Mumbai Metropolitan Region Development Authority (MMRDA) has deposited Rs 5.6 billion in an ongoing arbitration case concerning the city’s first metro line. The dispute stems from cost escalations on the 12-km Versova–Andheri–Ghatkopar corridor, operated by Mumbai Metro One Pvt Ltd (MMOPL), a joint venture where MMRDA holds 26% equity and a private infrastructure firm controls 74%.
The project, launched in 2007 under India’s first public-private partnership (PPP) model for urban transit, was initially estimated at Rs 23.56 billion. However, the total cost almost doubled to Rs 43.21 billion by the time of completion, triggering intense legal wrangling over the escalation. In August 2023, a three-member arbitration tribunal awarded MMOPL Rs 9.92 billion in compensation. This award was upheld by the Bombay High Court despite MMRDA contesting the decision under Section 34 of the Arbitration and Conciliation Act. While the High Court directed the full payment by July 2025, the Supreme Court’s interim order mandated a 50% deposit. MMRDA complied by transferring Rs 5.6 billion into court, marking a significant move in the case. Officials confirmed that this payment does not imply final liability acceptance but complies with court orders pending final adjudication.
The financial instability surrounding the metro project has been longstanding. MMOPL’s financial stress escalated after defaulting on loans sourced from a consortium led by Canara Bank. Subsequently, insolvency proceedings were initiated by State Bank of India and IDBI Bank in 2023. These cases were later withdrawn in April 2024 following a negotiated one-time settlement. In parallel, the National Asset Reconstruction Company (NARCL) has emerged as a key stakeholder in resolving MMOPL’s debt crisis. NARCL placed a bid of Rs 10.63 billion to acquire Rs 12.26 billion worth of stressed loans, signalling a broader market appetite for resolving complex PPP finance disputes through asset reconstruction.
Urban governance experts view this case as a litmus test for future infrastructure partnerships. With PPP frameworks continuing to be the model for large-scale urban transport systems in India, dispute resolution and financial risk-sharing will be closely watched. Officials familiar with the case underscored the need for tighter regulatory oversight and risk mitigation mechanisms in similar metro projects nationwide. Though the payment represents a major procedural step forward, the final resolution of the arbitration remains pending. Experts argue that while legal clarity is essential, such cases highlight the fragility of PPP models in the absence of long-term viability planning and adaptive contractual structures.
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