Legal Aspects of Business Project Report

Supreme Courts Decision on

Swiss Challenge Method of
Tendering
Group 9:

Animesh Gupta 14P
Govil Khattar
Nishant Bhatia 14P211
Samiran Mathur 14P222
Saumya Kumar 14P224
Vidit Vikram 14P236

Housing Development through Public
Private Partnership Model
The transfer to the private
sector of investment projects
that traditionally have been
executed or financed by the
public sector
Greenfield Investment in
infrastructure development has
been given encouragement in
India
In the process of dispensing
benefits to the people
government enters into
contract with several private
partners under this model
Though, some considered it as
lacking transparency, Supreme
Court approved the Swiss
Challenge method of tendering
followed by the state
government in case of Rani
Development Vs. Shre Krishna
Prathisthan, 2009

A PPP project under affordable housing scheme

Swiss Challenge Method of
Tendering
Swiss challenge is a form of public procurement in some (usually
lesser developed) jurisdictions which requires a public authority
which has received an unsolicited bid for a public project or
services to be provided to government, to publish the bid and
invite third parties to match or exceed it.
It's an offer made by the original proponent to the government
ensuring his process to be best by his initiative or on the demand
of the government to perform certain task.
Some Swiss challenges also allow the entity which submitted the
unsolicited bid itself then to match or better the best bid which
comes out of the Swiss challenge process.
The original proponent gets the right to counter-match any
superior offers given by the third party.
Advantages
Disadvantages
Certainty of success as at
least one willing private
partner is available right from
the beginning
Project proponent does a
complete feasibility check &
financial analysis of a project
resulting in better project
structuring
Identification of timelines,
risks and their allocation
along with transparent
bidding criteria becomes
easier
Benchmarking of project
costs, revenues and returns
and necessary technical and
financial studies is
completed before the bidding
stage
Legal validity of using the
Swiss challenge system
Among the international
issues related to the
implementation of this
method the problem
observed at the time of
construction of International
Passenger Terminal 3 in
Manila's Ninoy Aquino
International Airport
RAVI DEVELOPMENT VS SHREE
KRISHNA PRATHISTAN & OTHERS
Case Summary
Ravi Developers presented a suo motu proposal to the
MHADA to develop and build on certain pieces of land in
Maharashtra
MHADA decided to use the Swiss Challenge method of
tendering with all its particular guidelines
Project was awarded to Ravi Development which
exercised its right of first refusal and matched the winning
bid
Award of the project was challenged by some of the other
bidders on the grounds that the bidding process was
unfair, arbitrary and ambiguous
Bombay High Court struck down the bid process
Supreme Court studied the facts of the case carefully and
found that the process was patently fair and upheld the
Swiss challenge method
Legal Aspects
MHADA had clearly mentioned about the said method, i.e., the
rule of First right to refusal to the originator of the proposal
The project plan did not lack innovativeness and originality as
was held by the Bombay High Court
The decision of applying Swiss challenge method fell within the
realm of executive discretion and was exercised after due
application of mind in this case
Some suggestions given by SC
The relevant authority should also mention the nature of projects
that can be bid
Category of projects must be specified
Rules regarding timelines for the approval of a project and the
bidding process must be clearly set
The rules decided must be followed once the project
received/identified via the Swiss Challenge method
Fair amount of opportunity should be provided for a participatory
and an adequately competitive bidding process
Application of Swiss challenge
method in International cases
ASIA'S EMERGING DRAGON CORPORATION (AEDC),
petitioner,
vs.
DEPARTMENT OF TRANSPORTATION AND
COMMUNICATIONS (DOTC), SECRETARY LEANDRO R.
MENDOZA and MANILA INTERNATIONAL AIRPORT
AUTHORITY (MIAA), Respondents
Issue: AEDC was not awarded the project even after emerging as
unchallenged proposer fulfilling all necessary requirements
DOTC conducted the Swiss challenge which failed to produce
a better offer from a qualified challenger
Court had disqualified a previous challenger on the grounds of
ineligibility
All agreements the disqualified challenger entered into with
DOTC and MIAA were declared null and void
No other proposals were considered by the respondents and the
original proponent AEDC was unchallenged
The disqualified challenger had failed to comply with the
requirements and eligibility set by DOTC but was awarded the
project
This resulted in denial of equal protection to AEDC which had
complied with all the requirements but was not awarded the
project
Courts Decision: The court held that AEDC should be awarded
the project as it was the unchallenged proposer which had
fulfilled all necessary requirements

Thank You!