Mistry opens new front against Tatas over Parliament redevelopment project

The Mistry family alleges misconduct in bidding process, wants Tatas disqualified

Opening a new front, Shapoorji Pallonji Group (SP Group) has hit out at Tata Sons over the Parliament redevelopment project. The Mistry family-led SP Group, which has been engaged in a lengthy corporate battle with the salt-to-software conglomerate after Cyrus Mistry was removed as Tata Sons chairman in a boardroom coup four years ago, has alleged serious misconduct  during the project’s bidding process.      

In a series of letters to the Central Public Works Department (CPWD), the nodal body for the project, the SP Group has flagged off “probable conflict of interest” against Tata Sons, the holding company where the Mistry family holds 18.4 per cent stake.  It has asked CPWD to disqualify the Tatas, while seeking retendering of the bids.   

In one of the letters reviewed by Business Standard, it said since both – Tata Projects Ltd. (TPL) and Tata Consulting Engineers Ltd (TCE) – are part of the bidding process, it is in violation of rules set by the Central Vigilance Commission (CVC).

“It is noticed that TCE is associated with the project and providing consultancy service as sub-consultant and TPL is also a bidder for the subject tender. It is essential to make a mention that both the aforesaid companies are affiliates and part of the Tata Group, having common shareholding through Tata Sons including its direct and/or indirect associated companies,” the SP Group letter said.

Addressed to the CPWD executive engineer for the Central Vista Project Division-1, the Shapoorji Pallonji communication sought a thorough examination of the process.

After TPL emerged the lowest bidder on September 16, the SP group sent out another complaint. While CPWD had ruled out conflict of interest, the SP Group challenged the claim. “We however differ and disagree with your contentions that there is no conflict of interest. Accordingly, the bidding process cannot be treated to be impartial and as tendering process had been carried out in violation to government/CVC, Tata Projects needs to be disqualified and the subject works needs to be re-tendered,” it wrote.

According to sources, the SP Group alleged that the pre-qualification bid criteria were tweaked to accommodate TPL in the process. Initially, the bidding criteria only allowed firms with experience in construction of ‘concrete building projects’, but later experience in setting up ‘steel buildings’ was added to accommodate TPL, among other changes, the allegations suggested.

In response to queries, a TPL spokesperson said, “As per our understanding of the tender conditions and other provisions, we are not aware of any conflict of interest. There were no changes made to the pre-qualification criteria in the RFQ document issued by the tendering entity till the submission date. TPL participated in the RFQ process along with six other companies, and our qualification was found suitable based on a verification of our submission and experience. TPL has extensive experience in construction of buildings, and other complex projects”.

Further,  questions were raised over the thin bidding margin between TPL and L&T. While L&T submitted a bid of Rs 865 crore, TPL’s was at Rs 861.9 crore—a difference of Rs 3.1 crore.
 

“Thin margin between bids is not unusual in competitively bid tenders, where bidders could narrowly win or lose the project,” the TPL spokesperson responded. 
 

The SP Group did not comment on the matter. When contacted, CPWD officer Ashwani Mittal—the recipient of the SP Group letters--refused to comment.

The Parliament construction project is expected to be completed by the first half of 2022–before India’s 75th Independence Day. 

The latest controversy around the Parliament project has surfaced ahead of a crucial hearing in the Supreme Court on October 28 on the ongoing Tata-SP Group dispute. The court had restrained the SP Group from pledging its Tata Sons shares till the hearing last week of this month. With the Mistrys recently seeking an exit from the Tata Group, that matter too may come up on October 28.