Shares of Axis Bank and Reliance Infrastructure took a hit today after the Supreme Court of India issued a contempt notice to Axis Bank, its Managing Director Amitabh Choudhary, and a subsidiary of Reliance Infrastructure over a long-standing ₹4,500 crore escrow deposit dispute.
Case Background
The Delhi Metro Rail Corporation (DMRC) filed a contempt plea accusing Axis Bank and Delhi Airport Metro Express Private Limited (DAMEPL), a unit of Reliance Infrastructure, of defying a Supreme Court order issued in April 2024.
Supreme Court’s April 2024 Ruling
- The court overturned a previous mandate requiring DMRC to pay a ₹8,000 crore arbitration award to DAMEPL.
- Axis Bank was ordered to refund ₹4,500 crore, including ₹2,800 crore principal and accrued interest, held in escrow on behalf of DMRC.
Allegations of Non-Compliance
DMRC claims that Axis Bank and DAMEPL have failed to return the escrow funds as directed, accusing them of “wilfully” defying the Supreme Court’s instructions.
Current Proceedings
The Supreme Court has directed the respondents to provide an explanation for the non-compliance, marking a critical escalation in the case involving substantial public funds.
Market Impact
- Axis Bank Ltd.: Shares dropped by 0.45% to ₹1,148.50 as of 2:24 PM.
- Reliance Infrastructure Ltd.: Shares fell by 2.58% to ₹297.00 as of the same time.
This development highlights the ongoing challenges in ensuring judicial compliance in high-stakes corporate disputes and its potential implications for investor confidence in the involved entities. Both Axis Bank and Reliance Infrastructure are expected to respond to the Supreme Court’s notice in the coming days.
