SC grants relief to Adani Ports in tender process

The Supreme Court said on Monday that Adani Ports and Special Economic Zones (APSEZ) could participate in tenders launched by “public bodies”, offering relief to India’s biggest port developer and operator, which has faced multiple disqualifications of state-owned port projects against the backdrop of the case.

A bench of judges, MR Shah and Krishna Murari, said an order from the Andhra Pradesh High Court upholding the termination of an agreement between the private company and the Visakhapatnam Port Trust (VPT) would not deter Adani Ports to participate in future public tenders.

APSEZ was disqualified from the tender for the upgrading of the Jawaharlal Nehru Port Authority Container Terminal at Navi Mumbai, based on a clause in the JNPA tender.

The clause stated that disqualification/termination of a contract with a public entity within the last three years would automatically disqualify a bidding party from future tenders. JNPA cited this clause to say that the termination of VPT’s contract automatically disqualified APSEZ from participating in JNPA’s Mumbai bid.

The Supreme Court said: “The disqualification of termination of the tender by VPT shall not preclude or act as a disqualification for the petitioner for future tenders issued by public bodies. Since the forfeiture clause was not challenged before the HC, the claimant is free to challenge it again before the HC. »

Adani Ports had challenged in the Supreme Court a judgment of the Bombay High Court, which imposed a cost of Rs 5 lakh while rejecting the plea against the disqualification of the JNPA contract.

JNPA had issued an invitation asking the parties to participate in the tender for the operation and maintenance of their container terminal at Navi Mumbai for 30 years. Before the start of the auction, the JNPA board came across an order from Andhra Pradesh HC confirming the termination of a concession agreement by VPT. JNPA’s board of directors sent a notice to the port company asking why it should not be disqualified from the tender. Adani requested “without prejudice” participation in the bid. However, the board told Adani Ports on May 2 that it was disqualified from the bidding process. Adani then moved the Bombay HC, which did not rule in its favor and the port company then appealed to the Supreme Court on June 28.

Industry experts believe the court has cleared the air on an issue that has seen several high court positions across the country.

“The latest judgment gives clarity on how to approach the qualification of the said bidder and will help APSEZ to participate and be eligible for evaluation/qualification at the RFQ stage,” said Jagannarayan Padmanabhan, Practice Manager and director of CRISIL Research.

“It is a good thing for the sector, because the APSEZ has been very active in participating in the tenders launched by the main ports”, he added.

Meanwhile, APSEZ’s legal and political battles have already caused the company at least four disqualifications so far. An SPV of the company, Adani Vizag Coal Terminal, was served notice of contract termination by VPT in 2020. The former had invoked the “force majeure” clause.

In October 2021, a few days after sending a notice of termination of its coal terminal contract with VPT, the company was disqualified from a tender for the mechanization of two Western Quay berths launched by the same port authority.
Two months later, Deendayal Port Trust (DPT) also disqualified APSEZ’s tender for mechanized fertilizer and other clean cargo handling facilities, but gave no reason. Just after the Bombay High Court rejected the company’s plea for the JNPA tender, the port authority again disqualified it from a tender for a coastal and water wharf shallow, according to reports.

Another tender for the privatization of a berth by DPT was dropped after APSEZ became the sole bidder for the project. Business Standard recently announced that the Ministry of Ports, Shipping and Waterways will also restructure an Rs 842 crore tender for Mormugao Port in Goa after APSEZ was among only two bidders for the project.

The order comes at an opportune time as the port operator is said to be vying for a massive Rs 4,243 crore container terminal project at Tuna Tekra, which has been tendered by Deendayal Port Trust.
Source: Trade Standard

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