HC quashes MMRDA's contract termination notice to Systra; state agency denies graft charges

Mumbai, Feb 25 (PTI) The Bombay High Court on Tuesday quashed a contract termination notice issued by the Mumbai Metropolitan Region Development Authority (MMRDA) to French consultancy firm Systra, which had accused several officials of the authority of corruption related to metro projects in the city.

The court said the decision of termination was "arbitrary and unfair" and directed the authority to consider the issue afresh after hearing the company.

In a statement, the MMRDA, however, claimed that Systra "misrepresented" certain facts to the representatives of the French government only after receiving the suspension and termination notices from MMRDA.

"This clearly indicates that the allegations are an afterthought aimed at deflecting attention from their own contractual breaches," the authority said in a statement.

The statement said the consultancy firm claimed that the issues began in August 2023 but did not submit any formal representation to MMRDA, the Urban Development Department, the Chief Secretary's Office, or the Chief Minister's Office until after the suspension and termination notices were served.

They also pointed out that the so-called representation by Systra is unsigned, and as per the Government of Maharashtra's policy, such an unsigned document can only be treated as a "mere printout of wild allegations." "The French Embassy merely forwarded this printout without endorsing its veracity or merit (to the Maharashtra government)," it stated.

In January this year, the MMRDA terminated the contract of Systra's Indian subsidiary which had been appointed as a general consultant for design, assistance in procurement, construction, management and supervision of three routes of Mumbai Metro -- Thane-Bhiwandi-Kalyan, Andheri -CSIA and Mira Bhayander -- in 2021.

The issue gained attention when the French Embassy sent a letter on November 12, 2024, to Rupinder Singh, the Resident Commissioner of Maharashtra in Delhi and asked the state government to investigate the matter thoroughly and to "resolve the situation," citing Systra's complaints of "severe harassment" encountered while serving as a general consultant on MMRDA projects.

Systra alleged that MMRDA officials sought "undue favours," delayed payments, pressured the firm to inflate orders to contractors, stalled approvals for critical staffing, and imposed arbitrary penalties.

While the initial contract was to expire in November 2024, it was extended till December 2026.

But on January 3, 2025, the MMRDA issued the company a notice, stating it had decided to discontinue its services prompting the company to move the high court.

The MMRDA claimed that the general conditions of the contract enabled it to terminate it without assigning any reasons.

On Tuesday, a bench of Chief Justice Alok Aradhe and Justice Arif Doctor noted that the MMRDA did not give reasons while discontinuing the services of Systra MVA Consulting (India) Pvt Ltd on January 3, 2025.

"We find that the action of the MMRDA in discontinuation of the terms of the contract, which was extended up to December 2026, without assigning any reasons, is arbitrary, unfair and unreasonable," the High Court said.

The State or any of its authority even while acting in the contractual field is under an obligation to act fairly and cannot act arbitrarily or unreasonably, the HC said.

"The general conditions of the contract cannot be read to mean that the MMRDA has a license to act unfairly, arbitrarily or unreasonably in the contractual field without assigning reasons," the court said.

Quashing and setting aside the notice of MMRDA, the court directed the authority to take a fresh decision after hearing from the company.

Though the MMRDA claimed in the statement that the Bombay High Court's order had reinforced MMRDA's procedural integrity and its rightful discretion in the matter, the court had, however, not gone into the merits on performance of Systra.

Opposition leaders in Maharashtra, meanwhile, demanded a probe into the matter.

Sena (UBT) leader and former minister Aaditya Thackeray targeted deputy Chief Minister Eknath Shinde -- who heads the rival Shiv Sena -- over the issue. The MMRDA comes under Shinde's Urban Development department.

"While India and France get closer diplomatically, the @MMRDAOfficial run by Eknath Shinde's Urban Development department, rubbishes concerns of corruption raised by the French consultant," he said on X.

"I urge @CMOMaharashtra to launch an open, free and fair inquiry into this issue," he added.

Maharashtra Congress said the accusations of corruption require an open and impartial investigation.

The company's decision to seek assistance through diplomatic channels has cast doubt on our nation's standing internationally, said party spokesperson Sachin Sawant.

"We demand a judicial investigation into this grave issue. No international agency would choose to work in India if justice is not done here," he added. PTI SP KK PR MR SKL KRK

Source: PTI