Bombay High Court Partly Sets Aside Rs 496 Crore Award in Mumbai Metro-1 Arbitration Case

The Bombay High Court has partly allowed a petition filed by the Mumbai Metropolitan Region Development Authority (MMRDA), setting aside portions of a Rs 496 crore arbitral award granted in favour of Mumbai Metro One Private Limited (MMOPL) in connection with the Versova–Ghatkopar Metro-1 project.

In a judgment delivered on February 24, 2026, Justice Sandeep V Marne reviewed the arbitral award dated August 29, 2023, which had been passed by a three-member tribunal under the 2007 Concession Agreement governing the Metro-1 corridor.

Background of the Dispute

MMOPL, a joint venture in which Reliance Infrastructure Limited holds a 74 per cent stake and MMRDA holds 26 per cent, operates Mumbai’s first metro line between Versova and Ghatkopar.

The company had claimed that delays in handing over the Right of Way (ROW) and removal of encumbrances led to significant cost escalations. It sought compensation under multiple heads, including increased project costs, additional overheads, financial expenses, and issues linked to Viability Gap Funding (VGF).

The Metro-1 project was initially estimated at Rs 2,356 crore and was scheduled for completion within five years. However, commercial operations began in June 2014 after delays and cost overruns.

The arbitral tribunal had awarded more than Rs 496 crore with interest to MMOPL while rejecting MMRDA’s counterclaims. This prompted MMRDA to challenge the award under Section 34 of the Arbitration and Conciliation Act before the High Court.

Court’s Observations

The High Court reiterated that its role in reviewing arbitral awards is limited and that it cannot act as an appellate authority to reassess evidence. The court upheld the tribunal’s finding that delays in providing right of way and casting-yard land were attributable to MMRDA and had resulted in increased costs.

Accordingly, the court maintained that MMOPL was entitled to compensation over and above the extended concession period.

However, the court struck down three major heads of compensation, observing that MMOPL had failed to produce crucial evidence that was within its control. The judge stated that damages cannot be awarded on the basis of conjecture or guesswork when documentary proof is reasonably available.

The court emphasized that guesswork may only be applied where it is impossible to compute exact losses, not as a substitute for evidence.

Next Steps

The High Court directed both parties to submit a recalculation of the exact amount payable under the modified award. It further ordered that the revised sum be released in accordance with financing agreements, but only after eight weeks from the date of the judgment.

The ruling marks a significant development in one of Mumbai’s major infrastructure disputes, balancing contractual accountability with judicial restraint in arbitration matters.