It’s Anil Vs Mukesh for sea-link bid

NEW DELHI: The Supreme Court has allowed Reliance Energy Ltd (REL), an Anil Dhirubhai Ambani Group company, to bid for the Rs 2,600 crore Mumbai trans-harbour sea-link project within three months. This will put him in direct conflict with his brother Mukesh Ambani, who is part of another consortium bidding for the same project.

There are two other bidders also in the fray, making it a four-way battle for the spoils. The four consortia are: Mukesh Ambani with IL&FS (along with other partners); Anil Ambani with Hyundai Engineering, L&T-Gammon, and Iffco (along with others). The 22-km sea link project is intended to connect south Mumbai (Sewri) to the mainland (Nhava) in the southern part of Navi Mumbai through a six-lane dual carriageway in the first phase. #

Scrapping a Bombay high court order that had approved the Maharashtra State Road Development Corporation’s (MSRDC’s) decision to disqualify a REL-led consortium from bidding on technical grounds, the apex court said: ``We hold that the REL/HECL (Hyundai Engineering & Construction Co Ltd) was erroneously excluded from the second stage of the bidding process’’.

A bench comprising Justices Arijit Pasayat and SH Kapadia directed REL to submit its financial bid for the sea-link project within three months. The bench also ridiculed MSRDC for the vagueness in the terms and conditions prescribed for the bid.

The tenders must indicate with “legal certainty, (the) norms and benchmarks” to be used for judging the bids. Otherwise “it may violate the doctrine of level playing field’’, the bench added.

On June 4, the Bombay high court stayed the opening of bids for four weeks till July 2. REL challenged it and the apex court had extended the period of stay until a final decision on REL’s appeal.

It's Anil Vs Mukesh for trans-harbour project

MSRDC had disqualified REL from participating in the bidding process on the ground that its partner Hyundai did not meet the net worth criterion of Rs 200 crore despite REL’s claim that it was, on its own, capable of meeting the net worth requirements of the entire consortium.

MSRDC consultants didn’t give any reason for rejecting the indirect method (reconciliation method) invoked by KPMG, the chartered accountants of the REL consortium, the court noted. #

The bench said that “if future cash impact was the basis to exclude the REL consortium, then MSRDC consultants - Jean Muller, France, and Crisil - should have considered cash flow reporting methods which includes (the) reconciliation method”’.

“The very purpose of cash flow reporting is to find out the ability of HECL to generate cash flows in future and, if an important method of cash flow reporting is kept out without any reason, then the decision to exclude REL/HECL is arbitrary, whimsical and unreasonable’’, the court ruled.

``In our view, for non-consideration of the reconciliation method under cash flow reporting system, the impugned decision-making process stood vitiated,” the court said.

REL’s counsel KK Venugopal had argued that “the decision-making process stood vitiated for the reason that the report of the peer committee, which disagreed with MSRDC’s consultants, was referred to Crisil, which was just a rating agency and not (a firm of) chartered accountants.”

On the other hand, MSRDC’s counsel and former additional solicitor general Altaf Ahmed had contended that the corporation merely acted on the basis of evaluations done by expert consultants who stated that the financial position of HECL as in December, 2001, was poor and the provisioning made by it between 1999 and 2001 would have future cash impact.