The Gurgaon Metro is the country's first fully privately-developed project which was built by IL&FS.

The Gurgaon Metro will be operated and maintained by IL&FS till September 17 midnight as a licensee while its operational cost will be borne by the Haryana Urban Development Authority (HUDA), the Punjab and Haryana High Court ruled on Monday. The court also set September 17 as the next date of hearing in the matter related to termination of service contract between HUDA and Rapid Metro Rail Gurgaon Limited (RMGL) and Rapid Metro Rail Gurgaon South Limited (RMGSL), the two special purpose vehicles (SPVs) floated by the IL&FS.

The Gurgaon Metro is the country's first fully privately-developed project which was built by Infrastructure Leasing & Financial Services (IL&FS). IL&FS is now facing bankruptcy proceedings in the National Company Law Appellate Tribunal, putting the rail service at risk of closure.

Till the next date of hearing on September 17, the respondent (RMGL) shall operate and manage the Rapid Metro Rail at Gurgaon on both the lines but subject to reimbursement of the insurance and operation and maintenance cost by the petitioners (HUDA) of this period, the high court said in its order.

The court also stated that RMGL would not act as a concessionaire and would rather act as an agent, even as the counsel for HUDA submitted that the respondent can act as a licensee. The parties have also agreed to a termination of contract payment of at least 80 per cent to be given to RMGL/RMGSL by HUDA, the order said.

This would amount to nearly Rs 1,800 crore in payment to IL&FS, according to sources. The court said it has found that the dispute between the parties may be resolved by negotiation for which they both would require some time and, accordingly, it deferred the hearing of the to September 17.

The two parties also agreed to a time-bound handover of the project by IL&FS to HUDA, with the court seeking detailed modalities of how the transfer would work out between them. The development came after the expiry of the 90-day termination notice served by RMGL and RMGSL to HUDA on June 7, which came to end on September 7.

HUDA had moved the high court on September 6 challenging the validity of the termination notice and sought courts directions on continuity of the public utility by these two SPVs operating the metro link.

While some sources said the two IL&FS SPVs decided to terminate operations for financial reasons, the company has said it served termination notice to HUDA over the 'breach of terms" as per the concession agreement. The RMGL and RMGSL had on Friday last got approval from Justice (retd) D K Jain, appointed by the NCLAT to oversee IL&FS resolution process, to transfer the Gurgaon Metro Link to HUDA on September 9.

The Rapid Metro is a fully-elevated rapid transit system with stations at Cyber City, DLF Phase 2, DLF Phase 3, NH-8 and Golf Course Road up to Sector 55-56, among others and provides connectivity to the Delhi Metro from Sikanderpur Station. The metro witnesses an average daily ridership of around 60,000 passengers.