INDIA BUSINESS WORLD SEPTEMBER (1^st - 15^th) 2007
The Month that was ...

SUPREME COURT ALLOWS RELIANCE ENERGY TO BID FOR NAVI MUMBAI SEA-LINK EXPRESSWAY

THE Supreme Court has allowed Anil Ambani's Reliance Energy to participate in the financial bidding for the Rs 2,600-crore sea-link expressway between Mumbai and Navi Mumbai. The apex court asked REL to present financial quotations for the country's longest sea-link expressway by December 15.

The apex court order came as a major relief to the REL led consortium which was disqualified by the Maharashtra State Road Development Corp (MSRDC) from participating in the bidding process on the ground that its partner Hyundai Engineering and Construction failed to meet the Rs 200 crore net worth norm.

The Bombay High Court had upheld the Maharashtra State Road Development Corp order disqualifying the consortium from participating in the second stage of the bidding process, which involved financial bids. REL had filed an appeal in the apex court against the high court order.

The SC bench comprising Justice Arijit Pasayat and Justice SH Kapadia said, "In the result, we set aside the impugned judgement of Bombay High Court. We hold that REL and Hyundai Engineering and Construction (consortium) was erroneously excluded from the second stage of bidding process. Accordingly, we allow the civil appeal filed by REL."

"Since we have allowed the civil appeal, we extend the period of presenting the financial bids by REL/HECL up to Dec 15," said Justice Kapadia writing the verdict.

The court accepted the plea of REL, which, through its counsels Rajesh Kumar and Syed Naqvi had argued that to make the bid competitive, the consortium should be allowed to present its financial quotations for the project.

As a result of its disqualification, Sea King Infrastructure, part of the Mukesh Ambani controlled Reliance Group, was left as the sole front-runner for the project.

The court picking holes in the MSRDC's terms and conditions of the bid said that the tenders must indicate the norms and benchmarks. Otherwise, it may violate the doctrine of level playing field, said Justice Kapadia.

The court further said that the MSRDC's consultants had not given any reason for rejecting the indirect method (reconciliation method) invoked by KPMG, the Chartered Accountants for the REL consortium.

REL had said that the company on its own was capable of meeting the net worth for the entire consortium. It had sought direction from the apex court allowing the consortium to participate in the second stage of bidding process for the Mumbai Trans Harbour Link Project.

MSRDC had disqualified REL on the basis of its consultant Jean Muller's report that HECL's audited reports for December 31, 2004 included information supplied after the cut-off of January 10, 2005 and therefore, the consortium stood excluded.

REL had stated that the decision-making process stood vitiated for the reason that the report of peer committee, which disagreed with MSRDC's consultants, was referred to Crisil, which was just a rating agency and not a chartered accountancy firm.

However, senior counsel Altaf Ahmed on behalf of MSRDC had said that it had merely acted on the basis of evaluations done by consultants who stated that the financial position of HECL for December 2001 was poor and the provisioning made by it between 1999 to 2001 would have future cash impact.