• Infrastructure & Projects

  • Multiple arrangements govern the infrastructural projects, such as Build-Operate-Transfer Contract [BOT], Build-own-Operate-Transfer Contract [BOOT], Build-Lease-Transfer [BLT], DBFO [Design-Build-Finance-Operate], DBOT [Design-Build-Operate-Transfer], DCMF [Design-Construct-Manage-Finance], Etc.   

    Build–operate–transfer (BOT) or build–own–operate–transfer (BOOT) is a form of project financing, wherein a private entity receives a concession from the private or public sector to finance, design, construct, and operate a facility stated in the concession contract. This enables the project proponent to recover its investment, operating and maintenance expenses in the project. In BOT or BOOT the private sector builds an infrastructure project, operates it and eventually transfers ownership of the project to the government. In many instances, the government becomes the firm's only customer and promises to purchase at least a predetermined amount of the project's output. This ensures that the firm recoups its initial investment in a reasonable time span. This type of arrangement is used typically in complicated long-term projects as seen in power plants and water treatment facilities. In some arrangements, the government does not assume ownership of the project. In those cases, the company continues running the facility and the government acts as both the consumer and regulator. BOT finds extensive application in infrastructure projects and in public-private partnership. In the BOT framework a third party, for example the public administration, delegates to a private sector entity to design and build infrastructure and to operate and maintain these facilities for a certain period. During this period the private party has the responsibility to raise the finance for the project and is entitled to retain all revenues generated by the project and is the owner of the regarded facility. A BOOT structure differs from BOT in that the private entity owns the works.

    Under BLT a private entity builds a complete project and leases it to the government. On this way the control over the project is transferred from the project owner to a lessee. In other words, the ownership remains by the shareholders but operation purposes are leased. After the expiry of the leasing the ownership of the asset and the operational responsibility are transferred to the government at a previously agreed price. For foreign investors taking into account the county risks  BLT provides good conditions because the project company maintains the property rights while avoiding operational risks.   

    All the arrangements, BOT, BOOT, BLT, DBFO, DBOT, DCMF, Etc. which find very extensive application across the globe. Some advantages of such arrangements are:

    • Encourage private investment
    • Inject new foreign capital to the country
    • Transfer of technology and know-how
    • Completing project within time frame and planned budget
    • Providing additional financial source for other priority projects
    • Releasing the burden on public budget for infrastructure development

    The Government of India has allowed 100 per cent FDI in the construction business. This has paved the way for foreign investment into development of commercial and residential real estate.

    We , at Hello Counsel, represent various companies in the construction of highways, flyovers, etc. on BOT basis. We have advised them on Pre-Bidding Due Diligence, reviewing bidding documents, drafting and vetting agreements such as Concessionaire Agreement, EPC Contracts, Annual Maintenance Contracts, etc. We draft Work Orders, Purchase Orders, Letter of Intent etc. relating to the sale and purchase of construction materials. We also provide assistance in regulatory clearance and compliance. We also represent clients before Courts and other Dispute Resolution Bodies.

    We represent builders and construction businesses. Our clients include construction companies, both residential and commercial, design professionals, contractors and subcontractors. We negotiate contracts, conduct surveys and due diligence, prepare construction agreements, procure permits and licenses from local authorities and government undertakings. We advise our clients on site acquisition and development, contract negotiation, project bidding (public and private), project management issues, insurance contracting, regulatory and code compliance, project documentation, drafting employment and labour agreements and construction related litigation. We have conducted due diligence of real estate title work for our clients, including examination, certification and related work. We assist our clients in acquiring and developing properties, both commercial and residential, malls and industrial parks. We draft and review documents related to infrastructure and construction such as Concession Agreement and EPC contracts and related contracts including bank guarantees and performance bonds, agreements with architects, contractors and sub-contracts, consultancy agreements, work orders, and purchase orders. We advise on creation of joint ventures and assist in necessary documentation for the same. We also advise on structuring investments in this sector and advise on the most suitable entry route for foreign clients.

    Legislations Governing Infrastructure & Projects 

    Judgments: Infrastructure & Projects

    Citations: Tender Judgments

    • HBL Nife:- Union Of India & Anr. Versus HBL Nife Power Systems Ltd., Civil Appeal No. 3193 Of 2006, Judgment Dated-20.01.2016, Bench: T.S. THAKUR, & R. BANUMATHI, JJ, Supreme Court Of India [Full PDF Judgment]- Issue of purchase of submarine batteries for the Indian Navy- Open Tender can’t be done in the purchase of specialized and critical spare parts for the Defence Ministry- Procedure adopted by the Director General Quality Assurance (DGQA) working under the Ministry of Defence to ‘develop/indigenise’ critical items/spares upheld.
    • Michigan Rubber (India) Ltd. Versus State of Karnataka, Civil Appeal No. 5898/2012 Judgment: 17/08/2012, Bench: P. Sathasivam, J. & Ranjan Gogoi, J., Supreme Court Of India, Citation: 2012(4) SCV(Civil) 249: 2012 AIR(SC) 2915: 2012(8) SCR 128: 2012(8) SCC 216: 2012(7) JT 446: 2012(7) SCALE 414: 2012(6) SLT 116- Tender Bid- Pre-qualification criteria- Conditions incorporated in tender notice- Condition imposed in public interests- Sustainability- Held, failure of appellant to establish that same were contrary to public interest and beyond pale of discrimination or unreasonable- The CMB consisting of experienced persons, taking into account various aspects including safety of passengers and public interest, revised the tender conditions- Impugned conditions do not in any way could be classified as arbitrary, discriminatory or mala fide- No ground to interfere with impugned judgment of High Court- Appeal dismissed.- Tata Cellular vs. Union of India, (1994) 6 SCC 651, Raunaq International Ltd. vs. I.V.R. Construction Ltd. & Ors., (1999) 1 SCC 492, Union of India & Anr. vs. International Trading Co. & Anr., (2003) 5 SCC 437, Jespar I. Slong vs. State of Meghalaya & Ors., (2004) 11 SCC 485, Association of Registration Plates vs Union of India & Ors., (2005) 1 SCC 679, Reliance Airport Developers (P) Ltd. vs. Airports Authority of India & Ors., (2006) 10 SCC 1, Jagdish Mandal vs. State of Orissa and Others, (2007) 14 SCC 517, Tejas Constructions & Infrastructure Pvt. Ltd. vs. Municipal Council, Sendhwa & Anr., (2012) 6 SCC 464, Referred.- HELD: The Court would not normally interfere with the policy decision and in matters challenging the award of contract by the State or public authorities. In view of the above, the appellant has failed to establish that the same was contrary to public interest and beyond the pale of discrimination or unreasonable. We are satisfied that to have the best of the equipment for the vehicles, which ply on road carrying passengers, the 2nd respondent thought it fit that the criteria for applying for tender for procuring tyres should be at a high standard and thought it fit that only those manufacturers who satisfy the eligibility criteria should be permitted to participate in the tender. As noted in various decisions, the Government and their undertakings must have a free hand in setting terms of the tender and only if it is arbitrary, discriminatory, mala fide or actuated by bias, the Courts would interfere. The Courts cannot interfere with the terms of the tender prescribed by the Government because it feels that some other terms in the tender would have been fair, wiser or logical. In the case on hand, we have already noted that taking into account various aspects including the safety of the passengers and public interest, the CMG consisting of experienced persons, revised the tender conditions. We are satisfied that the said Committee had discussed the subject in detail and for specifying these two conditions regarding pre-qualification criteria and the evaluation criteria. On perusal of all the materials, we are satisfied that the impugned conditions do not, in any way, could be classified as arbitrary, discriminatory or mala fide.- The learned single Judge considered all these aspects in detail and after finding that those two conditions cannot be said to be discriminatory and unreasonable refused to interfere exercising jurisdiction under Article 226 of the Constitution and dismissed the writ petition. The well reasoned judgment of the learned single Judge was affirmed by the Division Bench of the High Court.- In the light of what is stated above, we fully agree with the reasoning of the High Court and do not find any valid ground for interference. Consequently, the appeal fails and the same is dismissed with no order as to costs.

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