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HC strikes down termination of metro rail consultant Systra’s contract
A bench of chief justice Alok Aradhe and justice Arif S Doctor noted that the MMRDA’s decision to discontinue the Systra-SMCIPL consortium’s contract without providing any reasons was “arbitrary, unfair, and unreasonable”
MUMBAI: The Bombay high court on Tuesday struck down the Mumbai Metropolitan Region Development Authority’s (MMRDA) decision to terminate the consultancy contract of a consortium led by French rail transport company Systra, which had accused several officials from the state-run planning agency of corruption related to metro projects in the city.
A bench of chief justice Alok Aradhe and justice Arif S Doctor noted that the MMRDA’s decision to discontinue the Systra-SMCIPL consortium’s contract without providing any reasons was “arbitrary, unfair, and unreasonable”. The bench directed the MMRDA to take a fresh decision on whether to discontinue the contract after hearing the consortium out.
The MMRDA, which refuted the corruption charges, issued a statement on Tuesday saying the high court order reaffirmed its authority under the contract. “The court set aside the notice dated January 3, 2025, while allowing MMRDA the discretion to decide on service continuation after a fair hearing. This reinforces MMRDA’s procedural integrity and its rightful discretion in the matter,” the statement said.
As the matter kicked up a political storm on Tuesday, deputy chief minister Eknath Shinde, who also heads the urban development department, asked additional chief secretary Aseemkumar Gupta to investigate, collect all relevant documents and submit a report to him in 15 days. The MMRDA comes under the urban development department.
Chief Minister Devendra Fadnavis confirmed that the additional chief secretary of the urban development department will look into the matter . “He will hear the complaints and also seek a response from MMRDA. Based on the response, he may submit a report to the government,” Fadnavis said.
The MMRDA had terminated the Systra-led consortium’s contract, awarded in 2021 and later extended to December 2026, last month. The contract was for consultancy services related to design, assistance in procurement, construction, and management supervision for Mumbai Metro lines 5 (Thane-Bhiwandi-Kalyan), 7A (Andheri-CSMIA) and 9 (Mira Bhayander). Systra MVA Consulting (India), which holds a 70% stake in the consortium that also includes Mumbai-based infrastructure company SMC Infrastructures Pvt Ltd, had then approached the high court to challenge the termination notice.
Breach of terms?
Senior advocate Venkatesh Dhond, appearing on behalf of Systra, argued that the MMRDA’s notice breached the terms of their agreement as the development authority had not assigned any reasons for discontinuing the consortium’s services.
The company argued that the MMRDA had acted unfairly and unreasonably, adding that the state is duty-bound to act fairly even in the contractual field. As a result, the discontinuation notice was liable to be struck down on this ground, it said.
Advocate general Birendra Saraf, who appeared on behalf of the MMRDA, contested the petition, submitting that the notice aligned with the agreement as the terms enabled the authority to terminate the contract without assigning any reasons. He pointed out that clause 2.8.1(f) of the agreement uses the expression “in its sole discretion and for any reason whatsoever”, which he said was of wide amplitude.
Saraf further argued that the consortium had willingly accepted the terms and conditions of the contract and cannot be permitted to eschew its contractual commitments by seeking to invoke principles of reasonableness or fairness.
The court, however, refused to accept the MMRDA’s argument, saying that the settled legal principles required the state to act fairly and reasonably, even in the contractual field.
“Clause 2.8.1(f) of the general conditions of [the] contract cannot be read to mean that the MMRDA has a licence to act unfairly, arbitrarily or unreasonably in the contractual field without assigning reasons,” the bench said. “The power under clause 2.8.1(f) of the contract has to be exercised in consonance with the principles of fairness, reasonableness and non-arbitrariness,” it added.
The high court order came on the same day the Times of India reported that Systra had accused senior MMRDA officials of corruption and harassment. The French firm alleged MMRDA officials sought “undue favours”, delayed payments, pressured it to inflate orders to contractors, stalled approvals for critical staffing, and imposed arbitrary penalties. The allegations were routed through the French embassy in India, which then sent a letter to Rupinder Singh, the resident commissioner of Maharashtra in Delhi, in November, asking the state government to investigate the matter.
Oppn slams govt
The report kicked up a political storm on Tuesday, with the opposition Maharashtra Vikas Aghadi (MVA) slamming the state government over the allegations. Meanwhile, the state’s chief secretary, Sujata Saunik, said that when she received the French embassy’s letter, she forwarded it to the MMRDA chief and was yet to get a reply.
Shiv Sena (UBT) MLA Aaditya Thackeray said the French embassy’s letter was “deeply concerning” and urged the state government to come clean on the matter. At a time when chief minister Devendra Fadnavis wants to create an industry-friendly image for Maharashtra, “Eknath Shinde’s con job and corruption is making global news,” he wrote on X.
“It’ll only be fair and diplomatically the right thing to do for the chief minister’s office to set the record straight for an agency that’s worked on the metro project all through,” he added.
Congress MP and Mumbai chief Varsha Gaikwad demanded a Central Bureau of Investigation probe into the allegations, which she said were “a massive international embarrassment” and “a direct hit to Mumbai’s credibility as a global economic hub”.
“The BJP government cannot be allowed to hush this up—just as it did when the US probe exposed large-scale corruption linked to the Adani Group in India. Fadnavis must respond immediately,” she said.
Maharashtra Congress general secretary Sachin Sawant said the accusations of corruption against MMRDA are serious and 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. We, therefore, demand a judicial investigation into this grave issue. No international agency would choose to work in India if justice is not done here,” he said.
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