The Supreme Court on Tuesday cleared the decks for Anil Ambani-controlled Reliance Energy Limited (REL) to bid for the Mumbai sea link project where a consortium led by elder brother Mukesh Ambani was the front-runner.
The consortium of REL and Hyundai Engineering and Construction Company Limited (HDEC) have been asked to present its financial bids by December 15, 2007 for the estimated Rs 2,600 crore project. With the judgment, REL’s consortium becomes the fourth bidder for the project. An apex court bench headed by Justice SH Kapadia, setting aside an earlier order by the Bombay High Court order, said: “We hold that REL/HDEC consortium was erroneously excluded from the second state of bidding process.”
The Maharashtra State Road Development Corporation Limited (MSRDC) had rejected the REL-led consortium’s financial bid after its consultants Jean Muller and Crisil held that its net cash profit was not at Rs 200 crore, and had therefore failed to satisfy the financial criteria. After taking into account the principles involved in ascertaining the bids, the bench said there are two methods of cash flow reporting direct and indirect and that both provide identical results in the matter of the final total.
The bench held: “No reason is given by the consultants of MSRDC for rejecting the indirect method invoked by KPMG, chartered accountants of REL/HDEC.”
REL had challenged the Bombay High Court’s order on the ground that it was capable of meeting the net worth for the entire consortium.