HC quashes contract to develop MHADA land on Mumbai outskirts

Merely because a person approached government authorities with a proposal, he/she can not be given preferential treatment in awarding the contract for the proposed project, the Bombay High Court has held.
The decision, in effect, makes it difficult for the government to adopt `Swiss challenge' method in awarding contracts.
In the present case, a Division Bench of Chief Justice Swatanter Kumar and Justice J P Deodhar recently set aside contract awarded to city-bases Ravi Developers in respect of development of 3.55 hectares of land in Mira Road, belonging to Maharashtra Housing and Area Development Authority (MHADA).
Under the Swiss challenge method, any person can approach the government with an innovative proposal. Government then calls for tenders. After the highest bid is identified, the originator of the proposal get a chance to match it. If he could match, he gets the contract, despite not being the original highest bidder.
In this case, Ravi Developers had approached the Chief Minister with proposal to develop the land owned by state-run MHADA. However, when tenders were called, one Ostwal Builders emerged as the highest bidder. As per the Swiss method, Ravi Builders were give opportunity to match Ostwal's bid. Ravi Builders accordingly raised their bid and bagged the contract.
Ostwal challenged this decision in the High Court. Government's defence was twofold: The method saves time and encourages public-private partnership in development, and it did not result in any loss to the government in present case.
But the court did not accept this argument. Firstly, the court said, development of government land was not "an innovative proposal".
Secondly, the judges said, "In the absense of innovative proposal, only reason to grant preferential treatment to the respondent (Ravi Builders) is respondent had approached the Chief Minister...Approaching the Chief Minister or any other authorities with a proposal to develop government lands can not be said to be an innovative proposal so as to grant preferential treatment to the person..."
"It would be opposed to the rule of law...It can not be said that persons approaching government authorities form a distinctive class," they further said.
The court also rejected government's claim that it had not suffered financial loss in the process. Ostwal Builders had offered to raise their bid further, the court pointed out, saying it would have been a better offer for the government.
Holding that whole process of awarding contract was "arbitrary, contrary to law, unreasonable and unfair," court directed that the contract be set aside.
Outlookindia.com; MUMBAI, MAR 30 (PTI)


© Copyright PTI. All rights reserved. Republication or redistribution of any PTI content, including by framing or similar means, is expressly prohibited without their prior written consent.