The Andhra Pradesh High Court has dismissed a petition filed by Adani Ports and Special Economic Zone Ltd (APSEZ) seeking to overturn its disqualification from the tender issued by the state-owned Visakhapatnam Port Authority for the mechanization of West Quay 7 and 8 berths at the port with private funds. .
APSEZ was excluded by the Visakhapatnam Port Authority from participating in the tender on the grounds that the firm “did not disclose” material facts related to the termination of a separate contract it had previously signed with the port authority to run the coal terminal, while submitting paper qualifications for the West Quay tender 7 and 8.
The court order is a setback for APSEZ because it could raise the case of other State-owned ports in blocking APSEZ from bidding for tenders, as the eligibility requirements for participation are the same in all major ports.
“An applicant, including any Consortium or Associate Member should, within the last three years, never have failed to perform any contract, as evidenced by the imposition of a penalty by an arbitral or judicial authority or a judicial pronouncement or an arbitral award against the Applicant. , Consortium Members or Associates, as the case may be, or be dismissed from any project or contract by any public entity, or have any contract terminated by any public entity for breach by the Applicant, Consortium Members or Associates said,” according to clause 2.2.8 of the tender conditions.
Exemption not legally tenable: APSEZ
APSEZ argued before the court that its exclusion from the bid was “legally and factually untenable”. Moreover, Adani Vizag Coal Terminal Pvt Ltd (AVCTPL), its unit that operates the coal terminal at Visakhapatnam Port, has terminated the contract and not the other way around, to show that clause 2.2.8 of the tender document relating to eligibility is “inapplicable to the facts and the state of the case”.
APSEZ said it did not violate any of the bid clauses, and there was no concealment.
However, this stand of APSEZ contradicts the note filed before the court, which shows that the Visakhapatnam Port Authority had issued a consultation notice to Adani Coal Terminal Vizag on October 3, 2020, citing failure to achieve the minimum guaranteed yield (MGT) stipulated in coal terminal contract.
On October 8, 2020, AVCTPL rejected the consultation notice stating that force majeure (arising from an epidemic) has been in effect for more than 120 days and calls for termination of the joint contract.
The Visakhapatnam Port Authority sent another consultation notice on November 23, 2020, and then issued a termination notice on December 26, 2020, informing AVCTPL that the contract would terminate effective April 23, 2021.
On 21 October 2021, AVCTPL sent a contract termination notice to Visakhapatnam Port Authority.
The dispute is currently undergoing arbitration before a three-member arbitration panel comprising former Supreme Court judges.
After hearing both sides, a single judge of the AP High Court observed that “there should be disclosure of any contractual non-compliance or non-compliance in past projects, along with contractual disputes and litigation/arbitration,” according to the tender document.
“The applicant, in this case, has only disclosed that there is pending arbitration between the said AVCTPL and Visakhapatnam Port but has not disclosed anything about the termination, non-compliance or non-compliance of the contract in the earlier contract,” the court said. .
APSEZ provided false information: Court
“Clause 2.2.8/2.7.3 of the offer document is clear. It clearly applies to the facts and circumstances of this case,” the Court said.
“This court is of the opinion that the decision-making process that led to the disqualification of the petitioner (APSEZ) cannot be found guilty. Their failure to disclose the termination of the contract of their wholly owned subsidiary in October 2021 and the termination of the Visakhapatnam Port in December 2020 / March 2021 is a clear case of giving materially incorrect false information,” the court said, dismissing APSEZ. petition.