2022 Supreme(SC) 76

SUPREME COURT OF INDIA
(From the High Court of Delhi)
M.R. Shah, A.S. Bopanna, JJ.
National High Speed Rail Corporation Limited - Appellant
Versus
Montecarlo Limited & Anr. - Respondents
Civil Appeal No. 6466 of 2021
Decided On : 31-01-2022

Headnote:

Whether in the facts and circumstances of the case and with respect to such a foreign funded project, the High Court is justified in interfering with the tender process in absence of any specific allegations of mala fides and/or favouritism?

Fact of the Case:

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 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 (JICA). That the appellant herein – NHSRCL is a Government Company incorporated under the Companies Act, 2013 with equity participation of 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. 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 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-scraping, Boundary Wall, General Inspection Train Shed, Maintenance Depot and other Associated Works at Sabarmati between MAHSR Km. 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”). That the Technical Bids submitted by various bidders including the original writ petitioner, were opened by the NHSRCL on 19.02.2021. 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 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 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 notification of the award in accordance with ITB 42.1, request a debriefing.” It appears that NHSRCL acted as per the decision of the JICC (consultant) approved/concurred by the JICA on the Bid submitted by the original writ petitioner as non-responsive and noncompliant to the technical requirements of the Bidding 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. From the aforesaid, it appears that a conscious decision has been taken by the JICC/JICA on the Bid submitted by the original writ petitioner as non-responsive and non-compliant to the technical requirements of the Bidding 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.

Finding of the Court:

The High Court has erred in 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. The High Court ought to have appreciated that other Bidders, who were granted the 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 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 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 Court has erred in holding that not granting the opportunity to the original writ petitioner to cure the defect is discriminatory.

Issues: Whether in the facts and circumstances of the case and with respect to such a foreign funded project, the High Court is justified in interfering with the tender process in absence of any specific allegations of mala fides and/or favouritism?

Ratio Decidendi: 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 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. 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 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 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, 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 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 taken by the JICA and the JICC, which has been acted upon by the tender committee.

Final Decision: The impugned judgment and order passed by the High Court is clearly 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.