India's infrastructure dreams are taking off like never before. With everything from bullet trains to smart metros, public-private partnerships (PPPs) are fueling some major development projects across the nation. But as things scale up, so do the complexities—and the risks. A recent issue with the Kanpur Metro's underground corridor serves as a stark reminder of what can go awry when payment accountability isn't built into the system.

Recent reports indicate that Gulermak, a major Turkish construction company working on the underground section of the Kanpur Metro alongside India's Sam India, has allegedly abandoned the project site without settling dues amounting to ₹80 crore. This departure has left 53 subcontractors—some of whom haven't been paid in over ten months—desperate for justice.

The Gulermak Controversy: What Happened?

Gulermak was tasked with building four stations along Corridor One of the Kanpur Metro, a key infrastructure project under the Uttar Pradesh Metro Rail Corporation (UPMRC). The company subcontracted work to over 50 smaller firms, handling everything from civil engineering to interior finishing.

Now, many of these contractors are claiming that Gulermak has left the city without paying them in full for their work. Several have gone on record saying they've only received about 50% of the promised payments, with the rest still outstanding—some for nearly a year. Despite repeatedly reaching out to UPMRC, the contractors say they haven't received any actionable response. On May 27, nine of the affected firms submitted a formal memorandum to the District Magistrate's office, seeking a resolution.

Who’s Affected? A Look at the Stakeholders

This situation isn't just a problem for one company; it sends shockwaves through an entire network of MSMEs and laborers. Some of the subcontractors affected and their outstanding dues include:

• Metro Marble – ₹3.70 crore

• Radiant Services – ₹1.20 crore

• Shreyans Infratech – ₹1.70 crore

• S Interior – ₹74.80 lakh

• MD Ehasan Painter – ₹39.80 lakh

• Vinod Gupta Enterprises – ₹8.54 lakh

• Nandan Prefab – ₹29.50 lakh

• Shri Balaji Enterprises – ₹21.50 lakh

Many of these companies are MSMEs that rely heavily on timely cash flow to keep their doors open. A sudden drop like this could seriously disrupt their operations, delay payroll, or even push some of them into bankruptcy.

UPMRC’s Position: Hands Tied?

In response to media inquiries, UPMRC’s Joint General Manager of Public Relations, Panchanan Mishra, clarified that the metro authority has already settled all payments with Gulermak for the work completed. “These contractors are sublets of the company,” he pointed out, making it clear that UPMRC isn’t directly liable.

He also mentioned that 5% of the contract value is still being held in reserve, which is a common practice in government contracts. However, if Gulermak doesn’t resolve its issues with its subcontractors, UPMRC might have to release this amount as a way to manage the situation.

This brings up a bigger issue: if subcontractors aren’t securely integrated into the payment process with proper oversight, what happens when the main contractor defaults or vanishes?

A Structural Flaw in India’s Project Finance Ecosystem

This situation shines a light on a significant flaw in how large infrastructure projects handle payments among multiple parties. The current system depends on:

• Trusting primary contractors to pay subcontractors fairly

• Post-project audits and payment holds (like UPMRC’s 5%)

• Legal actions only after problems arise

Yet, in projects worth hundreds of crores, these methods provide little real-time protection for the smaller players who are the most at risk. This model encourages a lack of transparency and opens the door for exploitation, especially in international joint ventures where one party might leave the country without any recourse.

The Need for Embedded Trust in Contract Execution

What we really need is a neutral, tech-driven trust layer that guarantees:

• Automated payments tied to milestone achievements

• Secure holding of funds until all parties confirm deliverables

• Real-time visibility into the flow of capital throughout the project lifecycle

Enter escrow infrastructure—a game-changing mechanism that can transform how public and private capital collaborates in infrastructure delivery.

How Castler Could Have Prevented This Crisis

At the core of this problem is the lack of payment security for subcontractors. This is precisely the gap that Castler, India’s top escrow infrastructure platform, aims to fill.

1. Multi-Party Escrow Agreements

Castler allows for the setup of multi-party escrow agreements where project funds are managed by a neutral escrow agent (usually a bank) and released only when contractual milestones are achieved. Each subcontractor can be a direct beneficiary, preventing payment issues like those experienced in the Gulermak case.

2. Regulated and RBI-Compliant

Castler adheres to RBI regulations and operates at bank-grade standards, providing legally binding contracts that ensure funds are safeguarded and can only be transferred under agreed-upon conditions. This mitigates the risk of one party absconding with outstanding liabilities.

3. Real-Time Dashboards and Transparency

With live dashboards, audit logs, and milestone tracking, all stakeholders—from contractors to government agencies—can keep an eye on the status of funds, approvals, and deliverables in real-time. This significantly lowers the chances of disputes and payment fraud.

4. Dispute Redressal and Legal Escrow Mechanism

If any disagreements come up, funds stay securely in escrow until a resolution is reached. This discourages contract breaches and provides a solid legal fallback without putting the entire project on hold.

5. Perfect for Infrastructure and Public Sector Projects

Castler is already making waves across various sectors, including fintech, NBFCs, gaming, real estate, and public utilities. Its customizable API-based infrastructure makes it a breeze to integrate into large-scale projects that involve multiple contractors and significant transactions.

Conclusion

The Kanpur Metro-Gulermak dispute isn’t merely a tale of unpaid dues; it’s a crucial reminder of how we need to rethink the structure of India’s infrastructure projects. In a time when technology can streamline trust and clear up financial murkiness, there’s no reason for MSMEs and subcontractors to be left exposed.

Escrow solutions like Castler do more than just safeguard funds—they protect futures.

As India prepares for trillions in infrastructure investments through Gati Shakti and the National Infrastructure Pipeline (NIP), incorporating escrow frameworks into public-private partnerships (PPPs) can promote transparency, ensure timely execution, and provide fair protection for all stakeholders.

✅ Don’t wait for defaults. Build your projects on trust.

Head over to www.castler.com to discover how escrow-led payment infrastructure can secure your next project—or reach out to us for a free consultation.