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The Mumbai bench of the National Company Law Tribunal (NCLT) has disposed of the corporate insolvency proceedings (CIRP) against Mumbai Metro One Private Limited (MMOPL), a unit of Reliance Infrastructure, following a one-time debt settlement between the lenders and the company. This resolution could pave the way for the Maharashtra government to acquire Reliance Infrastructure's stake in Mumbai's busiest metro rail line.
State Bank of India (SBI) and IDBI Bank had separately approached the bankruptcy court against MMOPL for non-payment of dues worth INR 416 crore and INR 133 crore respectively. The two banks are part of a consortium of six lenders who had originally lent a principal amount of INR 1,711 crore for the Mumbai Metro project.
MMOPL is a 74:26 joint venture between Reliance Infrastructure Ltd and Mumbai Metropolitan Regional Development Authority (MMRDA). The Mumbai Metro commenced operations in June 2014, spanning 11.4 kilometres between Versova, Andheri and Ghatkopar. It serves as Mumbai's oldest and busiest metro line, carrying over 450,000 daily commuters.
Reliance Infrastructure has been looking to exit the Mumbai Metro project since 2020 but disagreements over valuation had stalled the transaction. Last month, the Maharashtra cabinet cleared the purchase of Reliance Infrastructure's 74% stake in MMOPL, valuing the stake at INR 4,000 crore. The valuation was arrived at by a committee led by former state chief secretary Johny Joseph using the discounted cash flow model.
In a separate recent case, last week, the Supreme Court had overturned its previous order directing the Delhi Metro Rail Corporation (DMRC) to pay an arbitration award of INR 8,000 crore to Delhi Airport Metro Express Private Limited (DAMEPL), a special purpose vehicle under Reliance Infrastructure. The Supreme Court also ordered DAMEPL to refund around INR 3,300 crore which it had already received from DMRC. Reliance Infrastructure later clarified that the order does not impose any liability on it and that it had not received any money from DMRC or DAMEPL under the arbitration award
Reliance Infrastructure later clarified that the order does not impose any liability on it and that it had not received any funds from DMRC or DAMEPL related to the arbitration award.
With the resolution of insolvency proceedings and clearance of the stake purchase, the Maharashtra government is set to take over operations of the crucial Mumbai metro line. Overall, these developments will help settle the outstanding financial and legal issues around MMOPL and the Mumbai Metro.
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