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Saturday, September 17, 2016

tender documents, = 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 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 interfering with the interpretation given.- even if there was such an ambiguity or doubt, the High Court ought to have refrained from giving its own interpretation unless it had come to a clear conclusion that the interpretation given by NMRCL was perverse or mala fide or intended to favour one of the bidders. - Under the circumstances, we find merit in the appeals filed by the appellants and set aside the judgment and orders passed by the High Court and restore the decision of NMRCL to the effect that GYT-TPL JV was not eligible to bid for the contract under consideration.'; eligible bidders are necessary parties = the High Court was of opinion that the eligible bidders were not entitled to be either impleaded in the petition filed in the High Court by the ineligible bidder GYT-TPL JV or were not entitled to be heard. With respect, this is not the appropriate view to take in matters such as the present There are several reasons for this, one of them being that there could be occasions (as in the present appeals) where an eligible bidder could bring to the notice of the owner or employer of the project that the ineligible bidder was ineligible for additional reasons or reasons that were not within the contemplation of the owner or employer of the project. It was brought to our notice by Afcons Infrastructure in these appeals that GYT-TPL JV did not have any experience in the construction of a viaduct by the segmental construction method and that the translations of documents in Mandarin language filed in the High Court were not true English translations.- It is to avoid such a situation that it would be more appropriate for the constitutional Courts to insist on all eligible bidders being made parties to the proceedings filed by an unsuccessful or ineligible bidder.

                                                                  REPORTABLE
                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION
                       CIVIL APPEAL  NO. 9078  OF 2016

Afcons Infrastructure Ltd.                                     .…Appellant

                                          versus

Nagpur Metro Rail Corporation Ltd. & Anr.                     ….Respondents

                                    WITH

                            C.A. NO. 9079 OF 2016

                                    WITH

                         C.A. NOS. 9080-9081 OF 2016


                               J U D G M E N T

Madan B. Lokur, J.

1.    In Civil Appeal No. 9078 of  2016 and Civil Appeal No.  9079  of  2016
filed by Afcons Infrastructure Ltd., the challenge is to  the  judgment  and
orders dated 28th July, 2016 and 11th August,  2016  passed  by  the  Bombay
High Court.    In Civil  Appeal Nos. 9080-9081 of 2016filed  by  the  Nagpur
Metro Rail Corporation Ltd., the challenge is to  the  judgment  and  orders
dated 28th July, 2016 and 12th  August,  2016  passed  by  the  Bombay  High
Court.  The combined effect of all the impugned  orders  is  that  the  High
Court held that M/s. Guangdong Yuantian Engineering Company (GYT)  of  China
and M/s. TATA  Projects  Limited  (TPL)  as  a  Joint  Venture  (hereinafter
referred to as the ‘GYT-TPL JV’) are eligible to bid for  a  tender  invited
by the Nagpur Metro Rail Corporation Limited (for  short  ‘NMRCL’)  on  12th
May, 2016.
2.    Bids were invited by NMRCL  for  the  design  and  construction  of  a
viaduct in Reach-3 between Jhansi Rani Square and  Lokmanya  Nagar  Stations
from CH 7825M to CH 18212M on the East-West Corridor of  Nagpur  Metro  Rail
Project.
3.    GYT-TPL JV gave its bid for the  contract  but  NMRCL,  by  an  e-mail
dated  23rd  July,  2016  communicated  to  GYT-TPL  JV  that  its  bid  was
disqualified at the technical bid opening.  The comment/remark  relating  to
the disqualification stated that the documents submitted by  GYT-TPL  JV  do
not meet the eligibility conditions as  stipulated  in  Clause  4.2  (a)  of
Section III of the bid documents.
4.    The controversy on the eligibility of GYT-TPL JV  arises  in  view  of
Clause 4.2 (a) of Section III of the tender  conditions  which  reads  inter
alia as follows:
|4.2 (a)   |Specific Construction &        |A minimum number of similar   |
|          |Contract Management experience |contracts specified below that|
|          |                               |have  been satisfactorily     |
|          |                               |completed as a prime          |
|          |                               |contractor, joint venture     |
|          |                               |member during last 10 (ten)   |
|          |                               |years i.e. up till 31.05.2016 |
|          |                               |Should have received          |
|          |                               |minimum INR 3200 Million      |
|          |                               |from 1 contract in a metro    |
|          |                               |civil construction work and   |
|          |                               |should have completed         |
|          |                               |viaduct length not less than  |
|          |                               |5 km in the same contract.    |



5.    According to GYT-TPL  JV,  it  had  executed  the  Pearl  River  Delta
intercity high speed railway project in China;  it  had  received  INR  3200
million from that project and it had  constructed  a  viaduct  of  7.284  km
length under that contract. Before the High Court and before us,  there  was
no controversy that GYT-TPL JV had received a minimum of  INR  3200  million
from its Pearl River Delta Intercity High Speed  Railway  Project  and  that
whether it had completed a viaduct having a length of not less  than  5  km.
The sole question before the High Court was whether the  Pearl  River  Delta
Intercity High Speed Railway Project met the requirement of a  ‘metro  civil
construction work’.  According to NMRCL, an inter-city  high  speed  railway
project did not meet the requirements of a metro civil construction work.
6.    The High Court disagreed with NMRCL in the following words:
“The civil construction work completed by the  petitioner  [GYT-TPL  JV]  in
terms of condition no. 4.2 (a) was  for  an  intercity  high  speed  railway
project in China and in the said contract, the petitioner  had  completed  a
viaduct of 7.284 km length….The  petitioner  has  admittedly  constructed  a
viaduct of not less  than  5  km  for  the  prestigious  Pearl  River  Delta
Intercity high speed railway project in China.  We find on a reading of  the
tender conditions and particularly clause 4.2(a) thereof that  a  contractor
or a joint venture company is required  to  have  the  experience  in  Metro
Civil Construction work and of completing a viaduct having a length  of  not
less than 5 kms.  We do not appreciate  the  submission  on  behalf  of  the
respondent that since the petitioner had constructed the viaduct for a  high
speed railway project, the petitioner  would  not  have  the  experience  of
constructing a viaduct for a metro.  It is not disputed  by  the  respondent
that ‘metro’ would mean a railway or an underground  railway.   If  that  be
so, we fail to fathom as to why the technical  bid  of  the  petitioner  was
disqualified though the petitioner  has  constructed  a  viaduct  for  Pearl
River Delta Intercity high speed railway project in China of the  length  of
7.284 km.  In our view, the petitioner has the experience of constructing  a
viaduct of not less than 5 kms. in length  in  a  Metro  Civil  Construction
work contract  and  had  also  received  more  than  INR  3200  million  for
satisfactorily completing the said contract.  The distinction sought  to  be
made by the respondent NMRCL between  the  construction  of  a  viaduct  for
Intercity High Speed Railway Project and the construction of a  viaduct  for
the metro rail project, is illusory and not real.  The action  on  the  part
of the NMRCL of disqualifying the  petitioner’s  technical  bid  is  clearly
arbitrary and is liable to be set aside…..”

7.    There is no dispute before us that the Metro Railway (Construction  of
Works) Act, 1978 and The Metro Railways  (Operation  and  Maintenance)  Act,
2002 extend to Nagpur and are applicable to the Nagpur Metro  Rail  Project.
The expression ‘metro railways’ has been defined  in  Section  2(i)  of  the
Metro Railways (Construction of Works) Act, 1978 in the following words:

“(i) “metro railway” means a metro railway or any portion  thereof  for  the
public carriage of passengers, animals or goods and includes,--


(a) all land within the boundary marks indicating the  limits  of  the  land
appurtenant to a metro railway.


(b) all lines of rails, sidings, yards  or  branches  worked  over  for  the
purposes of, or in connection with, a metro railway,


(c) all  stations,  offices,  ventilation  shafts  and  ducts,  ware-houses,
workshops, manufactories, fixed plants and machineries,  sheds,  depots  and
other works constructed for the purpose of, or in connection with,  a  metro
railway;”





A clearer definition is to be found in The  Metro  Railways  (Operation  and
Maintenance) Act, 2002 in Section 2(i) thereof and this reads as follows:


“(i) "metro railway" means rail-guided  mass  rapid  transit  system  having
dedicated right-of-way, with steel wheel or rubber-tyred wheel coaches,  but
excluding tramways, for carriage of passengers, and includes--


(A) all land within the boundary marks indicating the  limits  of  the  land
appurtenant to a metro railway,


(B) all rail  tracks,  sidings,  yards  or  branches  worked  over  for  the
purposes of, or in connection with, a metro railway,


(C)  all  stations,  offices,  ventilation  shafts  and  ducts,  warehouses,
workshops, manufactories, fixed plants and machineries,  sheds,  depots  and
other works constructed for the purpose of, or in connection with,  a  metro
railway;”





8.     In view of the extension  of  these  two  statutes  to  the  city  of
Nagpur, there can be no doubt that the  definition  of  ‘metro  railway’  or
‘metro’ would apply to the tender conditions floated  for  the  purposes  of
the metro rail project of NMRCL.

9.    It is submitted before  us  that  an  inter-city  rail  is  completely
different from a metro rail. An inter-city rail is between  two  cities  and
the trains are usually high speed trains.  A metro rail  is  intra-city,  it
has a dedicated right-of-way, normally it does not have  high  speed  trains
and the frequency of trains is much greater that  of  inter-city  trains.[1]
A metro rail may extend, in some cases, to a suburb of a  metropolitan  city
but it essentially remains an intra-city project.  There  is,  therefore,  a
qualitative difference between an inter-city  rail  and  a  metro  rail.  By
itself, this indicates a qualitative difference in a  railway  project  that
is inter-city and a railway project that is intra-city and the  construction
of a viaduct for a railway project that is inter-city and a railway  project
that is intra-city.
10.   The fact that GYT-TPL JV made constructions in a metropolitan city  or
in a metropolitan area during the execution of the Pearl River Delta  inter-
city high speed railway project, does not make that  project  an  intra-city
metro rail project - it continues  to  be  an  inter-city  railway  project.
However, it not necessary  for  us  to  delve  into  these  issues  or  even
adjudicate on them.
11.   Recently,  in  Central  Coalfields  Ltd.  v.  SLL-SML  (Joint  Venture
Consortium)[2] 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 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 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. Board of Trustees  of  the  Port  of
Bombay[3] it was held that the constitutional Courts are concerned with  the
decision making process. Tata Cellular v. Union  of  India[4]  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  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[5] as mentioned in Central Coalfields.
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 with the decision making  process
or the decision.
14.   We must reiterate the words of caution  that  this  Court  has  stated
right from the time when Ramana  Dayaram  Shetty  v.  International  Airport
Authority of India[6] was decided almost 40  years  ago,  namely,  that  the
words used  in  the  tender  documents  cannot  be  ignored  or  treated  as
redundant or superfluous – they must be given meaning  and  their  necessary
significance.  In this context, the use of the word ‘metro’  in  Clause  4.2
(a) of Section III of the bid documents  and  its  connotation  in  ordinary
parlance cannot be overlooked.
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 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  interfering
with the interpretation given.
16.   In the present appeals, although there  does  not  appear  to  be  any
ambiguity or doubt about the interpretation given by  NMRCL  to  the  tender
conditions, we are of the view that even if there was such an  ambiguity  or
doubt,  the  High  Court  ought  to  have  refrained  from  giving  its  own
interpretation  unless  it  had  come  to  a  clear  conclusion   that   the
interpretation given by NMRCL was perverse  or  mala  fide  or  intended  to
favour one of the bidders. This was certainly not  the  case  either  before
the High Court or before this Court.
17.   Under the circumstances, we find merit in the  appeals  filed  by  the
appellants and set aside the judgment and orders passed by  the  High  Court
and restore the decision of NMRCL to the effect  that  GYT-TPL  JV  was  not
eligible to bid for the contract under consideration.
18.   Before we conclude, it is necessary to point out that the  High  Court
was of opinion that the eligible bidders were  not  entitled  to  be  either
impleaded in the petition filed in the High Court by the  ineligible  bidder
GYT-TPL JV or were not entitled to be heard.  With respect, this is not  the
appropriate view to take in matters such as the present. There  are  several
reasons for this, one of them being that there could  be  occasions  (as  in
the present appeals) where an eligible bidder could bring to the  notice  of
the owner or  employer  of  the  project  that  the  ineligible  bidder  was
ineligible for additional reasons  or  reasons  that  were  not  within  the
contemplation of the owner or employer of the project.  It  was  brought  to
our notice by Afcons Infrastructure in these appeals  that  GYT-TPL  JV  did
not have any experience in the construction of a viaduct  by  the  segmental
construction method and that  the  translations  of  documents  in  Mandarin
language filed in  the  High  Court  were  not  true  English  translations.
Submissions made by  learned  counsel  for  Afcons  Infrastructure  in  this
regard are important and would have had a bearing on  the  decision  in  the
writ petition filed in the High Court but since  Afcons  Infrastructure  was
not a party in the High Court, it could not  agitate  these  issues  in  the
writ petition but did so in the review petition which was  not  entertained.
It is to avoid such a situation that it would be more  appropriate  for  the
constitutional Courts to insist on all eligible bidders being  made  parties
to the proceedings filed by an unsuccessful or ineligible bidder.


19.   We make it clear that  we  have  not  considered  the  submissions  of
learned  counsel  for  Afcons  Infrastructure  on  the  two  issues  of  the
segmental construction method and faulty  translation  of  documents   since
they were not before the High Court and also  because  we  do  not  find  it
necessary to adjudicate on them in the view that we have taken.
20.   The appeals are allowed. The  parties  are  left  to  bear  their  own
costs.



                                                           .......………………….J.

            (Madan B. Lokur)



                                                               .……….…………….J.
New    Delhi;                                                          (R.K.
Agrawal)
September  15, 2016

-----------------------
[1]
      [2]         In  Delhi  the  time  duration  is  approximately  to  2-3
minutes during peak hours and 5-10 minutes during off peak duration  in  the
city.      Source:      http://www.delhicapital.com/delhi-metro/metro-train-
timings.html
[3]
      [4]         2016(8) SCALE 99.
[5]
      [6]        (1989) 3 SCC 293.
[7]
      [8]        (1994) 6 SCC 651.
[9]
      [10]       (2007) 14 SCC 517.
[11]
      [12]        (1979) 3 SCC 489

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