Government not to give credence to Formula E race agreements as they were taken up without legal vetting 

The State government of Hyderabad denies any legal obligations to Formula E due to unauthorized agreements made by a government official.

The State government is understood to have decided to not lend any credence to the agreements entered into by then Special Chief Secretary Arvind Kumar with Formula E Organisation (M/s ABB Formula E) as they are conducted without any legal vetting as is the norm for any governmental contractual obligations.

The government, upon receipt of breach of understanding notice from the Formula E Organisation, conducted an elaborate study, including that of legal aspects involved in the case, to understand the crux of the situation. It has accordingly asserted that the government has never entered into any agreement with Formula E and has no legal obligations in this regard. The agreements were entered into by the then Special Chief Secretary without taking approval from the competent authority, the State Cabinet and not following Secretariat Business Rules.

“Article 299 of the Constitution provides that all contracts made in the exercise of executive power of the Union or of a State shall be expressed to be made by the President or by the Governor of the State.” The agreements relating to Formula E were not legally vetted by the State government’s Law department and no consent was obtained from the competent authority.

“Accordingly, the State government is not legally bound by such unauthorised agreements entered by a government official and for all practical purposes, it will have the effect of a contract entered into by the official in his individual capacity,” officials say. The government has already called for an explanation from Mr. Arvind Kumar and has asked the organisers to refund all the unauthorised payments made to them so far from the State exchequer.

The development comes in the light of ₹55 crore payment made in advance to the promoters by the then Special Chief Secretary. This was in addition to the claims by the promoters of ₹20 crore incurred as track expenditure and another ₹35 crore incurred by for organising the race. Mr. Arvind Kumar as the then Municipal Administration Secretary went ahead to make advance payment of ₹55 crore to the promoters.

This was in addition to claims of ₹ 20 crore incurred as track expenditure and ₹35 crore by Hyderabad Racing for organising the race. But the expenditure could have been much higher if the government had not halted the process as the term of the agreement was for three seasons.

If the unauthorised agreement entered into by the then Special Chief Secretary is accepted, it would result in an expenditure of ₹200 crore per season, totalling to over ₹600 crore for the three upcoming seasons, sources said.