TaxTMI 
TaxTMI 
2009 (5) TMI 1009
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....A") filed S.L.P.(c) No. 13149 of 2008, S.L.P.(c) Nos. 11229 of 2008 and 11355-11356 of 2008 against the common order dated 27.03.2008 in W.P. (L) No. 2714 of 2007 with PIL No. 72 of 2007 of the High Court of Bombay, whereby it was held that inviting public tender on 20.05.2007 for development of the Government lands by invoking the Swiss Challenge Method with a view to confer preferential treatment to Ravi Development was wholly unfair, unreasonable, arbitrary, illegal and quashed the contract awarded to Ravi Development. As in the impugned judgment, High Court disapproved the Swiss Challenge Method and accordingly, MHADA had refused to award the contract to Shree Developers to whom land at Kavesar, Thane was allotted and Gurukrupa Developers, to whom land at Chhitalsar Manpada at Thane was allotted, both the said developers filed S.L.P.(c) Nos. 21754-21755 & 21756-21757 of 2008 respectively challenging the very same common order after getting permission from this Court. 2. Leave granted. 3. The common issue involved in all these appeals centres around the validity of the Swiss Challenge Method adopted by the MHADA on a pilot basis with respect to a proposal received from a p....
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....he effect that they are well aware of Swiss Challenge Method and that the original proposer shall be given an opportunity to take up the project on the highest eligible bid offer. They were also informed that in case the original proposer agrees to match his bid to the highest offer then the project shall be awarded in his favour. On 14.06.2007, Ravi Development wrote a letter to MHADA accepting to match highest bid amount. While so on 04.09.2007, Shree Krishna Pratisthan filed PIL No. 72 of 2007 before the High Court of Bombay challenging the public notice dated 20.05.2007 issued by MHADA only in respect of Mira Road Project and not in respect of two other projects. 7. On 22.11.2007, MHADA passed Resolution No. 6284 of 2007 accepting the bid of Ravi Development and awarded contract to them for getting construction of 30,000 Sq. Mtr. + 18,841 sq. mtr. (in lieu of receivable amount) = 48,841 sq. mtr. After giving undertaking accepting the Swiss Challenge Method and after participation and having failed in tendering process, M/s Ostwal Builders Ltd. filed W.P. (L) No. 2714 of 2007 challenging the public notice dated 20.05.2007 as well as MHADA's resolution dated 22.11.2007. Th....
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....e rival contentions and perused the relevant materials. It was highlighted that the High Court has gone totally wrong in observing that the proposal of Ravi Development under Swiss Challenge Method ought to have been innovative and since the said proposal was not innovative, the same should not have been processed under Swiss Challenge Method. With regard to the said conclusion, MHADA and the Government of Maharashtra placed materials to show that the said proposal under Swiss Challenge Method by `originator of proposal' need not be innovative at all and the said requirement has nowhere been stated under the said Swiss Challenge Method. Accordingly, it was pointed out that the repeated observations of the High Court to that effect are unsustainable. 11. It is useful to refer the Project details about the contract allotted to Ravi Development: Project Details 1.1 Maharashtra Housing and Area Development Authority (MHADA) established under MHADA Act, 1976 is engaged in the activity of housing development, Konkan Housing and Area Development Board is a regional unit of MHADA. An opportunity to private develop land at Mira Road, District Thane, owne....
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....a, Guram (U.S. Territory), Indonesia, Korea, Philippines, South Africa, Sri Lanka, Taiwan (China), Virginia (U.S.) and also in India by Andhra Pradesh, Rajasthan, Madhya Pradesh, Chhattisgarh, Gujarat, Uttaranchal, Punjab States and Cochin Port authorities. The above information by way of an assertion shows that Swiss Challenge Method is already in prevalence in various States in India as well as overseas. 13. The application of Swiss Challenge Method by MHADA is accused of being not fair and transparent but the said contention raised by the respondent as well as concluded in the impugned judgment cannot be relied upon as the public notice for tender dated 20.05.2007 issued by MHADA had clearly mentioned about the said method and the scheme to be followed under it. Moreover, in the said notice the rule of "First right to refusal" to the "originator of the proposal" has also been discussed accordingly. Though the name of the "originator of the proposal" may not have been mentioned but it was contended in the said public notice that "MHADA has received a suo motu proposal from a developer for development of this land" pointing out the land marked in the said public notice for due ....
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....14.06.2007 i.e. much before the filing of PIL No. 72 of 2007 to challenge the public tender. So it can be concluded that failure in the said bidding has raised the question of acceptability of Swiss Challenge Method and not before that when the public notice was actually published. 15. It was also pointed out that the tender notice and bid documents specify the details about Swiss Challenge Method without mentioning the innovativeness of the proposal, in such circumstances, interference by the High Court under the wrong assumption of innovativeness as one of the pre-conditions in the proposal of Ravi Development is totally incorrect. 16. The following materials are culled out from the information furnished by MHADA and State of Maharashtra. They are: At Mira Road, total land available with MHADA is 100286.25 sq.mtr. and out of the same (excluding area of 18969.40 sq.mtr. which went under D. P. Road, Nalla, amenities, open spaces etc.), near about 46400 sq.mtr. have been utilized and on the same, construction of merely 17840.23 sq.mtr. is actually carried. Thus, it is a fact that with the available subsidy to keep prices of LIG, EWS & MIG affordable MHADA has to....
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....rashtra on 11.10.2006. It is clear from the provisions of MHADA Act, 1976, that MHADA is an undertaking working under the control and in coordination with the Housing Department of Government of Maharashtra. It was explained that Ravi Development on 25.08.2006 submitted the proposal to the CEO, MHADA and since no immediate decision was taken by MHADA level as the same was new proposal, therefore, on 11.10.2006 similar proposal was submitted by them to the Chief Minister of Government of Maharashtra. It was pointed out that the Chief Minister had portfolio of Housing Department and as per Rules 3 and 12 of Maharashtra Government Rules for Conduct of Business, 1975 - business of the concerned Department of the Government are transacted by the Cabinet Minister of the said Department. In those circumstances, there was nothing wrong in submitting the same proposal to the Chief Minister of Maharashtra on 11.10.2006. As rightly pointed out by Mr. P.P. Rao, learned senior counsel, if there was no decision by MHADA in respect of their proposal dated 25.08.2006, naturally the party concerned viz., Ravi Development in the normal circumstances could approach to the higher authorities, in the c....
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....on MHADA. However, the materials placed by the State and MHADA show that on receipt of the representation from the Ravi Development without any endorsement or direction to consider the case of Ravi Development, the officer concerned merely forwarded the same to the Chief Executive Officer, MHADA to offer their remarks. As rightly pointed out, perusal of the entire documents clearly shows that there was no attempt either from the authorities of the State of Maharashtra or from the Chief Minister to favour Ravi Development. In such circumstances, the contention of the learned Solicitor General appearing for the State and MHADA is well founded and the contrary conclusion of the High Court is liable to be rejected. 20. In the public notice and bid documents dated 20.05.2007, it was specifically mentioned about the principle of "initiator or proposer" and with the said understanding Shree Ostwal Builders Ltd. has participated in the tender process and also gave an undertaking on 11.06.2007 while submitting their bid document. The following undertaking submitted by them which is not in dispute is as follows: We are well aware of Swiss Challenge method and that the origi....
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....ered to the great advantage of MHADA and more dis-advantage of Ravi Development. 23. The further particulars furnished by the State of Maharashtra show that National Housing Policy & Maharashtra State Housing Policy promote Public-Private partnership for construction of EWS (Economically Weaker Section), LIG (Lower Income Group), MIG (Middle Income Group) Housing. MHADA is a major player for the same in state of Maharashtra. Subsidy provided is not adequate and MHADA has no control on actual quality construction, therefore, MHADA has to construct low rise and ground floor structures with poor specifications so as to keep the prices of the EWS, LIG, MIG houses affordable to masses and FSI of 1.20 is unutilized due to the low rise structures and poor specifications in almost all the layouts of MHADA in Mumbai and in Mumbai Metropolitan region and MHADA is finding it difficult to sell even these houses at concessional rates. Therefore, MHADA conducted a detailed survey of Public Private Participation (PPP) options available for carrying out land developments for construction of better EWS, LIG and MIG houses at affordable price. In the report dated 24.04.2007, written to the Govern....
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....ng of tenders or absence of public auction or invitation alone is no sufficient reason to castigate the move or an action of a public authority as either arbitrary or unreasonable or amounting to mala fide or improper exercise or improper abuse of power by the authority concerned. Courts have always leaned in favour of sufficient latitude being left with the authorities to adopt their own techniques of management of projects with concomitant economic expediencies depending upon the exigencies of a situation guided by appropriate financial policy in the best interests of the authority motivated by public interest as well in undertaking such ventures.... 26. The decision to apply Swiss Challenge Method clearly fell within the realm of executive discretion and in this case, exercised after due application of mind. It is clear from the materials placed before us that there is neither arbitrariness nor unreasonableness in the adoption of the said policy. 27. Recently, there has been shift towards encouraging private participation in the government works and promoting of public-private partnership. The Ministry of Housing and Urban Poverty Alleviation in its National Urban Housing ....
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....onally as well as in India. In those circumstances, the High Court is not justified in striking out the Swiss Challenge Method without allowing the State Government to exercise its executive discretion on a pilot basis. It is not possible to reject the claim of State of Maharashtra and MHADA, in view of shortage of land, increasing cost in housing sector, the Central and State Governments recommended strongly for public private joint ventures and in the said category Swiss Challenge method is the acceptable democratic method as compared to other options. 28. The slums in urban area are primarily a resultant of shortage of supply of housing and shortage in supply of LIG/MIG category of housing. To ensure that the lands for public housing and metropolis like Mumbai are put to maximum utilization and maximum tenements are made available for families of MIG and LIG categories for which in the present scenario one of the way outs is joint venture development by public and private bodies. 29. Due to shortage of land, ever increasing cost, and maximum utilization of permissible FSI, by adopting public-private joint ventures, it would be possible to minimize the cost of LIG, EWS and ....