New Delhi, April 21 (). The Department of Economic Affairs, Ministry of Finance has advised the Ministry of Housing and Urban Affairs (MoHUA) that the impact of the proposed amendment on the rights of lenders as well as those exempted under other laws should be considered.
The Department of Economic Affairs is of the view that the proposed amendments may affect other stipulations of the Metro Act and may also affect lenders’ approach to metro projects, as lenders may be denied recourse to revenue streams of such projects. can be done.
The Department of Expenditure (Ministry of Finance) has also sought safeguards, so that the payment of dues by the metros to the Government of India, to protect the interests of the Government of India, would be irreversible.
The Ministry of Housing and Urban Affairs had sought comments from various Central Ministries on the proposed amendment to the Metro Act.
The proposed amendment will certainly discourage international and domestic funding agencies from participating in the Indian infrastructure sector apart from the suppliers/contractors. This amendment raises more concerns than it resolves.
The single point agenda of the Ministry of Housing and Urban Affairs is to encumber Metro Rail property from execution proceedings, as per arbitration awards and civil court orders, regardless of the subsequent effects of such a move.
Even the Central Ministries are not on the same page as the Ministry of Housing and Urban Affairs.
Had the MOHUA simultaneously suggested some way of paying the decree holders, either by the Government of India itself or through any other viable option, that would have prevented so much anxiety. The proposed amendment bars recourse to decree holders, even in the case of a decree passed only by the Supreme Court of India.
Even government companies (like IRCON, NBCC) participating in tenders floated by metro rail companies will also be adversely affected. Most public financial institutions and banks will also be adversely affected, as they will not be able to recover their funds for metro projects if the orders against the metro rail companies are not implemented.
The amendment in the Metro Act will have a serious impact on India’s ranking in Ease of Doing Business.
According to the Union Law Ministry, the proposed amendment prima facie does not meet the test of constitutionality.
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