THE Supreme Court on Tuesday cleared the decks for the financial bidding process to continue on one of Mumbai’s most crucial infrastructure projects—the Mumbai Trans Harbour Sea Link.
With its order allowing a consortium led by Anil Ambani’s Reliance Energy Ltd (REL) to bid for the construction and operation of the Rs 4,000-crore sea link, the Apex Court ended a year-long impasse on the project, set to be India’s longest bridge across the sea at 22.5 km.
Linking Sewri in Central Mumbai to Nhava across the creek, the sea link will provide connectivity not just to southern areas of Navi Mumbai but also to the proposed Navi Mumbai Special Economic Zone, the Jawaharlal Nehru Port Trust and the proposed second airport at Navi Mumbai.
On Tuesday, the Bench comprising Justices Arijit Pasayat and S H Kapadia directed REL to submit its financial bid for the project within three months. “We hold that REL/HECL (consortium) was erroneously excluded from the second stage of the bidding process. Since we have allowed this civil appeal, we extend the period for presenting financial bids by REL/HECL up to December 15, 2007,” the Bench said.
The REL-led consortium and its major partner, Hyundai Engineering and Construction Co, now join the race for the project with three other consortia: One comprises IL&FS, Sea-King Infrastructure Ltd (SKIL), John Laing Construction Ltd and Laing O Rourke. SKIL is backed by the Mukesh Ambani group, which is developing the Navi Mumbai SEZ. The other two consortia are led by IFFCO and Larsen& Toubro.
In mid-2006, the Maharashtra State Road Development Corporation (MSRDC) had disqualified the REL-led consortium on the grounds that Hyundai Engineering and Construction Co, did not have the required Rs 200 crore net worth that year. REL’s contention had been that its individual net worth covered the criteria for the entire consortium.
Flaying MSRDC for apparent arbitrariness in the terms and conditions of the bid, the Court pointed out that the tenders must indicate with “legal certainty, norms and benchmarks”. Otherwise, it may “violate the doctrine of level playing field”. MSRDC’s consultants had not given any reason for rejecting the indirect method (reconciliation method) invoked by KPMG, the chartered accountants of the REL consortium, it pointed out.
The apex court said if future cash impact was the basis to exclude the REL-Hyundai consortium, then MSRDC consultants — Jean Muller, France, and Crisil — should have considered cash flow reporting methods, which includes reconciliation method.
“The very purpose of cash flow reporting is to findout the ability of HECL to generate cash flow 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 said.
“In our view, for non-consideration of reconciliation method, under cash flow reporting system, the impugned decision-making process stood vitiated,” said Justice Kapadia, who wrote for the Bench.
While Phase I of the project will comprise a six-lane dual carriageway, a double track rail link running parallel is to be added in Phase Two, running to the north of the road link.
The Link
* Early 2004: MSRDC floats global tenders for construction of the Mumbai Trans Harbour Sea Link
* Mid- 2006: Three consortia are invited to submit bids, REL is not among three those who are prequalified, following which REL approaches Bombay High Court
* June 2007: REL moves Supreme Court after getting interim relief from the Bombay High Court, which stayed the opening of bids
* September 2007: SC orders that REL be allowed to bid, grants 3 months' time to submit its bid.