Supreme Court of India
NATIONAL HIGH SPEED RAIL CORPORATION LIMITEDversusMONTECARLO LIMITED & ANR
- Citation
- 2022 INSC 124
- Decided
- 31 January 2022
- Disposal
- Appeal(s) allowed
- Bench
- M R SHAH
Holding
In foreign sovereign‑funded contracts, the decision of the foreign investor and its consultant on bid responsiveness is conclusive and not amenable to judicial review unless mala fides, arbitrariness or favouritism is established; therefore the High Court’s interference was erroneous.
Summary
The National High Speed Rail Corporation Limited (NHSRCL) issued a tender for the Mumbai‑Ahmedabad Bullet Train project, which is funded by a loan from Japan International Cooperation Agency (JICA). Monte Carlo Limited submitted a technical bid that was rejected by NHSRCL as non‑responsive due to material deviations, a decision endorsed by JICA’s consultant JICC. The Delhi High Court set aside the rejection, holding the bid substantially responsive and directing re‑evaluation. NHSRCL appealed, arguing that the High Court should not interfere with the tender process of a foreign‑funded project absent any allegation of mala fides or favouritism, and that the terms of the bidding documents, including confidentiality and debriefing clauses, were valid. The Supreme Court held that the decision of JICA/JICC on bid responsiveness is final and not subject to judicial review unless there is proven mala fides, arbitrariness or bias, and that the High Court erred in intervening. Consequently, the appeal was allowed and the High Court’s order was quashed.
Issues considered
- The High Court’s jurisdiction to interfere with the tender process of a foreign‑funded project in the absence of specific allegations of mala fides or favouritism.
- Whether the confidentiality (Clause 28.1) and debriefing (Clause 42.5) provisions in the ITB are illegal or can be upheld.
- The scope of judicial review in contracts funded by a foreign sovereign entity versus contracts funded from the Consolidated Fund of India.
- Whether a material deviation in a technical bid justifies rejection without granting an opportunity to cure.
Legislation cited
- Companies Act, 2013
- Constitution of Indias. Article 226
Subjects
foreign funded contractjudicial reviewtender processhigh speed railJICAJICCtechnical bidnon‑responsive bidsubstantial complianceArticle 226confidentiality clausedebriefing clausepublic interestmala fidesfavouritism
Judgment
810 [2022]
SUPREME COURT 12 S.C.R. 810
REPORTS [2022] 12 S.C.R.
A NATIONAL HIGH SPEED RAIL CORPORATION LIMITED
v.
MONTECARLO LIMITED & ANR.
(Civil Appeal No. 6466 of 2021)
B JANUARY 31, 2022
[M. R. SHAH AND A. S. BOPANNA, JJ.]
Constitution of India – Judicial Review – Foreign funded
project – Bullet Train Project – Interference by High Court in Tender
Process – When not justified – Appellant, a government company
C
issued a tender notice calling for bids for works in relation to the
project of construction of Mumbai-Ahmedabad High Speed Rail
(Project) – Bids submitted by the respondent along with four other
bidders were declared unsuccessful at Technical Stage – High Court
allowed the writ petition filed by the respondent and quashed the
D communications dated 27.04.2021 and 28.04.2021 and the
notification dated 28.04.2021 by which the technical Bid submitted
by the respondents was rejected on the ground that the same is non-
responsive – Whether w.r.t such a foreign funded project, the High
Court was justified in interfering with the tender process in absence
of any specific allegations of mala fides and/or favouritism – Held:
E
High Court ought to have appreciated that the Bullet Train Project
is a result of long-drawn deliberations between the Government of
India and the Government of Japan – A loan agreement came to be
executed between the Japan International Cooperation Agency
(JICA) and Hon’ble the President of India – JICA agreed to fund
F approximately Rs.1 lakh crores for the project on the terms and
conditions mentioned in the loan agreement and the other agreed
terms including the terms and conditions of the Bid document
finalized by the JICA/JICC (Japan International Consultants
Consortium) – The Bidding Documents are based on JICA’s Standard
Bidding Documents as well as based on its procurement guidelines,
G
which form an integral part of the loan agreement – Therefore, any
decision contrary to the terms and conditions of the Bidding
Document would be altering the terms and conditions of the loan
agreement, which would not be permissible – JICA has a vital role
to play in such contracts – The foreign funded investment such as
H
810
NATIONAL HIGH SPEED RAIL CORPORATION LIMITED v. 811
MONTECARLO LIMITED & ANR.
the present investment in the form of concessional Official A
Development Assistance (ODA) loan by the JICA are made on the
basis of non- negotiated terms and conditions where the sole
discretion as to what will be the conditions of investment and on
what terms the contractors would be chosen to implement the project
vests with the investor- foreign developed nation – The ultimate
B
decision vests on the concerned parties, who financed/invested in
the project, i.e., in the present case JICA – The decision to hold that
the Bid was not responsive was of JICC – Under the contractual
mechanism,the appellant had no authority to deviate from the
evaluation done by JICC – Appellant acted as per the decision of
the JICC concurred by JICA – The JICC and JICA can be said to be C
the final authority and no contrary decision to the decision of the
JICC/JICA could have been taken by the appellant, more
particularly, with respect to the Bidding Process etc. – Further, the
bidding procedure adopted was transparent, fair and does not
suffer from any arbitrariness – As such there were no allegations of
D
mala fides and/or favouritism either against the appellant or against
JICC and/or JICA – High Court erred in interfering with the
conscious decision taken by the JICA/JICC, followed by the
appellant – It erred in holding that the Bid submitted by the
respondent was in substantial compliance and in interfering with
the tender process and with the decision of the JICC/JICA rejecting E
the Bid submitted by the original writ petitioner at technical stage –
Impugned judgment passed by the High Court is quashed and set
aside – Contracts.
Contracts – Foreign Funded Contracts – Constitution of India
– Judicial Review – Scope of – Held: Scope of judicial review in F
foreign funded contract should be far much less than the ordinary
Government funded contracts funded from Consolidated Fund of
India – The scope of judicial review in such foreign funded
contracts/projects would be restricted and minimal – In such foreign
funded contracts, the only ground for judicial review ought to be
on a limited aspect, i.e., the action of the executing authority does G
not suffer from favouritism or nepotism and based on the grounds
which have been concealed from the foreign financing authority, if
disclosed, would have persuaded the financing authority to cancel
the contract.
H
812 SUPREME COURT REPORTS [2022] 12 S.C.R.
A Allowing the appeal, the Court
HELD: 1.1 It is required to be noted that as per the tender
documents, all the Bidders were required to adhere to the
requirements as per the terms and conditions mentioned in the
tender document. There cannot be any deviation by any Bidder.
B The terms and conditions of the tender documents were settled
by the JICA as per JICA’s International Guidelines, which are
required to be followed by all Bidders including the original writ
petitioner. Therefore, when the terms and conditions of the
tender document were settled by the JICA, it is ultimately for
the JICC/JICA to take a decision whether a Bid submitted by a
C particular Bidder is non-responsive and/or non-compliant to the
technical requirements of the Bidding Documents. Therefore,
when a conscious decision has been taken by the JICC/JICA on
the Bid submitted by the original writ petitioner being non-
responsive/non-compliant to the technical requirements of the
D Bidding Documents, unless there are specific allegations of mala
fides and/or favouritism, the same could not have been the subject
matter of scrutiny by the High Court in exercise of the powers
under Article 226 of the Constitution of India. [Para 7.3][849-F-
H; 850-A-B]
E 1.2 At this stage, it is to be noted that what can be said to
be substantially responsive Technical Bid has been defined under
Article 33.2. The High Court in the impugned order has observed
and held that the Bid submitted by the original writ petitioner
can be said to be substantially responsive Technical Bid.
However, it is required to be noted that when the author of the
F tender document, in the present case, JICC/JICA, had taken a
conscious decision that the Bid submitted by the respondent –
original writ petitioner can be said to be non- responsive and
suffering from material deviation, it was not for the High Court
to consider/opine whether the Bid submitted by the original writ
G petitioner is substantially responsive Technical Bid or not unless
the decision is found to be perverse and/or suffered from mala
fides and/or favoritism. At the cost of repetition, it is to be noted
that under the contractual obligation, it was not open for the
appellant – corporation and/or even the Republic of India to
deviate from any of the terms and conditions of the loan agreement
H
NATIONAL HIGH SPEED RAIL CORPORATION LIMITED v. 813
MONTECARLO LIMITED & ANR.
and/or the decision of JICC/JICA. Therefore, in absence of any A
allegation of mala fides/arbitrariness and/or favouritism, the High
Court has committed a grave error in interfering with a conscious
decision taken by the JICC/JICA, which has been followed by
the appellant. [Para 7.6 & 7.7][851-B-E]
1.3 It is required to be noted that a conscious decision was B
taken by JICC/JICA holding that the Bid submitted by the original
writ petitioner suffers from material deviation and the same cannot
be said to be a substantially responsive Technical Bid. The
decision was taken by the employer – JICC/JICA and followed
by the appellant considering the relevant clauses of the ITB, more
particularly, ITB Clause 33.2, which defines a substantially C
responsive Technical Bid. The High Court ought to have
appreciated that other Bidders, who were granted opportunity to
cure the defects had cleared the first stage and they were granted
opportunity to cure the defects as per ITB Clause 34. As per the
JICC and JICA, with respect to those Bidders, who were given D
an opportunity to cure the defects after they cleared Stage I, their
defects were found to be substantially responsive and, therefore,
in exercise of the powers under Clause 34, the opportunity was
given to them to cure the defects, which as such was found to be
substantially responsive and non- material compliance. The High
Court ought to have appreciated that so far as the original writ E
petitioner is concerned, its Bid was rejected at the first stage
itself having specifically found that the same constitute a material
deviation/non-conformity. Therefore, all the other Bidders who
were granted the opportunity to cure the defects were different
than that of the original writ petitioner and, therefore, the High F
Court has erred in holding that not granting the opportunity to
the original writ petitioner to cure the defect is discriminatory.
Even otherwise it is required to be noted that once a conscious
decision was taken by the JICC and JICA, who can be said to be
the author of the terms and conditions of the tender document,
taking a view and stand that the Bid submitted by the original G
writ petitioner suffers from material deviation and the said
decision was taken after considering the relevant clauses of the
ITB, thereafter it was not open for the High Court to interfere
with such a conscious decision in exercise of powers under Article
H
814 SUPREME COURT REPORTS [2022] 12 S.C.R.
A 226 of the Constitution of India and take a view that the Bid
submitted by the original writ petitioner was in substantial
compliance. [Paras 8, 9][863-F-H; 864-A-G]
1.4 As observed hereinabove, there are as such no
allegations of malafides and/or favouritism at all. Therefore, the
B High Court has erred in holding that the Bid submitted by the
original writ petitioner was insubstantial compliance. Whether
the Bid submitted by a Bidder suffers from any material deviation
and/or any substantial deviation should be left to the author of
the Bid document and normally, the High Courts, in exercise of
the powers under Article 226 of the Constitution of India, should
C not interfere with the same unless such a decision is found to be
mala fide and/or there are allegations of favouritism and/or such
a decision is arbitrary.[Para 10][864-G-H; 865-A]
1.5 In the present case, as observed hereinabove, the
decision to reject the Bid of the original writ petitioner at the
D first stage on the ground that the Bid submitted by the original
writ petitioner suffers from material deviation and the same cannot
be said to be in substantial compliance has been taken by the
tender committee in concurrence with JICC and JICA. The role
of the JICA has been extensively dealt with by the Gujarat High
E Court in the decision referred to hereinabove. Therefore, when
the JICA has agreed to fund such a huge amount and the terms
and conditions of the tender document are finalized by the JICC/
JICA, and, therefore, when conscious decision has been taken
by the JICC/JICA, the same was not required to be interfered
with by the High Court lightly and when such a decision of the
F High Court would have a cascading effect on such a foreign funded
Mega project. The scope of judicial review in such foreign funded
contract should be far much less than the ordinary Government
funded contracts funded from Consolidated Fund of India. The
scope of judicial review in such foreign funded contracts/projects
G would be restricted and minimal. In such foreign funded contracts,
the only ground for judicial review ought to be on a limited aspect,
i.e., the action of the executing authority does not suffer from
favouritism or nepotism and based on the grounds which have
been concealed from the foreign financing authority, if disclosed,
H
NATIONAL HIGH SPEED RAIL CORPORATION LIMITED v. 815
MONTECARLO LIMITED & ANR.
would have persuaded the financing authority to cancel the A
contract.[Para 11][865-B-E]
1.6 The High Court ought to have appreciated that the Bullet
Train Project is a result of long-drawn deliberations between the
Government of India on the one hand and the Government of
Japan on the other. That thereafter a loan agreement came to be B
executed between the Japan International Cooperation Agency
(JICA) and Hon’ble the President of India and the JICA agreed
to fund approximately Rs.1 lakh crores for the project on the
terms and conditions mentioned in the loan agreement and the
other agreed terms including the terms and conditions of the Bid
document shall be finalized by the JICA/JICC. The Bidding C
Documents are based on JICA’s Standard Bidding Documents
as well as based on JICA’s procurement guidelines, which form
an integral part of the loan agreement. Therefore, any decision
contrary to the terms and conditions of the Bidding Document
would be altering the terms and conditions of the loan agreement, D
which would not be permissible. JICA has a vital role to play in
such contracts. It is to be noted that the foreign funded investment
such as the present investment in the form of concessional Official
Development Assistance (ODA) loan by the JICA are made on
the basis of non-negotiated terms and conditions where the sole
discretion as to what will be the conditions of investment and on E
what terms the contractors would be chosen to implement the
project vests with the investor – foreign developed nation. The
ultimate decision vests on the concerned parties, who financed/
invested in the project, i.e., in the present case JICA. Therefore,
the High Court has erred in interfering with the conscious decision F
taken by the JICA and the JICC, which has been acted upon by
the tender committee. Under the circumstances, the High Court
has erred in interfering with the conscious decision of the JICC
/ JICA / appellant / tender committee to reject the Bid submitted
by the original writ petitioner at Stage I on the ground that the
Bid submitted by the original writ petitioner was suffering from G
material deviation. [Paras 12, 13][865-F-H; 866-A-D]
1.7 Now so far as the view taken by the High Court in the
impugned judgment and order that Clause 28 under Clause (e)
H
816 SUPREME COURT REPORTS [2022] 12 S.C.R.
A of Option A Section1 and Clause 42.5 of ITB are patently illegal,
inasmuch as they seek to curtail the right of the bidders to
challenge the rejection of their bid in a multi-stage bidding process
at the earliest, and before the award of the contract is concerned,
at the outset, it is required to be noted that as such the aforesaid
clauses of the ITB were not under challenge before the High
B
Court. Even otherwise, it is required to be noted that Clauses
28.1 and 42.5 of ITB were well within the knowledge of the original
writ petitioner at the time of participating in the tender process.
The aforesaid clauses of the ITB were put to the knowledge of
all the participants/bidders and the same applied to all. Despite
C the above clauses in the ITB, original writ petitioner participated
in the tender process. Therefore, once having accepted the terms
and conditions of the tender process with the full knowledge of
Clauses 28.1 and 42.5, and participated with full knowledge,
thereafter, it was not open for the original writ petitioner to make
a grievance with respect to such clauses.[Para 14][866-E-G]
D
1.8 Under the circumstances, the High Court has committed
a grave error in holding that Clauses 28.1 and 42.5 are patently
illegal, more particularly, in absence of any challenge to the same
and also on the ground that once the original writ petitioner
participated having knowledge of the aforesaid clauses in the ITB,
E thereafter it was not open for the original writ petitioner to
challenge the same. The original writ petitioner was knowing right
from the very beginning with respect to the confidentiality clause
contained in Clause 28 and that grounds on which the Bids of
unsuccessful Bidders are not selected shall be communicated
F only after a final decision to award the contract is communicated
under Clause 42. If the original writ petitioner was aggrieved
either it would not have participated and/or ought to have
challenged such clauses before participating in the tender process
Under the circumstances, the impugned judgment and order
passed by the High Court holding Clauses 28.1 and 42.5 as
G patently illegal cannot sustain and the same also deserves to be
quashed and set aside.[Para 14.5][869-D-F]
1.9 It is deemed proper to express few words of caution to
the High Courts while entertaining the writ petitions challenging
H
NATIONAL HIGH SPEED RAIL CORPORATION LIMITED v. 817
MONTECARLO LIMITED & ANR.
the tender process midway and/or while interfering with the tender A
process in the contracts, more particularly, with respect to the
contracts/projects funded by the foreign countries and with
respect to the Mega project like the present one. Before
entertaining the writ petition with respect to such Mega projects
funded by the foreign countries, one has to appreciate that funds
B
of such Mega projects by the foreign country is followed by a
detailed discussion between the Prime Ministers of both the
countries and to strengthen bilateral cooperation in the rail sector.
The foreign country is ready to invest/fund such a huge amount
on non- negotiated terms and the Bid Documents are prepared
by the foreign financial agency/country in accordance with the C
latest version of the Standard Bidding Documents. These
investments from developed nations are made on the basis of
non-negotiated terms and conditions, where the sole discretion
as to what would be the conditions of the investments and on
what terms the contractors would be chosen to implement the
D
project, vests with the investor foreign developed nation.
Considering the special peculiarities of such foreign sovereign
funded development contracts, which can be envisaged and exist
only due to the availability of the investment and willingness of
the foreign sovereign country to finance such infrastructure
project, the said contracts assume the different characteristics. E
Therefore, there shall be different considerations so far as the
judicial interference is concerned between the foreign funded
contracts and the ordinary public works contracts funded from
public exchequer. It is always to be borne in mind and as observed
in the case of Asia Foundation and Construction Ltd., it is difficult
F
for a developing country to go ahead with such a high cost project
unless the developed country grant loan/subsidy and/or ready to
fund such high cost projects, which are very important projects
for developing country, more particularly, when the developed
country is ready to fund a huge amount at a minimal concessional
rate of interest and on suitable terms and conditions of repayment. G
It is also to be noted that any delay in execution of such a Mega
project, which is very important project for the developing country
like India may not be in the larger public interest and in the
nation’s interest. Such an interference by the Courts midway and
delay in the projects like these which is funded by the foreign
H
818 SUPREME COURT REPORTS [2022] 12 S.C.R.
A countries on bilateral mutual understanding/agreement by the
developed country to a developing country may affect the future
investments/funding. Many a times, such a delay in the execution
of the project due to the intervention by the Courts may have
cascading effect on the project cost and ultimately may increase
the project cost and may impose heavy financial burden and lead
B
to increased and unbudgeted expenditure. Even while
entertaining the writ petition and/or granting the stay which
ultimately may delay the execution of the Mega projects, it must
be remembered that it may seriously impede the execution of
the projects of public importance and disables the State and/or
C its agencies/instrumentalities from discharging the constitutional
and legal obligation towards the citizens. Therefore, the High
Courts should be extremely careful and circumspect in exercise
of its discretion while entertaining such petitions and/or while
granting stay in such matters. Even in a case where the High
Court is of the prima facie opinion that the decision is as such
D
perverse and/or arbitrary and/or suffers from mala fides and/or
favouritism, while entertaining such writ petition and/or pass any
appropriate interim order, High Court may put to the writ
petitioner’s notice that in case the petitioner loses and there is a
delay in execution of the project due to such proceedings initiated
E by him/it, he/they may be saddled with the damages caused for
delay in execution of such projects, which may be due to such
frivolous litigations initiated by him/it. The impugned judgment
and order passed by the High Court is clearly unsustainable and
the same is accordingly quashed and set aside. The original writ
petition before the High Court filed by the respondent herein
F
stands dismissed. [Paras 15, 16][869-G-H; 870-A-H; 871-G-H;
872-A-D]
Afcons Infrastructure Limited v. Nagpur Metro Rail
Corporation Limited, AIR 2016 SC 4305 : [2016] 3
SCR 551; Central Coalfields Limited & Anr. v. SLL-
G SML [A Joint Venture Consortium], (2016) 8 SCC 622
: [2016] 4 SCR 890; Maa Binda Express Carrier &
Anr. v. North Eastern Frontier Railway & Ors., (2014)
3 SCC 760 : [2013] 12 SCR 529; Tata Cellular v. Union
of India, 1994 6 SCC 651 : [1994] 2 Suppl. SCR 122 -
H relied on.
NATIONAL HIGH SPEED RAIL CORPORATION LIMITED v. 819
MONTECARLO LIMITED & ANR.
Siemens Public Communication Networks Private A
Limited and Anr. v. Union of India and Ors., (2008) 16
SCC 215 :[2008] 15 SCR 585; Poddar Steel
Corporation v. Ganesh Engineering Works and Others,
(1991) 3 SCC 273; B.S.N. Joshi and Sons Ltd. v. Nair
Coal Services Ltd. and Ors., (2006) 11 SCC 548 : [2006]
B
8 Suppl. SCR 11; Michigan Rubber (India) Limited v.
State of Karnataka, (2012) 8 SCC 216 : [2012] 8 SCR
128; Jagdish Mandal v. State of Orissa, (2007) 14 SCC
517 : [2006] 10 Suppl. SCR 606; Tejas Constructions
and Infrastructure (P) Ltd. v. Municipal Council,
Sendhwa, (2012) 6 SCC 464 : [2012] 4 SCR 90; CRRC C
Corporation Limited v. Metro Link Express for
Gandhinagar and Ahmedabad (MEGA) Company
Limited, (2017) 8 SCC 282 : [2017] 5 SCR 87, Asia
Foundation and Construction Ltd. v. Trafalgar House
Construction (I) Ltd. and Ors., (1997) 1 SCC 738;
D
Central Coalfields Limited & Anr. v. SLL-SML [A Joint
Venture Consortium] and Ors., (2016) 8 SCC 622 :
[2016] 4 SCR 890 - referred to.
Case Law Reference
[2008] 15 SCR 585 referred to Para 3.11 E
(1991) 3 SCC 273 referred to Para 3.12
[2016] 3 SCR 551 relied on Para 3.14
[2006] 8 Suppl. SCR 11 referred to Para 3.14
[2012] 8 SCR 128 referred to Para 3.14
F
[2006] 10 Suppl. SCR 606 referred to Para 3.14
[2012] 4 SCR 190 referred to Para 3.14
[2016] 4 SCR 890 relied on Para 3.14
[2013] 12 SCR 529 relied on Para 3.14
G
[2017] 5 SCR 87 referred to Para 4.2
(1997) 1 SCC 738 referred to Para 7.4
[2016] 4 SCR 890 referred to Para 7.8
[1994] 2 Suppl. SCR 122 relied on Para 15
H
820 SUPREME COURT REPORTS [2022] 12 S.C.R.
A CIVIL APPELLATE JURISDICTION : Civil Appeal No.6466
of 2021.
From the Judgment and Order dated 23.08.2021 of the High Court
of Delhi at New Delhi in Writ Petition (Civil) No.5127 of 2021.
Tushar Mehta, SG, Kunal Chatterji, Sanjeet Ranjan, Rajat Nair,
B Yash Kumar, Advs. for the Appellant.
Anshin H. Desai, Sr. Adv., Monish Panda, Parth J. Contractor,
Ayush Sharma, Ms. Priyamwada Sinha, Advs. for the Respondents.
The Judgment of the Court was delivered by
C M. R. SHAH, J.
1. Feeling aggrieved and dissatisfied with the impugned judgment
and order dated 23.08.2021 passed by the High Court of Delhi in Writ
Petition (C) No. 5127 of 2021 by which the High Court has allowed the
said writ petition preferred by the respondent herein – original writ
D petitioner (hereinafter referred to as the “original writ petitioner”) and
has quashed the communications dated 27.04.2021 and 28.04.2021 and
the notification dated 28.04.2021 by which the original writ petitioner
was informed that its technical Bid has been rejected on the ground that
the same is non-responsive and consequently has directed the appellant
herein to proceed in accordance with law qua the tender process by
E
further examining the Bid of the original writ petitioner, the original
respondent – National High Speed Rail Corporation Limited (hereinafter
referred to as “NHSRCL”) has preferred the present appeal.
2. That the appellant herein – NHSRCL is a Government Company
incorporated under the Companies Act, 2013 with equity participation of
F
the Government of India, Government of Gujarat and Government of
Maharashtra, incorporated with the object to finance, construct, maintain
and manage the upcoming High Speed Rail Corridor in India.
2.1 That the NHSRCL issued a tender notice on 22.10.2020 calling
for bids in relation “to the Bid Package No. MAHSR-8 for the — Design
G and Construction of Civil and Building Works for the Depot on Design
Build Lump Sum Price Basis for Double Line High Speed Railway
involving works for Site Formation, Abutment, Retaining Walls, Roadbed
for track, Box Culvert, Roads, Cable Duct, Foundations of OHE Masts,
Piping, Drainage, Water Supply, Water Harvesting, Fire Fighting, Land-
H scraping, Boundary Wall, General Inspection Train Shed, Maintenance
NATIONAL HIGH SPEED RAIL CORPORATION LIMITED v. 821
MONTECARLO LIMITED & ANR. [M. R. SHAH, J.]
Depot and other Associated Works at Sabarmati between MAHSR Km. A
507.599 and MAHSR Km. 509.726 in the State of Gujarat for the Project
of Construction of Mumbai-Ahmedabad High Speed Rail, (hereinafter
referred to as “the Project”).
2.2 That the Technical Bids submitted by various bidders including
the original writ petitioner, were opened by the NHSRCL on 19.02.2021. B
The original writ petitioner alongwith four other bidders were declared
unsuccessful. The NHSRCL informed the original writ petitioner through
uploading of Technical Proposal Evaluation Summary on 27.04.2021 on
CPPP that the Bid of the original writ petitioner alongwith four other
bidders have been rejected at Technical Stage. The original writ petitioner
sought the reasons for rejection of its Bid. In response, NHSRCL vide C
its communication dated 28.04.2021 addressed to original writ petitioner
informed that its Bid was not substantially responsive. A reference was
made to Clauses ITB 28.1 and 42.5. Under clause 28.1 “information
relating to the evaluation of the Bids and recommendation of the Contract
award shall not be disclosed to bidders or any other persons, not officially D
concerned, with such process until information on Contract award is
communicated to all bidders in accordance with ITB 42.” As per clause
42.5, “only after notification of award, unsuccessful Bidders may request,
in writing, to the Employer a debriefing seeking explanations on the
grounds on which their Bids were not selected and the Employer shall
promptly respond, in writing, to any unsuccessful Bidders who, after the E
notification of the award in accordance with ITB 42.1, request a
debriefing.” It appears that NHSRCL acted as per the aforesaid two
clauses.
2.3 Aggrieved by the aforesaid communication/notification dated
27.04.2021 and 28.04.2021 respectively and aggrieved by the F
disqualification of its Bid, the original writ petitioner approached the High
Court by way of writ petition being Writ Petition (C) No. 5127 of 2021
and by the impugned judgment and order, the High Court has allowed
the said writ petition and has quashed and set aside the communications
dated 27.04.2021 and 28.04.2021 and the notification dated 28.04.2021 G
rejecting the Bid of original writ petitioner at Technical Stage.
2.4 While allowing the writ petition, the High Court has commented
upon Clauses 28.1 and 42.5 of ITB and has observed that not to give
reasons at that stage would tantamount to depriving the bidders to
approach the Court and know the reasons for rejection of their Bid.
H
822 SUPREME COURT REPORTS [2022] 12 S.C.R.
A That thereafter the High Court has considered the reasons for which
the Bid submitted by the original writ petitioner was found to be technically
non-responsive and has overruled the objections while treating the Bid
as technically non-responsive and has observed and held that the Bid
submitted by the original writ petitioner was substantially responsive and
that there was a substantial compliance of the terms and conditions of
B
the Bid document. Consequently, the High Court has quashed and set
aside the aforesaid communications rejecting the original writ petitioner’s
Bid at Technical Stage as a technically non-responsive and has directed
the NHSRCL to consider and evaluate the Bid submitted by the original
writ petitioner alongwith the Bids submitted by four other bidders.
C 2.5 Feeling aggrieved and dissatisfied with the impugned judgment
and order passed by the High Court, the NHSRCL has preferred the
present appeal.
3. Shri Tushar Mehta, learned Solicitor General appearing on
behalf of the appellant – NHSRCL has submitted that the present matter
D pertains to the tender floated for works in Package C8, which is a part
of various other packages being finalized for the implementation of
Mumbai-Ahmedabad High Speed Rail popularly known as Bullet Train
Project. It is submitted that the Mumbai-Ahmedabad Project is a fully
foreign funded project, which was envisaged when the Japanese and
the Indian Governments entered into a Memorandum of Understanding,
E pursuant to which it was agreed that the said project would be fully
funded by the Concessional Official Development Assistance Loan of
over Rs.80,000/- crores by the Japan International Cooperation Agency
(JICA). It is submitted that thus, the Bullet Train Project is a Foreign
Sovereign Funded Contract distinct from Contracts Funded from
F Consolidated Fund of India. It is submitted that as per the Memorandum
of Corporation, and when the said project is fully funded by JICA for an
amount of Rs.1 lakh crore with a very negligible rate of interest and by
providing repayment in installments of 27 years and above, as per the
Memorandum of Corporation, the process of bidding and the subsequent
decisions are to be vetted by JICA. It is submitted that the content of the
G bidding documents was based on JICA’s Standard Bidding Documents
(SBD) as well as JICA’s procurement guidelines and the same form an
integral part of the loan agreement. It is submitted that in the present
case, JICA appointed JICC as consultant.
3.1 It is further submitted by Shri Mehta, learned Solicitor General
H that in the present case when the original writ petitioner submitted its
NATIONAL HIGH SPEED RAIL CORPORATION LIMITED v. 823
MONTECARLO LIMITED & ANR. [M. R. SHAH, J.]
Bid / Technical Bid and when the same was evaluated at the Technical A
Evaluation Stage, the Technical Bid submitted by the original writ
petitioner was found to be non-responsive on the ground of (i) Non-
Signing of Form CON: 2.0 Pending Litigation and (ii) Non-Signing of 3.0
Litigation History in the physically submitted Bid by the authorised
representative of the original writ petitioner. It is submitted that as such
B
the Bid document was prepared by JICC and approved by JICA. It is
submitted that in the present case when the Bids submitted by the
respective bidder was evaluated by JICC as per the JICA’S International
Guidelines, the same was approved by the Tender Committee of the
appellant, which was finally concurred and approved by JICA. It is
submitted that the decision to hold that the Bid was non-responsive was C
of JICC, which has been approved by the JICA. It is submitted that
appellant under the contractual mechanism cannot in its discretion deviate
from the evaluation done by JICC and any deviation unilaterally made
by the Appellant/Government of India may not be acceptable/concurred
by JICA. It is submitted that the same shall also be violative of “privilege
D
participation principle” as implementing the High Court’s order will enable
the other bidders whose Bids have been rejected by the appellant on the
same ground to participate in the tender. It is submitted that the High
Court’s evaluation of the other bidders will also render their bids
responsive and therefore any such action will render the entire bidding
un-competitive and shall have cascading effect on the other Packages. E
3.2 Shri Mehta, learned Solicitor General has taken us to the
relevant clauses of the Memorandum of Corporation or Understanding
as entered between JICA and the President of India; JICA’s Standard
Bidding Guidelines and the Guidelines for procurement under Japanese
ODA Loans. He has also taken us to the various clauses of the Bid F
documents and to satisfy the Court’s conscience that the appellant acted
just in accordance with the Memorandum of Understanding, Loan
Agreement entered between JICA and Government of India and as per
the relevant terms and conditions of the Bid document.
3.3 It is submitted that in the present case, Technical Bid Evaluation G
was done by JICC (consultant appointed by JICA). It is submitted that
there was a detailed deliberation / discussion by the Technical Consultant
(TC) on Technical Bid evaluation. It is submitted that Stage 1 was
Evaluation of Administrative Requirements and Stage 3 was Evaluation
of Compliance with Technical Requirements. It is submitted that the
JICC recommended that the Bids of the five bidders had material non- H
824 SUPREME COURT REPORTS [2022] 12 S.C.R.
A conformities and were not in compliance with the technical requirements
of the Bidding Documents and so they were disqualified. It is submitted
that the Bid submitted by the original writ petitioner was also found to be
non-responsive/found to be had material non-conformities. It is submitted
that by letter dated 10.04.2021, the appellant – NHSRCL sought the
concurrence of JICA to Technical Bid Evaluation Report. It is submitted
B
that vide communication dated 23.04.2021, JICA confirmed the Technical
Bid Evaluation Report.
3.4 It is submitted that when JICA, JICC and the Technical
Evaluation Committee took a conscious decision that the Bid submitted
by the original writ petitioner was non-responsive and was not in
C conformity with the relevant clauses of the Bidding Document, and
therefore, when the appellant acted upon the said recommendation/
Technical Bid Evaluation Report and rejected the Bid submitted by original
writ petitioner at Technical Stage, the High Court has materially erred in
interfering with such a fair and conscious decision in exercise of powers
D under Article 226 of the Constitution of India.
3.5 Shri Tushar Mehta, learned Solicitor General appearing on
behalf of the appellant has vehemently submitted that in the present
case and with greatest respect, the High Court has not at all considered
the distinction between Foreign Sovereign Funded Contracts and the
E contracts funded from the Consolidated Fund of India.
3.6 It is submitted that Foreign Sovereign Funded Contracts, like
the present one, are sui generis specie of contracts and are completely
different and distinct from Government Contracts/ Public Works
Department Contracts / Public Private Partnership Contracts, which
F are either wholly or partially funded from public money, i.e., Consolidated
Fund of India or of the State and implemented by a statutory/local authority
of the State. It is submitted that in such foreign funded contracts, it is the
investor, which normally is the friendly sovereign country (a developed
nation, like in the present case Japan) which takes a decision to invest in
a friendly State (a developing nation, like in the present case India) and
G finances and implements projects meant for development of the recipient
developing nation.
3.7 It is submitted that these investments from developed nations
are made on the basis of non-negotiated terms and conditions, where
the sole discretion as to what would be the conditions of the investments
H and on what terms the contractors would be chosen to implement the
NATIONAL HIGH SPEED RAIL CORPORATION LIMITED v. 825
MONTECARLO LIMITED & ANR. [M. R. SHAH, J.]
project, vests with the investor foreign developed nation. Thus, all crucial A
aspects of decision making and the terms and conditions on which such
investment has to be made and how the contractors have to be chosen
to implement the said project remains with the instrumentality/agency of
the sovereign which has proposed to make investments in developing
nation. It is submitted that so far as role of Indian authorities / local
B
authorities is concerned, they theoretically act as an intermediary and
are technically only given the role of performing ‘first level scrutiny’ that
the investment made would be expended/contractors would be chosen
as per the terms and conditions proposed by the investor State. It is
submitted that in such a case, the local authority/instrumentality of the
State acts as a facilitator and for all purposes the final decision-making C
authority regarding selection of the contractors etc. remains with the
entity of the foreign State through whom the investments are made. It is
submitted that in the present case, the scrutiny of the Bids was not done
by the NHSRCL. It was done by JICC which is an independent body
authorised by JICA to evaluate the bids as per its terms and conditions
D
and thereafter on the basis of recommendations given by JICC, the final
decision to select a contractor is of JICA. It is, therefore, submitted that
the discretion with the Indian authority - appellant - NHSRCL to vary
any term is not at all permissible and even advisable.
3.8 It is submitted that the Hon’ble Gujarat High Court in its
judgment and order in the case of CRRC Corporation Ltd. Vs. Metro- E
Link Express for Gandhinagar and Ahmedabad (MEGA)
Company Ltd. in Special Civil Application No.12833 of 2017 has
dealt with and considered in detail role of JICA and role of the
implementing agency of the project in India and the scope of the judicial
review of the Indian Courts while exercising the power under Article F
226 of the Constitution of India. It is submitted that the decision of the
Gujarat High Court in the case of CRRC Corporation Ltd. Vs. Metro-
Link Express for Gandhinagar and Ahmedabad (MEGA)
Company Ltd. (supra) has been confirmed by this Court. Heavy reliance
is placed upon the decision of this Court in the case of M/s CRRC
Corporation Ltd. Vs.Metro Link Express for Gandhinagar and G
Ahmedabad (MEGA) Company Ltd. passed in Special Leave Petition
(Civil) Diary No.35385 of 2017.
3.9 Shri Mehta, learned Solicitor General has further vehemently
submitted that in the facts and circumstances of the case, the High Court
H
826 SUPREME COURT REPORTS [2022] 12 S.C.R.
A has materially erred in interfering with the tender process in exercise of
powers under Article 226 of the Constitution of India. It is submitted that
in the present case the High Court has exceeded in its jurisdiction in
exercise of powers under Article 226 of the Constitution of India and
has deviated the scope of judicial review in contractual matters. It is
submitted that the High Court while exercising the powers under Article
B
226 of the Constitution of India and interfering with the administrative
process with respect to the Foreign Sovereign Funded Contract/Project
has not at all appreciated and/or considered the difference between the
foreign funded contracts and the ordinary Public Works contracts funded
from Public Exchequer.
C 3.10 It is submitted that considering the special peculiarity of such
Foreign Sovereign Funded Development Contracts, which can be
envisaged and exist only due to the availability of the investment and
willingness of the foreign sovereign country to finance such infrastructural
project, the said contract assumes the characteristics, which are more
D of private in nature rather than being a full-fledged Public Works
Contracts/Government Contracts where the Government of India is the
sole authority of funding and implementing the project and in which the
element of public law and judicial review parameters are applicable in
its full vigour. It is submitted that being in the nature of an investment by
a friendly sovereign country on concession, the decision remains with
E the investor as to through whom the said investments are transformed
into public infrastructural projects and as to on what terms and conditions
the contractors are to be chosen who would transform their project into
public infrastructural projects.
3.11 It is submitted that the terms of NIT proposed by the investor
F assumes a sacrosanct effect as any deviation from the same can
perpetrate a detrimental effect on the funding of the infrastructural project.
Such Contracts have ramification which are international in nature, far
beyond the decision-making power of the local Government situated in
India and therefore, the decision making with regard to such contract is
G dependent upon larger consideration of international fiscal policy where
a developed country decides to finance an infrastructural project for a
developing country. It is submitted that considering the aforesaid factors,
the scope of judicial review in these foreign funded contracts is far much
less than the ordinary Government Funded Contracts, i.e., funded from
the Consolidated Fund of India, whose scope of judicial review is
H
NATIONAL HIGH SPEED RAIL CORPORATION LIMITED v. 827
MONTECARLO LIMITED & ANR. [M. R. SHAH, J.]
otherwise held to be restricted and limited by this Court. Reliance is A
placed upon the decision of this Court in the case of Siemens Public
Communication Networks Private Limited and Anr. Vs. Union of
India and Ors.,(2008) 16 SCC 215 @ paras 20-24.
3.12 It is further submitted that in such foreign funded contracts,
there is no room of any deviation from essential conditions of tender B
proposed by the investor. Signing of the forms to the Bid in indelible ink,
thus, formed an essential condition of the NIT. It is submitted that deviation
from the essential conditions of NIT is not at all permissible in the contract
of present nature and the doctrine of substantial compliance, which may
be applicable in the case of domestic tender matters shall not be applicable
at all with respect to the contract of present nature having international C
ramification and foreign funding. Reliance is placed upon the decision of
this Court in the case of Poddar Steel Corporation Vs. Ganesh
Engineering Works and Others, (1991) 3 SCC 273. It is submitted
that when the final decision-making authority is under the jurisdictional
control of a governmental body in India, the State may adopt a position D
wherein it allows tender participant to participate in case there is
substantial compliance. However, the same may not be a position with
contracts issued for implementing foreign funded infrastructural projects
as the same would amount to changing the terms on which the investment
is agreed to be made. It is submitted that in the present case as such, the
appellant has complied with and/or followed the conditions as envisaged E
by the foreign funding party and there cannot be any deviation from the
terms and conditions of the NIT by the appellant; as such which can be
said to be a facilitating party and/or implementing agency only. It is
submitted that in the present case, as one of the essential conditions of
signing the forms in indelible ink has not been complied with, therefore, F
a conscious decision was taken by the investor – JICA and the consultant
– JICC, which has been applied by the appellant.
3.13 It is submitted that in the impugned judgment and order the
High Court has applied the doctrine of substantial compliance, equity
and fair play. It is submitted that however the doctrine of substantial G
compliance shall not be applicable in commercial contracts. It is submitted
that it would tantamount to violation of the essential conditions of the
contract. It is submitted that when a condition which is specifically
imposed by a foreign funding party for an infrastructural project, such
condition being non-negotiable in nature and forms an integral part to the
H
828 SUPREME COURT REPORTS [2022] 12 S.C.R.
A contract, the adherence of such condition has to be in totality as it is not
permissible either for the executing authority in India to approve a Bid
document despite there being a clear breach of a condition imposed by
the foreign funding party. It is submitted that doctrine of substantial
compliance, thus, cannot be negotiated with the foreign funding party;
though in public works which are funded from Consolidated Fund of
B
India/public money the same may be possible and/or may be permissible.
It is submitted that the High Court has not properly appreciated the facts
while allowing the doctrine of substantial compliance to creep in such
foreign funded international projects which would result in seriously
jeopardizing the willingness of the foreign State to finance an infrastructure
C project of this magnitude. It is submitted that as such the scope of judicial
review on the parameters laid down for judicial review of contractual
matters and projects funded solely from the Consolidated Fund of India
where the decision-making authority is solely an Indian Governmental
authority will not be applicable in such cases. It is submitted that in
cases like the present one, the terms offered by the foreign sovereign,
D
on the basis of which it proceeds to finance an infrastructural project,
becomes sacrosanct and cannot be deviated from and in such cases, the
compliance has to be strict and not substantial. It is submitted that any
insistence on substantial compliance may affect the willingness of the
foreign sovereign to finance such a project and to share technical know-
E how regarding the same.
3.14 It is further submitted by Shri Mehta, learned Solicitor General
that as per the settled preposition of law laid down by this Court, the
scope of judicial review in contractual matters is extremely limited. It is
submitted that only in a case where the process adopted or decision
F made by the authority is mala fide or intended to favour someone; or
where the process adopted or decision made is arbitrary and irrational
that the court can say: “the decision is such that no responsible authority
acting reasonably and in accordance with relevant law would have
reached”; and in cases where the public interest is affected, the Courts
will be justified in interfering such decision in exercise of powers under
G Article 226 of the Constitution of India. Reliance is placed upon the
following decisions:-
Afcons Infrastructure Limited Vs. Nagpur Metro Rail
Corporation Limited, AIR 2016 SC 4305; B.S.N. Joshi and Sons
Ltd. Vs. Nair Coal Services Ltd. and Ors., (2006) 11 SCC 548;
H
NATIONAL HIGH SPEED RAIL CORPORATION LIMITED v. 829
MONTECARLO LIMITED & ANR. [M. R. SHAH, J.]
Michigan Rubber (India) Limited Vs. State of Karnataka, (2012) A
8 SCC 216; Jagdish Mandal Vs. State of Orissa, (2007) 14 SCC
517; Tejas Constructions and Infrastructure (P) Ltd. Vs.
Municipal Council, Sendhwa, (2012) 6 SCC 464; Central
Coalfields Limited & Anr. Vs. SLL-SML [A Joint Venture
Consortium], (2016) 8 SCC 622; and Maa Binda Express Carrier
B
& Anr. Vs. North Eastern Frontier Railway & Ors., (2014) 3 SCC
760.
3.15 It is further submitted that with the aforesaid limited scope
of judicial interference/intervention in exercise of the powers under
Article 226 of the Constitution of India, the decision taken in the present
case to reject the Bid of original writ petitioner at Technical Stage on the C
ground that the same is non-responsive is to be considered. It is submitted
that considering the relevant clauses of the ITB/Bid document, it is
ultimately for the investor and/or the appropriate authority to consider
whether the Bid complies with the terms and conditions of the Bid
document and/or whether there is a substantial compliance and/or D
whether there is any material deviation or not. Once there is an application
of mind on the aforesaid aspects and the appropriate authority/investor
comes to the conclusion that there is a material deviation in the Bid
submitted by the bidder, unless there are allegations of mala fide and the
same are established and proved, the interference of the Court in exercise
of powers under Article 226 of the Constitution of India with respect to E
such a conscious decision is not warranted. It is submitted that it is
ultimately for the Employer to have a conscious call or decision whether
the Bid is technically responsive or there is a material deviation or not.
3.16 It is further submitted by Shri Mehta, learned Solicitor General
that observations made by the High Court that applying Clauses ITB F
28.1 and 42.5 it affects the fairness in the tender process and it affects
the rights of the bidders to challenge the decision rejecting their bids, the
High Court has not at all appreciated and/or considered the object and
purpose of the said clauses. It is submitted that the object and purpose
of the said clauses cannot be said to be taking away the rights of the G
bidders to challenge the decision rejecting its bids. It is submitted that it
only differs the challenge. It is submitted that the main object and purpose
of the aforesaid clauses is that there is no interference at the stage
where the tender process is going on. It is submitted that if at every
stage the bidder approaches the Court and/or makes grievance, it may
H
830 SUPREME COURT REPORTS [2022] 12 S.C.R.
A further delay the completion of the tender process and which may
ultimately result in delay in execution of the Mega project / public project.
It is submitted that after the entire tender process is completed and the
work order is issued, on the request made, the reasons for rejecting the
Bid can be supplied and thereafter it will be open for the bidder to take
recourse to law at that stage and even after the contract is awarded; the
B
bidder is not rendered remediless. It is, therefore, submitted that the
observations made by the High Court with respect to the aforesaid two
clauses are absolutely unwarranted and beyond the scope of judicial
review in exercise of powers under Article 226 of the Constitution of
India.
C 3.17 It is submitted that the findings recorded by the High Court
in the impugned judgment and order that ITB Clauses 28.1 and 42.5 are
patently illegal may lead to altering the tender conditions as these are as
per JICA SBD and can be altered only with JICA’s concurrence. It is
submitted that seeking alterations in JICA ITB will tantamount to re-
D negotiations between the tendering authorities and JICA. This will not
only delay the BID-Package No.C8 but also the other 17 Bid Packages
which are yet to be awarded for this project, valued at approximately
Rs.50,000 crores.
3.18 It is submitted that the confidentiality clauses are a part of
E JICA guidelines and the appellant as well as the participating bidders are
bound by the same. It is submitted that as a consequence of the findings
of the High Court, the confidentiality clauses will have to be removed
from all the on-going and future tenders. JICA being an international
funding agency may or may not agree to altering of the tendering rules
and this may take substantial period of time for negotiations, which
F eventually may lead to a deadlock in all the JICA funded projects. It is
submitted that JICA SBD shall apply to all JICA funded projects in India
and, therefore, this change will have to be implemented across all the
projects including but not limited to the Bullet Train Project. It is submitted
that between 2016-2021, JICA has approved 49 loan agreements
G amounting to JPY 1975 Billion (INR 132,300 crores) for different projects
in India. It is submitted that therefore the impugned judgment and order
passed by the High Court would have a far-reaching cascading effect,
which has not been considered by the High Court at all.
3.19 It is submitted that the Bullet Train Project is a highly
H prestigious project and it is imperative and in the interest of public welfare
NATIONAL HIGH SPEED RAIL CORPORATION LIMITED v. 831
MONTECARLO LIMITED & ANR. [M. R. SHAH, J.]
that the contract ought to be concluded at the earliest. It is, therefore, A
submitted that if every unsuccessful bidder is granted liberty to approach
a court of law as per their whims and fancies seeking remedy against its
individual grievances, the whole intent and approach behind the project
will get throttled. It is submitted that bearing in mind that, clause Nos.28.1
and 42.5 are enacted which are as per JICA ITB.
B
3.20 It is further submitted that in the present case as such the
terms of the tender has been applied uniformly to all the bidders and
there is no discrimination at all. It is submitted that the entire tender
process has been conducted absolutely in fair and transparent manner.
It is submitted that as such there are no specific allegations of either
mala fides or favouritism and, therefore, the tender process is not vitiated. C
3.21 It is submitted that ITB 29.1 in order to enable examination,
evaluation and comparison of the Bids, permits the Appellant to ask any
Bidder for a clarification of its Bid, provided the same does not result in
a change in the substance of the Bid. It is submitted that the submission
on behalf of the original writ petitioner that the discretion of seeking D
clarifications from other Bidders except the original writ petitioner is
discriminatory and arbitrary is wrong and misplaced. It is submitted that
the appellant has treated all the Bidders at equal footing. It is submitted
that the High Court has wrongly observed and held that the clarification
sought by the appellant only from other bidders is discriminatory. It is E
submitted that procedure followed by the appellant in disqualifying the
bidder and nature of clarifications sought from other bidders were strictly
as per the protocols laid down by JICA. It is submitted that evaluation of
the bids is done in various stages. In the present case, the original writ
petitioner was disqualified at stage 1 and only the bidders who pass
Stage 1 were to proceed to next stage and given their disqualification at F
Stage 1, no clarifications were sought from original writ petitioner.
3.22 It is submitted that on the issue of clarifications, the High
Court has wrongly concluded that seeking clarifications from other
bidders was discriminatory. It is submitted that other bidders from whom
clarifications were sought had cleared stage 1 and pursuant to that the G
clarifications were sought from them. It is submitted that the submission
on behalf of the respondent - original writ petitioner that the appellant
would have granted the liberty to cure the defect cannot be sustained. It
is submitted that at Stage 1.1 (b) (iii) read with Clause A.4 (b), the
appellant was not obliged to provide opportunity to Montecarlo- original H
832 SUPREME COURT REPORTS [2022] 12 S.C.R.
A writ petitioner for curing the defects of non-signing of the forms and
JICA was justified in holding the said omission as material and holding
the Bid as non-compliant/non-responsive. It is submitted that as per clause
A.4 (b), all the forms must be reviewed exactly as submitted and errors
or omissions may count against the bidder.
B 3.23 It is submitted that the High Court has failed to appreciate
that the Technical Bids of four bidders – Bidder Nos. 1, 3, 7 and 9 were
“Substantially Responsive” as they adhered to the requirements laid down
in Stage 1 evaluation. It is submitted that therefore an opportunity was
accorded to them for clarification. It is submitted that clarifications to
re-confirm compliance to the Bidding Documents were sought by the
C appellant on the recommendations of JICC in terms of ITB clause 29.1
for rectification of the non-conformities. The said decision was affirmed
by the Tender Committee of the appellant in its meeting dated 09.04.2021.
Therefore, clarifications were sought only from those bidders whose
bids were found to be ‘Substantially Responsive’ and were in conformity
D with the evaluation process laid down in Stages 1 & 2. It is submitted
that the High Court has erred in concluding that such opportunity was
discriminatory.
3.24 It is further submitted by learned Solicitor General that if the
impugned judgment and order passed by the High Court in these
E circumstances is interfered by this Court, the same would have a
cascading effect. It will not only affect the fundings to the National
projects by the foreign country/foreign agency, it would further delay
the MEGA project like Bullet Train Project. It is submitted that pursuant
to the impugned judgment and order, the Package C8 has been delayed
which has a cascading effect on implementation of other packages and
F thus eventually delaying the entire project. It is submitted that halting of
work of C8 Package which concerns the construction of depot at
Sabarmati will have a cascading effect on another linked package,
package D2 which pertains to the design, construction, installation, testing
and commissioning of Sabarmati Depot consisting of workshop, inspection
G shed, maintenance facilities and associated works. It is submitted that
the Bullet Train Project is of national importance and the appellant/
Government /Union Government’s ultimate object is catering to aspirations
of the people of India. It is submitted that the total cost of the Bullet
Train Project is Rs.1,08,000 crores and the substantial amount with the
concessional rate of interest is to be funded by JICA and, therefore, the
H
NATIONAL HIGH SPEED RAIL CORPORATION LIMITED v. 833
MONTECARLO LIMITED & ANR. [M. R. SHAH, J.]
project is a foreign funded project due to the relations between the A
developed country and developing country. It is submitted that therefore
any delay in such a project due to frivolous litigation and baseless
challenges to the tendering clauses may render the project commercially
and transactionally unviable as it may affect the willingness of the investor/
financing State to go ahead with the project.
B
3.25 Making above submissions and relying upon above decisions,
it is prayed to allow the present appeal and quash and set aside the
impugned judgment and order passed by the High Court.
4. Present appeal is vehemently opposed by Shri Anshin H. Desai,
learned Senior Advocate appearing on behalf of the respondent. It is C
vehemently submitted by Shri Desai, learned Senior Advocate appearing
on behalf of the respondent/original writ petitioner that in the facts and
circumstances of the case, the High Court has not committed any error
in allowing the writ petition directing the appellant herein to proceed in
accordance with law qua the tender process examining the Bid of the
original writ petitioner. D
4.1 It is submitted by Shri Desai, learned Senior Advocate
appearing on behalf of the respondent that the main contention on behalf
of the appellant is that the project being funded by JICA and the same
being a foreign funded project, the decisions taken in this regard must
not be a subject matter of judicial review. So far as the said submission E
is concerned, it is submitted that though the project is funded by JICA
and the evaluation assistance is rendered by JICC, which upon being
approved by Ministry of Railways is subject to review of JICA, still the
project involves outlay of a substantial amount of the public exchequer
of this country. It is submitted that 81% of the total project cost is funded F
by JICA loan, which needs to be repaid from the public exchequer –
capital along with interest. It is submitted that the amount paid by JICA
for the project in question is not an aid but it is a loan. It is submitted that
even the balance 19% of the total project cost needs to be arranged for
by the Ministry of Railways upfront from the public exchequer. It is
submitted that therefore the decision with respect to the tender process G
is always a subject matter of judicial review.
4.2 It is further submitted on behalf of the respondent that in the
case of CRRC Corporation Limited Vs. Metro Link Express for
Gandhinagar and Ahmedabad (MEGA) Company Limited, (2017)
H
834 SUPREME COURT REPORTS [2022] 12 S.C.R.
A 8 SCC 282, in relation to a JICA funded project, while reversing the
decision of the Hon’ble Gujarat High Court, which rejected the petition,
has held the evaluation done therein as erroneous and has directed the
concerned authority to proceed with the further evaluation of the Bid,
despite existence of Clause 42.5. It is submitted that in the aforesaid
case, the facts and circumstances were similar to that in the present
B
case.
4.3 It is further submitted that even if the sole contention of the
appellant is accepted the same cannot in any manner be deemed to be
providing the appellant with a free hand to act in an arbitrary and
discriminatory manner. It is further submitted by Shri Desai, learned
C Senior Advocate appearing on behalf of the respondent that in the present
case the respondent is not asking for the tender to be awarded to it, the
only prayer is that its Bid, which is wrongly rejected at Stage I (Evaluation
of Administrative Requirements) by adopting a discriminatory approach
must be evaluated further. It is submitted that as such the respondent’s
D Bid is almost Rs.32 crores lesser than that of L1. It is further submitted
on behalf of the respondent that the terms of the tender must be applied
uniformly to all Bidders and there can be no discrimination even in a
JICA funded/loaned project. Shri Desai, learned Senior Advocate
appearing on behalf of the respondent has taken us to the ITB Clauses
1.1, 22.1, 22.2, 29.1, 33.2, 34 and 1.3, the relevant clauses of the tender.
E It is submitted that the evaluation sequence comprises of five stages of
evaluation as under:-
i. Stage 1 – Evaluation of Administrative Requirements
ii. Stage 2 – Evaluation of Compliance and Responsiveness
F iii. Stage 3 – Evaluation of Compliance with Qualification
Requirements
iv. Stage 4 – Technical Evaluation
v. Stage 5 – Evaluation of Price Bid
G 4.4 It is submitted that in the present case, the respondent submitted
Form CON 2.0 with the requisite details filled in. It is submitted that the
Form was duly stamped, however, inadvertently, the same was not signed.
It is submitted that the respondent also submitted Form CON 3.0 with
the requisite details filled in. The said form was also duly stamped,
however, inadvertently, the same was also not signed.
H
NATIONAL HIGH SPEED RAIL CORPORATION LIMITED v. 835
MONTECARLO LIMITED & ANR. [M. R. SHAH, J.]
4.5 It is submitted that the respondent Bidder had also filed Form A
ACK with specific declaration that all information provided in the Bid by
the respondent is true, correct and accurate as per Para A(i). It is
submitted that the said Form is also duly signed and stamped. It is
submitted that as rightly observed by the High Court, the evaluation
process and holding the respondent non-compliance at Stage 1 is
B
discriminatory.
4.6 It is submitted that JICC Evaluation Report, which was
confirmed by the Ministry of Railways and acted upon, in Para 2.1.1,
there is a specific observation pursuant to a Preliminary Examination
that there are no material non-conformities as regards the respondent
(5/9) and others, except 2 Bidders. It is submitted that in Para 2.1.3, it is C
specifically observed that there were a number of non-conformities in
the Bids submitted by Bidders 1/9, 3/9, 7/9 and 9/9 creating inconsistencies
with the stated position in their Letter of Technical Bid which is an essential
document as per ITB 31.2(a).
4.7 It is submitted that clarifications were sought from the above D
Bidders and they were given opportunity to rectify the non-conformities
in accordance with ITB 29.1 so as to re-confirm compliance to the Bidding
Document. However, so far as the respondent is concerned, no such
opportunity and/or clarification has been sought for contrary to ITB 33.2
which defines Material Deviation and arbitrarily, the respondent’s non- E
conformity has been held to be as material non-conformities.It is
submitted therefore that the action of the appellant is rightly held to be
discriminatory.
4.8 It is submitted by Shri Desai, learned Senior Advocate
appearing on behalf of the respondent that in the present case, the sole F
reason provided for rejection is that “without signature, it is unknown
whether it has been submitted with the Bidder’s knowledge and
approval”. No other reason has been ascribed for the rejection. It is
submitted that even the said reasoning is provided to the respondent
after the respondent approached the Hon’ble High Court. It is submitted
that all the appellant had to do was to call upon the respondent to provide G
a signed copy, or to seek a clarification that the respondent confirms the
Form CON 2.0 and CON 3.0. It is submitted that the respondent is not
resiling from the declaration made in the said Forms and stands by it
even today and the stage to evaluate whether the declaration made by
the respondent is correct or not has not come and still the Bid is rejected H
836 SUPREME COURT REPORTS [2022] 12 S.C.R.
A on the sole ground that it is not signed. It is further submitted that
surprisingly, in relation to ‘Material Deviations’ and non-conformities of
far more serious nature, the appellant has permitted select Bidders to
rectify and/or clarify.
4.9 It is submitted that so far as the Bidder No.9/9 (L2) is
B concerned, he had made an identical error whereby the said Bidder
failed to put its signature and stamp on the Site Organization Chart in
accordance with ITB 22.2. In the case of the said Bidder, the appellant
exercised discretion and called upon the said Bidder to rectify the same.
4.10 It is submitted that even with respect to Bidder No.7/9 (L1),
C though it failed to provide details qua the Site Organization Chart, Method
Statement qua Earthwork and other details, the appellant exercised
discretion in terms of ITB 29.1 and permitted the Bidder to rectify all
defects. It is submitted that the said Bidder also did not submit Bid Security
Form in accordance with ITB 12.1. It is submitted that despite noting
that the submission was in contravention of ITB 12.1, which does not
D permit alteration to the Bidding Form, the defect was waived as being
non-material.
4.11 It is submitted that so far as Bidder 3/9 is concerned, though
it failed to submit details of Key Personnel and also failed to give an
undertaking as required in Form ACK, the appellant has given the
E opportunity to rectify the defects. It is submitted that the aforesaid errors/
non-conformities are far more serious than the inadvertent error of the
respondent. It is submitted that though the aforesaid Bidders were given
the opportunity to rectify the defects, no such opportunity was given to
the respondent.
F 4.12 It is submitted that so far as the respondent is concerned, not
signing of Forms CON 2.0 and Con 3.0 is an inadvertent error, which
can be said to be a non-material, non-conform in terms of ITB 33.2 read
with ITB 34, which ought to have been waived as has been done in the
case of other Bidders with more serious non-conformities.
G 4.13 It is further submitted that even otherwise as held by this
Court in the case of Poddar Steel Corporation Vs. Ganesh
Engineering Works and Others (supra) and B.S.N. Joshi and Sons
Ltd. Vs. Nair Coal Services Ltd. and Ors., (2006) 11 SCC 548,
non-material non-conformity can be waived even if there is no clause
permitting such waiver. It is submitted that even if ITB 28.1 and ITB
H
NATIONAL HIGH SPEED RAIL CORPORATION LIMITED v. 837
MONTECARLO LIMITED & ANR. [M. R. SHAH, J.]
42.5 provide for no reasons to be given, the respondent where it perceives A
foul play in the tendering process, can always approach the Court. It is
submitted that in the present case, the High Court having examined the
facts and the record, has categorically observed that the appellant has
indulged in ‘changing the goal posts’ and ‘giving a long rope to the other
Bidders’, while adopting ‘an allergic attitude towards the respondent’. It
B
is submitted that before the High Court, the respondent also specifically
alleged ‘mala fide’ on the part of the appellant.
4.14 Now, so far as the submission on behalf of the appellant that
there would be a cascading effect of the impugned order is concerned,
it is submitted that the aforesaid is not sustainable, in view of the fact
that after the impugned order, till date the appellant has awarded or is in C
the process of awarding contracts for other Packages cumulating to
about Rs. 5,000 crores already.
4.15 Now so far as the documents produced by the appellant
before this Court by way of I.A. No.128406 of 2021 and I.A. No.132078
of 2021 are concerned, it is submitted that as they do not form part of D
the record before the High Court and therefore, the same may not be
considered by this Hon’ble Court. It is submitted that nothing has been
stated why the same could not be placed before the Hon’ble High Court.
4.16 Making above submissions, it is prayed to dismiss the present
appeal and direct the appellant to proceed and further evaluate the Bid E
submitted by the respondent in accordance with the terms of the Bid
Document.
5. Heard learned counsel for the respective parties at length.
6. By the impugned judgment and order, the High Court has F
allowed the writ petition preferred by the respondent herein – original
writ petitioner and has quashed the communications dated 27.04.2021
and 28.04.2021 and the notification dated 28.04.2021 by which the
technical Bid submitted by the respondents – original writ petitioners
was rejected on the ground that the same is non-responsive and
consequently the High Court has directed to proceed in accordance with G
law qua the tender process by further examining the Bid of the respondent
herein – original writ petitioner.
6.1 Therefore, the short question which is posed for the
consideration of this Court is whether in the facts and circumstances of
the case and with respect to such a foreign funded project, the High H
838 SUPREME COURT REPORTS [2022] 12 S.C.R.
A Court is justified in interfering with the tender process in absence of any
specific allegations of mala fides and/or favouritism?
6.2 While considering the aforesaid issue, the nature of the project
and few relevant chronological dates and events are required to be noted,
referred to and considered.
B 6.3 The present matter pertains to the tender floated for works in
Package C8, which is a part of various other Packages being finalized
for the implementation of the Mumbai-Ahmedabad High Speed Rail
popularly known as Bullet Train Project. It cannot be disputed that the
Bullet Train Project is very important and National project. The Bullet
C Train Project is a fully foreign funded project, which was envisaged
when the Japanese and Indian Governments entered into a Memorandum
of Understanding, pursuant to which it was agreed that the said project
would be fully funded by a Concessional Official Development Assistance
(ODA) loan of Rs.1 lakh crores by the Japan International Cooperation
Agency. It appears that before the loan agreement was entered into, a
D Memorandum of Understanding / Agreement was entered into between
the two Prime Ministers - Japan and the India, which provided how the
project would be financed and operated. From the Memorandum of
Understanding, it appears that the loan was on diplomatic consideration
and was based on Republic of India’s position in commodity of nations
E due to which a huge loan was granted to India with provisions of:- (i)
technology transfer (which is unavailable in India); (ii) Indian Human
resource training/development by Japan International Cooperation
Agency and its consultant for operation of the said projects; and (iii)
provision to ‘Make in India’ the bullet train which would be operating
under the said project. That thereafter a discussion was held between
F the JICA and the Ministry of Railways, Government of India on 26.09.2016
and the discussion was recorded on various aspects including the project
objectives, selection of the consultant(s), implementation schedule,
Products (Draft and final documents for adoption by the Ministry of
Railways), which included:- (1) Technical specifications and standards,
G as required for the project (excluding those prepared under the Follow-
up Study); (2) Basic Design Documents including drawings and Design
Basis Reports necessary for bidding or implementation of the Project;
(3) Standard Design Documents including drawings and Design Basis
Reports necessary for bidding or implementation of the Project; (4)
Detailed Design Documents including drawings and Design Basis Reports
H
NATIONAL HIGH SPEED RAIL CORPORATION LIMITED v. 839
MONTECARLO LIMITED & ANR. [M. R. SHAH, J.]
necessary for bidding or implementation of the Project; (5) Bidding A
Documents, including Prequalification Documents (hereinafter referred
to as “Bidding Documents”); (6) General Arrangements Drawings
(hereinafter referred to as “GAD”); (7) Cost Estimate of the Project;
(8) Construction Standards; and (9) Updated Resettlement Action Pion,
Environment Impact Assessment and Environmental Management Plan
B
which were prepared under the Joint F/S.
6.4 A detailed discussion took place with respect to the role of
JICA, Consultant (JICC) and the Ministry of Railways. The relevant
clauses of the record of discussion for General Consultancy (excluding
supervision) of the Bullet Train Project between JICA and Ministry of
Railways are as under:- C
“1.Project Objectives
With the Final Alignment Design (FAD) being prepared
as part of the Follow-up Study, the objectives of the General
Consultancy (hereinafter referred to as “the Study”) are to prepare D
technical specification and standards (excluding those prepared
under the Follow-up study), Basic Design Documents, Standard
Design Documents, Detailed Design Documents (along with
Design Basis Reports (set of conditions and requirements taken
into account in designing) necessary for bidding or implementation
of the Project, Bidding Documents, Engineering Cost Estimation E
and Construction Standard for the Project which are to be adopted
by the Ministry of Railways (hereinafter referred to as “the
MOR”), to prepare General Arrangement Drawings (hereinafter
referred to as “GAD”), Environment and Social Impact
Assessment and to support the MOR for procurement of F
contractors. It is confirmed by the MOR that the drawings and
documents to be formulated by the Study will be utilized for
procurement of the Project, only after they are adopted and
endorsed by the MOR.
3.Selection of the Consultant(s) G
A Japanese consultant firm(s) will be selected and engaged by
JICA for the implementation of the Study (hereinafter referred to
as “the JICA Consultant (s)”)
6.2 Products (Draft and final documents for adoption by the
MoR) H
840 SUPREME COURT REPORTS [2022] 12 S.C.R.
A (1) Technical specifications and standards, as required for the
project (excluding those prepared under the Follow-up
Study);
(2) Basic Design Documents including drawings and Design
Basis Reports necessary for bidding or implementation of
B the Project;
(3) Standard Design Documents including drawings and Design
Basis Reports necessary for bidding or implementation of
the Project;
(4) Detailed Design Documents including drawings and Design
C Basis Reports necessary for bidding or implementation of
the Project;
(5) Bidding Documents, including Prequalification Documents
(hereinafter referred to as “Bidding Documents”);
D (6) General Arrangements Drawings (hereinafter referred to
as “GAD”);
(7) Cost Estimate of the Project;
(8) Construction Standards; and
(9) Updated Resettlement Action Pion, Environment Impact
E Assessment and Environmental Management Plan which
were prepared under the Joint F/S.
7. Implementing Arrangements
7.1 Precondition for the Commencement of the Study
F The MOR will complete the items described in Annex 2 at
its own cost and expense, and submit them to JICA, in a
satisfactory manner, prior to the commencement of the
Study, Neither JICA nor JICA Consultant(s) will have any
obligation to commence the Study unless such preconditions
G are satisfied.
7.3 Implementation Arrangement
The MOR and the JICA Consultant(s) will be responsible
in the following manner for completing the Study in order
to ensure a smooth procurement procedure of the Protect.
H
NATIONAL HIGH SPEED RAIL CORPORATION LIMITED v. 841
MONTECARLO LIMITED & ANR. [M. R. SHAH, J.]
(1) The JICA Consultant(s) will prepare the Draft Design A
Documents and technical specification and standards
as required under this study and submit them to the
MOR.
(2) The MOR will review the Draft Design Documents
as well as technical specification and standards. It B
will give comments, if any, within 15 days of
submission of the Draft Design Documents by the
JICA Consultant(s). The JICA Consultant(s) will
consider these comments and incorporate them
appropriately, wherever the JICA Consultant(s)
consider it necessary. If no comments are submitted C
by the MOR by the said deadline, it will be deemed
that the MOR has no comments to offer.
(3) The JICA Consultant(s) will then forward these
documents and technical specification and standards
along with the comments from the MOR to the D
committee for their review, as mentioned in paragraph
8.2.
(4) The MOR will adopt the outcomes of the study based
on the recommendations of the committee within 15
days of receiving the final documents duly E
recommended. If the intimation for adoption by the
MOR is not issued by the said deadline, the
documents/outcomes will be deemed to be adopted
by the MOR. JICA will notify the MOR in a written
form after such deemed adoption. F
7.4 The JICA Consultant(s)
The JICA Consultant(s) will work on the comments and
requests of the MOR with all due technical diligence to the
extent of the TOR stipulated in this Record of Discussion
between the MOR and JICA. G
7.5 Consultation
JICA, the JICA Consultant(s) and the MOR will consult
each other in good faith in respect of any matter that may
arise from or in connection with the Study, including any
H
842 SUPREME COURT REPORTS [2022] 12 S.C.R.
A disputes among from this document. When a dispute that
cannot be solved through an amicable consultation among
the three parties arises, both sides will consult their relevant
government authorities to solve such dispute.
8. Products of the Study
B 8.1 Services of the JICA Consultant(s)
The JICA Consultant(s) will provide the following services:-
(1) Customize and provide all technical specifications and
standards required for design and operation of High
C Speed Rail systems, along with their technical
commentary (excluding those prepared under Follow-
up study)
(2) Preparation of Basic Design Documents including
drawings and Design Basis Reports necessary for
D bidding or implementation of the Project;
(3) Preparation of Standard Design Documents including
drawings and Design Basis Reports necessary for
bidding or implementation of the Project;
(4) Preparation of Detailed Design Documents including
E drawings and Design Basis Reports necessary for
bidding or implementation of the Project;
(5) Preparation of Bidding Documents;
(6) Preparation of Engineering Cost Estimation;
F (7) Preparation of Construction Standard;
(8) Support to the MOR for procurement of contractors;
(9) preparation of GAD; and
(10) Review and update of the Resettlement Action Plan,
Environment Impact Assessment and Environmental
G
management Plan, which were prepared under the
Joint F/S.
It is the MOR’s responsibility to provide necessary,
accurate and appropriate data/information to JICA
and the JICA Consultant(s), so as to finalize the
H
NATIONAL HIGH SPEED RAIL CORPORATION LIMITED v. 843
MONTECARLO LIMITED & ANR. [M. R. SHAH, J.]
documents listed at (2) to (4), (hereinafter collectively A
referred to as ‘’the Draft Design Documents”) and
(1), (5) to (7) and (9) to (10) so that they can be
utilized only for the procurement (bidding) process
and construction work of the Project.
8.2 Adoption by the MOR B
Upon request from the relevant government authorities of
Japan, JICA will set up a committee composed of experts
of Japanese high speed railway (hereinafter referred to as
“the Committee”) to review the organization structure, the
process and the GC’s work for the Draft Design
Documents, technical specification and standards which are C
developed through the Fellow-up Study and the Study. The
Committee offer its review may require the JICA
Consultant(s) to revise the documents. The JICA
Consultant(s) will revise the documents as advised by the
committee and resubmit them for the Committee’s review. D
The Committee, when satisfied, will issue a letter to the
MOR recommending the Draft Design Documents for
adoption by the MOR.
The MOR will conduct technical inspection to review the
technical aspects of the Final Design Documents and
Construction Standard and adopt the Final Design E
Documents. the Bidding Documents, the Engineering Cost
Estimation, and the Construction Standard in a written form,
as the executing agency of the Project, for use of these
documents on the Project, at its own expense.
The MOR acknowledges and confirms that the JICA and F
the Committee, or the Committee members will not bear
any liability and responsibility in connection with their review
of the Draft Design Documents and technical specification
and standards. The MOR will indemnify and hold harmless
JICA, the Committee and the Committee members against
any claim from any third parties that may arise from or in G
connection with such review.”
6.5 As per Annexure I to the said Record of Discussion, the JICA
consultant was to prepare GAD on all aspects mentioned in Clause 2,
which included preparation of Bidding Documents. Clause 2.8 and Clause
3, which are relevant for our purpose are as under:- H
844 SUPREME COURT REPORTS [2022] 12 S.C.R.
A “2.8 Preparation of Bidding Documents
The JICA Consultant(s) will prepare the Draft Bidding Documents
for each contract package in accordance with the latest version
of Standard Bidding Documents under Japanese ODA Loans
together with all relevant specifications, drawings and other
B documents, which are consisting of the following documents:-
a. Instruction to Bidders;
b. Bid Form;
c. General Conditions of Contract;
d. Particular Conditions of Contract;
C e. General Specifications;
f. Technical Specifications;
g. Bill of Quantities based on the design drawings for detailed
design packages and price schedule for design and built
packages;
D h. Design Drawing;
i. Contract Form;
j. Bid Security Form;
k. Performance Security Form: and
E I. Employer’s Requirement.
3) Tender Assistance
3)-1 Assistance in Pre-Qualification (P/Q)
The JICA Consultant(s) will:
a. define technical and financial requirements, capacity and/
F or experience for P/Q criteria taking into consideration
technical features of the Project and the capabilities of
industry in both countries;
b. prepare draft P/Q documents in accordance with the latest
version of Standard Prequalification Documents under
G Japanese ODA Loans,
c. assist the MOR in P/Q announcement, addendum/
corrigendum, and clarifications to the applicants’ queries,
d. assist the MOR in evaluating P/Q applicants in accordance
with the criteria set forth in PQ documents; and
H
NATIONAL HIGH SPEED RAIL CORPORATION LIMITED v. 845
MONTECARLO LIMITED & ANR. [M. R. SHAH, J.]
e. prepare a draft P/Q evaluation report for approval by the A
P/Q evaluation committee of the MOR.
3)-2 Assistance in the Bidding Procedure
The JICA Consultant(s) will:-
a. assist the MOR in issuing bid invitation, conducting pre-bid
meetings, issuing addendum/corrigendum, and clarifications B
to bidders’ queries;
b. assist the MOR in evaluating bids in accordance with the
criteria set forth in the bidding documents;
c. prepare a draft bid evaluation report for approval by the bid
evaluation committee of the MOR; C
d. assist the MOR in contract negotiation by preparing agenda
and facilitating negotiations. including preparation of minutes
of negotiation meetings; and
e. prepare a draft contract agreement.”
6.6 That the Japan International Consultants Consortium (JICC) D
was appointed by JICA. That thereafter a loan agreement No.ID-P277
came to be entered into between JICA and the President of India dated
28.09.2018 under which the JICA agreed to lend the Republic of India
approximately Rs.1 Lakh Crores on the terms and conditions mentioned
in the loan agreement. Article 1 provided for loan amount; Article II E
provided for repayment, interest and Front-End Fee; Article III provided
for Particular Covenants, which included, Section 1 – General Terms
and Conditions, Section 2 – Procurement Procedure and Section 3 –
Disbursement Procedure. Thereafter the Bidding Documents were
prepared based on JICA’s Standard Bidding Documents as well as JICA’s
procurement guidelines, which was an integral part of the loan agreement. F
The Bidding Documents were prepared by the JICC – consultant
approved/weighed by the JICA. From the aforesaid, it appears that the
entire tender process was to be carried out by the Consultant – JICC,
approved by JICA and the Ministry of Railways can be said to be only
an implementing agency. G
6.7 That thereafter the tenders came to be invited taking into
consideration the Record of Discussion for General Consultancy of the
Project and Loan Agreement and JICA’s Standard Bidding Guidelines
and Guidelines for procurement under the Japanese ODA Loans. The
Bidding Documents were prepared by the JICC (consultant) and
H
846 SUPREME COURT REPORTS [2022] 12 S.C.R.
A approved by JICA. That evaluation of the Technical Bids was carried
out by JICC (consultant), which was appointed by JICA. At this stage, it
is required to be noted that the JICC was appointed in terms of the
specific understanding between the Borrower (Republic of India) and
JICA with the specific mandate to support the Ministry of Railways for
preparation of Bidding Documents including Prequalification Documents
B
and procurement of contractors for the construction of the Project. It is
required to be noted that the Bidding Documents were prepared as per
JICA’s International Guidelines and as per the terms and conditions of
the Loan Agreement as observed hereinabove.
6.8 That Nine Bidders including the respondent herein – original
C writ petitioner submitted their Bids. That Technical Bid of Nine Bidders
was evaluated by JICC as per JICA’s International Guidelines. The
evaluation of the Technical Bids was carried out as per Evaluation and
Qualification Criteria in four stages namely, (i) - Stage 1 – Evaluation of
Administrative Requirements; (ii) Stage 2 – Evaluation of Compliance
D and Responsiveness; (iii) Stage 3 – Evaluation of Compliance with
Qualification Requirements; and (iv) Stage 4 – Technical Evaluation.
6.9 It appears that during the course of technical evaluation,
clarification was sought from four Bidders (other than the respondent
herein - original writ petitioner, who was Bidder No.5/9). It was found
that respondent herein – original writ petitioner had material deviation in
E its Bid and therefore it was disqualified at Stage 1. The Bid submitted by
other Bidders, i.e., 2/9, 4/9, 6/9 and 8/9, which also had material deviation,
their respective Bids were not further evaluated. A conscious decision
was taken by the consultant – JICC holding that the Bid submitted by
the original writ petitioner was non-responsive and was suffering from
F material deviation. By communication dated 23.03.2021, accepting the
report, which was prepared as per the Evaluation and Qualification
Criteria, a conscious decision was taken by the JICC (Consultant) that
five Bidders namely Bidder Nos. 2/9, 4/9, 5/9, 6/9 and 8/9 be disqualified.
Thereafter, the JICC took a conscious decision accepting the Draft Final
Technical Bid Evaluation Report and it was observed that JICC has
G determined that the Technical Bids of Bidder Nos. 1/9, 3/9, 7/9 and 9/9
are substantially responsive. That thereafter JICA concurred with the
decision of the JICC holding that the Technical Bids of the above four
Bidders are substantially responsive and compliant to the Technical
Requirements of the Bidding Documents. That thereafter the JICC
H recommended the NHSRCL, the opening of the Price Bid of the aforesaid
NATIONAL HIGH SPEED RAIL CORPORATION LIMITED v. 847
MONTECARLO LIMITED & ANR. [M. R. SHAH, J.]
four Bidders after JICA’s concurrence of the Final Technical Bid A
Evaluation Report, which as observed hereinabove, the JICA concurred.
6.10 From the aforesaid, it appears that a conscious decision has
been taken by the JICC (consultant) approved/concurred by the JICA
on the Bid submitted by the original writ petitioner as non-responsive
and non-compliant to the technical requirements of the Bidding B
Documents. The decision of the JICC and JICA has been followed by
the appellant herein – Corporation, which otherwise, they were bound to
as per the terms and conditions of the loan agreement as well as the
general terms and conditions referred to hereinabove.
6.11 From the aforesaid, it can be seen that the decision to hold
that the Bid was not responsive was of JICC. Under the contractual C
mechanism, the appellant had no authority to deviate from the evaluation
done by JICC. Any deviation by the appellant or Government of India
may not be acceptable by JICA, who has agreed to fund a huge sum of
approximately Rs. 1 lakh crores for the Bullet Train Project, which was
funded on the terms and conditions agreed between the JICA and the D
Republic of India / Hon’ble the President of India. It is ultimately for the
JICC/JICA to take a decision whether the Bid submitted by a particular
Bidder is responsive or not and/or compliant or not to the technical
requirements of the Bidding Documents. From the impugned judgment
and order passed by the High Court, it appears that what is weighed by
the High Court is that some of the Bidders were called for negotiation E
and the original writ petitioner was not called for the negotiation and
therefore the High Court has held that the action of the appellant is
discriminatory and violative of Article 14 of the Constitution of India.
However, the High Court has not appreciated that it was the decision of
the JICC concurred by the JICA that the Bid submitted by the original F
writ petitioner was non-responsive and non-compliant to the technical
requirements of the Bidding Documents. It appears that the JICC thought
it fit to call clarification from some of the Bidders at the initial stage,
however, it was found that the Bid submitted by the respondent – original
writ petitioner was suffering from material deviation, the JICC thought it
fit not to call for any explanation and/or clarification from the original G
writ petitioner and the Bid submitted by the respondent – original writ
petitioner was rejected at the first stage itself, i.e., at the stage of Technical
Evaluation.
6.12 At the cost of repetition, it is observed that the appellant
herein acted as per the decision of the JICC concurred by JICA. As per H
848 SUPREME COURT REPORTS [2022] 12 S.C.R.
A the contractual obligation and the terms and conditions of the loan
agreement as well as the Guidelines for procurement under the Japanese
ODA loans and the Memorandum of Understanding and the terms and
conditions on which the JICA agreed to fund a huge sum of approximately
Rs.1 lakh crores, the JICC and JICA can be said to be the final authority
and no contrary decision to the decision of the JICC/JICA could have
B
been taken by the appellant, more particularly, with respect to the Bidding
Process etc. It cannot be disputed that being the funding agency, who
has agreed to fund such a huge amount, role of the JICA is very important
and the JICA would always have an upper hand and the say in the entire
Project. From the material on record, we are satisfied that the Bidding
C Procedure adopted is transparent, fair and does not suffer from any
arbitrariness. It is required to be noted that as such there are no allegations
of mala fides and/or favouritism either against the appellant or against
JICC and/or JICA.
7. In light of the above, it is required to be considered whether in
D the facts and circumstances of the case, the High Court is justified in
setting aside the decision of the appellant / JICC / JICA in rejecting the
Bid submitted by the respondent – original writ petitioner on the ground
that it is non-responsive / non-compliant to the technical requirements of
the Bidding Documents.
7.1 While considering the aforesaid issue, few decisions of this
E Court are required to be referred to and considered coupled with the
fact that Bullet Train Project is a high cost and MEGA Government
Project and is funded by a foreign country and which is one of the biggest
National Project. It is to be noted that foreign sovereign funded contracts,
like the present one, are completely different and distinct from the
F Government Contracts/ Public Works Department Contracts / Public
Private Partnership Contracts, which are either wholly or partially funded
from public money, i.e., Consolidated Fund of India or of the State and
implemented by a statutory/local authority of the State. It cannot be
disputed that in the present case, Japan being friendly sovereign country
– a developed nation has agreed to fund a huge amount for a National
G Project in favour of another friendly State – developing nation – in the
present case, the Republic of India. Such a huge sum/amount is funded
by the developed nation to implement the Project meant for development
of the developing nation – the Republic of India. The contracts are entered
into and the huge sum is funded on the basis of non-negotiated terms
H and conditions and therefore, the foreign developed nation, who has agreed
NATIONAL HIGH SPEED RAIL CORPORATION LIMITED v. 849
MONTECARLO LIMITED & ANR. [M. R. SHAH, J.]
to invest/fund such a huge amount is always justified in insisting for their A
own terms and conditions on which such a huge amount is funded.
7.2 At this stage, a decision of the Gujarat High Court, which has
been confirmed by this Court in the case of CRRC Corporation Ltd.
Vs. Metro-Link Express for Gandhinagar and Ahmedabad
(MEGA) Company Ltd. in Special Civil Application No.12833 of B
2017 is required to be referred to. In that case the Metro Rail Project
was financed by the JICA. One GEC was appointed as consultant. Bid
submitted by one of the Bidders was rejected on the ground that the
same was non-responsive. The decision was taken by the Metro Rail
Corporation after consulting JICA. Rejection of the Bid at Technical
Stage was the subject matter of writ petition before the High Court. C
One of the submissions made on behalf of the Bidder was that the JICA
ought not to have been consulted and that decision could not have been
taken on the basis of the opinion of the JICA. While rejecting the
submission on behalf of the original writ petitioner that JICA ought not to
have been consulted, it was observed that when the entire project is D
being financed by the JICA, and when JICA is going to fund the entire
project, the cost of which is Rs. 10,773 Crores, it is expected of the
JICA that the whole process of awarding tender has to be done and is
being done, after obtaining JICA’s concurrence at all stages. It was held
that there is nothing wrong in involving JICA at every stage of tender
process and in obtaining JICA’s concurrence on it. In the present case E
also, no wrong has been committed by the appellant corporation in
accepting and/or taking decision to reject the original writ petitioner’s
Bid at Technical Stage on the basis of the decision of the JICC approved/
concurred by JICA.
7.3 It is required to be noted that as per the tender documents, all F
the Bidders were required to adhere to the requirements as per the
terms and conditions mentioned in the tender document. There cannot
be any deviation by any Bidder. The terms and conditions of the tender
documents were settled by the JICA as per JICA’s International
Guidelines, which are required to be followed by all Bidders including
the original writ petitioner. Therefore, when the terms and conditions of G
the tender document were settled by the JICA, it is ultimately for the
JICC/JICA to take a decision whether a Bid submitted by a particular
Bidder is non-responsive and/or non-compliant to the technical
requirements of the Bidding Documents. Therefore, when a conscious
decision has been taken by the JICC/JICA on the Bid submitted by the H
850 SUPREME COURT REPORTS [2022] 12 S.C.R.
A original writ petitioner being non-responsive/non-compliant to the technical
requirements of the Bidding Documents, unless there are specific
allegations of mala fides and/or favouritism, the same could not have
been the subject matter of scrutiny by the High Court in exercise of the
powers under Article 226 of the Constitution of India.
B 7.4 At this stage, the decision of this Court in the case of Asia
Foundation and Construction Ltd. Vs. Trafalgar House
Construction (I) Ltd. and Ors., (1997) 1 SCC 738 is required to be
referred to. In that case, before this Court, the offer made by the Bidder,
who was found to be L1 was not accepted after consulting the
international financial institutions such as Asian Development Bank/World
C Bank, approving the same, this Court observed that it is difficult for a
country to go ahead with such a high-cost projects unless the financial
institutions the Asian Development Bank and/or the World Bank grant
loan/subsidy. It is further observed that when such financial institutions
grant such huge loan, they always insist that for any project for which
loan has been sanctioned must be carried out in accordance with the
D specifications and within the scheduled time and the procedure for
granting the award must be duly adhered to. In the case before this
Court, there was some dispute between the Bank on the one hand and
the consultant, who was called upon to evaluate bids on the question
whether there is any power of making any correction to the bid documents
E after a specified period. The High Court after construing certain clauses
of the bid documents came to the conclusion that such a correction was
permissible, and therefore, the Bank could not have insisted upon granting
the contract in favour of the appellant therein. This Court did not accept
the view taken by the High Court by observing that it was not within the
permissible limits of interference for a court of law, particularly when
F the Court has not found any mala fides / favouritism in the grant of
contract.
7.5 From the impugned judgment and order passed by the High
Court and as observed hereinabove, the High Court has set aside the
decision of the appellant to reject the Bid submitted by the original writ
G petitioner as non-responsive and suffering from material deviation on
the ground of violation of Article 14 of the Constitution of India by
observing that other Bidders were called for clarification but the original
writ petitioner was not called. However, as observed hereinabove, the
appellant had taken a decision as per the decision taken by the JICC/
JICA. JICC/JICA took a conscious decision to reject the Bid of the
H
NATIONAL HIGH SPEED RAIL CORPORATION LIMITED v. 851
MONTECARLO LIMITED & ANR. [M. R. SHAH, J.]
original writ petitioner as non-responsive/non-complaint and the same A
was found to be material deviation.
7.6 At this stage, it is to be noted that what can be said to be
substantially responsive Technical Bid has been defined under Article
33.2. The High Court in the impugned order has observed and held that
the Bid submitted by the original writ petitioner can be said to be B
substantially responsive Technical Bid. However, it is required to be
noted that when the author of the tender document, in the present case,
JICC/JICA, had taken a conscious decision that the Bid submitted by
the respondent – original writ petitioner can be said to be non-responsive
and suffering from material deviation, it was not for the High Court to
consider/opine whether the Bid submitted by the original writ petitioner C
is substantially responsive Technical Bid or not unless the decision is
found to be perverse and/or suffered from mala fides and/or favoritism.
7.7 At the cost of repetition, it is to be noted that under the
contractual obligation, it was not open for the appellant – corporation
and/or even the Republic of India to deviate from any of the terms and D
conditions of the loan agreement and/or the decision of JICC/JICA.
Therefore, in absence of any allegation of mala fides/arbitrariness and/
or favouritism, we are of the opinion that the High Court has committed
a grave error in interfering with a conscious decision taken by the JICC/
JICA, which has been followed by the appellant.
E
7.8 At this stage, few decisions of this Court on the interference
by the Courts in the tender matters are required to be referred to:-
7.8.1 In the case of Afcons Infrastructure Limited Vs. Nagpur
Metro Rail Corporation Limited, AIR 2016 SC 4305, this Court in
paras 11 to 13 and 15 has observed and held as under :-
F
“11. Recently, in Central Coalfields Ltd. v. SLL-SML (Joint
Venture Consortium), (2016) 8 SCC 622, it was held by this Court,
relying on a host of decisions that the decision-making process of
the employer or owner of the project in accepting or rejecting the
bid of a tenderer should not be interfered with. Interference is
permissible only if the decision-making process is mala fide or is G
intended to favour someone. Similarly, the decision should not be
interfered with unless the decision is so arbitrary or irrational that
the Court could say that the decision is one which no responsible
authority acting reasonably and in accordance with law could have
reached. In other words, the decision-making process or the
H
852 SUPREME COURT REPORTS [2022] 12 S.C.R.
A decision should be perverse and not merely faulty or incorrect or
erroneous. No such extreme case was made out by GYT-TPL
JV in the High Court or before us.
12. In Dwarkadas Marfatia and Sons v. Port of Bombay,
(1989) 3 SCC 293, it was held that the constitutional courts are
B concerned with the decision-making process. Tata
Cellular v. Union of India, (1994) 6 SCC 651 went a step further
and held that a decision if challenged (the decision having been
arrived at through a valid process), the constitutional courts can
interfere if the decision is perverse. However, the constitutional
courts are expected to exercise restraint in interfering with the
C administrative decision and ought not to substitute its view for
that of the administrative authority. This was confirmed in Jagdish
Mandal v. State of Orissa, (2007) 14 SCC 517, as mentioned
in Central Coalfields Ltd. v. SLL-SML (Joint Venture Consortium),
(2016) 8 SCC 622.
D 13. In other words, a mere disagreement with the decision-
making process or the decision of the administrative authority is
no reason for a constitutional court to interfere. The threshold of
mala fides, intention to favour someone or arbitrariness, irrationality
or perversity must be met before the constitutional court interferes
E with the decision-making process or the decision.
15. We may add that the owner or the employer of a project,
having authored the tender documents, is the best person to
understand and appreciate its requirements and interpret its
documents. The constitutional courts must defer to this
understanding and appreciation of the tender documents, unless
F there is mala fide or perversity in the understanding or appreciation
or in the application of the terms of the tender conditions. It is
possible that the owner or employer of a project may give an
interpretation to the tender documents that is not acceptable to
the constitutional courts but that by itself is not a reason for
G interfering with the interpretation given.”
7.8.2 In the case of B.S.N. Joshi & Sons Ltd. Vs. Nair Coal
Services Ltd. and Ors., (2006) 11 SCC 548, after considering the
various decisions of this Court on the point enumerated in para 66, this
Court has observed and held as under:
H
NATIONAL HIGH SPEED RAIL CORPORATION LIMITED v. 853
MONTECARLO LIMITED & ANR. [M. R. SHAH, J.]
“66. We are also not shutting our eyes towards the new A
principles of judicial review which are being developed; but the
law as it stands now having regard to the principles laid down in
the aforementioned decisions may be summarised as under:
(i) if there are essential conditions, the same must be adhered
to; B
(ii) if there is no power of general relaxation, ordinarily the
same shall not be exercised and the principle of strict compliance
would be applied where it is possible for all the parties to comply
with all such conditions fully;
(iii) if, however, a deviation is made in relation to all the C
parties in regard to any of such conditions, ordinarily again a power
of relaxation may be held to be existing;
(iv) the parties who have taken the benefit of such relaxation
should not ordinarily be allowed to take a different stand in relation
to compliance with another part of tender contract, particularly
when he was also not in a position to comply with all the conditions D
of tender fully, unless the court otherwise finds relaxation of a
condition which being essential in nature could not be relaxed and
thus the same was wholly illegal and without jurisdiction;
(v) when a decision is taken by the appropriate authority
upon due consideration of the tender document submitted by all E
the tenderers on their own merits and if it is ultimately found that
successful bidders had in fact substantially complied with the
purport and object for which essential conditions were laid down,
the same may not ordinarily be interfered with;
(vi) the contractors cannot form a cartel. If despite the F
same, their bids are considered and they are given an offer to
match with the rates quoted by the lowest tenderer, public interest
would be given priority;
(vii) where a decision has been taken purely on public
interest, the court ordinarily should exercise judicial restraint.”
G
7.8.3 In the case of Michigan Rubber (India) Limited Vs.
State of Karnataka, (2012) 8 SCC 216, after considering various
other decisions of this Court on the point, more particularly, after
considering the decisions in the case of Jagdish Mandal (supra) and
Tejas Constructions and Infrastructure (P) Ltd. (supra), in paras
23 and 24, this Court has observed and held as under: H
854 SUPREME COURT REPORTS [2022] 12 S.C.R.
A “23. From the above decisions, the following principles
emerge:
(a) The basic requirement of Article 14 is fairness in action
by the State, and non-arbitrariness in essence and substance
is the heartbeat of fair play. These actions are amenable to
B the judicial review only to the extent that the State must act
validly for a discernible reason and not whimsically for any
ulterior purpose. If the State acts within the bounds of
reasonableness, it would be legitimate to take into
consideration the national priorities;
(b) Fixation of a value of the tender is entirely within the
C purview of the executive and the courts hardly have any
role to play in this process except for striking down such
action of the executive as is proved to be arbitrary or
unreasonable. If the Government acts in conformity with
certain healthy standards and norms such as awarding of
D contracts by inviting tenders, in those circumstances, the
interference by courts is very limited;
(c) In the matter of formulating conditions of a tender
document and awarding a contract, greater latitude is
required to be conceded to the State authorities unless the
E action of the tendering authority is found to be malicious
and a misuse of its statutory powers, interference by courts
is not warranted;
(d) Certain preconditions or qualifications for tenders have
to be laid down to ensure that the contractor has the capacity
and the resources to successfully execute the work; and
F
(e) If the State or its instrumentalities act reasonably, fairly
and in public interest in awarding contract, here again,
interference by court is very restrictive since no person
can claim a fundamental right to carry on business with the
Government.
G 24. Therefore, a court before interfering in tender or
contractual matters, in exercise of power of judicial review, should
pose to itself the following questions:
(i) Whether the process adopted or decision made by the authority
is mala fide or intended to favour someone; or whether the process
H adopted or decision made is so arbitrary and irrational that the
NATIONAL HIGH SPEED RAIL CORPORATION LIMITED v. 855
MONTECARLO LIMITED & ANR. [M. R. SHAH, J.]
court can say: “the decision is such that no responsible authority A
acting reasonably and in accordance with relevant law could have
reached”? and
(ii) Whether the public interest is affected?
If the answers to the above questions are in the negative, then
there should be no interference under Article 226.” B
7.8.4 In the case of the Central Coalfields Limited & Anr.
Vs. SLL-SML [A Joint Venture Consortium] and Ors., (2016) 8
SCC 622, it is specifically observed and held by this Court that the
Court must, as far as possible, avoid a construction which would render
the words used by the author of the document meaningless and futile or C
reduce to silence any part of the document and make it altogether
inapplicable. It is further observed that whether a term of NIT is essential
or not is a decision taken by the employer, which should be respected
and soundness of that decision cannot be questioned by Court. In the
case before this Court, the bid was rejected for non furnishing of bank
guarantee in prescribed format. While submitting EMD by furnishing D
bank guarantee in format prescribed by GTC of another tender and the
bidder took the plea that bank guarantee format of present tender was
ambiguous. Rejecting the claim of the bidder and upholding the decision
of the employer of rejection of bid for non-compliance of submitting the
bank guarantee in prescribed format, this Court in paras 31 to 38, 42 to E
44, 47 to 49, 52, 55 and 56 has observed and held as under:
“31. We were informed by the learned Attorney General
that 9 of the 11 bidders furnished a bank guarantee in the prescribed
and correct format. Under these circumstances, even after
stretching our credulity, it is extremely difficult to understand why
JVC was unable to access the prescribed format for the bank F
guarantee or furnish a bank guarantee in the prescribed format
when every other bidder could do so or why it could not seek a
clarification or why it could not represent against any perceived
ambiguity. The objection and the conduct of JVC regarding the
prescribed format of the bank guarantee or a supposed ambiguity G
in NIT does not appear to be fully above board.
32. The core issue in these appeals is not of judicial review
of the administrative action of CCL in adhering to the terms of
NIT and the GTC prescribed by it while dealing with bids furnished
by participants in the bidding process. The core issue is whether
H
856 SUPREME COURT REPORTS [2022] 12 S.C.R.
A CCL acted perversely enough in rejecting the bank guarantee of
JVC on the ground that it was not in the prescribed format, thereby
calling for judicial review by a constitutional court and interfering
with CCL’s decision.
33. In Ramana Dayaram Shetty v. International Airport
B Authority of India, (1979) 3 SCC 489, this Court held that the
words used in a document are not superfluous or redundant but
must be given some meaning and weightage: (SCC p. 500, para
7)
“7. … It is a well-settled rule of interpretation applicable
alike to documents as to statutes that, save for compelling
C necessity, the Court should not be prompt to ascribe
superfluity to the language of a document “and should be
rather at the outset inclined to suppose every word intended
to have some effect or be of some use”. To reject words
as insensible should be the last resort of judicial
D interpretation, for it is an elementary rule based on common
sense that no author of a formal document intended to be
acted upon by the others should be presumed to use words
without a meaning. The court must, as far as possible, avoid
a construction which would render the words used by the
author of the document meaningless and futile or reduce to
E silence any part of the document and make it altogether
inapplicable.”
34. In Ramana Dayaram Shetty case, the expression
“registered IInd Class hotelier” was recognised as being inapt
and perhaps ungrammatical; nevertheless common sense was not
F offended in describing a person running a registered IInd grade
hotel as a registered IInd class hotelier. Despite this construction
in its favour, Respondent 4 in that case were held to be factually
ineligible to participate in the bidding process.
35. It was further held that if others (such as the appellant
G in Ramana Dayaram Shetty case) were aware that non-fulfilment
of the eligibility condition of being a registered IInd class hotelier
would not be a bar for consideration, they too would have
submitted a tender, but were prevented from doing so due to the
eligibility condition, which was relaxed in the case of Respondent
4. This resulted in unequal treatment in favour of Respondent 4
H
NATIONAL HIGH SPEED RAIL CORPORATION LIMITED v. 857
MONTECARLO LIMITED & ANR. [M. R. SHAH, J.]
— treatment that was constitutionally impermissible. Expounding A
on this, it was held: (SCC p. 504, para 10)
“10. … It is indeed unthinkable that in a democracy
governed by the rule of law the executive Government or
any of its officers should possess arbitrary power over the
interests of the individual. Every action of the executive B
Government must be informed with reason and should be
free from arbitrariness. That is the very essence of the rule
of law and its bare minimal requirement. And to the
application of this principle it makes no difference whether
the exercise of the power involves affectation of some right
or denial of some privilege.” C
(emphasis supplied)
36. Applying this principle to the present appeals, other
bidders and those who had not bid could very well contend that if
they had known that the prescribed format of the bank guarantee
was not mandatory or that some other term(s) of NIT or GTC D
were not mandatory for compliance, they too would have
meaningfully participated in the bidding process. In other words,
by rearranging the goalposts, they were denied the “privilege” of
participation.
37. For JVC to say that its bank guarantee was in terms E
stricter than the prescribed format is neither here nor there. It is
not for the employer or this Court to scrutinise every bank guarantee
to determine whether it is stricter than the prescribed format or
less rigorous. The fact is that a format was prescribed and there
was no reason not to adhere to it. The goalposts cannot be
rearranged or asked to be rearranged during the bidding process F
to affect the right of some or deny a privilege to some.
38. In G.J. Fernandez v. State of Karnataka, (1990) 2 SCC
488, both the principles laid down in Ramana Dayaram Shetty
were reaffirmed. It was reaffirmed that the party issuing the tender
(the employer) “has the right to punctiliously and rigidly” enforce G
the terms of the tender. If a party approaches a court for an order
restraining the employer from strict enforcement of the terms of
the tender, the court would decline to do so. It was also reaffirmed
that the employer could deviate from the terms and conditions of
the tender if the “changes affected all intending applicants alike
H
858 SUPREME COURT REPORTS [2022] 12 S.C.R.
A and were not objectionable”. Therefore, deviation from the terms
and conditions is permissible so long as the level playing field is
maintained and it does not result in any arbitrariness or
discrimination in Ramana Dayaram Shetty sense.
42. Unfortunately, this Court in Poddar Steel
B Corpn. v. Ganesh Engg. Works, (1991) 3 SCC 273 did not at all
advert to the privilege-of-participation principle laid down
in Ramana Dayaram Shetty and accepted in G.J. Fernandez. In
other words, this Court did not consider whether, as a result of the
deviation, others could also have become eligible to participate in
the bidding process. This principle was ignored in Poddar Steel.
C 43. Continuing in the vein of accepting the inherent authority
of an employer to deviate from the terms and conditions of an
NIT, and reintroducing the privilege-of-participation principle and
the level playing field concept, this Court laid emphasis on the
decision-making process, particularly in respect of a commercial
D contract. One of the more significant cases on the subject is the
three-Judge decision in Tata Cellular v. Union of India, (1994) 6
SCC 651 which gave importance to the lawfulness of a decision
and not its soundness. If an administrative decision, such as a
deviation in the terms of NIT is not arbitrary, irrational,
unreasonable, mala fide or biased, the courts will not judicially
E review the decision taken. Similarly, the courts will not countenance
interference with the decision at the behest of an unsuccessful
bidder in respect of a technical or procedural violation. This was
quite clearly stated by this Court (following Tata Cellular) in Jagdish
Mandal v. State of Orissa, (2007) 14 SCC 517] in the following
F words: (SCC p. 531, para 22)
“22. Judicial review of administrative action is intended to
prevent arbitrariness, irrationality, unreasonableness, bias
and mala fides. Its purpose is to check whether choice or
decision is made “lawfully” and not to check whether choice
or decision is “sound”. When the power of judicial review
G
is invoked in matters relating to tenders or award of
contracts, certain special features should be borne in mind.
A contract is a commercial transaction. Evaluating tenders
and awarding contracts are essentially commercial
functions. Principles of equity and natural justice stay at a
H distance. If the decision relating to award of contract is
NATIONAL HIGH SPEED RAIL CORPORATION LIMITED v. 859
MONTECARLO LIMITED & ANR. [M. R. SHAH, J.]
bona fide and is in public interest, courts will not, in exercise A
of power of judicial review, interfere even if a procedural
aberration or error in assessment or prejudice to a tenderer,
is made out. The power of judicial review will not be
permitted to be invoked to protect private interest at the
cost of public interest, or to decide contractual disputes.
B
The tenderer or contractor with a grievance can always
seek damages in a civil court. Attempts by unsuccessful
tenderers with imaginary grievances, wounded pride and
business rivalry, to make mountains out of molehills of some
technical/procedural violation or some prejudice to self, and
persuade courts to interfere by exercising power of judicial C
review, should be resisted. Such interferences, either
interim or final, may hold up public works for years, or delay
relief and succour to thousands and millions and may
increase the project cost manifold.”
This Court then laid down the questions that ought to be D
asked in such a situation. It was said: (Jagdish Mandal case, SCC
p. 531, para 22)
“22. … Therefore, a court before interfering in tender or
contractual matters in exercise of power of judicial review,
should pose to itself the following questions:
E
(i) Whether the process adopted or decision made by the
authority is mala fide or intended to favour someone;
or
Whether the process adopted or decision made is so
arbitrary and irrational that the court can say: “the decision
F
is such that no responsible authority acting reasonably and
in accordance with relevant law could have reached”;
(ii) Whether public interest is affected.
If the answers are in the negative, there should be no interference
under Article 226.”
G
44. On asking these questions in the present appeals, it is
more than apparent that the decision taken by CCL to adhere to
the terms and conditions of NIT and the GTC was certainly not
irrational in any manner whatsoever or intended to favour anyone.
H
860 SUPREME COURT REPORTS [2022] 12 S.C.R.
A The decision was lawful and not unsound.
47. The result of this discussion is that the issue of the
acceptance or rejection of a bid or a bidder should be looked at
not only from the point of view of the unsuccessful party but also
from the point of view of the employer. As held in Ramana
B Dayaram Shetty the terms of NIT cannot be ignored as being
redundant or superfluous. They must be given a meaning and the
necessary significance. As pointed out in Tata Cellular there must
be judicial restraint in interfering with administrative action.
Ordinarily, the soundness of the decision taken by the employer
ought not to be questioned but the decision-making process can
C certainly be subject to judicial review. The soundness of the
decision may be questioned if it is irrational or mala fide or intended
to favour someone or a decision “that no responsible authority
acting reasonably and in accordance with relevant law could have
reached” as held in Jagdish Mandal followed in Michigan Rubber.
D 48. Therefore, whether a term of NIT is essential or not is
a decision taken by the employer which should be respected. Even
if the term is essential, the employer has the inherent authority to
deviate from it provided the deviation is made applicable to all
bidders and potential bidders as held in Ramana Dayaram Shetty.
However, if the term is held by the employer to be ancillary or
E subsidiary, even that decision should be respected. The lawfulness
of that decision can be questioned on very limited grounds, as
mentioned in the various decisions discussed above, but the
soundness of the decision cannot be questioned, otherwise this
Court would be taking over the function of the tender issuing
F authority, which it cannot.
49. Again, looked at from the point of view of the employer
if the courts take over the decision-making function of the employer
and make a distinction between essential and non-essential terms
contrary to the intention of the employer and thereby rewrite the
arrangement, it could lead to all sorts of problems including the
G
one that we are grappling with. For example, the GTC that we
are concerned with specifically states in Clause 15.2 that “Any
bid not accompanied by an acceptable Bid Security/EMD shall
be rejected by the employer as non-responsive”. Surely, CCL ex
facie intended this term to be mandatory, yet the High Court held
H that the bank guarantee in a format not prescribed by it ought to
NATIONAL HIGH SPEED RAIL CORPORATION LIMITED v. 861
MONTECARLO LIMITED & ANR. [M. R. SHAH, J.]
be accepted since that requirement was a non-essential term of A
the GTC. From the point of view of CCL, the GTC has been
impermissibly rewritten by the High Court.
52. There is a wholesome principle that the courts have
been following for a very long time and which was articulated
in Nazir Ahmad v. King Emperor, AIR 1936 PC 253 (2), namely: B
“… where a power is given to do a certain thing in a certain
way the thing must be done in that way or not at all. Other
methods of performance are necessarily forbidden.”
There is no valid reason to give up this salutary principle or
not to apply it mutatis mutandis to bid documents. This principle C
deserves to be applied in contractual disputes, particularly in
commercial contracts or bids leading up to commercial contracts,
where there is stiff competition. It must follow from the application
of the principle laid down in Nazir Ahmad that if the employer
prescribes a particular format of the bank guarantee to be
furnished, then a bidder ought to submit the bank guarantee in D
that particular format only and not in any other format. However,
as mentioned above, there is no inflexibility in this regard and an
employer could deviate from the terms of the bid document but
only within the parameters mentioned above.
55. On the basis of the available case law, we are of the E
view that since CCL had not relaxed or deviated from the
requirement of furnishing a bank guarantee in the prescribed
format, insofar as the present appeals are concerned every bidder
was obliged to adhere to the prescribed format of the bank
guarantee. Consequently, the failure of JVC to furnish the bank
guarantee in the prescribed format was sufficient reason for CCL F
to reject its bid.
56. There is nothing to indicate that the process by which
the decision was taken by CCL that the bank guarantee furnished
by JVC ought to be rejected was flawed in any manner
whatsoever. Similarly, there is nothing to indicate that the decision G
taken by CCL to reject the bank guarantee furnished by JVC and
to adhere to the requirements of NIT and the GTC was arbitrary
or unreasonable or perverse in any manner whatsoever.”
7.8.5 In the case of Maa Binda Express Carrier & Anr. Vs.
North Eastern Frontier Railway & Ors., (2014) 3 SCC 760, this H
862 SUPREME COURT REPORTS [2022] 12 S.C.R.
A Court had an occasion to consider the scope of judicial review in the
matters relating to award of contracts by the State and its instrumentalities.
In paras 8 to 10 this Court has observed and held as under:
“8. The scope of judicial review in matters relating to award
of contracts by the State and its instrumentalities is settled by a
B long line of decisions of this Court. While these decisions clearly
recognise that power exercised by the Government and its
instrumentalities in regard to allotment of contract is subject to
judicial review at the instance of an aggrieved party, submission
of a tender in response to a notice inviting such tenders is no more
than making an offer which the State or its agencies are under no
C obligation to accept. The bidders participating in the tender process
cannot, therefore, insist that their tenders should be accepted simply
because a given tender is the highest or lowest depending upon
whether the contract is for sale of public property or for execution
of works on behalf of the Government. All that participating bidders
D are entitled to is a fair, equal and non-discriminatory treatment in
the matter of evaluation of their tenders. It is also fairly well settled
that award of a contract is essentially a commercial transaction
which must be determined on the basis of consideration that are
relevant to such commercial decision. This implies that terms
subject to which tenders are invited are not open to the judicial
E scrutiny unless it is found that the same have been tailor-made to
benefit any particular tenderer or class of tenderers. So also, the
authority inviting tenders can enter into negotiations or grant
relaxation for bona fide and cogent reasons provided such
relaxation is permissible under the terms governing the tender
F process.
9. Suffice it to say that in the matter of award of contracts
the Government and its agencies have to act reasonably and fairly
at all points of time. To that extent the tenderer has an enforceable
right in the court which is competent to examine whether the
aggrieved party has been treated unfairly or discriminated against
G to the detriment of public interest. (See Meerut Development
Authority v. Assn. of Management Studies [(2009) 6 SCC 171]
and Air India Ltd. v. Cochin International Airport Ltd. [(2000) 2
SCC 617].
10. The scope of judicial review in contractual matters was
H further examined by this Court in Tata Cellular v. Union of
NATIONAL HIGH SPEED RAIL CORPORATION LIMITED v. 863
MONTECARLO LIMITED & ANR. [M. R. SHAH, J.]
India, Raunaq International Ltd. case [Raunaq International A
Ltd. v. I.V.R. Construction Ltd., (1999) 1 SCC 492] and in Jagdish
Mandal v. State of Orissa besides several other decisions to which
we need not refer.”
7.9 Thus, from the aforesaid decisions, it can be seen that a Court
before interfering in a contract matter in exercise of powers of judicial B
review should pose to itself the following questions:-
(i) Whether the process adopted or decision made by the
authority is mala fide or intended to favour someone; or
whether the process adopted or decision made is so
arbitrary and irrational that the court can say: “the decision C
is such that no responsible authority acting reasonably and
in accordance with relevant law could have reached”? And
(ii) Whether the public interest is affected? If the answers to
the above questions are in negative, then there should be
no interference under Article 226.”
D
7.10 Applying the law laid down by this Court in the aforesaid
decisions to the facts of the case on hand and when a conscious decision
was taken by the JICC/JICA holding the Bid submitted by the original
writ petitioner as non-responsive/non-compliant to the technical
requirements of the Bidding Documents and suffering from material
deviation, we are of the opinion that the High Court has erred in E
interfering with the tender process and interfering with the decision of
the JICC/JICA rejecting the Bid submitted by the original writ petitioner
at technical stage.
8. At the outset, it is to be noted that the Bid submitted by the
original writ petitioner was rejected at the first stage on the ground of F
material deviation/non-responsive and having found that the tender
submitted by the original writ petitioner was not found to be as per the
terms and conditions of the tender document. However, the High Court
by the impugned judgment and order has set aside the conscious decision
taken by the JICA, JICC and the appellant by observing that the Bid
G
submitted by the original writ petitioner can be said to be in substantial
compliance and on the ground that though the other Bidders were given
opportunity to correct their errors/defects, however, the original writ
petitioner was not afforded the same opportunity and therefore the
decision not to give opportunity to correct the defects/errors can be said
H
864 SUPREME COURT REPORTS [2022] 12 S.C.R.
A to be discriminatory and violative of Article 14 of the Constitution of
India.
However, it is required to be noted that a conscious decision was
taken by JICC/JICA holding that the Bid submitted by the original writ
petitioner suffers from material deviation and the same cannot be said to
B be a substantially responsive Technical Bid. The decision was taken by
the employer – JICC/JICA and followed by the appellant considering
the relevant clauses of the ITB, more particularly, ITB Clause 33.2,
which defines a substantially responsive Technical Bid. The High Court
ought to have appreciated that other Bidders, who were granted
opportunity to cure the defects had cleared the first stage and they were
C granted opportunity to cure the defects as per ITB Clause 34. As per
the JICC and JICA, with respect to those Bidders, who were given an
opportunity to cure the defects after they cleared Stage I, their defects
were found to be substantially responsive and, therefore, in exercise of
the powers under Clause 34, the opportunity was given to them to cure
D the defects, which as such was found to be substantially responsive and
non-material compliance. The High Court ought to have appreciated
that so far as the original writ petitioner is concerned, its Bid was rejected
at the first stage itself having specifically found that the same constitute
a material deviation/non-conformity. Therefore, all the other Bidders who
were granted the opportunity to cure the defects were different than
E that of the original writ petitioner and, therefore, the High Court has
erred in holding that not granting the opportunity to the original writ
petitioner to cure the defect is discriminatory.
9. Even otherwise it is required to be noted that once a conscious
decision was taken by the JICC and JICA, who can be said to be the
F author of the terms and conditions of the tender document, taking a view
and stand that the Bid submitted by the original writ petitioner suffers
from material deviation and the said decision was taken after considering
the relevant clauses of the ITB, thereafter it was not open for the High
Court to interfere with such a conscious decision in exercise of powers
under Article 226 of the Constitution of India and take a view that the
G Bid submitted by the original writ petitioner was in substantial compliance.
10. As observed hereinabove, there are as such no allegations of
mala fides and/or favouritism at all. Therefore, the High Court has erred
in holding that the Bid submitted by the original writ petitioner was in
substantial compliance. Whether the Bid submitted by a Bidder suffers
H from any material deviation and/or any substantial deviation should be
NATIONAL HIGH SPEED RAIL CORPORATION LIMITED v. 865
MONTECARLO LIMITED & ANR. [M. R. SHAH, J.]
left to the author of the Bid document and normally, the High Courts, in A
exercise of the powers under Article 226 of the Constitution of India,
should not interfere with the same unless such a decision is found to be
mala fide and/or there are allegations of favouritism and/or such a decision
is arbitrary.
11. In the present case, as observed hereinabove, the decision to B
reject the Bid of the original writ petitioner at the first stage on the
ground that the Bid submitted by the original writ petitioner suffers from
material deviation and the same cannot be said to be in substantial
compliance has been taken by the tender committee in concurrence
with JICC and JICA. The role of the JICA has been extensively dealt
with by the Gujarat High Court in the decision referred to hereinabove. C
Therefore, when the JICA has agreed to fund such a huge amount and
the terms and conditions of the tender document are finalized by the
JICC/JICA, and, therefore, when conscious decision has been taken by
the JICC/JICA, the same was not required to be interfered with by the
High Court lightly and when such a decision of the High Court would D
have a cascading effect on such a foreign funded Mega project. The
scope of judicial review in such foreign funded contract should be far
much less than the ordinary Government funded contracts funded from
Consolidated Fund of India. The scope of judicial review in such foreign
funded contracts/projects would be restricted and minimal. In such foreign
funded contracts, the only ground for judicial review ought to be on a E
limited aspect, i.e., the action of the executing authority does not suffer
from favouritism or nepotism and based on the grounds which have
been concealed from the foreign financing authority, if disclosed, would
have persuaded the financing authority to cancel the contract.
12. The High Court ought to have appreciated that the Bullet F
Train Project is a result of long-drawn deliberations between the
Government of India on the one hand and the Government of Japan on
the other. That thereafter a loan agreement came to be executed between
the Japan International Cooperation Agency (JICA) and Hon’ble the
President of India and the JICA agreed to fund approximately Rs.1 lakh
crores for the project on the terms and conditions mentioned in the loan G
agreement and the other agreed terms including the terms and conditions
of the Bid document shall be finalized by the JICA/JICC. The Bidding
Documents are based on JICA’s Standard Bidding Documents as well
as based on JICA’s procurement guidelines, which form an integral part
of the loan agreement. Therefore, any decision contrary to the terms H
866 SUPREME COURT REPORTS [2022] 12 S.C.R.
A and conditions of the Bidding Document would be altering the terms and
conditions of the loan agreement, which would not be permissible. JICA
has a vital role to play in such contracts. It is to be noted that the foreign
funded investment such as the present investment in the form of
concessional Official Development Assistance (ODA) loan by the JICA
are made on the basis of non-negotiated terms and conditions where the
B
sole discretion as to what will be the conditions of investment and on
what terms the contractors would be chosen to implement the project
vests with the investor – foreign developed nation. The ultimate decision
vests on the concerned parties, who financed/invested in the project,
i.e., in the present case JICA. Therefore, the High Court has erred in
C interfering with the conscious decision taken by the JICA and the JICC,
which has been acted upon by the tender committee.
13. Under the circumstances, the High Court has erred in interfering
with the conscious decision of the JICC / JICA / appellant / tender
committee to reject the Bid submitted by the original writ petitioner at
D Stage I on the ground that the Bid submitted by the original writ petitioner
was suffering from material deviation.
14. Now so far as the view taken by the High Court in the
impugned judgment and order that Clause 28 under Clause (e) of Option
A Section 1 and Clause 42.5 of ITB are patently illegal, inasmuch as
they seek to curtail the right of the bidders to challenge the rejection of
E their bid in a multi-stage bidding process at the earliest, and before the
award of the contract is concerned, at the outset, it is required to be
noted that as such the aforesaid clauses of the ITB were not under
challenge before the High Court. Even otherwise, it is required to be
noted that Clauses 28.1 and 42.5 of ITB were well within the knowledge
F of the original writ petitioner at the time of participating in the tender
process. The aforesaid clauses of the ITB were put to the knowledge of
all the participants/bidders and the same applied to all. Despite the above
clauses in the ITB, original writ petitioner participated in the tender
process. Therefore, once having accepted the terms and conditions of
the tender process with the full knowledge of Clauses 28.1 and 42.5,
G and participated with full knowledge, thereafter, it was not open for the
original writ petitioner to make a grievance with respect to such clauses.
14.1 Even otherwise, it is required to be noted that Clauses 28.1
and 42.5 are part of the instructions to the Bidders (ITB) and, therefore,
part of the Bidding Document. At this stage, it is required to be noted
H that loan agreement was materialized after a detailed Memorandum of
NATIONAL HIGH SPEED RAIL CORPORATION LIMITED v. 867
MONTECARLO LIMITED & ANR. [M. R. SHAH, J.]
Understanding and the loan agreement between the two Prime Ministers A
and how the project would be financed and operated. That thereafter
followed by general consultancy of the project discussion, it was
culminated into a loan agreement with the specific condition that the
terms of the contract and the Bid document shall be finalised and prepared
by JICC and approved by JICA. It appears that the contents of the
B
Bidding Document are based on JICA’ Standard Bidding Documents as
well as JICA’s procurement guidelines and form an integral part of the
loan agreement. It is to be noted that such foreign funded investments in
the form of concessional Official Development Assistance (ODA) loan
by JICA are made on the basis of non-negotiated terms and conditions,
where the sole discretion as to what will be the terms and conditions of C
the tender and on what terms and conditions the project would be
financed, vests with the investor foreign developed nation. Therefore,
the impugned judgment and order passed by the High Court on Clauses
28.1 and 42.5 would be altering the terms and conditions of the Bid
Document / ITB, which as such were finalized and approved by the
D
JICC/JICA and which were provided as per the JICA’s international
guidelines and which as such were to be complied with by all the bidders/
participants.
14.2 Even otherwise, the High Court has not at all appreciated
the purpose of the aforesaid clauses. The aforesaid clauses stated that
information relating to the evaluation of the Bids and recommendation E
of the Contract award, shall not be disclosed to Bidders or any other
person, until information on Contract award is communicated to all the
Bidders in accordance with ITB 42 and as per Clause 42.5 “After
notification of award, unsuccessful Bidders may request, in writing, to
the Employer a debriefing seeking explanations on the grounds on which F
their Bids were not selected”. It further provides that “the Employer
shall promptly respond, in writing, to any unsuccessful Bidders who,
after the notification of the award in accordance with ITB 42.1, request
a debriefing”. Thus, Clauses 28.1 and 42.5 read as under:-
“Option A – Section I. Instructions to Bidders
G
Clause E. Evaluation and Comparison of Bids
28. Confidentiality
“28.1 Information relating to the evaluation of Bids and
recommendation of Contract award, shall not be disclosed to
Bidders or any other persons not officially concerned with such
H
868 SUPREME COURT REPORTS [2022] 12 S.C.R.
A process until information on Contract award is communicated to
all Bidders in accordance with ITB 42.
Clause F. Award of Contract
42. Notification of Award
42.5 After notification of award, unsuccessful Bidders may request,
B in writing, to the Employer a debriefing seeking explanations on
the grounds on which their Bids were not selected. The Employer
shall promptly respond, in writing, to any unsuccessful Bidders
who, after the notification of award in accordance with ITB 42.1,
request a debriefing.”
C (emphasis supplied)
14.3 The purpose of the aforesaid clauses appears to be to prevent
a possible challenge to the multiple stage tender process midway. The
High Court has construed that the said clauses would restrict the right of
the bidders to seek judicial scrutiny of the tender process. However, the
High Court does not seem to be wholly true. The High Court ought to
D
have appreciated that first of all Clause 28 is a confidentiality clause. On
general reading of the aforesaid two clauses, it can be said that it does
not take away the right of the Bidders to seek judicial scrutiny at all.
Only the stage and time to know the reasons and thereafter if the
unsuccessful Bidder is aggrieved can seek the remedy, which is deferred
E till the final decision on award of contract is taken and communicated.
As observed hereinabove, the object and purpose would be no
interference in the tender process in between till the final decision to
award the contract is taken. By no stretch of imagination, it can be said
that it takes away the right of the unsuccessful bidder to seek the judicial
scrutiny of the tender process. After the final decision is taken to award
F
the contract and the contract is awarded, thereafter it will always be
open for the unsuccessful bidders to ask for the reasons to which the
employer is required to furnish promptly and thereafter the unsuccessful
bidder may avail the legal remedy, which may be available to it, may be
claiming the damages. The High Court ought to have appreciated that it
G is always advisable that in such a foreign funded Mega project, delay
may have a cascading effect and many a times have a financial burden
due to delay in projects and therefore, there shall be minimal interference
and/or no interference till the entire tender process or till the award of
contract is completed. The foreign funded agency therefore is justified
in providing such clauses to prevent challenge to the tender process
H
NATIONAL HIGH SPEED RAIL CORPORATION LIMITED v. 869
MONTECARLO LIMITED & ANR. [M. R. SHAH, J.]
midway. A foreign funded agency, who invests/funds such a huge amount A
for such a Mega project on bilateral talks between two countries is justified
in insisting such clauses and to insist that the information relating to the
evaluation of the Bids and recommendation of contract award shall not
be disclosed to Bidders or any other person until information on contract
award is communicated to all the Bidders and the grounds on which the
B
unsuccessful Bidders’ Bids are not selected shall be provided thereafter.
14.4 The object and purpose of providing aforesaid clauses is
very clear namely no interference with respect to the tender process
midway and till the final decision on awarding the contract is taken.
Even, we are also of the opinion that in a Mega project, which is funded
by a foreign country, there shall not be any interference with the tender C
process midway till the final decision is taken to award the contract. The
reason behind this is that any delay in such a project may increase the
ultimate project cost and it may affect the future investment by the foreign
country, which would never be in the larger nation’s interest.
14.5 Under the circumstances, the High Court has committed a D
grave error in holding that Clauses 28.1 and 42.5 are patently illegal,
more particularly, in absence of any challenge to the same and also on
the ground that once the original writ petitioner participated having
knowledge of the aforesaid clauses in the ITB, thereafter it was not
open for the original writ petitioner to challenge the same. The original
writ petitioner was knowing right from the very beginning with respect E
to the confidentiality clause contained in Clause 28 and that grounds on
which the Bids of unsuccessful Bidders are not selected shall be
communicated only after a final decision to award the contract is
communicated under Clause 42. If the original writ petitioner was
aggrieved either it would not have participated and/or ought to have F
challenged such clauses before participating in the tender process. Under
the circumstances, the impugned judgment and order passed by the High
Court holding Clauses 28.1 and 42.5 as patently illegal cannot sustain
and the same also deserves to be quashed and set aside.
15. Before we part, we deem it proper to express few words of
G
caution to the High Courts while entertaining the writ petitions challenging
the tender process midway and/or while interfering with the tender process
in the contracts, more particularly, with respect to the contracts/projects
funded by the foreign countries and with respect to the Mega project
like the present one. Before entertaining the writ petition with respect to
such Mega projects funded by the foreign countries, one has to appreciate H
870 SUPREME COURT REPORTS [2022] 12 S.C.R.
A that funds of such Mega projects by the foreign country is followed by a
detailed discussion between the Prime Ministers of both the countries
and to strengthen bilateral cooperation in the rail sector. The foreign
country is ready to invest/fund such a huge amount on non-negotiated
terms and the Bid Documents are prepared by the foreign financial
agency/country in accordance with the latest version of the Standard
B
Bidding Documents. These investments from developed nations are made
on the basis of non-negotiated terms and conditions, where the sole
discretion as to what would be the conditions of the investments and on
what terms the contractors would be chosen to implement the project,
vests with the investor foreign developed nation. Considering the special
C peculiarities of such foreign sovereign funded development contracts,
which can be envisaged and exist only due to the availability of the
investment and willingness of the foreign sovereign country to finance
such infrastructure project, the said contracts assume the different
characteristics. Therefore, there shall be different considerations so far
as the judicial interference is concerned between the foreign funded
D
contracts and the ordinary public works contracts funded from public
exchequer. It is always to be borne in mind and as observed by this
Court in the case of Asia Foundation and Construction Ltd. (supra), it is
difficult for a developing country to go ahead with such a high cost
project unless the developed country grant loan/subsidy and/or ready to
E fund such high cost projects, which are very important projects for
developing country, more particularly, when the developed country is
ready to fund a huge amount at a minimal concessional rate of interest
and on suitable terms and conditions of repayment.It is also to be noted
that any delay in execution of such a Mega project, which is very
important project for the developing country like India may not be in the
F
larger public interest and in the nation’s interest. Such an interference
by the Courts midway and delay in the projects like these which is funded
by the foreign countries on bilateral mutual understanding/agreement by
the developed country to a developing country may affect the future
investments/funding. Many a times, such a delay in the execution of the
G project due to the intervention by the Courts may have cascading effect
on the project cost and ultimately may increase the project cost and may
impose heavy financial burden and lead to increased and unbudgeted
expenditure. Therefore, while exercising the writ jurisdiction challenging
the tender process midway and/or while entertaining the writ petition
challenging the award of contract with respect to such Mega projects,
H
NATIONAL HIGH SPEED RAIL CORPORATION LIMITED v. 871
MONTECARLO LIMITED & ANR. [M. R. SHAH, J.]
more particularly, when such Mega projects are funded by the foreign A
countries, the Courts have to bear in mind the following principles laid
down by this Court in the case of Tata Cellular Vs. Union of India,
1994 6 SCC 651 in paragraph 94 as under:
“94. The principles deducible from the above are:
(1) The modern trend points to judicial restraint in administrative B
action.
(2) The court does not sit as a court of appeal but merely
reviews the manner in which the decision was made.
(3) The court does not have the expertise to correct the
administrative decision. If a review of the administrative C
decision is permitted it will be substituting its own decision,
without the necessary expertise which itself may be fallible.
(4) The terms of the invitation to tender cannot be open to
judicial scrutiny because the invitation to tender is in the realm
of contract. Normally speaking, the decision to accept the
D
tender or award the contract is reached by process of
negotiations through several tiers. More often than not, such
decisions are made qualitatively by experts.
(5) The Government must have freedom of contract. In other
words, a fair play in the joints is a necessary concomitant for
an administrative body functioning in an administrative sphere E
or quasi-administrative sphere. However, the decision must
not only be tested by the application of Wednesbury principle
of reasonableness (including its other facts pointed out above)
but must be free from arbitrariness not affected by bias or
actuated by mala fides. F
(6) Quashing decisions may impose heavy administrative burden
on the administration and lead to increased and unbudgeted
expenditure.
Based on these principles we will examine the facts of this case
since they commend to us as the correct principles. G
Even while entertaining the writ petition and/or granting the stay
which ultimately may delay the execution of the Mega projects, it must
be remembered that it may seriously impede the execution of the projects
of public importance and disables the State and/or its agencies/
instrumentalities from discharging the constitutional and legal obligation
H
872 SUPREME COURT REPORTS [2022] 12 S.C.R.
A towards the citizens. Therefore, the High Courts should be extremely
careful and circumspect in exercise of its discretion while entertaining
such petitions and/or while granting stay in such matters. Even in a case
where the High Court is of the prima facie opinion that the decision is as
such perverse and/or arbitrary and/or suffers from mala fides and/or
favouritism, while entertaining such writ petition and/or pass any
B
appropriate interim order, High Court may put to the writ petitioner’s
notice that in case the petitioner loses and there is a delay in execution
of the project due to such proceedings initiated by him/it, he/they may be
saddled with the damages caused for delay in execution of such projects,
which may be due to such frivolous litigations initiated by him/it. With
C these words of caution and advise, we rest the matter there and leave it
to the wisdom of the concerned Court(s), which ultimately may look to
the larger public interest and the national interest involved.
16. In view of the above and for the reasons stated above, the
impugned judgment and order passed by the High Court is clearly
D unsustainable and the same deserves to be quashed and set aside and is
accordingly quashed and set aside. Present appeal is allowed accordingly.
The original writ petition before the High Court filed by the original writ
petitioner – respondent herein stands dismissed. No costs.
Pending application(s), if any, also stand disposed of.
E
Divya Pandey Appeal allowed.
(Assisted by : Rahul Rathi, LCRA)
F
G
H
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