Adani Ports apprises Supreme Court of JNPA's rejection affecting other contracts

Adani Ports apprises Supreme Court of JNPA's rejection affecting other contracts

Earlier, the Bombay High Court had dismissed its writ petition and imposed a fine of Rs.5 lakhs

The Supreme Court has heard a plea by Adani Port Trust and Special Economic Zone aggrieved by the Bombay High Court's order of dismissing its plea challenging the disqualification for upgradation of the container terminal in Navi Mumbai by the Board of Trustees of the Jawaharlal Nehru Port Authority (JNPA).

The matter was listed before the bench of Chief Justice NV Ramana, Justice C.T. Ravikumar and Justice Hima Kohli.

Appearing for Adani Port, senior advocate AM Singhvi submitted that his client was being disqualified in other tenders as a result of a cascading effect.

He stated, "The SLP assails a denial of eligibility to me regarding a port in which the rival person who is getting it. I made a statement well before he appeared and again today that I am not pressed for this contract that the rival is or likely to be a successful bidder. However, the disqualification in that SLP is such that it disqualifies me and makes him eligible. This has a cascading effect on three other ports and in the future every day more contracts are coming. That disqualification should be stayed".

Singhvi further pointed out that the disqualification was on the ground that a subsidiary of Adani had terminated a 2011 contract with Vishakhapatnam Port Trust (VPT) in 2020. He pointed out that the dispute with VPT was a subject matter of a pending arbitration case and the sub-judice issue could not be used to disqualify the JNPA tender.

He contended, "There is no judicial adjudication, no award, nothing. Using this first one which was a dispute of 2011 pending in arbitration, they gave three cascading disqualifications on that basis. That is why the writ challenges clause 2.28 with abundant precaution saying that a clause cannot be interpreted without an adjudication."

Clause 2.28 of the Tender stated that the bidder should not have any contract terminated by any public entity for breach by such an applicant, consortium member, or associate. In June, the Bombay High Court dismissed the writ petition filed by Adani Ports challenging the clause with a cost of Rs.5 lakhs.

Singhvi stated, "Before somebody adjudicates, it cannot be that the Port Trust is a judge in its own case. Secondly, when you are actually under adjudication - in one case under arbitration, in another case under writ; then to apply it in future cases, gives you a complete power of arbitrariness. Any breach in Contract 1 cannot have three disqualifications in three other contracts on the ground that there is a breach, even though it is not adjudicated, even though I have won a division bench order, even though I have an ongoing arbitration."

Appearing for the Centre, the Solicitor General of India, Tushar Mehta, highlighted that the clause was included due to the direction of Niti Aayog.

He stated, "The Niti Aayog directed all PSUs to have this clause (2.28) so that we do not deal with parties who have been terminated by the respective PSUs and who get no relief of state. If there is a termination and termination is stayed, if there is arbitration and the award is stayed then that stands on a different footing.

"All tenders by all PSUs would be affected by this. Second, the petitioner participated in the tender with open eyes that this is the condition in the tender and now we are at a stage where we are opening the bids. At that stage, he comes and says stay this disqualification."