Short answer: Bad writing or plot hole
Whatever you want to call it, the whole scene is basically patched together without accounting for all the facts.
The driver should have been aware of the situation long before Octavius ripped out his controls. He might have noticed two people crashing into the train, he probably would have noticed them fighting on top or inside the train, but he did not.
If he had noticed, he probably would have stopped the train.
The passengers most definitely did notice the fight, but still did not pull the emergency brakes. One reason for that might be that passengers in New York were advised not to pull the emergency brakes in case of an emergency. Here is an article from the NY Times:
Every subway car in the city is equipped with a placard titled
“Emergency Instructions.” The first instruction: “Do not pull the
So what emergency, exactly, does this emergency brake refer to? The
explanation, transit officials say, is simple. If someone gets caught
between the train’s closing doors, or between subway cars, and is
about to be dragged to an unenviable fate, pull the cord. The train
will stop, possibly saving a life.
But in case of fire, crime or a sick passenger — in fact, any other
situation that could fairly be described as an emergency — the cord
should be left alone. Stopping the train between stations will make it
harder for help to arrive.
However, in case of two people fighting on top of the train, I would have pulled the emergency brake.
Lastly, the whole scenario is very much impossible, as some nice people over at Engineering SE confirmed:
As hazzey put it:
Rail brakes are designed to be fail-safe. That is, when a failure occurs, the safe operation happens.
And regdoug writes:
I suspect that ripping out the speed control lever would have immediately applied the emergency brake.
So the train would have probably started to brake as soon as Octavius demolished the speed control, and even if not, the brakes are designed fail-safe, so the passengers would still have been able to pull the emergency brake and stop the train.
In short: The authors probably ignored all the above or did not think about it for the sake of a (imho) very cool fight scene.