The Hindu Business Line : SC says REL team can bid for Mumbai sea link project

New Delhi, Sept. 11 The Supreme Court on Tuesday allowed the consortium of Reliance Energy Ltd (REL) of Anil Ambani group and Hyundai Engineering Construction Co (HDEC) to submit its bid for the Rs 2,600-crore sea link project between Mumbai and Navi Mumbai.

A Bench of Mr Justice Arijit Pasayat and Mr Justice S.H. Kapadia passed this order while setting aside a judgment of the Bombay High Court upholding the exclusion of the consortium from the second stage of bidding on the ground that it had not fulfilled the criteria relating to net worth of Rs 200 crore.

The Bench held that the REL/HDEC consortium was erroneously excluded from the second stage of bidding process and extended the period for presenting financial bids by REL/HDEC up to December 15, 2007.

The Maharashtra State Road Development Corporation Ltd had disqualified them from presenting their bid.

The Bombay High Court dismissed a writ petition filed by REL/HDEC. The present appeal is directed against this judgment dated June 4.

Level playing field

Writing the judgment for the Bench, Mr Justice Kapadia said: “When Article 19 (1) (g) of the Constitution confers fundamental right to carry on business to a company, it is entitled to invoke the doctrine of ‘level playing field’.

“In the world of globalisation, competition is an important factor to be kept in mind.

“This is because the said doctrine provides space within which equally-placed competitors are allowed to bid so as to sub serve the larger public interest.”

Test of reasonableness

“Today India has dismantled Licence Raj. Decisions or acts which results in unequal and discriminatory treatment, would violate the doctrine of level playing field embodied in Article 19 (1) (g).”

The Bench pointed out that Article 14 (equality before law) applied to government policies and “if the policy or act of the government, even in contractual matters, fails to satisfy the test of reasonableness, then such an act or decision would be unconstitutional.”

The Bench was of the view that when tenders were invited, the terms and conditions had to indicate with legal certainty, norms and benchmarks.

If there was vagueness or subjectivity in the said norms it might result in unequal and discriminatory treatment and "may violate the doctrine of level playing field."

The Bench after analysing various methods of the "cash flow reporting", said: "there are two methods, direct and indirect. Both given identical results in the matter of final total. They differ only in presentation of the data. No reason has been given by the consultants of MSRDC for rejecting the indirect method." Holding that the "decision to exclude REL/HDEC is arbitrary, whimsical and unreasonable", the Bench said "for non-consideration of the Reconciliation Method, under cash flow reporting system, the impugned decision-making process stood vitiated."