HC notices to Centre, SAIL on JK Cement petition

The central government and Steel Authority of India (SAIL) have been issued notices by the Delhi High Court seeking their response to a petition contesting the rejection of JK Cement's bid to partner the steel major on a joint venture slag-based cement plant.

A Division Bench comprising Justices Sanjay Kishan Kaul and Valmiki J Mehta issued notices to the Centre and (SAIL), directing them to file replies to the JK Cement petition within three weeks. The high court has scheduled the next hearing on the matter on January 19, 2011.

JK Cement claims that its bid was rejected in an "arbitrary manner" despite being the most suitable.

In October, 2007, SAIL had invited bids for joint venture participation in a proposed slag-based cement plant at Rourkela, in Orissa. However, the tender proceedings came to an abrupt halt due to some dispute. The matter was later taken to the Orissa High Court, which stayed the tender proceedings.

Later, the bids were opened in 2009 and JK Cement was found to be the highest bidder. However, SAIL did not issue a Letter of Intent and instead, rejected the bid on November 2, 2010.

During today's proceedings in the Delhi High Court, SAIL gave an assurance that it will maintain the status quo and not invite any new tender in the near future.

"SAIL would not propose to invite any new tender in the near future, at least till next date of hearing," submitted senior advocate K K Rao, appearing for SAIL.

Meanwhile, senior counsel Mukul Rohatgi, appearing for JK Cement, submitted that the PSU has rejected the bid without reasonable justification, even though JK Cement was ostensibly the most suitable bidder.

He further submitted that PSU has regularly extended the validity of the bid and bank guarantee furnished by JK Cement.

He also said that JK Cement had offered the lowest project cost and highest premium payable to the PSU among all the bidders in the fray. As such, he argued that SAIL could not reject the bid without giving a valid and cogent reason.

JK Cement is one of the largest grey cement manufacturers in Northern India and the second largest manufacturer of white cement in India, with a market share of about 38 per cent.