The bench, which is monitoring the construction of the Metro's fourth phase, said the Delhi Metro Rail Corporation(DMRC) will incur heavy operational losses, while facilities will suffer as a result of the Delhi government-proposed plan.
Justice Mishra said: "You (Delhi government) will make travel free and the Central government will have to pay for it."
On the Delhi government's admission that it is not immediately implementing the proposal, the court replied that it would be implemented sooner or later.
"They (Centre) will suffer with your policy..you (Delhi government) are aiming to destroy the metro", Justice Mishra said, adding that the Delhi government plan cannot be implemented without Centre's cooperation.
Noting that losses on this count will run up to Rs 1,500 crore per annum, the bench said that, as a result, DMRC may not remain a profitable venture.
The court also told the Delhi government that it must spend public money properly and should refrain from giving free sops to people.
The annual revenue for DMRC ranges between Rs 6,000 to Rs 7,000 crore.
The court noted that if free sops are given, there would be a yearly direct loss to DMRC, incapacitating the Corporation from paring its long-term debt obligations on time, hampering its expansion and depreciating both facilities and maintenance.
DMRC is the beneficiary of a soft loan from Japan.
The court was informed that Delhi Metro has never run into losses, and it may not run into losses in future.
Justice Mishra said that the Delhi government should, instead, be devising a strategy to keep costs down.
"Public money is what you (Delhi government) handle, and in case of any public money caution should be excercised. Court is not powerless. Self-treated bankruptcy should not come in the way," he said.
The court noted that Delhi Metro and the Centre are not in complete agreement with the plan.
The Delhi Metro had sent a report in July to the Aam Aadmi Party (AAP) government, seeking at least eight months to prepare for implementing the proposal, which included seeking approval from the fare-fixation committee.
DMRC has said Rs 1,566.64 crore was required annually to fund the fare exemption.
According to Delhi Chief Minister Arvind Kejriwal the fare fixation committee's approval is a mere "formality".
The Supreme Court is monitoring the development of DMRC's fourth phase, which is over 100 km long and estimated to add around 18.6 lakh riders per day.
The phase-IV of Delhi Metro will consist of six corridors Aerocity to Tughlakabad, Inderlok to Indraprastha, Lajpat Nagar to Saket G Block, Mukundpur to Maujpur, Janakpuri West to R.K. Ashram and Rithala to Bawana and Narela.
Of the 103.94 km to be constructed, 37.01 km will be underground while around 66.92 km will be elevated. The estimated cost of the project is Rs 46,845 crore.
(Sumit Saxena can be contacted at sumit.s@.in)
( With inputs from IANS )