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 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 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 nonresponsive – 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: 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 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, 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 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 – 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 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 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 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 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 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.
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. 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 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 nonresponsive/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. [Para 7.3][849-FH; 850-A-B]
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 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 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 and/or the decision of JICC/JICA. Therefore, in absence of any 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 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 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 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. 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 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 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 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 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 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. 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 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 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.[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 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. 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 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) 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 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 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]
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, 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 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 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 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 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 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 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 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 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. 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 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 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 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 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 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 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. SLLSML [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 relied on. Siemens Public Communication Networks Private
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]
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 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; Central Coalfields Limited & Anr. v. SLL-SML [A Joint Venture Consortium] and Ors., (2016) 8 SCC 622 : [2016] 4 SCR 890 - referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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