A dramatic incident unfolded on Elizabeth Street at around 9:40 p.m. when a male passenger reportedly threatened a taxi driver near the Flinders Lane intersection.

Fortunately, the driver managed to escape unharmed, abandoning the vehicle in the process.

According to reports, the passenger allegedly seized the taxi keys and drove off towards North Melbourne, only to return to the city shortly afterward.

The situation escalated when the taxi collided with another car at approximately 10 p.m., causing a chain reaction that involved several other vehicles and damaged traffic lights at the Flinders Street and Spencer Street junction.

As the alleged carjacker attempted to flee the scene, an off-duty police officer intervened and restrained him, authorities stated.

Law enforcement has since apprehended a 36-year-old man, who is currently without a fixed address. He was taken to the hospital for a medical evaluation.

He will be interviewed by detectives.