Supreme Court lifts bar on Adanis in port projects
The Supreme Court on Monday has ruled that the Adani Group’s disqualification from the Vizag Port project cannot be treated as an “ineligibility” that bars it from bidding for other port projects. The relief to the Adanis may speed up the finalisation of two large infrastructure projects at Tajpur and Haldia in Bengal.
A bench of Justices M.R. Shah and Krishna Murari held that an order of the Andhra Pradesh High Court — which had upheld the termination of a concession agreement between Adani and the Visakhapatnam Port Trust (VPT) — will not act as a disqualification in future tenders floated by public bodies.
The termination of the contract by VPT had a cascading effect on APSEZ, India’s largest port operator. Jawaharlal Nehru Port Authority (JNPA) of Mumbai disqualified Adani from a global tender to operate and maintain a container terminal in Navi Mumbai.
The board of the JNPA cited the termination of VPT as a reason for the disqualification from the 30- year contract on the basis of a clause which provides that disqualification from any project or contract by any public entity in the last three years would act as a disqualification to bid for the tender. “The disqualification arising from the termination of tender by VPT shall not bar or act as disqualification for the petitioner for future tenders floated by public bodies,” Justices Shah and Murari held on Monday in an APSEZ petition.
Haldia The termination of contract by VPT also slowed down decision-making processes in two port projects in Bengal. APSEZ had emerged as the top bidder in both the tenders floated by two public bodies: Syama Prasad Mookerjee Port, Calcutta (formerly Calcutta Port Trust) and West Bengal Industrial Development Corporation (WBIDC). SMP, which reports to the Union shipping ministry in Delhi, had issued a letter of intent to Adani for the mechanisation of berth no 2 in Haldia in PPP mode on February 10. However, the port did not follow through by awarding the contract.
An official of SMP said the port was being “watchful” of the legal proceedings at the Supreme Court and the high courts of Andhra Pradesh and Bombay. “There was technically no impact of the VPT termination on this particular contract as the development took place after Adani was qualified as bidder for berth no 2.
Moreover, the ask from a prospective bidder is to disclose if it has been barred from any public contract in the last three years. The authority to accept or reject an offer based on the information remains with the public body, such as SMP,” the official explained. However, with SC granting relief to Adani from the VPT termination, SMP may now go ahead and award the contract later this month. “We are awaiting the order,” said a source in the port.
APSEZ was the highest bidder in a public tender floated by WBIDC for the development of Tajpur port, Bengal’s only greenfield port in half a century. Even though APSEZ was found to be the highest bidder on March 23, the government did not proceed with subsequent steps on the project which usually culminate in awarding the contract. When Gautam Adani, chairman of Adani Group, came to attend the Bengal Global Business Summit on April 20 in Calcutta, hopes were running high of a formal announcement, which never came.
A source said the VPT termination would not have cast any shadow on the Tajpur deal given the nature of the tender but the government still wanted to tread with ‘‘abundant caution’’ given the high stakes. The law department of the government is now expected to pore over the SC judgment and take the final call. “Bengal deserves some good news. Hopefully, it should happen,” a government source said.