Dharavi Redevelopment: Bombay High Court Allows Dubai Based Company To Challenge Tender Process By Which Adani Emerged Highest Bidder

A division bench of Acting Chief Justice S. V. Gangapurwala and Justice Santosh Chapalgaonkar allowed the petitioner to amend the petition according to the draft amendment submitted in court. It posted the matter for further consideration on January 6, 2022.

The state government in 2018 had floated a tender for the Dharavi Redevelopment Project. The petitioner Seclink Technologies Corporation was the highest bidder and Adani Properties Pvt Ltd was the second highest bidder. However, the state cancelled the tender process claiming that an additional 45 acres of Railway land has become available due to an MoU and a new tender to incorporate it is required.

In 2022, a new global tender was floated and Adani Properties Pvt Ltd emerged as the highest bidder. The petitioner had originally challenged the cancellation of the earlier tender. However, it sought amendment to bring subsequent events on record and make appropriate challenge.

According to the draft amendment, the cancellation of the original and floating a new tender was "arbitrary, mala fide and calculated to solely exclude the petitioner from participating in the new tender, since the petitioner was H1 or the highest bidder by huge margin in the previous tender and with the mala fide intent to solely favour the second highest bidder in the previous tender and ensure that entity could be the successful awardee of the present tender."

The petitioner suffered financial loss of Rs. 8424 crores due to the cancellation of the earlier tender, according to the draft amendment. Further, the state violated principles of promissory estoppel and natural justice.

In the 2018 tender process, the petitioner had participated as a leader of a consortium of 8 companies. However, the 2022 tender capped the number of members in a consortium to 2, thereby excluding the petitioner's consortium. "There is no rationale or change in circumstances that warranted such a cap on the number of members of the consortium, especially when the project is of such magnitude and has far reaching consequences for the future of the entire city of Mumbai", the draft amendment contends.

In the 2018 tender, the petitioner's consortium had offered Rs. 7200 crores for 80% stake in the special company that would be formed with the government to complete the Dharavi Redevelopment Project.

In the 2022 tender process, the highest bid i.e., Adani Group's bid for the same stake was Rs. 5069 crores. Therefore, the petitioner contends in the draft amendment that there is a loss of Rs. 2131 crores to the public exchequer in the 2022 tender process.

The 2018 tender required that the successful bidder must have total experience of at least 25 million square feet in the last 7 years in the construction/development of real estate projects. The 2022 tender lowered this minimum technical experience of the bidder to 6 million square feet for in the last seven years in the development of real estate projects. The criteria of 'construction or development' was substituted to just 'development'. The new tender provided that the experience has to be shown by way of occupation certificate in the name of the bidder.

The draft amendment claims that the state knew that the petitioner's consortium had the requisite construction experience under the previous tender. The petitioner company has undertaken megaprojects on construction basis but not as developer in their own name. Therefore, the state put this condition to oust the petitioner's consortium.

The 2018 tender did not require any minimum realty experience for the lead member in case of a consortium. However, the 2022 tender provided that the lead member must have helped build 1.4 million square feet. According to the draft amendment, this prevented Seclink from bidding in the new tender.

Advocates Suraj Iyer and Jenil Shah appeared for the petitioner and Senior Advocate Millind Sathe appeared as special counsel for the state.

Case no. – WP/4823/2022 [Original]

Case Title – Seclink Technologies Corporation v. State of Maharashtra and Anr.