decision that overturned an Rs 8,000 crore arbitration award in favor of the Delhi Metro Rail Corporation (DMRC). The reversal of this award dealt a significant blow to the company’s financial outlook, leading to a sharp decline in investor confidence and stock value. Reliance Infra now faces renewed challenges in its ongoing legal battles and financial stability.
New Delhi: On April 10th, Reliance Infrastructure’s shares declined by 20%, reaching the lower circuit at Rs 227.4, subsequent to a Supreme Court mandate for its airport metro division to reimburse arbitral award payments to the Delhi Metro Rail Corporation (DMRC). This decline likely reflects market concerns and reactions following adverse legal developments, such as the Supreme Court’s decision regarding arbitration payments to DMRC. Investors are closely monitoring the situation for further impacts on the company’s financial stability and future prospects
The Supreme Court, in response to DMRC’s curative petition, reversed its prior decision that held the public transporter accountable for approximately Rs 8,000 crore payment to Delhi Airport Metro Express Pvt Ltd (DAMEPL).
The bench, led by Chief Justice of India DY Chandrachud, along with Justices BR Gavai and Surya Kant, instructed the Reliance Infrastructure unit to repay the funds deposited by DMRC. This legal matter originates from DMRC’s failure to remit termination fees to DAMEPL, a firm belonging to Anil Ambani’s Reliance Infrastructure.
DMRC terminated an agreement to operate the airport metro line in the capital but continued to utilize the project’s resources and earnings from July 2013 onward.
An arbitration panel ruled in favor of DAMEPL, instructing DMRC to pay Rs 2782.33 crore along with interest.
This decision affirmed by both the Delhi High Court and subsequently the Supreme Court.
As of February 14, 2022, DMRC settled Rs 1,678.42 crore of the outstanding amount, leaving Rs 8009.38 crore unpaid. By February 2023, this pending amount decreased to Rs 6330.96 crore. DMRC’s curative petition sought to contest the 2021 Supreme Court ruling.
In terms of stock performance, Reliance Infrastructure shares have risen by 8% this year, outperforming the Nifty 50 index’s 4% increase.