TCS declined to comment on the issue, citing it as a legal matter.
The issue relates to a contract for development of a tax collection and management system for Orange County in 2007-2008. TCS won the bid for the job for an amount of about USD 8 million.
According to the contract, Tata America International Corporation (TCS America) was to develop and implement the Property Tax Management System Project for Orange County.
The lawsuit was filed in April this year in the California Central District Court, people with knowledge of the development said. It alleges that TCS made "a series of false promises and intentional misrepresentations" during the bidding process and "made promises to complete the project on a budget and according to a timeline with which they had no intention of complying."
The lawsuit further claims: "The county has suffered millions of dollars of damages as a result of defendants' wrongful conduct and it will continue to suffer damages for the years it will take to develop a replacement for the failed project."
When contacted, a TCS spokesperson said: "As a matter of policy we don't discuss pending legal matters. We stand by the quality of our work and commitment to customer success as demonstrated by the fact that over 98 per cent of our business comes from repeat clients."
TCS posted strong first-quarter results helped by an all-round performance with strong revenue growth across markets led by the US.
The Mumbai-headquartered firm posted a net profit of Rs 3,831 crore for the June quarter, up 15.5 per cent from Rs 3,318 crore in the same period last year.