High Court stays Swiss Challenge

Hyderabad: The Hyderabad High Court on Monday granted stay on the Swiss Challenge method adopted by Andhra Pradesh government to allot bids for developing the start-up area of Amaravati, the proposed capital of the State.

Justice M S Ramachandra Rao of the High Court of Judicature at Hyderabad for the States of Telangana and Andhra Pradesh was hearing a petition filed by Aditya Constructions opposing the method and seeking disclosure of details submitted by Singaporean companies, so that it also can participate in the bidding.

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Highlights:

• Justice M S Ramachandra Rao has pointed out that the State’s action in keeping even the revenue-sharing details sought by the petitioner under confidential category or proprietary information category is not prima facie correct
• Special trade secrets or intellectual property can fall under proprietary information, but not the revenue sharing details, the judge said

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The court directed the Andhra Pradesh government to file an affidavit and posted the matter to October 31 for further hearing. The AP government earlier wanted to develop some part of the proposed capital region under the Swiss Challenge method.

A consortium of Singaporean companies had submitted the proposals to Capital Region Development Authority (CRDA) in this regard. Under the Swiss Challenge, a developer will be asked to present a bid. Then, other prospective developers would be asked to present counter bids.

If the latter is lower, the first bidder will be asked to submit another bid again. If the first bidder comes up with lower bid then he gets the right, and if he fails, the one with lower bid gets the project.

The High Court order is considered a major setback to the Andhra Pradesh government. The High Court granted an interim order staying all further proceedings for development of 6.84 square kilometres start-up area of the upcoming Amaravati capital city till the disposal of main writ petitions.

Justice Ramachandra Rao, in an elaborate 44-page interim order, stated that in the present circumstances there was no other alternative than to grant stay since it would not be possible to put back the clock once the bid of the “Original Project Proponent” was opened and selection was finalised.

There would be irreparable injury to the petitioners, the State and public interest since by the time the writ petitions were decided. There could be award of the contract to the master developer and there could be expending of money also. The judge also noted that since the period of execution of the project is 20 years, the short delay by granting this stay would only serve the public interest and the interest of justice.

As has been reported earlier, the Attorney General of India Mukul Rohtagi had appeared on behalf of CRDA and made elaborate arguments against the petitioner's plea. The Andhra Pradesh Advocate General Dammalapati Srinivas represented the State and pleaded for dismissal of the petition, questioning the bona fides of the petitioner firms Aditya Housing and Infrastructure Development Corporation Pvt. Ltd and Envian Engineering Pvt Ltd, which challenged the Tender Notification.

The judge, in his order, noted that prima facie a situation was before him where the State chose the method of Swiss Challenge for selecting a master developer for its capital city, but did not follow the method by not revealing the revenue sharing details offered by Singapore firm.

This had deprived the interested persons of making a counter challenge. He also faulted the reversing of order in processing the Singapore proposal by the government. The Act mandated that the proposal should be vetted first by the CRDA and then by the government. In the present case, it was the government that began the exercise and then sent it down to the infrastructure authority. The judge found this a violation of the CRDA Act.

Though the Swiss Challenge method allowed the core information about the first proponent to be kept confidential, the State’s action in keeping even the revenue sharing details offered by the company under confidential category or proprietary information category is not prima facie correct and they should not be kept confidential.

Special trade secrets or intellectual property can fall under proprietary information, but not the revenue sharing details, the judge said. The state has fixed very short time for the contending firms to challenge the Singapore firm’s offer.

This was not providing a level playing field to the interested applicants. Hence the actions of the authorities in this regard suffered from illegality and procedural impropriety apart from jeopardising public interest, Justice Ramachandra Rao said.

Stating that normally the Court would not grant stay of the tender process for development programmes as cautioned by the Supreme Court in Tata Cellular case, the judge said the question before him presently was whether in the light of the glaring infirmities in the process,

the court should do nothing and fold its hands or point out the defects, so that they can be rectified at the earliest stage. So saying he stayed the ongoing process and directed the State of AP to file its counter and posted the case to October 31 for final hearing.