SC to review Maha’s award of Dharavi redevelopment project to Adani Group

NEW DELHI The Supreme Court on Friday agreed to review the Maharashtra government’s decision to award the Dharavi Redevelopment Project in Mumbai to Adani Properties Ltd, even as it directed Adani Properties to maintain an escrow account for all financial transactions related to the project.

Admitting a petition by SecLink Technologies Corporation (STC), the top court also made the award of the contract to Adani Realty subject to its final orders. A bench comprising Chief Justice of India Sanjiv Khanna and justice Sanjay Kumar took note of an undertaking by STC, which had emerged as the highest bidder in the initial tender process before a second round was floated, ultimately awarding the contract to Adani Properties.

STC assured the court that it would meet all obligations undertaken by Adani Properties under the second tender and proposed a revised bid of ₹8,640 crore, aligning with all stipulated obligations.

Dharavi, one of Asia’s largest slums, is a densely populated settlement in Mumbai, and its redevelopment project holds immense significance as it aims to transform the area into a modern urban space, providing improved housing, infrastructure, and economic opportunities for its residents.

During the hearing, the bench scrutinised the changes made in the tender conditions between the first and second bidding rounds.

“There are two aspects of it. Whether you were entitled to cancel the last contract or not. We understand that there are additional obligatory conditions in the second tender, but the petitioner claims that while he was the highest bidder in the first tender with an offer of ₹7,000 crore, the second tender conditions were tweaked to eliminate him. The high court did not examine this contention,” it observed.

Senior advocate Mukul Rohatgi, appearing for Adani Properties, argued that STC had previously expressed reservations regarding the inclusion of railway land in the project. “They said that if railway land is brought in, the project is not feasible. So, they cannot raise these concerns now because the second tender clearly states that railway land is part of the project.”

The bench, however, questioned the rationale behind altering the tender conditions after STC’s exclusion. “You might be justified in cancelling and floating a fresh tender, but why did you change the conditions later? We will examine this. Why did they not think of all this in the first round and only after he opted out?” the court asked.

Senior counsel CA Sundaram, representing STC, countered that his client was willing to increase its bid to ₹8,640 crore while adhering to all conditions imposed in the second tender. However, solicitor general Tushar Mehta, representing the Dharavi Redevelopment Project (DRP), noted that Adani Properties’ bid was ₹8,869 crore, including a ₹5,069 crore base bid, ₹1,000 crore allocated to the railways for land, a ₹2,800 crore minimum indemnity amount, and the responsibility of constructing over 800 residential quarters.

Sundaram replied that his client was willing to match all the other conditions along with a revised bid of ₹8,640, following which the bench proceeded to issue notices to DRP and Adani Realty, scheduling the next hearing in May.

During the proceedings, Sundaram also called for a stay on the contract’s execution, alleging foul play. “It is such a scandal. They first knock me out and then change all the conditions later to benefit the successful bidder,” he said. Rohatgi, however, defended the progress of the project, stating that work had already commenced, with tools, equipment, and 2,000 workers engaged on-site.

Taking into account the ongoing work, the Supreme Court directed that all payments be processed through an escrow account to ensure transparency and accountability.

“As the matter is sub judice, we direct that the third respondent (Adani Properties) will make all payments only through one bank account wherein all credits will be made and disbursement will be made for the execution of this contract. Proper invoices and billing will be maintained as required under the Income Tax Act and pertinent rules,” the order stated.

The court further emphasised that the contract’s execution remains subject to the final ruling and directed that original files be produced at the next hearing scheduled for May 25.

The top court’s intervention follows the Bombay high court’s December 20, 2024 dismissal of STC’s petition against the Maharashtra government’s award of the project to Adani Realty. The high court ruled that the plea “lacked force”.

STC, a Seychelles-based company leading a consortium of firms, had participated in the 2018 tender process, emerging as the highest bidder. However, a government resolution dated November 5, 2020, cancelled the process, and STE was informed via a letter on November 11, 2020. Subsequently, on September 22, 2022, the Maharashtra government initiated a fresh tender with revised conditions. Adani Realty was selected as the lead partner, and on July 13, 2023, it was awarded a ‘letter of award’ for executing the redevelopment.

STC contended that the cancellation of the earlier tender was arbitrary and violative of Article 14 of the Constitution. It also claimed that the new eligibility conditions were designed to exclude it from participation. However, the Bombay high court ruled that there was no final acceptance of STC’s bid in 2019 and that a mere acknowledgment of the highest bid did not constitute a concluded contract. The high court further held that a company that did not participate in the revised 2022 tendering process could not challenge its terms and conditions.

Maharashtra government, the Adani Group and STC refused to comment on the matter.