CONSORTIUM OF TITAGARH FIREMA ADLER S.P.A. - TITAGARH WAGONS LTD. THROUGH AUTHORIZED  SIGNATORY, TITAGARH TOWERS, 756, ANANDAPUR, E. M.  BYPASS, KOLKATA- 700 07, WEST BENGAL versus NAGPUR METRO RAIL CORPORATION LTD. (NMRCL) HAVING ITS HEAD OFFICE AT METRO HOUSE, BUNGALOW NO. 28/2, ANAND NAGAR, C.K. NAIDU ROAD, CIVIL LINES, NAGPUR THROUGH ITS GENERAL MANAGER (PROCUREMENT) & ANR.
[2017] 5 S.C.R. 337, Supreme Court of India, 2017
Outcome: Dismissed (Dismissed)
Segment: Ratio
[20 I 7] 5 S.C.R. 337 
CONSORTIUM OF TITAGARH FIREMA ADLER S.P.A. -
A 
TITAGARH WAGONS LTD. THROUGH AUTHORIZED 
SIGNATORY, TITAGARH TOWERS, 756, ANANDAPUR, E. M. 
BYPASS, KOLKATA- 700 I 07, WEST BENGAL 
v. 
NAGPUR METRO RAIL CORPORATION LTD. (NMRCL) 
HAVING ITS HEAD OFFICE AT METRO HOUSE, BUNGALOW 
NO. 28/2, ANAND NAGAR, C.K. NAIDU ROAD, CIVIL LINES, 
NAGPUR THROUGH ITS GENERAL MANAGER 
(PROCUREMENT) & ANR. 
(Civil Appeal Nos. 1353-1354of2017) 
MAY09,2017 
[DIPAK MISRA AND AMITAVA ROY, JJ.] 
Contract: 
Award of contract - By Government body (respondent No. 
1) - To a company (respondent No. 2) owned by Government of 
Peoples Republic of China - In preference to the appellant-company 
- Challenged on the ground that respondent No. 2 company was 
not technically qualified as its bid was not that of a 'single entity' 
and it had relied on the experience of its subsidiaries - Held: 
Respondent No. 2 being a Government Company, was the owner of 
its subsidiary companies and came within ambit of Cl. 4.1 of the bid 
document as a 'Government owned entity' - 1" respondent applied 
its commercial wisdom in the understanding and interpretation which 
has been given concurrence by the concerned Committee and the 
Financing Bank - In absence of any perversity. bias or malafide, 
interpretation placed by 1"' respondent need not be interfered with 
in exercise of power of judicial review. 
Judicial Review: 
B 
c 
D 
E 
F 
Judicial review of administrative decision in respect of G
contractual matters - Scope of - Held: Judicial review of 
administrative decisions of Government bodies in respect of 
contractual matters is intended to prevent arbitrariness or favoritism 
and is exercised in larger public interest - There should be judicial 
restraint on administrative action as the court lacks expertise to 
H 
337
338 
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B 
c 
D 
E 
F 
G 
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SUPREME COURT REPORTS 
[2017] 5 S.C.R. 
correct the administrative decision - Administrative decision must 
not only be tested by the application of Wednesbury principle or 
reasonableness, but also must be free from arbitrariness not affected 
by bias or actuated by mala tides - If the decision relating to award 
of contract is bona fide and in public interest, courts will not, in 
exercise of power of judicial review, interfere even if a procedural 
observation or error in assessment or prejudice to a tenderer, is 
made out - In the facts of the present case, decision of awarding 
the contract in question should not be interfered with in absence of 
any perversity, bias or mala fide. 
Dismissing the appeals, the Court 
HELD: 1. Though the principle of judicial review cannot 
be denied so far as exercise of contractual powers of Government 
bodies are concerned, but it is intended to prevent arbitrariness 
or favouritism and it is exercised in the larger public interest or 
if it is brought to the notice of the court that in the matter of 
award of a contract power has been exercised for any collateral 
purpose. There should be judicial restraint on administrative 
action. The role of the court is only to review the manner in 
which the decision has been taken. The Court lacks expertise 
to correct the administrative decision. The Government is 
conferred freedom of contract which recognizes a fair play in the 
joints as a necessary concomitant
for an administrative body 
functioning in an administrative sphere or quasi-administrative 
sphere. The administrative decision must not only be tested by 
the application of Wednesbury principle of reasonableness but 
also must be free from arbitrariness not affected by bias or 
actuated by malafides. If the decision relating to award of contract 
is bona fide and is in public interest, courts will not, in exercise of 
power of judicial review, interfere even if a procedural aberration 
or error in assessment or prejudice to a tenderer, is made out. 
[Paras 27, 29) [359-C-E; 361-F-G] 
Tata Cellular v. Union of India (1994) 6 SCC 651 : 
[1994) 2 Suppl. SCR 122; Montecarlo Ltd. v. NTPC 
Ltd. 2016 (10) SCALE 50; Jagdish Manda! v. State of · 
Orissa & Ors. (2007) 14 SCC 517: [2006) 10 Suppl. 
SCR 606; Master Marine Services (P) Ltd. v. Metcalfe 
& Hodgkinson (P) Ltd. and another (2005) 6 SCC 138 :
CONSORTIUM OF TITAGARH FlREMA ADLER S.P.A. v. 
NMRCL 
(2005) 3 SCR 666; B.S.N. Joshi & Sons Ltd. v. Nair 
Coal Services Ltd. and others (2006) 11 SCC 548 : 
[2006] 8 Suppl. SCR 11; Michigan Rubber (India) Ltd. 
v. State of Karnataka (2012) 8 SCC 216 : (2012] 8 
SCR 128; A/cons Infrastructure Ltd. v. Nagpur Metro 
Rail Corporation Ltd. 2016 (8) SCALE 765; Tamil 
Nadu Generation and Distribution Corporation Ltd. 
(TANGEDCO) rep. by its Chairman & Managing 
Director and another v. CSEPDl-Trishe Consortium, rep. 
by its Managing Director and another 2016 (10) 
SCALE 69; Reliance Telecom Ltd. and another v. Union 
of India and another 2017 (1) SCALE 453; Asia 
Foundation & Construction Ltd. v. Trafalgar House 
Construction (I) Ltd. and others (1997) 1 SCC 738 : 
(1996] 10 Suppl. SCR 209 - relied on. 
339 
A 
B 
c 
2.1 Respondent No. 2 is a company owned by the People's 
Republic of China and, therefore, it comes within the ambit of D 
Clause 4.1 of the bid document as a Government owned entity. 
As perceived by the 1" respondent, a single entity can bid for 
itself and it can consist of its constituents which are wholly own~d 
subsidiaries and they may have experience in relation to the 
project. That apart, as is understood by the said respondent, where 
the singular or unified entity claims that as a consequence of E 
merger, all the subsidiaries form a homogenous pool under its 
immediate control in respect of rights, liabilities, assets and 
obligations, the integrity of the
singular entity as owning such 
rights, assets and liabilities cannot be ignored and must be given 
effect. While judging the eligibility criteria of the second 
F 
respondent, the 1'' respondent has scanned Article 164 of the 
Articles of Association of respondent No. 2 which are submitted 
along with the bid from which it is evincible that the Board of 
Directors of respondent No. 2 has been entrusted with the 
authority and responsibility to discharge all necessary and 
essential decisions and functions for the subsidiaries as well. 
G 
According to 1 '' respondent, the term "Government owned 
entity" would include a Government owned entity and its 
subsidiaries and there can be no matter of doubt that the identity 
of the entities as belonging to the Government when established 
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SUPREME COURT REPORTS 
[20 l 7] 5 S.C.R. 
A can be treated as a Government owned entity and the experience 
claimed by the parent of the subsidiaries can be taken into 
consideration. [Para 32) [363-G-H; 364-A-D) 
2.2 Thus, there is material on record that respondent No. 
2, a Government company, is the owner of the subsidiary 
B 
companies and subsidiary companies have experience. 1'' 
respondent, has applied its commercial wisdom in the 
. understanding and interpretation which has been given the 
concurrence by the concerned Committee and the financing Bank. 
The concept of "Government ow'ned entity" cannot be conferred 
a narrow construction. It would include its subsidiaries subject 
C 
to the satisfaction of the owner. There need not be a formation of 
a joint venture or a consortium. In the obtaining fact situation, 
the interpretation placed by the 1" respondent in the absence of 
any kind of perversity, bias or ma/a fide should not be interfered 
with, in exercise of power of judicial review. Decision taken by 
D the 1" respondent is keeping in view the commercial wisdom 
and the expertise and it is no way against the public interest. 
(Para 34] (366-D-G] 
E 
F 
G 
H 
New Horizons Ltd. v. Union of India (1995) 1 SCC 478 : 
[1994] 5 Suppl. SCR 310; State of U.P. v. Renusagar 
Power Co. (1988) 4 SCC 59: [1988] 1 Suppl. SCR 
627 -
relied on. 
W.B. Electricity Board v. Patel Engineering Co. Ltd. 
(2001) 2 SCC 451: [2001) 1 SCR 352; Littlewoods 
Mail Order Stores,
Ltd. v. Mc Gregor (1969) 3 All ER 
855; DHN Food Distributors Ltd. and others v. London 
Borough of Tower Hamlets (1976) 3 All ER 462; Harold 
Holdsworth & Co. (Wake.field) Ld. v. Caddies (1955) 1 
WLR 352; Central Coal.fields Ltd. v. SLL-SML (Joint 
Venture Consortium (2016) 8 SCC 622; 
Ba/want Rai 
Saluja and another v. Air India Ltd. and others (2014) 
9 SCC 407; Rohde and Schwarz Gmbh and Co. K.G v. 
Airport Authority of India (2014) 207 DLT 1; Cure 
Projects and Technologies Ltd. v. State of Bihar and 
another 2011 (59) BLJR 183; Mrs. Bacha F Guzdar, 
Bombay v. Commissioner of Income Tax, Bombay AIR 
1955 SC 74 : [1955) SCR 876; Life Insurance 
Corporation of India v. Escorts Ltd. and others (1986)
CONSORTIUM OF TITAGARH FIREMA ADLER S.P.A. v. 
341 
NMRCL 
1 SCC 264 : [1985) 3 Suppl. SCR 909; Western 
A 
Coalfields Limited v. Special Area Development 
Authority, Korba and another (1982) 1 SCC 125 : 
[1982) 2 SCR 1; Nazir Ahmad v. King Emperor AIR 
' 1936 PC 253 - referred to. 
Case Law Reference 
B 
[1994) 5 Suppl. SCR 310 
relied on 
Para4 
[1994) 2 Suppl. SCR 122 
relied on 
Para4 
(2016) 8 sec 622 
referred to 
Para 4 
2016 (8) SCALE 765 
relied on 
Para4 
c 
(2014) 9 sec 407 
referred to 
Para 11 
(2014) 207 DLT 1 
referred to 
Para 11 
2011 (59) BLJR 183 
referred to 
Para 11 
[1988) 1 Suppl. SCR 627 
relied on 
Para 12 
D 
2016 (10) SCALE 50 
relied on 
Para 13 
[2012) 8 SCR 128 
relied on 
Para 13 
[2006) 10 Suppl. SCR 606 
relied on 
Para 13 
[1955) SCR 876 
referred to 
Para 15 
[1985) 3 Suppl. SCR 909 
referred to 
E 
Para 26 
[1982] 2 SCR 1 . 
referred to 
Para 26 
~-
AIR 1936 PC 253 
referred to 
Para 26 
[2005] 3 SCR 666 
relied on 
Para 27 
F 
[2006] 8 Suppl. SCR 11 
relied on 
Para 27 
2016 (10) SCALE 69 
relied on 
Para 28 
2017 (1) SCALE 453 
relied on 
Para 29 
[1996] 10 Suppl. SCR 209 
relied on 
Para 29 
[2001) 1 SCR 352 
referred to 
Para 30 
G 
(1969) 3 All ER 855 
referred to 
Para 32 
(1976) 3 All ER 462 
referred to 
Para 32 
(1955) 1 WLR 352 
referred to 
Para 32 
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SUPREME COURT REPORTS 
[2017] 5 S.C.R. 
A 
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1353-
1354 of2017. 
From the Judgment and Order dated 05.10.2016 and 22.11.2016 
of the High Court of Bombay at Nagpur Bench in W. P. (C) No. 5818 of 
2016 and M.C.A. (Review) No. 1087 of2016. 
B 
WITH 
c 
Civil Appeal No. 1355 of2017. 
Dr. A. M. Singh vi, Raju Ramachandran, Sr. Advs, Saurabh Kirpal, 
Pradeep Agarwal, Deepak Biswas, Nishith Mishra, Arjun Minocha, 
Sourav Vig, Ms. Anannya Ghosh, Dhananjaya Mishra, Arnav Dash 
Ramendra Mohan Patnaik, Advs. for the Appellant. 
Mukul Rohatgi, AG, Gopal Subramanian, Dhruv Mehta, S. K. 
Mishra, Shyam Divan, Sr. Advs, Mehul M. Gupta, Pavan Bhushan, R. P. 
Gupta, Prabhjit Jauhar, Ms. Anumpa K, N. P. Singh, S.S. Jauhar,Advs. 
D 
for the Respondents. 
E 
F 
The Judgment of the Court was delivered by 
DIPAK MISRA, J. I. Nagpur Metro Rail Corporation Ltd., the 
I'' respondent herein, issued a Notice Inviting Tender (NIT) on 25.01.2016 
for the work of design, manufacture, supply, testing, commissioning of 
69 passenger rolling stock (Electrical Multiple Units) and training of 
personnel at Nagpur Metro Rail Project. The said project is being funded 
by KfW Development Bank, Germany. As per the clause ITS 35.8 at 
all stages of bid evaluation and contract, award would have to be subject 
to no-objection from KfW Development Bank. 
2. In response to the said NIT, three bidders submitted their bids. 
One was found technically disqualified and
thus, only the appellant and 
the respondent No. 2 remained in contest. Upon opening of financial bid 
on29.09.2016, it was found that the appellant had given a bid of Rs. 852 
crores whereas the bid of the respondent No. 2 was Rs. 851 crores. 
The Director Level Tender Committee of the l" respondent agreed with 
G 
the report of the tender evaluation committee and recommended to accept 
the lowest offer of respondent No. 2 and the work order was to be 
issued after compliance of certain technical requirements. Before issue 
ofworkorder, the appellant filed Writ Petition No. 5818 of2016 before 
the High Court contending that respondent No. 2 was not technically 
qualified and, therefore, its financial bid could not have been opened. 
H
CONSORTIUM OF TITAGARH FIREMA ADLER S.P.A. v. 
NMRCL [DIPAK MISRA, J.] 
3. It was contended by the appellant herein before the High Court 
that Clause 26 of the tender document prevented a person from getting 
any information about the technical qualification of the competitor, till 
the contract is awarded, which is arbitrary, unreasonable and violative 
of Article 14 of the Constitution; that the respondent No. 2 is not having 
the requisite experience as required under the NIT, for it does not meet 
the eligibility criteria on its own, but was relying on the experience of its 
subsidiary. 
4. The Division Bench rejected the contention to go into the legality 
or otherwise of clause 26 observing that the appellant had participated in 
the tender bid knowing very well that such a clause existed and it was 
not open to it to contend that the said clause is onerous and lacks 
transparency and, therefore, violative of Article 14 of the Constitution; 
and it had challenged the same only after it is found that its financial bid 
was higher than that of respondent No. 2. It further observed that the 
matter would have been different had the appellant, immediately after 
the tender notice was published, challenged the said condition after NIT 
was issued. The High Court placing reliance upon the decisions in New 
Horizons Ltd. v. Union oflndia1, Tata Cellular v. Union of India0, 
Central Coalfields Ltd. v. SLL-SML (Joint Venture Co11sortium)3 and 
Afcons Infrastructure Ltd. v.
Nagpur Metro Rail Corporation Ltd. 4 
dismissed the writ petition. Be it noted, though the High Court felt that it 
could have non-suited the writ petitioner only on the ground that it had 
participated in the tender process knowing fully well that stipulation in 
nature of the clause 26.1 existed, yet proceeded to address the controversy 
and directed the owner to produce the record solely for the further 
purpose of being satisfied as to whether the decision making process by 
the employer/owner is legally valid or not and further to examine as to 
whether the decision arrived at by the owner that the respondent No. 2, 
the lowest bidder, possessed requisite experience. After perusing the 
entire documents on record, the High Court came to hold that:-
"15. It is to be noted that the tender evaluation committee consists 
343 
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of Chief Project Manager/RS,. General Manager/Procurement, 
G 
Chief Project Manager/Signaling and the General Manager/ 
Finance. The said Committee has evaluated the documents with 
1 (1995) 1 sec 478 
'(1994) 6 sec 651 
3 2016 (8) SCALE 99: (2016) 8 sec 622 
'2016 (8) SCALE 765 
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SUPREME COURT REPORTS 
[2017] 5 S.C.R. 
regard to the technical qualification of the petitioner as well as 
respondent no.2. The Committee has noted that respondent no.2 
was formed in June 2015 by merger of CRC Corporation and 
CNR Corporation limited. The documents relating to the merger 
has been submitted along with the bid. The Evaluation Committee 
has also noted that after the incorporation of the respondent no.2, 
upon the merger of CSR Corporation and CNR Corporation, 
respondent no.2 was awarded contract for supply of 76 cars for 
Naida Metro Project by Delhi Metro Rail Corporation Ltd. The 
Committee found that insofar as Clause No.12 is concerned, though 
the minimum requirement was that the bidder must have an 
experience of total 60 metro cars and out of which 30 cars should 
be either stainless steel or aluminium, respondent no.2 was having 
an experience of total 594 metro cars and all the cars were of 
stainless steel. Insofar as clause 12.1 is concerned, which requires 
that out of the number of cars manufactured, there has to be 
completed satisfactory revenue operation at least in one country 
outside country of origin/manufacturer or in India or at least one 
in GS country of 30 metro cars, respondent no.2 was having an 
experience of 432 outside country of origin. It could thus be seen 
that the perusal of the document placed on record would reveal 
that the decision making process of the technical evaluation 
committee has
been guided by the relevant factors and it cannot 
be said that they have not taken into consideration any of the 
relevant factors. We are, therefore, of the considered view that 
the decision of the technical evaluation committee would fall within 
the ambit of'rationality'. 
16. It is further to be noted thatthe minutes of the tender evaluation 
committee was further placed for approval before the Director 
Level Tender Committee consisting of Director (Rolling Stock 
and Systems), Director (Projects) and Director (Finance). It could 
thus be seen that the matter has not been examined at only one 
level of expert committee, but has gone through examination at 
two levels of experts." 
5. Thereafter, the High Court referred to the authorities mentioned 
hereinbefore and appreciated the principles stated therein and eventually 
dismissed the Writ Petition.
CONSORTIUM OF TITAGARH FIREMA ADLER S.P.A. v. 
345 
NMRCL [DIPAK MISRA, J.] 
6. It is pertinent to mention that in the course of hearing of the 
A 
matter before the High Court, learned counsel for the writ petitioner 
sought permission to withdraw the Writ Petition with further liberty to 
approach the High Court after award of the contract. The Court, though 
expressed its willingness to grant permission to withdraw the Writ Petition, 
it was not inclined to grant liberty as sought by the learned counsel for 
8 
the petitioner. Simpliciter withdrawing was not accepted and grant of 
liberty was insisted upon. Dealing with the said fact, the Division Bench 
referred to a passage from Central Coalfields Ltd. (supra) and expressed 
thus:-
"24. We find that if we accept the prayer as made by the petitioner, 
it will be giving leverage to the petitioner to again approach this 
Court and delay the project further. Taking into consideration the 
public interest, we have ourselves scrutinised the entire minutes 
of the Tender Evaluation Committee and Director Level Committee 
to find out as to whether the decision making process, answers 
the test as laid down by Their Lordships of the Apex Court. We 
have found that the decision making process cannot be termed to 
be vitiated on the ground of arbitrariness, irrationality or mala tides. 
Accepting the request of the learned senior counsel for the 
petitioner would further permit the project to be delayed. Needless 
to state that
the project is an important project for the city of 
Nagpur. In that view of the matter, though the prayer which on 
first impression appears to be innocuous, is liable to be rejected." 
7. After dismissal of the Writ Petition, an application for review 
(M.C.A. [Review] No. 1087 of2016) was filed. The High Court, while 
dealing with the application for review, noted the two grounds on which 
the review was sought. It is worth reproducing:-
"i. While exercising the principle ofWednesbury reasonableness, 
the order in review failed to take into account relevant omission in 
the process of scrutiny, like (a) how rate discount cannot be granted 
and (b) improper calculation of service tax which renders the 
applicant bid lowest. 
ii. that there was suppression ofrelevant facts by respondent No. 
2 before the authorities." 
8. Dealing with the said aspect, the Division Bench held:-
"13. Shri S.G. Aney, learned senior counsel appearing on behalf 
c 
D 
E 
F 
G 
of the petitioner, submitted that when an action would fall in the 
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SUPREME COURT REPORTS 
[2017] 5 S.C.R. 
ambit of malice in law, it may not be necessary to implead the 
persons against whom malafides are attributed as a party 
respondent. We find that by no stretch of imagination the present 
case would fall in the ambit of malice in law. If it is a case of 
applicant that the tender processing authorities in order to favour 
the respondent No. 2 have deliberately made some omissions or 
have committed some malafide act in order to help the respondent 
No. 2 to get the contract, then in that event such of the officers of 
the respondent No. 1 who are attributed with such an act or 
omission, were necessary parties. So also it was necessary for 
the petitioner to make specific averments against those individuals. 
As already discussed hereinabove, though a specific query was 
made in that regard, the learned Senior Counsel appearing on 
behalf of the petitioners, as that stage, fairly stated that no .such 
malafides are attributed in the memo of petition. In the light of 
this factual position, seeking review on the ground that there was 
a wrong deliberate evaluation of price bids by respondent No. I 
and the same act was malafide in order to favour the respondent 
No. 2 and to illegally oust the petitioner, in our view, is an 
imagination ofa fertile brain of the draftsman. 
14. We further find that the Review Application depicts total non-
application of mind. In paragraph No. 6.8 of the application, the
draftsman of the Review Application, has averred that the 
respondent No. 2 has not formed any JV /Consortium and as such, 
it was not eligible to bid in the tender process. We do hope that 
the draftsman of the Review Application understands the basic 
distinction between a Joint Venture/Consortium and an 
incorporation of a new company after merger of two companies 
into one. 
15. It is further to be noted that though the memo of petition. runs 
into 22 pages, the review application runs into 39 pages. We have 
no hesitation to say that the Review Application has been drafted 
without application of mind. The rules require that while filing a 
Review Application, a lawyer should certify that good grounds 
exist for seeking review of the order. We are at pains to say that 
in the present case the said certification has been done in the 
most casual manner, only to show compliance with the 
requirements of the rules."
CONSORTIUM OF TITAGARH FIREMA ADLER S.P.A. v. 
NMRCL [DIPAK MISRA, J.] 
9. On the basis of the aforesaid analysis, the High Court dismissed 
the application for review with costs of Rs. I lakh (Rupees One Lakh). 
10. We have heard Dr. Abhishek Manu Singhvi, learned senior 
counsel with Ms. Anannya Ghosh, learned counsel for the appellant in 
Civil Appeal Nos. 1353-1354 of 2017 and Mr. Raju Ramachandran, 
learned senior counsel with Mr. Ramendra Mohan Patnaik, learned 
counsel for the appellant in Civil Appeal No. 1355of2017, Mr. Mukul 
Rohatgi, learned Attorney General for India, Mr. Gopal Subramaniam, 
learned senior counsel with Mr. R.P. Gupta, learned counsel appearing 
for the I" respondent, Mr. Shyam Divan, learned senior counsel with 
Mr. S.S. Jauhar, learned counsel for the respondent No. 2. 
11. Assailing the defensibility of the order passed by the High 
Court, learned senior counsel for the appellant submitted that the bid of 
the respondent No. 2 is not that of a 'single entity' and it had relied on 
the experience of its subsidiaries; that it has not submitted the bid on the 
basis of its own experience but on the strength of the experience of the 
subsidiaries of the erstwhile parent/original companies, upon the merger 
of which respondent No. 2 came into existence, which is not only contrary 
to the eligibility and qualification criteria but also to the settled position of 
law which provide that unless the subsidiaries are constituents of the 
Joint Venture
(JV), their experience cannot be taken into consideration 
for the purpose of considering the experience of the holding company; 
that the respondent No. 2, on a standalone basis, does not possess the 
requisite experience as provided under the tender conditions; that the 
respondent No. 2 should have given its bid either as a JV or as a 
consortium together with its subsidiaries to avail the benefit of the 
experience of its subsidiaries; that there is a specific restriction on the 
bidder to take the experience of its subsidiaries, which are separate 
legal entities, without forming a consortium or JV; that the subsidiaries 
of respondent No. 2 are separate and independent legal entities and the 
supplies in respect of which experience is claimed by respondent No. 2 
were supplies not made by respondent No. 2 but by other independent 
legal entities; that respondent No. 2 does not have requisite facilities for 
manufacture of the car body on its own and it shall have to sub-contract 
the same to its subsidiary companies, which is violative of Clause 4.4 of 
the tender conditions of contract. In support of his submissions, learned 
senior counsel for the appellant has placed reliance on Ba/want Rai 
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SUPREME COURT REPORTS 
[2017] 5 S.C.R. 
Saluja and anotlzer v. Air India Ltd. and otlters5, Roltde and Schwarz 
Gmhli and Co. K.G. v. Airport Authority of lndia6 and Core Projects 
and Technologies Ltd. v. State of Bi/1ar and anotlter7• 
12. Mr. Gopal Subramaniam, learned senior counsel for the I st 
respondent, before placing his submissions, put forth the facts and 
canvassed that the project was funded by KfW Development Bank, 
Germany and as per clause lB 35.8, all stages of bid evaluation and 
contract award would have to be subject to a No Objection from KfW: 
that the appellant wrote to the l" respondent seeking amendment to 
clause 12.l of Annexure Ill-A (PQ-lnitial filter) i.e. "Operation 
Performance" clause according to which, as it then was, the bidder had 
to have satisfactorily delivered at least 30 metro cars outside the country 
of manufacture or delivered in India and sought inclusion of the condition 
that delivery to any of the G8 countries should also be treated as 
acceptable; that the request of the appellant was accepted and it became 
eligible to bid; that the l ''respondent extended the date of submission of 
tender from 141h June to 241h June at the request of the appellant; that all 
the bid documents were given to the independent General Consultant of 
the I" respondent consisting of Mis. Systra, Mis. RITES, Mis. AECOM 
and Mis. Egis for Pre-qualification (PQ) and Technical approval which 
held respondent No. 2 as qua!
ified and Appraisal and Tender Committee 
of the I SI respondent also gave their reports which were forwarded on 
29.8.2016 to Ktw Germany for its no-objection; that the bids, which 
were made on e-portal which is managed by the Government of 
Maharashtra, were opened on 29.9.2016 and the bid of respondent No. 
2 was found to be the lowest at Rs.851 crores, whereas the bid of the 
appellant was Rs.852 crores; that on 29.9.2016 and 3.10.2016, the 
appellant made representations to the I SI respondent stating that 
respondent No. 2 was not qualified as a holding company and could not 
have claimed benefit of experience of a subsidiary and sought documents 
relating to eligibility of respondent No. 2 vis-a-vis its experience; and 
that on 4.10.2016 the appellant filed the Writ Petition before the High 
Court contending, inter alia, that the appel !ant was not allowed to check 
the technical documents of respondent No. 2, clauses 25.1 and.25.3 
were not followed, bid -price being so close to the appellant's should 
have been re-evaluated and evaluation process and grant of tender in 
'(2014) 9 sec 407 
6(2014) 207 DLT I 
72011 (59) BUR 183
CONSORTIUM OF TITAGARH FIREMA ADLER S.P.A. v. 
349 
NMRCL [DIPAK MISRA, J.] 
favour of respondent No. 2 was ma la fide, which was dismissed by the 
A 
High Court vi de order dated 05.10.2016 holding that the evaluation of 
the bid was proper and appellant could not challenge clause 26, which 
mandated confidentiality of technical bids till grant of contract. 
13. Learned senior counsel would further contend that the 
respondent No. 2, being a company owned by Government of People's 
Republic of China, it clearly came within the ambit of clause 4.1 of the 
bid-document as a 'government-owned entity'. Learned senior counsel 
would urge that a single entity can bid for itself and it can consist of its 
constituents which are wholly owned subsidiaries and they may have 
experience in relation to the project and all the subsidiaries form a 
homogenous pool under its immediate control in respect of rights, liabilities, 
assets and obligations, that in view of Article 164 of the Articles of 
Association of respondent No. 2, its Board of Directors have been 
entrusted with the authority and responsibility to discharge all necessary 
and essential decisions and functions for the subsidiaries and, therefore, 
the experience of respondent No. 2's l 00% wholly owned subsidiaries 
ought to be considered as part of the parent company's experience; and 
that the term 'government owned entity' includes no bar against· a 
government owned entity and its subsidiaries. Learned senior counsel
referred to the history of doctrine oflifting the corporate veil and submitted 
that this Court has relaxed the principles governing lifting of corporate 
veil and relied on the authorities in State of U.P. v. Renusagar Power 
Co. 8 and New Horizom Ltd. (supra). Mr. Gopal Subramanium would 
further contend that the bid documents have been thoroughly examined 
by the !"respondent and it satisfied itselfofthe capability, ·experience 
and expertise of the successful bidder, i.e., respondent No. 2. and the 
thorough analysis of the technical qualification of respondent No. 2 is 
clear from the report of the independent General Consultant; that the 
experience of respondent No. 2 in supplying metro trains across the 
world exceeds the appellant's experience by a huge margin; that treating 
respondent No. 2 along with its 100% subsidiaries as one entity is 
supported by the fact that Delhi Metro Rail Corporation Ltd., which has 
on a similarly, if not same, worded bid-document granted the tender to 
respondent No. 2, who had also bid there as.a parent company claiming 
experience of and execution through I 00% wholly owned subsidiaries; 
that there is no bar whatsoever, express or implied, in the tender document 
'(I98&J4 sec 59 
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to treat the parent company along with its I 00% wholly owned 
subsidiaries as one entity; that the scheme of the bid document is such 
that which itself provides that parent company would have to perform 
the works under the agreement in case the subsidiary failed and in view 
of this, the objections raised by the appellant are hyper-technical. Learned 
senior counsel would further submit that this Court has consistently held 
that interference by the courts is required only when the decision taken 
by the owner is irrational or arbitrary, or is vitiated by bias, favouritism 
or malafide. He has placed reliance upon on the authorities inMontecar/o 
Ltd. v. NTPC Ltd. 9 , Michigan Rubber (India) Ltd. v. State of 
Karnataka' 0, Jagdish Manda/ v. State of Orissa & Ors." and Afcons 
Infrastructure Ltd. (supra). 
14. Mr. Shyam Divan, learned senior counsel for the respondent 
No. 2, submitted that the respondent No. 2, being a government entity, 
participated in the tender and gave all the details, which were duly 
accepted by the respondent No. I and after examining the entire details 
of supplies and commissioning of various contracts executed by the 
respondent No. 2 and its I 00% wholly owned subsidiaries issued Letter 
of Acceptance dated 5.10.2016 in its favour to execute the contract. 
Learned senior counsel further submitted that for the purposes of their 
experience in the present tender, respondent No.
2 had provided the 
details in Form 4.4 Attachment-I to the effect that it had supplied 606 
metro cars in the last I 0 years which is much higher than the appellant's 
experience which would be beneficial for the project and would further 
public interest. Mr. Divan, strongly relied on Article 164 of the Articles 
of Association of respondent No. 2, which was submitted along with the 
bid, and argued that the Board of Directors of respondent No. 2 has 
been entrusted with the complete right to make decisions for the company 
including subsidiaries and, therefore, as long as the entity is a government 
owned entity, it should include both the parent and its wholly owned 
subsidiaries. 
15. In reply to the submissions advanced by the respondent No. 1, 
Dr. Singhvi, learned senior counsel appearing for the appellant in Civil 
Appeal Nos. 1353-1354 of 2017 would submit that Clause 4.1 treats a 
government owned entity like any other bidder and does not give any 
9 2016 (10) SCALE 50 
"(2012) s sec 216 
11 (2007) 14 sec 517
CONSORTIUM OF TITAGARH FIREMA ADLER S.P.A. v. 
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NMRCL [DIPAK MISRA, J.] 
concession or preferential treatment to it and if a company cannot include 
its subsidiaries and count their experience as its own experience for the 
purpose of submitting a bid (without forming a consortium/JV), the same 
criteria applies to the government owned entity. He further referred to 
Clause !TB 43, 43.1to43.4, 39.3, 42.1, 42.2 and Clause 1.14 of the 
General Conditions of contract and submitted that in case of award of 
work, the joint and several responsibility and liability on all the members 
of the proposed JV/consortium in the event of default has to be fixed 
and such purpose would be defeated in the event if it is found that 
·respondent No. 2, having placed its bid as a single entity, is entitled to 
rely upon and surreptitiously include the experience of its subsidiary 
companies and it would be impossible to place responsibility and liability 
on the subsidiaries in the event the respondent No. 2 or its subsidiaries 
default in their obligations under the tender documents. Criticizing the 
letter dated 22.6.2016 written by respondent No. 2, it is submitted by 
learned counsel for the appellant that the letter is a unilateral 
communication to the 1" respondent and does not legally constitute a 
binding agreement and in the absence of adherence to prescribed formats 
under the tender documents, such a letter has no sanctity and cannot be 
treated as a substitute to be a legally
valid and binding agreement between 
the respondent No. 2 and its subsidiary companies inasmuch as the letter 
wrongly states that the experience of its subsidiaries is the experience 
of the parent as the holding company owns only shares in its subsidiary 
and being the owner of shares does not mean that the holding company 
owns the assets, liabilities and experience of the subsidiary and placed 
reliance on Mrs. Bacha F. Guzdar, Bombay v. Commissioner of 
Income Tax, Bombay' 2• 
16. Learned senior counsel would further contend that the 
respondent No. 2 has tried to couch within its own ambit, the experience 
of six of its subsidiaries and the entity designated by respondent No. 2 as 
the entity responsible for completion of work under the present tender 
i.e. Mis. CRRC Dalian Co. Ltd. does not have any prior experience at 
all, while the remaining five entities/subsidiaries may have had prior 
experience; that there is gross and manifest arithmetical error in service 
tax payable which results in the appellant's bid being lower than Rs.32.82 
crores; that there is suppression of serious material facts by respondent 
No. 2 regarding supply of defective metro cars by their subsidiaries in 
"AIR 1955 SC 74 
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Singapore and Hong Kong which had to be recalled and allegation of 
payment of kickbacks in Phillipines and these disclosures were required 
to be made in terms of Annexure lil of the tender documents, which 
would have required the I" respondent to disqualify respondent No. 2 
from the tender process. 
I 7. To appreciate the rival submissions raised at the Bar certain 
relevant conditions from the NIT are required to be appreciated. Clause 
4.1 deals with the eligibility criteria. It reads as follows:-
"4. I A bidder may be a firm that is a private entity, a government-
owned entity - subject to !TB 4.3 - or any combination of such 
entities in the form of a joint venture (JV) under an existing 
agreement or with the intent to enter into such an agreement 
supported by a letter of intent. In the case of a joint venture, a II 
members shall be jointly and severally liable for the execution of 
the contract in accordance with the contract terms. The JV shall 
nominate a representative who shall have the authority to conduct 
all business for and on behalf of any and all the members of the 
JV during the bidding process and, in the event the JV is awarded 
the contract, during contract execution. Unless specified in the 
BOS, there is no limit on the number of members in a JV." 
4.3 The Agency's eligibility criteria to bid are described in Section 
V - Eligibility criteria and social and environmental
responsibility." 
18. Placing reliance upon Clause4.1, it is contended by the learned 
senior counsel for the appellant that conditions embodied in the said 
clause clearly stipulate the conditions precedent to fulfil to earn the status 
of a consortium or a Joint Venture and the said postulates provide the 
distinctions, as regards the obligations, responsibilities, etc. to be fulfilled 
by a bidder who is a "'single entity" and a bidder who is a consortium or 
a Joint Venture. For the aforesaid purpose, our attention has been drawn 
to Clauses 4.7. 4.8 and 4.11. We have also been invited to peruse the 
Clauses 11.3.1.3, 11.3.1.4, 11.3.1.9, 12.2and43.3. 
I 9. Clauses I2 and 12.1 being relevant are reproduced below:-
"12. Delivery Record 
Has the bidder/consortium/joint venture ofits members, individually 
or jointly as a member of other consortia/joint venture have
CONSORTIUM OF TITAGARH FIREMA ADLER S.P.A. v. 
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NMRCL [DIPAK MISRA, J.] 
experience of and carried out vehicle design, interface (with other 
A 
designated contractors such as signaling, track, traction, etc.) 
assembly & supply, testing and commissioning of minimum of total 
60 metro (i.e. MRT, LRT, Suburban Railways or High Speed 
Railways) cars out of which minimum 30 cars shall be either 
stainless steel or aluminium in the last ten (I 0) years. 
12.1. Operation Performance 
Out of 60 or more cars commissioned in accordance with SN 12 
above, have minimum of total 30 metro (i.e. MRT, LRT, Suburban 
Railways or High Speed Railways) cars completed satisfactory 
revenue operation. 
* 
At least in one country outside the country of origin/ 
manufacture. 
* 
Or in India 
* 
Or at least in one G8 country viz. Canada, France, Germany, 
Italy, Japan, United Kingdom and United States in the last three 
(3) years". 
20. Relevant portion of Section V -Eligibility criteria and social 
and environmental responsibility is extracted below:-
"Bidders that are government-owned enterprises or institutions 
may participate only if they can establish that they (i) are legally 
and financially autonomous (ii) operate under commercial law. 
To be eligible, a government-owned enterprise or institution shall 
establish to the Agency's satisfaction, through all relevant 
documents, including its Charter and other information the Agency 
may request, that it: (i) is a legal entity separate
from their 
government (ii) does not currently receive substantial subsidies or 
budget support; (iii) operates like any commercial enterprise, and, 
inter alia, is not obliged to pass on its surplus to their government, 
can acquire rights and liabilities, borrow funds and be liable for 
repayment of its debts, and can be declared bankrupt." 
21. Clause 27 that deals with clarification of bids and Clause 29 
that deals with determination of responsiveness, being relevant, are 
reproduced below:-
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27. Clarification of Bids 
27.1 To assist in the examination, evaluation, and comparison of 
the bids, and qualification of the Bidders, the Employer may, at its 
discretion, ask any Bidder for a clarification of its bid, given a 
reasonable time for a response. Any clarification submitted by a 
Bidder that is not in response to a request by the Employer shall 
not be considered. The Employer's request for clarification and 
the response shall be in writing. No change, including any voluntary 
increase or decrease, in the prices or substance of the bid shall be 
sought, offered, or permitted, except to confirm the correction of 
arithmetic errors discovered by the Employer in the evaluation of 
the bids, in accordance with ITB 31. 
27 .2 If a Bidder does not provide clarifications of its bid by the 
date and time set in the Employer's request for clarification, its 
bid may be rejected. 
D 
29. Determination of Responsiveness 
E 
29.1 The Employer's determination of a bid's responsiveness is 
to be based on the contents of the bid itself, as defined in !TB 11. 
29.1.1 General Evaluation: Priorto the detailed evaluation of Bids, 
the Employer will determine whether each Bid: 
• 
has been properly signed; and 
• 
has been accompanied by a valid Bid Security; and 
• 
meets the Qualification (Initial Filter) Evaluation Criteria -
The Employer will evaluate the eligibility and acceptability 
F 
based on Initial Filter criteria
indicated in these documents. 
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The technical proposals of only those Bidders, who qualify in 
the Initial Filter evaluation, will be evaluated. 
• 
Signed copy of Statement of Integrity, Eligibility and Social 
and Environmental Responsib ii ity 
A 'NO' answer to any of the above items will disqualify the Bid/ 
Bidder. 
29.l.2 Evaluation of Technical Package: The Employer will 
evaluate the technical proposal to determine the technical suitability 
and acceptability as per Works Requirements - General
CONSORTIUM OF TITAGARH FIREMA ADLER S.P.A. v. 
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NMRCL [DIPAK MISRA, J.] 
Specifications and Technical Specifications of only such Bidders 
A 
who qualify based on BOS !TB 29.1.1 above. 
The Technical Proposal as submitted in accordance with BOS 
ITB Para 11.3.1 (including its relevant sub-paras) shall be evaluated 
for its conformity with the general and technical requirements as 
per Par 2, Sections VIl-A and VII-B, as well as against the back 
B 
of the parameters provided in Partl, Annexure IV-C. 
Furthermore, the adequacy and appropriateness of the Bidder's 
responses to the related requirements in Part I shall be evaluated. 
29.2 A substantially responsive bid is one that meets the 
requirements of the bidding documents without material deviation, c 
reservation, or omission. A material deviation, reservation, or 
omission is one that, 
(a) if accepted, would: 
(i) 
Affect in any substantial way, the scope, quality, or 
performance of the Works specified in the contract; or 
0 
(ii) Limit in any substantial way, inconsistent with the bidding 
documents, the employer's rights or the bidder's 
obligations under the proposed contract; or 
(b) if rectified, would unfairly affect the competitive position of E 
other bidders presenting substantially responsive bids. 
29.2. l Evaluation of qualifying conditions: Bids that include 
qualifications which: 
1. seek to shift to the Employer, another government agency or 
another contractor all or part of the risk and/or
liability allocated 
F 
to the Contractor in the Bidding Documents; or 
2. which includes a deviation from the Bidding Documents which 
would render the Works, or any part thereof, unfit for their intended 
purpose; or 
3. fails to fulfill the eligibility criteria as mentioned in SN 12, 12.1 
and 13 of "(A) FILTER OF APPLICANTS - CHECKLIST of 
INITITAL FILTER EVALUATION CRITERIA"; or 
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' 
4. which fails to commit to the date specified for the completion 
of the Works as specified under Key Dates 6 and 9 under Section 
IX. Particular Conditions (PC) Part A - Contract Data 'Table: 
Summary of Sections' 
will be deemed non-conforming and shall be rejected. 
29.3 The Employer shall examine the technical aspects of the bid 
submitted in accordance with ITB 16, in particular, to confirm 
that all requirements of Section VII, Works Requirements have 
been met without any material deviation, reservation or omission. 
29.4 Bids which are: 
• not fulfilling the General Evaluation Criteria as per ITB 29. l. I 
above, 
• not substantially responsive as per !TB 29.2 above 
• having material deviation or reservation as per !TB 29 .2 above 
• not fulfilling the qualifying condjtions as per !TB 29.2. I above, 
and 
• not fulfilling the Employer's Requirements - General 
Specification and Technical Specification as per !TB 29.1.2 
above will be deemed non-conforming and shall be rejected 
by the Employer, and shall not be al lowed subsequently to be 
made responsive by correction or withdrawal of the 
nonconforming deviation or reservation. 
29.5 If any Bid is rejected, pursuant to !TB 29.4 above, the 
Financial Package of such Bidder shall be returned unopened. 
29.6 Bidders may note that pursuant to their qualification in the 
'Initial Filter Evaluation Criteria' and 'Technical Evaluation' as 
per !TB
29.4 above, in case the Bidder(applies to each individual 
member in case of a Joint Venture/Consortium) is debarred/ 
blacklisted by Government oflndia/State Government/Government 
undertaking after the due date of submission of Bid but before 
opening of financial package by NMRCL, they shall inform the 
same to NMRCL in writing within 5 working days of issue of 
such debarment, failing which it will be considered that the Bidder 
has willfully concealed the information and the Bidder shall be
CONSORTIUM OF TITAGARH FIREMA ADLER S.P.A. v. 
NMRCL [DIPAK MISRA, J.) 
solely responsible for al'l implications that may arise in accordance 
with the conditions of this Bid. Any such debarment will result in 
disqualification of the Bidder and the Financial Package of such 
Bidder shall be returned unopened." 
22. As the learned senior counsel has also stressed upon Clause 
4.11 of the Technical Proposal, we think it apt to extract the relevant 
part of the said clause:-
"l. A notarized copy of Consortium Agreement relating to the 
composition of the bidder shall be submitted, if a bidder is a 
consortium. Should the bidder be an entity established or to be 
established to bid for this contract, details of the shareholders' 
agreement or proposed shareholders' agreement shall be supplied 
together with the percentage participation and percentage equity 
in the agreements. 
2. The contractual arrangements and copies of agreements in 
relation thereto must, as a minimum, provide information on all 
members or participants involved, their respective participation in 
the Bid, the management structure, ownership and control of the 
members or participants comprising the bidder and the name of 
the lead member who would have overall lead management 
responsibility for the Works, the registered addresses of all parties 
and the names of their respective senior partners, chairmen or 
managing directors as appropriate. Such agreements should also 
reflect the joint and several
liabilities of the members to the 
Employer in the vent that the contract is awarded to them and 
provide "deadlock" provisions in the event that decisions of the 
Consortium cannot be reached by unanimous agreement." 
23. As the uncurtained facts would reveal, on 17.02.2016 the 
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appellant wrote to the I" respondent seeking amendment to the "operation 
performance clause", i.e., Clause 12. l of the Annexure III-A (PQ-lnitial 
Filter). According to the said Clause, the bidder is required to have 
satisfactorily delivered at least 30 metro cars outside the country of G 
manufacture or delivered in India. The amendment that was sought 
related to inclusion of the condition that delivery to any of the GS countries 
should also be treated as acceptable. Such an amendment was for the 
appellant's merged entity, which gave it the requisite experience, had 
manufactured and delivered metro cars only in GS countries. The request 
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of the appellant was accepted by the employer and supply to any of the 
G8 countries was included as permissible. That apart, the appellant's 
request seeking extension of time to bid was also acceded to and 
accordingly time was extended and final date of submission was declared 
to be 08.07.2016. The time that was fixed at 4 p.m. was extended till 7 
p.m. at the request made by the appellant. The purpose of narrating 
these aspects is only to highlight that the allegations of mala fide are 
farther from the truth. 
24. The core issue, as we perceive, pertains to acceptance of the 
technical bid of the respondent No. 2 by the I" respondent and we are 
required to address the same solely on the touchstone of eligibility criteria 
regard being had to the essential -€Onditions. The decision on other 
technical aspects, as we are advised at present, is best left to the experts. 
We do not intend to enter into the said domain though a feeble attempt 
has been made on the said count. 
25. The anchored submission by the learned senior counsel for 
the appellant is thatthe respondent No. 2 does not really fulfil the eligibility 
criteria but the 1 '' respondent, for some unfathomable reason, has 
deliberately closed its eyes to the fact that has been projected and adroitly 
conferred the status of single entity on the 2"d respondent. 
26. What is urged before this Court is that the respondent No. 2 
E 
could not have been
regarded as a single entity and, in any case, it could 
not have claimed the experience of its subsidiaries because no consortium 
or joint venture with its subsidiaries was formed. With regard to 
relationship of holding and subsidiary companies, we have been 
commended to the authorities in Ba/want Rai Saluja (supra) and also 
F 
the judgment of the Delhi High Court in Roltde and Schwarz .Gmblt 
and Co. K.G. (supra). The essential submission is that respondent No. 
2 as the owner of the subsidiary companies including their assets and 
liabilities, cannot claim their experience and there is necessity to apply 
the principle of "lifting the corporate veil", as has been laid down in 
Renusagar Power Co. (supra) and Life Insurance Corporation of 
G 
India v. Escorts Ltd. and others 13 • It is also argued that the Government 
owned entity cannot be treated differently, for a Government owned 
entity is distinct from the Government and, forthe said purpose, inspiration 
has been drawn from the authority in Western Coalfields Limited v. 
H 
"(I 986) 1 sec 264
CONSORTIUM OF TITAGARH FIREMA ADLER S.P.A. v. 
NMRCL [DIPAK MISRA, J.] 
Special Area Development Authority, Korba and anotlter14 • It has 
also been urged that when the tender has required a particular thing to 
be done, it has to be done in that specific manner, for the law envisages 
that 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. For the aforesaid purpose, 
inspiration has been drawn from the authority in Central Coalfields 
Ltd. (supra) wherein reliance has been placed on Nazir Ahmad v. King 
Emperor15 • 
27. Before we proceed to deal with the concept of single entity 
and the discretion used by the I" respondent, we intend to deal with role 
of the Court when the eligibility criteria is required to be scanned \Ind 
perceived by the Court. In Montecarlo Ltd. (supra), the Court referred 
to TATA Cellular (supra) wherein certain principles, namely, the modern 
trend pointing to judicial restraint on administrative action; the role of the 
court is only to review the manner in which the decision has been taken; 
the lack of expertise on the part of the court to correct the administrative 
decision; the conferment of freedom of contract on the Government 
which recognizes a fair play in the joints as a necessary concomitant for 
an administrative body functioning in an administrative sphere or quasi-
administrative sphere, were laid down. It was also stated in the said 
case that the administrative
decision must not only be tested by the 
application ofWednesbury principle ofreasonableness but also must be 
free from arbitrariness not affected by bias or actuated by mala tides. 
The two-Judge Bench took note of the fact that in Jagdislt Manda/ 
(supra) it has been held that, ifthe decision relating to award of contract 
is bona fide and is in public interest, courts will not, in exercise of power 
of judicial review, interfere even if a procedural aberration or error in 
assessment or prejudice to a tenderer, is made out. The decisions in 
Master Marine Services (P) Ltd. v. Metcalfe & Hodgkinson (P) 
Ltd. and a11other16, B.S.N. Joshi & Sons Ltd. v. Nair Coal Services 
Ltd. and otlzers 17 and Michigan Rubber (India) Ltd. (supra) have 
been referred to. The Court quoted a passage from A/cons 
Infrastructure Ltd. (supra) wherein the principle that interpretation 
placed to appreciate the tender requirements and to interpret the 
documents by owner or employer unless mala fide or perverse in 
"(1982) 1sec125 
15 AIR 1936 PC 253 
"(2005) 6 sec 138 
11 (2006) 11 sec 548 
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understanding or appreciation is reflected, the constitutional Courts should 
not interfere. It has also been observed in the said case that 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. 
After referring to the said authority, it has been ruled thus: 
"24. We respectfully concur with the aforesaid statement of law. 
We have reasons to do so. In the present scenario, tenders are 
floated and offers are invited for highly complex technical subjects. 
It requires understanding and appreciation of the nature of work 
and the purpose it is going to serve. It is common knowledge in 
the competitive commercial field that technical bids pursuant to 
the notice inviting tenders are scrutinized by the technical experts 
and sometimes third party assistance from those unconnected with 
the owner's organization is taken. This ensures objectivity. Bidder's 
expertise and technical capability and capacity must be assessed 
by the experts. In the matters of financial assessment, consultants 
are appointed. It is because to check and asceftain that technical 
ability and the financial feasibility have sanguinity and are workable 
and realistic. There is a multi-prong complex approach; highly 
technical in nature. The tenders
where public largesse is put to 
auction stand on a different compartment. Tender with which we 
are concerned, is not comparable to any scheme for allotment. 
This arena which we have referred requires technical expertise. 
Parameters applied are different. Its aim is to achieve high degree 
of perfection in execution and adherence to the time schedule. 
But, that does not mean, these tenders wi II escape scrutiny of 
judicial review. Exercise of power of judicial review would be 
called for if the approach is arbitrary or malafide or procedure 
adopted is meant to favour one. The decision making process 
should clearly show that the said maladies are kept at bay, But 
where a decision is taken that is manifestly in consonance with 
the language of the tender document or subserves the purpose 
for which the tender is floated, the court should follow the principle 
of restraint. Technical evaluation or comparison by the court would 
be impermissible. The principle that is applied to scan and 
understand an ordinary instrument relatable to contract in other 
spheres has to be treated differently than interpreting and
CONSORTIUM OF TITAGARH FIREMA ADLER S.P.A.· v. 
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NMRCL [DIPAK MISRA, J.] 
appreciating tender documents relating to technical works and 
A 
projects requiring special skills. The owner should be allowed to 
carry out the purpose and there has to be allowance of free play 
in the joints." 
28. In Tamil Nadu Generation and Distribution Corporation 
Ltd. (TANGEDCO) rep. by its Chairman & Managing Director and B 
another v. CSEPDI-Trishe Consortium, rep. by its Managing 
Director and anotfter18, the Court, after referring to Jagdish Manda/ 
(supra) and taking note of the complex fiscal evaluation and other aspects, 
held: 
"36 .... At this juncture we are obliged to say that in a complex 
fiscal evaluation the Court has to apply the doctrine of restraint. 
Several aspects, clauses, contingencies, etc. have to be factored. 
These calculations are best left to experts and those who have 
knowledge and skills in the field. The financial computation involved, 
the capacity and efficiency of the bidder and the perception of 
feasibility ofcompletion of the project have to be left to the wisdom 
of the financial experts and consultants. The courts cannot really 
enter into the said realm in exercise of power of judicial review. 
We cannot sit in appeal over the financial consultant's assessment. 
Suffice it to say, it is neither ex facie erroneous nor can we perceive 
as flawed for being perverse or absurd." 
29. In Reliance Telecom Ltd. and another v. Union of India 
and
another19, the Court referred to the authority in Asia Foundation 
& Construction Ltd. v. Trafalgar House Construction (I) Ltd. and 
otllers20 wherein it has been observed that though the principle of judicial 
review cannot be denied so far as exercise of contractual powers of 
Government bodies are concerned, but it is intended to prevent 
arbitrariness or favouritism and it is exercised in the larger public interest 
or if it is brought to the notice of the court that in the matter of award of 
a contract power has been exercised for any collateral purpose. 
Thereafter, the Court in Reliance Telecom Ltd. (supra) proceeded to 
state thus: 
"75 .... In the instant case, we are unable to perceive any 
arbitrariness or favouritism or exercise of power for any collateral 
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purpose in the NIA. In the absence of the same, to exercise the 
power of judicial review is not warranted. In the case at hand, we 
think, it is a prudent decision once there is increase of revenue 
and expansion of the range of serv~ce." 
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And again: 
"76. It needs to be stressed that in the matters relating to complex 
auction procedure having enormous financial ramification, 
interference by the Courts based upon any perception which is 
thought to be wise or assumed to be fair can lead to a situation 
which is not warrantable and may have unforeseen adverse impact. 
It may have the effect potentiality of creating a situation of fiscal 
imbalance. In our view, interference in such auction should be on 
the ground of stricter scrutiny when the decision making process 
commencing from NIA till the end smacks of obnoxious 
arbitrariness or any extraneous consideration which is perceivable." 
30. The learned counsel for the appellants invited our attention to 
the authority in W.B. Electricity Board v. Pmel Engineering Co. Ltd.2' 
wherein it has been ruled: 
"24 .... The appellant, Respondents I to 4 and Respondents 10 
and 11 are all bound by the ITB which should be complied with 
scrupulously. In a work of this nature and magnitude where bidders 
who fulfil prequalification alone are invited to bid, adherence to 
the instructions cannot be given a go-by by branding it as a pedantic 
approach, otherwise it
will encourage and provide scope for 
discrimination, arbitrariness and favouritism which are totally 
opposed to the rule of law and our constitutional values. The very 
purpose of issuing rules/instructions is to ensure their enforcement 
lest the rule of law should be a casualty. Relaxation or waiver of 
a rule or condition, unless so provided under the JTB, by the State 
or its agencies (the appellant) in favour of one bidder would create 
justifiable doubts in the minds of other bidders, would impair the 
rule of transparency and fairness and provide room for 
manipulation to suit the whims of the State agencies in picking 
and choosing a bidder for awarding contracts as in the case of 
distributing bounty or charity. In our view such approach should 
always be avoided. Where power to relax or waive a rule or a 
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CONSORTIUM OF TITAGARH FIREMA ADLER S.P.A. v. 
363 
NMRCL [DIPAK MISRA, J.] 
condition exists under the rules, it has to be done strictly in 
A 
compliance with the rules. We have, therefore, no hesitation in 
concluding that adherence to the !TB or rules is the best principle 
to be followed, which is also in the best public interest. 
x 
x 
x 
x 
x 
31 .... Thae Project undertaken by the appellant is undoubtedly 
for the benefit of the public. The mode of execution of the work 
of the Project should also ensure that the public interest is best 
served. Tenders are invited on the basis of competitive bidding 
for execution of the work of the Project as it serves dual purposes. 
On the one hand it offers a fair opportunity to all those who are 
interested in competing for the contract relating to execution of 
the work and, on the other hand it affords the appellant a choice 
to select the best of the competitors on a competitive price without 
prejudice to the quality of the work. Above all, it eliminates 
favouritism and discrimination in awarding public work,:; to 
contractors .... Merely because a bid is the lowest the requirements 
of compliance with the rules and conditions .... " 
st 
31. Having stated this, we have to see, how the 1 respondent 
has perceived the offer of the respondent No. 2 in the backdrop of the 
tender conditions. It is not in dispute that the project in question has 
been funded by KfW Development Bank, Germany and as per Clause 
!TB 35.8, it is
necessary at all stages of bid evaluation and contract 
award has to be subject to no-objection from KfW Development Bank. 
Emphasis has been laid on the approach of the High Court which has 
taken note of the fact that the respondent No. 2 had been awarded the 
tender by the Delhi Metro Rail Corporation. It has also been highlighted 
that the papers relating to the financial bid along with report were 
forwarded to KfW which gave its no-objection. Be it noted, the appellants 
have been quite critical about the acceptance of the offer and the 1st 
respondent has given a numberofreasons to justify the same. As indicated 
earlier, we are only concerned with the eligibility criteria and not with 
the fiscal aspect. 
32. Respondent No. 2. as is evident, is a company owned by the 
People's Republic of China and, therefore, it comes within the ambit of 
Clause 4.1 of the bid document as a Government owned entity. We 
have already reproduced the said clause in earlier part of the judgment. 
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SUPREME COURT REPORTS 
[2017] 5 S.C.R. 
As perceived by the 1st respondent, a single entity can bid for itself and 
it can consist of its constituents which are wholly owned subsidiaries 
and they may have experience in relation to the project. That apart, as is 
understood by the said respondent, where the singular or unified entity 
claims that as a consequence of merger, all the subsidiaries form a 
homogenous pool under its immediate control in respect of rights, liabilities, 
assets and obligations, the integrity of the singular entity as owning.such 
rights, assets and liabilities cannot be ignored and must be given effect. 
While judging the eligibility criteria of the second respondent, the l '' 
respondent has scanned Article 164 of the Articles of Association of the 
respondent No. 2 which are submitted along with the bid from which it is 
evincible that the Board of Directors of the respondent No. 2 has been 
entrusted with the authority and responsibility to discharge all necessary 
and essential decisions and functions for the subsidiaries as well. 
According to the 1st respondent, the term "Government owrted entity" 
would include a government owried entity and its subsidiaries and there 
D 
can ~e no matter of doubt that the identity of the entities as belonging to 
the Government when established can be treated as a Government owned 
entity and the experience claimed by the parent of the subsidiaries can 
be taken into consideration. Learned
senior counsel for the 1st respondent 
has drawn our attention to the ''lifting of corporate veil" principle or 
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doctrine of "piercing the veil" and in that context, reliance has been 
placed on Litt/ewoods Mail Order Stores, Ltd. v. McGregor22, DHN 
Food Distributors Ltd. a11d others v. London Boro11gh of Tower 
Hamlets 23 and Harold Holdsworth & Co. (Wakefield) Ld. v. 
Caddies24• Learned senior counsel has also placed reliance upon the 
principles stated in Re11usagar Power Co. (supra) that"'have been 
reiterated in New Horizons Ltd. (supra). In the written submission tiled 
on behalf of the 1" respondent, the relevant paragraphs from Re1111sagar 
Power Co. (supra) have been copiously quoted. It is also urged that in 
the current global economic regime the multinational corporations conduct 
their business through their subsidiaries and, therefore, there cannot be 
a hyper-technical approach that eligibility of the principal cannot be taken 
cognizance of when it speaks of the experience of the subsidiaries. It is 
also contended by Mr. Subramaniam that in the context of fraud or evasion 
of legal obligations, the doctrine of"piercing the veil" or "lifting of the 
22 (1969)3AllER855 
23 ( 1976) 3 All ER 462 
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"(1955) I WLR 352
CONSORTIUM OF TITAGARH FIREMA ADLER S.P.A. v. 
NMRCL [DIPAK MISRA, J.] 
corporate veil" can be applied but the said principle cannot be taken 
recourse to in a matter of the present nature. 
" 
33. With regard to the satisfaction of the 1 respondent, it has 
been highlighted before us that the said respondent had thoroughly 
examined the bid documents and satisfied itself about of the capability, 
experience and expertise of the respondent No. 2 and there has been a 
thorough analysis of the technical qualification of the respondent No. 2 
by the independent General Consultant and the reports of the Appraisal 
st 
. 
and Tender Committee of the I respondent and also the no-objection 
has been received from KfW Development Bank, Germany which is 
funding the entire project. Narrating the experience of the respondent 
No. 2, it has been stated in the written submission filed on behalf of the 
1st respondent: 
"36. That it is further clear from the record that besides being the 
lowest bidder, the experience of R 2 in supplying Metro Trains 
across the world exceeds the Petitioner's experience by a huge 
margin. Where for clause 12, R 2 has shown a figure of 594 
Metro Cars, Petitioner has shown only 72 Dirs~ and for clause 
12.1 where R 2 has shown 432 Cars, Petitioner has again shown 
only 72 Cars. This vast experience of R 2 would be beneficial for 
the project and would further public interest. 
37. That R 1 without any malice, or malafide has treated R 2 
along with its I
00% subsidiaries as one entity. This understanding 
of the clause has been at the ends of both pa11ies viz. R I and R 
2, who were ad idem vis-ii-vis the eligibility of the parent company 
to bid using the experience and executing the contract through its 
various 100% wholly owned subsidiaries. 
38. That the above understanding of R 1 of treating R 2 along 
with its I 00% subsidiaries is supported by the understanding of 
the Delhi Metro Rail Corporation Ltd., which has on a similarly, if 
not same, worded bid-document granted the tender/agreement to 
R 2, which had even there bid as a parent company claiming 
experience of and execution through 100% wholly owned 
subsidiaries. 
39. That moreover, there is no bar, whatsoever, express or implied, 
in the tender document to treat the parent company along with its 
100% wholly owned subsidiaries as one entity. Therefore, the 
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SUPREME COURT REPORTS 
[2017] 5 S.C.R. . 
scope of judicial review should be limited in adjudging the decision 
taken by R 1 in the best interest of the project, and thereby, the 
public. 
40. That arguendo, no project, whatsoever, has been caused to 
the project or to other bidders including the Petitioner by the above 
understanding of the tender conditions by R 1. It is humbly 
submitted that R 2 fulfilled all the technical requirements. The 
bid-document itself provided for bidding as a consortium, and did 
not require in such a case fulfilment of any material condition, 
which if not fulfilled would prejudice any parties or the projyct. 
Moreover, the scheme of the bid-document is such that it itself 
provides for a Parent Company Guarantee. According to this 
Parent Company Guarantee Form, a parent company would have 
to perform the works under the agreement in case the subsidiary 
failed. Therefore, tne objections raised by the Petitioner are hyper-
technical and have been raised only to stall the project once it 
was found to be unsuccessful." 
34. As is noticeable, there is material on record that the respondenr 
. No. 2, a Government company, is the ownerofthe subsidiary companies 
and subsidiary companies have experience. The 1st respondent, as it 
appears, has applied its commercial wisdom in the understanding and 
E 
interpretation which has been given the concurrence by the concerned 
Committee and the financing bank. We are disposed to think
that the 
concept of "Government owned entity" cannot be conferred a narrow 
construction. It would include its subsidiaries subject to the satisfaction 
of the owner. There need not be a formation of a joint venture or a 
consortium. In the obtaining fact situation, the interpretation placed by 
F . the 1st respondent in the absence of any kind of perversity, bias or ma la 
fide should not be interfered with in exercise of power of judicial review. 
Decision taken by the 1st respondent, as is perceptible, is keeping in 
view the commercial wisdom and the expertise and it is no way against 
the public interest. Therefore, we concur with the view expressed by 
G 
the High Court. 
35. Resultantly, the appeals, being devoid of merit, are dismissed. 
In the facts and circumstances of the case, there shall be no order as to 
costs. 
Kalpana K. Tripathy 
Appeals dismissed.