Pay ₹1,169 crore to Reliance Infrastructure arm: Bombay HC to MMRDA

In a relief to Anil Ambani-promoted Reliance Infrastructure, the Bombay High Court on Tuesday directed the Mumbai Metropolitan Region Development Authority (MMRDA) to pay the arbitration award of ₹1,169 crore to its debt-ridden subsidiary Mumbai Metro One Pvt Ltd (MMOPL).

 

MMOPL has been operating Mumbai’s first metro line between the Versova-Andheri-Ghatkopar Corridor -- which recently completed 11 years of operations. 

 

The money -- which the firm intends to use to slash its debt -- has to be deposited with the registry of the court before July 15, 2025, Reliance Infrastructure told the Bombay Stock Exchange.

 

The stocks of Reliance Infrastructure soared 3.53 per cent to touch 404.40 on Tuesday.

 

 

The matter dates back to August 2023, when MMOPL won an arbitration award of ₹992 crore passed by a three-member arbitral tribunal in the matter of arbitration between MMOPL and MMRDA for various disputes, including the cost of the project.

 

The initial estimated cost of the project was ₹2,356 crore, according to the data from MMRDA’s website. The cost escalated to ₹4,321 crore later.

 

MMRDA had challenged the award, initiating proceedings for the same under section 34 of the Arbitration and Conciliation Act, 1996 -- which the high court has now upheld in favour of MMOPL.

 

MMOPL is a joint venture of Reliance Infrastructure and MMRDA, where Reliance Infrastructure holds a 74 per cent stake, while the rest is with the MMRDA.

 

The mass rapid transit system project was awarded by MMRDA through a global competitive bidding process on a public-private-partnership (PPP) framework to a Reliance Infrastructure-led consortium in 2007.

 

MMOPL, a special-purpose vehicle, was incorporated for the implementation of the project. MMRDA is an apex body for planning and coordination of development activities in the MMR. 

 

This was the first metro project awarded in the country on a PPP basis and entailed the design, financing, construction, operation, and maintenance of about 12-km of elevated metro with 12 stations en-route.

 

The project was financed by a consortium of banks led by Canara Bank. The other banks in the consortium were Indian Bank, State Bank of India, Bank of Maharashtra, IDBI Bank, and India Infrastructure Finance Company (UK).

 

However, in November 2024, the consortium was looking to sell ₹1,226 crore of loans through a bidding process.

 

In the same month, state-owned National Asset Reconstruction Company Ltd. (NARCL) had given an anchor bid of ₹1,063 crore to acquire the stressed loans from the MMOPL consortium.

 

Separately, State Bank of India (SBI) and IDBI Bank had initiated insolvency proceedings against MMOPL amid non-payment of loans of ₹416.08 crore and ₹133 crore, respectively, in 2023.

 

However, in April 2024, the Mumbai bench of the National Company Law Tribunal (NCLT) dismissed their petitions as the parties concerned agreed to the one-time debt settlement.

 

In March 2024, the government of Maharashtra approved the purchase of Reliance Infrastructure’s 74 per cent stake in MMOPL for ₹4,000 crore through MMRDA.

 

However, the plan was stalled due to lack of funds with MMRDA being cited as one of the reasons behind the move, according to a report by The Hindu in June 2024.