MUMBAI: The Bombay High Court on Tuesday held that Bhartiya Samruddhi Finance, a company tasked by the state to build Common Service Centres, cannot be penalised for delays in the project caused by a lack of broadband connectivity in remote areas.
Amid the delays and petitions filed by the company and the state, the government had withheld releasing funds to complete the project. Justice Somasekhar Sundaresan dismissed cross-petitions filed by the two parties, removing the last legal hurdle in the long-drawn contractual dispute that had stalled the project.
The case arose from a 2011 agreement between the state government and the company to establish 1,362 Common Service Centres (CSCs) in rural and semi-urban areas of the state. These centers would allow people to access government services and welfare schemes digitally, as per the central government’s national e-governance plan, an initiative launched in 2006 to make all government services available through electronic means.
The court highlighted that in this case, its role was not to just settle a financial dispute, but to ensure that “the policy intent behind the Common Service Centres initiative is not defeated by bureaucratic rigidity or impractical contractual expectations”.
The court noted that rolling out the CSCs was delayed because several rural regions of the state still lack telecom connectivity. Expecting a private contractor to create last-mile connectivity where even the state and BSNL had no network coverage was “neither reasonable nor commercially viable” the court added.
In the initial agreement, the state had asked the company to set up 1,362 CSCs across the Nashik revenue division in north Maharashtra within five years. While the company set up 1,276 centres, 1,208 of them rural, many are not functional because several villages in Nashik and Nandurbar districts lack broadband access.
The state argued that the company missed contractual milestones and withheld the viability gap funding for the project, asking the company to pay ₹7.62 crore in damages. Viability gap funding is a grant provided to support social infrastructure projects which are not financially viable on their own.
Samruddhi countered the state and alleged that connectivity issues which had caused the delay were beyond its control and that even the central government had, in a 2011 advisory, cautioned states against penalising agencies facing such challenges.
Justice Sundaresan held, “No commercial party can be expected to do what even the State and licensed service providers had failed to do.” The court noted that the project’s design assumed the existence of state-provided broadband connectivity and Samruddhi’s role was limited to installing communication equipment, not creating telecom infrastructure.
By directing the state to release funds for the completion of the project within four weeks, the court has opened the door for the long-pending viability payments to Samruddhi. The move is expected to revive the stalled CSC operations in parts of rural Maharashtra.