New Delhi: The government is yet to respond to a legal challenge from a highway builders lobby over the decision to alter bidding guidelines for large infrastructure projects to keep out frivolous bidders. The lobby says the government’s decision goes against the fundamental right to equality.
The National Highway Builders Federation (NHBF) has challenged the government in the Delhi high court as first reported by The Economic Times on 11 March.
The petition, details of which are emerging now, says the government’s decision would result in restrictive trade practice, provide “scope for favouritism and high level of corruption” and amount to a breach of the fundamental freedom to practice a trade or profession of one’s choice.
Breach of freedom: A file photo of a national highway construction site. (Photo: Rajeev Dabral/ Mint)
The challenge, filed in January, came in response to the bidding norms—issued by the finance ministry and ratified by the Prime Minister’s committee on infrastructure—that favour bidders who have executed large projects. The norms, reported by Mint on 28 December, cap the number of bidders at six, with some individual exceptions.
The case has been filed against the National Highways Authority of India (NHAI), the Planning Commission and the expenditure department of the finance ministry. On 23 January, the court ordered that the respondents file their counter arguments. The next hearing is set for 4 April.
NHAI filed its response in February and stated that it is “neither empowered or authorized to effect any changes to the request for qualification”. The other respondents are yet to file their responses.
“I believe they are arguing on the basis of article 14 of the constitution,” said an NHAI official, who did not wish to be quoted. “Let us see what the court will decide.”
Recently, the federation, in a bid to resolve the dispute out of court, met Planning Commission officials asking for the clause capping the number of bidders be dropped, according to an NHBF representative, who did not wish to be quoted. He said the federation is yet to hear back from the government.
“In the contracting world, if you put some restrictions at the bid level, somebody will always complain,” said a government official, who did not wish to be named. “Their argument is that some companies will end up getting all the contracts. The truth is, if one company starts putting in winning bids for too many contracts, at some point the NHAI will prevent the company and say their capacity is getting stretched,” the official said.
The lawyer for the federation, however, said increasing the number of pre-qualified applicants (those that meet the technical criteria and are allowed to make financial bids) does not change the nature of the legal challenge. “Why have a set of 100 people qualify and then select five from that,” Manoj Kumar, a senior partner with law firm Hammurabi and Solomon, said. “Also, if only four or five people put their bids, then price discovery is lower,” he added.
Analysts said the Planning Commission could look at differentiating projects. “Maybe they could look at a graded approach. For large projects, they could set the standards high, and for the shorter stretches, they could allow more people to bid,” said Arvind Mahajan, executive director, advisory services, KPMG Advisory Services Pvt. Ltd.
“It is like they want Indians to be subcontractors for ever,” said an executive with an infrastructure firm who did not wish to be named. His implication is that the norms favour large and foreign companies.