April 02, 2026, Mumbai: Mumbai Metropolitan Region Development Authority (“MMRDA”) and Mumbai Metro One Private Limited (“MMOPL”) entered into a Concession Agreement dated March 7, 2007 for the construction, operation and maintenance of the elevated Metro-1 line connecting Versova, Andheri and Ghatkopar (“Project”). MMOPL had availed loan facilities of approximately Rs. 1,650 Crores from a consortium of lenders (Canara Bank, Indian Bank, Bank of Maharashtra, State Bank of India and IDBI Bank) for the Project. The loan facilities were secured, inter alia, by a first-ranking pari-passu mortgage and charge over all receivables and accounts, including all monies received by MMOPL in relation to the Project. Such receivables were required to be deposited into an escrow account established pursuant to the Escrow Agreement dated March 16, 2016 (“Escrow Agreement”). MMOPL had been classified as a non-performing asset (NPA) in 2018, and the lenders had initiated recovery proceedings, including before the Debts Recovery Tribunal-III, New Delhi.
Disputes arose between MMOPL and MMRDA under the Concession Agreement, resulting in MMOPL initiating arbitration proceedings against MMRDA. A three-member arbitral tribunal delivered an award dated August 29, 2023, read with a corrected award dated February 26, 2024 (“Impugned Award”), in favour of MMOPL, directing MMRDA to pay approximately INR 496.48 Crores (excluding interest) to MMOPL towards its various claims. MMRDA thereafter filed Commercial Arbitration Petition No. 427 of 2024 before the Bombay High Court under Section 34 of the Arbitration and Conciliation Act, 1996 (“Section 34 Petition”), challenging the Impugned Award. MMRDA also filed Interim Application No. 3642 of 2024 (“Stay Application”) seeking an unconditional stay of the Impugned Award. The Bombay High Court, vide its order dated June 10, 2025, directed deposit of 100% of the awarded amount along with interest pending determination of the Section 34 Petition. The said order of the Bombay High Court was modified by the Supreme Court vide its order dated July 14, 2025, reducing the deposit amount to 50% of the amount awarded along with interest. Accordingly, MMRDA deposited an amount of Rs. 560,21,39,542/- with the Bombay High Court.
In the meanwhile, vide a Deed of Assignment dated December 23, 2024, the consortium of lenders assigned the loans granted to MMOPL, in favour of National Asset Reconstruction Company Limited (“NARCL”). NARCL filed Interim Application No. 3495 of 2025 seeking intervention in the Section 34 Petition, contending that in the event of the Impugned Award being sustained, the amount deposited by MMRDA along with accrued interest, ought to be transmitted to the escrow account under the Escrow Agreement. Vide judgment dated February 24, 2026, the Bombay High Court partly upheld the Impugned Award, allowed NARCL’s intervention application, and directed that the court-deposited sum along with accrued interest be transmitted to the escrow account, the details of which are to be furnished by NARCL.
This establishes a notable precedent for lenders seeking to protect their security interests against the Borrower directly within Section 34 proceedings between the Borrower and other third parties, by securing payment through a substantive court order rather than being relegated to pursuing separate enforcement proceedings.
The transaction team was led by Dhananjay Kumar, Partner (Head- Insolvency & Restructuring); Gathi Prakash Karrah, and Surbhi Pareek, Partners; with assistance from Nidhi Asher, Principal Associate; Aditya Tanay Pandey and Vidushi Trivedi, Associates.
