State Bank of India (SBI), the largest bank in India, has taken legal action against Reliance Infrastructure (RInfra) for the Mumbai Metro One Private Limited (MMOPL) company. MMOPL is responsible for operating the Versova – Andheri – Ghatkopar Metro Rail. SBI is seeking to recover around ₹416.08 crore from the company.
MMOPL is a joint venture between RInfra and Mumbai Metropolitan Region Development Authority (MMRDA). RInfra holds 74% of the equity share, and the remaining 26% is held by MMRDA.
This metro project is significant because it is the first one in India to be financed by Indian banks and awarded on a Public-Private Partnership basis.
SBI filed a petition under the Insolvency and Bankruptcy Code (IBC) against MMOPL before the NCLT Mumbai. Section 7 of IBC allows financial creditors to initiate Corporate Insolvency Resolution Process (CIRP) against a debtor in case of default.
Apart from SBI, other lenders of MMOPL include Canara Bank, IDBI Bank, Indian Bank, Bank of Maharashtra, IDBI Bank, and India Infrastructure Finance Company (UK).
MMOPL has faced financial stress since the start of its operations in June 2014. The company has been requesting higher fares, which has been a point of disagreement with the state government. MMOPL also attempted to generate additional revenue through commercial exploitation of certain areas of the metro assets, but the plan did not materialize.
There are disagreements between the equity partners regarding the construction cost and valuation of the 11.4 km long metro line. The concession agreement between MMRDA and RInfra, signed in 2007, had an estimated construction cost of ₹2,356 crore. However, at the end of construction, MMOPL claimed that the cost escalated to ₹4,321 crore, justifying higher fares. This led to a legal battle in the Bombay High Court.
In 2014-15, MMOPL filed an arbitration claim against MMRDA for ₹2,830 crore, including interest up to June 2020, citing various defaults under the Concession Agreement. In response, MMRDA filed counterclaims of ₹1,644 crore.
In January 2021, MMRDA sought to appoint a consultant, but there has been limited progress on this matter. The situation remains complex and uncertain, and MMOPL is seeking appropriate legal advice to protect its interests in this ongoing matter.
