The Hyderabad High Court on Monday stayed the Swiss Challenge model proposed by the Andhra Pradesh government to award construction projects for its new capital Amaravati.

Admitting a petition filed by Aditya Constructions and NVN Engineers challenging the government's decision to adopt the Swiss Challenge model, Justice M.S. Ramachandra Rao directed the state to file its response and adjourned the hearing till October 31.

The High Court of Judicature in Hyderabad is the common high court for both the states of Telangana and Andhra Pradesh.

Under the Swiss Challenge model, the government or its agency invites a developer to present a bid. Other prospective developers are then asked to offer counter bids. If their bid is lower, the first bidder is asked to submit a fresh bid.

If the first bidder comes up with lower bid, it gets the project, and if it fails, the one with lower bid wins the project.

The state cabinet in June approved the controversial model for awarding the capital city's development project to the Singapore consortium of Ascendas-Singbridge and Sembcorp Development Ltd.

The government had subsequently floated a special purpose vehicle -- Amaravati Development Company -- to take up various works for construction of the greenfield capital city on the banks of the Krishna river in Guntur district.

The Singapore consortium has 58 per cent stake in the SPV while the remaining 42 per cent is held by the Andhra Pradesh government.

The Swiss Challenge mode has come under criticism in various countries, as well as opposition parties in the state, who alleged that it lacks transparency and favours a particular company.