SC provides relief to Adani Ports in connection with bidding process

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

A Bench of Justices M R Shah and Krishna Murari said an Andhra Pradesh High Court order that upheld the termination of an agreement between the private company and the Visakhapatnam Port Trust (VPT) would not deter Adani Ports from participating in future public bids.

APSEZ was disqualified from bidding for upgrading the Jawaharlal Nehru Port Authority container terminal in Navi Mumbai, based on a clause in the JNPA tender.

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

The Supreme Court said: “The disqualification from termination of tender by VPT shall not bar or act as disqualification for the petitioner for future tenders floated by public bodies. Since the disqualification clause was not challenged before the HC, the petitioner shall be at liberty to challenge the same afresh before the HC.”

Adani Ports had challenged before the apex court a judgement of the Bombay High Court, which imposed a cost of Rs 5 lakh while dismissing the plea against disqualification for the JNPA contract.

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

Relief after multiple disqualifications

• Dec 2020: Vizag Port serves termination notice on APSEZ arm Adani Vizag Coal Terminal after the latter invoked force majeure
• Oct 2021: APSEZ disqualified from Vizag Port tender for mechanisation of Western Quay 7 and 8 berths
• Dec: APSEZ disqualified from Kandla Port (Deendayal Port Trust) tender for mechanised fertiliser and other clean cargo handling facilities without ascribing any reason
• May 2022: APSEZ disqualified from Jawaharlal Nehru Port Trust’s container terminal tender
• July: APSEZ disqualified from JNPT tender for shallow water and coastal berths
• August: Deendayal port scraps tender after APSEZ emerges sole bidder Mormugao Port seeks ports ministry’s direction after APSEZ among only two bidders for berth redevelopment tender

Sector experts feel the court has cleared the air on an issue which saw multiple stands from high courts across the country. 

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

“This is good for the sector as APSEZ has been quite active in participating in the bids floated by major ports,” he added.

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

In October 2021, days after sending a termination notice for its coal terminal contract with VPT, the company was disqualified from a tender for the mechanisation of two Western Quay berths floated by the same port authority.

Two months later, Deendayal Port Trust (DPT) also disqualified APSEZ tender for mechanised fertiliser and other clean cargo handling facilities, albeit without ascribing any reason. Right after the Bombay High Court had dismissed the company’s plea over the JNPA tender, the port authority again disqualified it from a coastal and shallow water berth tender, according to reports.

Another tender for the privatisation of a berth by DPT was scrapped after APSEZ had emerged as the lone bidder for the project. Business Standard recently reported that the ministry of ports, shipping, and waterways would also restructure a Rs 842-crore tender for Goa’s Mormugao Port after APSEZ was among the only two bidders for the project.

The order comes at an opportune time as the port operator is reportedly in the running for a massive Rs 4,243 crore container terminal project at Tuna Tekra, the tender for which was floated by Deendayal Port Trust.