MMRDA-Systra dispute: Payment held, contract cut, French Embassy steps in

The conflict began in early 2024 when MMRDA suspended payments to Systra for its consultancy work on Mumbai Metro projects and sent a termination notice in Jan 2025

The Bombay High Court has overturned the Mumbai Metropolitan Region Development Authority’s (MMRDA) decision to terminate its contract with French company Systra MVA Consulting (India) Pvt Ltd, which was providing consultancy services for three metro lines in Mumbai. The court ruled that the termination was “arbitrary and unfair” and directed MMRDA to reconsider its decision after giving Systra a fair hearing.

 

Here's a closer look at the contract, dispute, termination, and next steps.

 

Systra’s work in Mumbai

Systra has played a significant role in Mumbai’s metro rail expansion, providing consultancy services for civil works on metro lines 5, 9, and 7A. Additionally, the company has contributed to the detailed design of metro lines 2, 4, and 7, branding guidelines for MMRDA’s metro network, and other key transport infrastructure projects, including the Mumbai Coastal Road.

 

 

What is the MMRDA-Systra dispute?

The dispute arose from a contract awarded to Systra-SMCIPL Consortium, in which Systra holds a 70 per cent stake, for general and design consultancy services for Mumbai metro lines 5 (Thane-Bhiwandi-Kalyan), 7A [Andheri (East)-CSIA], and 9 (Mira Bhayander).

 

MMRDA had invited bids for the consultancy role in February 2020, and Systra won the contract in June 2020 with a bid of Rs 90.76 crore. The company was formally appointed as the general consultant for system works in May 2021. Initially, the consultancy agreement was set for 42 months, concluding in November 2024. However, it was later extended to December 2026.

 

MMRDA suspends payments, terminates contract

The conflict began in early 2024 when MMRDA suspended payments to Systra for its consultancy work on Mumbai Metro projects.

 

The dispute escalated in November 2024 when Systra, through a letter routed via the French Embassy, accused MMRDA officials of corruption, undue pressure, and payment delays. The French firm claimed that the harassment intensified after leadership changes at MMRDA in August 2023.

 

On January 3, 2025, MMRDA issued a notice informing Systra of its decision to discontinue its services.

 

Systra challenges termination notice

Systra, represented by senior advocate Venkatesh Dhond, challenged the termination, arguing that the notice was not in accordance with the contract terms and lacked justification. The firm contended that MMRDA had failed to provide any reasons for the termination, making its decision arbitrary and unfair.

 

MMRDA’s claims against Systra

Defending MMRDA’s stance, senior advocate and Maharashtra Advocate General Birendra Saraf maintained that the termination was well within the general contract conditions, which allowed MMRDA to end the agreement without citing reasons. He also argued that Systra’s plea was misconceived and that the company should seek arbitration instead.

 

In a detailed 28-page statement, MMRDA dismissed Systra’s corruption allegations as "baseless," stating that the French embassy merely forwarded the letter without endorsing its claims. The agency also pointed out that Systra’s accusations surfaced only after payment suspensions were issued.

 

Further, MMRDA accused Systra of multiple contractual violations, including labour law breaches, unauthorised staffing at metro sites, and security lapses involving sensitive project data. It cited safety failures as well, referencing a fatal accident involving a transit mixer operator in December 2024.

 

MMRDA defended its decision to suspend payments for the civil consultancy contract on metro lines 5, 9, and 7A, arguing that these projects were already in advanced execution stages. However, it revoked suspension orders for other contracts after Systra acknowledged breaches and submitted remedial plans.

 

Bombay HC ruling on MMRDA-Systra dispute

The Bombay High Court, however, disagreed with MMRDA’s reasoning. It ruled that while the contract permitted termination without specifying reasons, this clause could not be interpreted as granting MMRDA the unrestricted right to act arbitrarily.

 

A division bench of Chief Justice Alok Aradhe and Justice Arif S Doctor issued the ruling on Tuesday, quashing the notice sent by MMRDA in January that ended Systra’s consultancy contract. However, the court did not grant Systra’s request for specific performance, meaning it did not compel MMRDA to reinstate the contract but only mandated a fresh decision-making process.

 

The judges also stated that since they had already concluded MMRDA’s actions were arbitrary, there was no need to examine the contract’s nature in detail. Furthermore, they dismissed MMRDA’s argument that Systra should pursue arbitration, affirming that the authority’s conduct did not warrant such a course of action.

 

What now?

With the court’s decision, MMRDA must now re-evaluate Systra’s contract, ensuring due process is followed. However, the legal battle does not impact ongoing metro construction work, according to MMRDA sources, as cited by The Print. The outcome of this reassessment could determine whether Systra continues its involvement in Mumbai’s Metro development or if further legal and contractual challenges arise.

 

(With agency inputs)