OSTWAL BUILDERS LTD Vs. STATE OF MAHARASHTRA

JUDGEMENT

(1.) The challenge in these two cases, is to the public tender issued by the Government on 20-5-2007 in so far as it relates to inviting tenders by invoking the 'Swiss Challenge Method'.

(2.) As the question raised in these two cases are common, both the cases are admitted, heard together and disposed of by this common Judgment.

(3.) 'Swiss Challenge Method' is a method invoked by the Government with a view to accelerate rapid growth of the housing sector in the State by inducting private entrepreneur through public - private partnership (PPP). In view of the resource crunch, the Government considers it prudent to enter into joint venture agreements with private parties for development of the Government lands by invoking the Swiss Challenge Method. Under this method, any person/firm/association/private developer can approach the public authorities with his innovative proposal for development of the Government lands. The said proposal is scrutinized and if found to be technically and financially viable, the proposal is accepted and thereafter public tenders are invited by invoking the Swiss Challenge Method, which means that the person who has voluntarily submitted a proposal for development of the Government lands ('originator of the proposal' for short) would be entitled to the joint venture contract even if he is not the highest tenderer, provided the originator of the proposal agrees to raise his bid to that of the highest tenderer. In other words, under the Swiss Challenge Method, the originator of the proposal has the right of first refusal or right of first choice to match the offer given by the highest tenderer and bag the joint venture contract even though he is not the highest tenderer. If the originator of the proposal declines the option, then the contract is awarded to the highest tenderer whose bid is found to be most competitive. If the highest tenderer backs out, then the earnest money deposited by the highest tenderer is forfeited. Thus, according to the State, the right of first refusal contained in the Swiss Challenge Method serves twin purposes. Firstly, it boosts or encourages private participation in the development of the government lands and secondly, the development contract is awarded at the best competitive price ascertained from the bids received from the public tender. Therefore, it is claimed that the decision to invoke the Swiss Challenge Method at the best competitive price is a policy decision taken by the Government in public interest.