Developers await verdict on hsg development
Bombay High Court To Decide On Swiss Challenge Method To Award Bids
Mumbai: The Bombay high court is expected to pass a judgment soon, one that may change the way the government gives out land development contracts.
The stakes being high in any real estate bid, developers are keenly awaiting the outcome of a petitionthe first of its kind, in the court.
The case here specifically deals with a contract for a sprawling 69,000-sq-m plot in Mira Road, but the verdict is expected to signal a larger trend. Toying with innovative ideas for allotting construction contracts, the state had taken a leaf from Rajasthan and decided to introduce in 2006 what is internationally known as the Swiss Challenge Method (SCM). Under this, the governmentin public interestcan give its land for development to a private realtor. According to the SCM (see box), a private developer suo motu proposes to develop a plot of land for the state. He submits a detailed proposal, which is checked by the state for technical and financial viability and then approved. In lieu of the contract, the developer proposes to give the state some freebies. The government then calls for bids but the original proposer is given a chance to match the highest bidder.
In this case, the Konkan Housing and Redevelopment Board had received a proposal for a mega residential housing project in Mira Road by way of SCM from a developer who had suo motu made the proposal, subsequent to which tenders were issued. Under the SCM, if another developer bids more than what the original realtor had proposed, the project will go to the higher bidder unless the latter bids more.
Moving court, Ostwal Builders has challenged the contract given by Konkan Housing to Ravi Developments under the SCM. The petitioners have said Ravi Developments had not participated in the tender process and that its original suo motu proposal was not for the land that was being bid for.
The petition challenged the arbitrary action of the Konkan board, which ignored the highest bid and gave the work to a lower bidder by adopting a process, which was contrary to the public interest.
Strongly opposing the petitioners contention and denying that the plot was not the same, senior counsel S G Aney said the court cannot intervene in a process if it was otherwise legal. The Konkan board stood to gain 30,000-sqm of free, saleable area under the scheme, the court was told.
The stakes being high in any real estate bid, developers are keenly awaiting the outcome of a petitionthe first of its kind, in the court.
The case here specifically deals with a contract for a sprawling 69,000-sq-m plot in Mira Road, but the verdict is expected to signal a larger trend. Toying with innovative ideas for allotting construction contracts, the state had taken a leaf from Rajasthan and decided to introduce in 2006 what is internationally known as the Swiss Challenge Method (SCM). Under this, the governmentin public interestcan give its land for development to a private realtor. According to the SCM (see box), a private developer suo motu proposes to develop a plot of land for the state. He submits a detailed proposal, which is checked by the state for technical and financial viability and then approved. In lieu of the contract, the developer proposes to give the state some freebies. The government then calls for bids but the original proposer is given a chance to match the highest bidder.
In this case, the Konkan Housing and Redevelopment Board had received a proposal for a mega residential housing project in Mira Road by way of SCM from a developer who had suo motu made the proposal, subsequent to which tenders were issued. Under the SCM, if another developer bids more than what the original realtor had proposed, the project will go to the higher bidder unless the latter bids more.
Moving court, Ostwal Builders has challenged the contract given by Konkan Housing to Ravi Developments under the SCM. The petitioners have said Ravi Developments had not participated in the tender process and that its original suo motu proposal was not for the land that was being bid for.
The petition challenged the arbitrary action of the Konkan board, which ignored the highest bid and gave the work to a lower bidder by adopting a process, which was contrary to the public interest.
Strongly opposing the petitioners contention and denying that the plot was not the same, senior counsel S G Aney said the court cannot intervene in a process if it was otherwise legal. The Konkan board stood to gain 30,000-sqm of free, saleable area under the scheme, the court was told.
WHAT THE METHOD MEANS
It allows for development of land with private participation provided the state is of the opinion that it is in the public interest to do so
Any person, firm or association can make a suo motu proposal for development
The bid, along with a detailed project report, is checked for financial and technical viability
Tenders are invited from the open market
The original proposer will get a chance to match the best bid obtained through the tender process
The project is awarded to the suo motu proposer if he matches the best bid; on his refusal, the project goes to the highest bidder