NHAI’s decision cannot be questioned but decision-making process can be subjected to judicial review: Delhi High Court

 IN THE HIGH COURT OF DELHI AT NEW DELHI W.P.(C) 3743 2020 Date of decision: 14th December 2020 IN THE MATTER OF: TRACK AND TOWERS INFRATECH P LTD ..... Petitioner Through Mr. R.K. Sanghi and Mr. Ishan Sanghi Advocates. NATIONAL HIGHWAY AUTHORITY OF INDIA ..... Respondent Through Mr. Dayan Krishnan Sr. Advocate with Ms. Madhu Sweta Ms. Raveena Dewan Advocates. and HON BLE MS. JUSTICE HIMA KOHLI HON BLE MR. JUSTICE SUBRAMONIUM PRASAD SUBRAMONIUM PRASAD J. communication No. NHAI KNT Aurad Bidar Mainwork 2020 153524 dated 18.6.2020 issued by the respondent No.1 NHAI holding its bid as non responsive for Two laning with paved shoulder from km.0.000 to km.45.878 of Aurad Bidar Section of NH 161A on EPC Mode under Bharatmala Pariyojana in the State of Karnataka. The brief facts of the case are that on 17.01.2020 reference No. NHAI KNT Aurad Bidar Mainwork 2020 153524. The relevant clauses of W.P.(C) 3743 2020 the tender which are necessary for the purpose of deciding this case read as 2.2.2 Qualification requirements of Bidder: 2.2.2.2 Technical Capacity i. For the past experience( the "Technical Capacity") the Bidder shall over financial years the Bid Due Date have received payments for construction of Eligible project(s) or has undertaken construction works by itself in a PP project such that the sum total thereof as further adjusted in accordance with clause 2.2.2.5&is more than Rs.504.96 crore(the "Threshold Technical Capacity"). ii. Provided that at least one similar work of 25% of Estimated Project Cost of Rs. 84.16 crore shall have been completed from the Eligible Projects in category 1 and or category 3 specified in clause 2.2.2.5. For this purpose a project shall be considered to be completed if more than 90% of the value of work has been completed and such completed value of work is equal to or more than 25% of the estimated project cost. The sole Bidder or in case the Bidder being a Joint Venture any shall necessarily member of Joint Venture demonstrate additional i.e. shall have the Bid Due Date similar Major Bridge ROB Flyover having span equal to or greater than 16.25 meters. iii. Deleted. W.P.(C) 3743 2020 iv. The up dation factor to update the price of the eligible projects for the year indicated in table Up dation factor 1.05 Year 1 Year 2 Year 3 Year 4 Year 5 Categories and factors for evaluation 2.2.2.5 of Technical Capacity: Subject to the provisions of Clause 2.2.2 the following categories of experience would qualify as Technical Capacity and eligible experience to eligible projects as stipulated in Clauses 2.2.2.6 & the "Eligible Projects"). In case the Bidder has experience for each category would be computed as per weight of following factors to arrive at its aggregated Eligible Experience: in relation categories experience on Eligible Project in Highway sector that qualify under Clause 2.2.2.6Project in core sector that qualify under Clause 2.2.2.6Construction in Highway sector that qualify under Clause 2.2.2.6Construction in core sector that qualify under Clause 2.2.2.6ii. The Technical capacity in respect of an Eligible Project situated in a developed country which is a W.P.(C) 3743 2020 member of OECD shall be further multiplied by a factor of 0.05 and the product thereof shall be the Experience Score for such Eligible Project. iii. For the purpose of this RFP: a) highways sector would be deemed to include highways expressways bridges tunnels runways railways metro rail and other ports construction cost of Jetties any other linear infrastructure including bridges etc.) and b) core sector would be deemed to include civil construction cost of power sector commercial setups airports industrial parks estates logistic parks pipelines irrigation water supply sewage and real estate development. In case of projects executed by applicant under category 3 and 4 as a member of Joint Venture the project cost should be restricted to the share of the applicant in the joint venture for determining eligibility as per provision under clause 2.2.2.23743 2020 works shall be considered as eligible projects in case of Maintenance works to be taken up on EPC mode. III. The works such as Improvement in Riding Quality workshall be considered for Technical Capacity 2.2.2.2 in case of Maintenance works to be taken up on EPC mode. IV. Project in Highway sector shall constitute the following for the purpose of considering under category 1 & 3 as applicable if:] i. widening reconstruction up gradation works on NH SH or on any category of road taken up under CRF ISC EI SARDP LWE ii. Widening reconstruction up gradation works loan assistance on MDRs with multilateral agencies or on BOT basis iii. widening reconstruction up gradation work of roads in Municipal corporation limits construction of Bypasses. construction of stand alone bridges ROBs tunnels w.r.t. roads. v. Long term OMT works of NHAI MoRT&H. road road city V. The projects with the title of RIDF PMGSY road roads municipality road Bridges for railway line work of metro rails real estate projects which demonstrate road development construction bridges or culverts may be considered under category 4. In case both the estimated cost of project and revised cost of project are provided the revised cost of project shall be considered for evaluation. " emphasis added) W.P.(C) 3743 2020 The petitioner submitted its bid and in the Pre Bid Meeting it raised a query as to whether construction of railway tracks is considered a “similar work” for qualifying in the eligibility criteria. The said query was replied to by the respondent NHAI in the following words: Name of the work: Two laning with paved shoulder from km.0.000 to km.45.878 of Aurad Bidar Section of NH 161A under Bharatmala Pariyojana in the State of Karnataka on EPC Mode. Ref: Bidar Mainwork 2020 153524 dated 17.01.2020. Reply to the Pre Bid Query Clause No. 2.2.2.2and Clause 2.2.2.5Provided that at least one similar work of 25% of Estimated Project Cost Rs. 84.16 crore shall have been completed from the eligible Projects in category 1 and or Category 3 specified in Clause 2.2.2.5. For this purpose a project shall be considered to be completed if more than 90% of the value of work has been completed and such completed value of work is equal to or more than 25% of the estimated project cost. Refer clause 2.2.2.5(a) which is amply Experience over the past 5 financial years preceding the bid due date shall be considered for evaluating the As per clause 2.2.2.5 i) Railway works are under category 1 3. Request you to clarify whether construction of Railway tracks are considered as similar work for eligibility criteria In continuation to the above please clarify the completion date for the certificate should be current year before the bid submission or previous financial year W.P.(C) 3743 2020 Records show that on 12.05.2020 the respondent NHAI had sought a clarification from the petitioner as to how the projects which it had executed satisfies the terms and conditions specified in the tender document. The respondent s letter dated 12.05.2020 reads as under: Sub: Two laning with paved shoulder from km.0.000 to km.45.878 of Aurad Bidar Section of NH 161A on EPC Mode under Bharatmala Pariyojana in the State of Karnataka Query on evaluation of Technical Bids BIDAR 2020 147603 dated 17.01.2020. This has reference to your bid submitted for the subject project. The online bids were opened on 19.03.2020 at 11:30 AM at NHAI HQ. The Evaluation Committee has raised the following queries vide letter no.151446 dated 20.03.2020. Annex IV Project Code A B C D I: Please clarify why project should not be considered under category 4. Project Code E F G H: The scope of Project is majorly earthwork which does not fall under category of eligible project. Please clarify why the project should be considered or determining technical capacity. 2. You were requested to submit your reply latest by 5:00 PM on 24.03.2020 which was further extended upto 07.04.2020 due to lockdown. Now since the lockdown has been partially opened in many states therefore it is requested to submit your replies for the above observations latest by 20.05.2020. It may be noted that no further extensions W.P.(C) 3743 2020 will be given for submission of reply of the queries and evaluation will be done for the bidders who s replies have been received. The bidders who have not till 20.05.2020 will be considered as non responsive." their replies The petitioner gave its reply on 15.05.2020 stating inter alia that under Clause 2.2.2.5(a) highway sector includes the projects involving construction re construction of railway tracks yards for keeping containers etc. and therefore the works mentioned by it are qualified to be considered under Category 3. The respondent NHAI declared the result of the technical evaluation on 18.06.2020 and the petitioner was disqualified on the ground that its bid did not satisfy the conditions prescribed in Clause 2.2.2.2of the tender. On a query raised by the petitioner as to why it has been disqualified the respondent NHAI replied on 25.06.2020 stating that “the completed „construction re construction of railway tracks’ railway projects have been considered in category 3 but such projects cannot be construed as similar work as the nature of work does not pertain to construction of Highways and railway works cannot be considered under similar capacity." The result of the technical evaluation dated 18.06.2020 whereby the bid of the petitioner was held to be non responsive has been challenged in the instant petition. Arguing for the petitioner Mr. Sanghi learned counsel contended that Clause 2.2.2.5of the tender categorically states that the highways sector would be deemed to include highways expressways bridges tunnels runways railways 3743 2020 keeping containers etc.) metro rail and other ports. In view of the clear stipulation rejection of the petitioner s bid on the ground construction re construction of the railway tracks cannot be construed as a „similar work‟ is completely erroneous. He argued that when a specific query was raised for a clarification as to whether construction of Railway tracks is considered as „similar work‟ for qualifying the eligibility criteria the respondent NHAI stated that Clause 2.2.2.5 (a) is amply clear. He therefore contends that to the specific query raised by the petitioner the respondent NHAI having stated that Clause 2.2.2.5 (a) is the answer then the obvious conclusion is that highway sector would be deemed to include projects including highways expressways bridges tunnels runways railwaysof over Rs.495.51 crores in the last five financial years preceding the bid due date. Apart from this the second criteria which the bidder has to satisfy is that it had to undertake "at least one similar work" of 25% of Estimated Project Cost of Rs. 84.16 crores Rupees eighty four crore and sixteen lakh only). He submitted that a perusal of Clause 2.2.2.5 would show that railway projects would be eligible for being considered as projects in the highway sector as they would fall in Category 1 and or Category 3 but Clause 2.2.2.5(IV) provides that for the purpose of consideration under Category 1 and or 3 the bidder has to W.P.(C) 3743 2020 satisfy the conditions prescribed in Clause 2.2.2.5 (IV). He contended that if Clause 2.2.2.5 (IV) is read with Clause 2.2.2.2 then the bidder should have executed any of the five works referred to therein and since the petitioner has not executed any of the works mentioned in Clause 2.2.2.5 (IV) it cannot be said to have qualified. Mr. Krishnan concluded by submitting that the decision making process adopted by NHAI in the technical evaluation has been fair unbiased and reasonable it does not warrant any interference under Article 226 of the Constitution of India. In rejoinder Mr. Sanghi learned counsel for the petitioner sought to contend that the Clause 2.2.2.2when read with Clauses 2.2.2.5(a) and Clauses 2.2.2.5 (IV) is ambiguous because once it is mentioned that the highway sector includes construction re construction of railway tracks then the petitioner could not have been disqualified. He placed reliance on the judgment of the Supreme Court in Reliance Energy Vs. Maharashtra State Road Development Corp Ltd. reported as8 SCC 1 to canvass that if there is vagueness or subjectivity in the norms specified then in such a case courts must interfere otherwise it would result in arbitrariness and not provide a level playing field to all the bidders. 11. We have heard Mr. R.K. Sanghi learned counsel appearing for the petitioner and Mr. Dayan Krishnan Senior Advocate appearing for the respondent NHAI and have carefully perused the records. 12. The extent of judicial review in matters relating to award of contract interpretation of the clauses of the contract notice inviting tenders is well settled. In Jagdish Mandal v. State of Orissa reported as 14 SCC 517 the Supreme Court has observed as under: 22. Judicial review of administrative action W.P.(C) 3743 2020 to prevent arbitrariness irrationality unreasonableness bias and mala fides. Its purpose is to check whether choice or decision is made “lawfully” and not to check whether choice or decision is “sound”. When the power of judicial review is invoked in matters relating to tenders or award of contracts certain special features should be borne in mind. A contract is a commercial transaction. tenders and awarding contracts are essentially commercial functions. Principles of equity and natural justice stay at a distance. If the decision relating to award of contract is bona fide and is in public interest courts will not in exercise of power of if a procedural interfere even judicial review aberration or error in assessment or prejudice to a tenderer is made out. The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil court. Attempts by unsuccessful tenderers with imaginary grievances wounded pride and business rivalry to make mountains out of molehills of technical procedural violation or some prejudice to self and persuade courts to interfere by exercising power of judicial review should be resisted. Such interferences either interim or final may hold up public works for years or delay relief and succour to thousands and millions and may increase the project cost manifold. Therefore a court before interfering in tender or contractual matters in exercise of power of judicial review should pose to itself the following i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone Whether the process adopted or decision made W.P.(C) 3743 2020 is so arbitrary and irrational that the court can say: “the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached” Whether public interest is affected.” If the answers to the questions posed in the aforesaid judgment are in the negative there should be no interference by courts under Article 226 of the Indian Constitution. In Michigan Rubber Ltd. v. State of Karnataka reported as 2012) 8 SCC 216 after examining the case law laid down on the scope of interference by courts in tender matters the following principles have been carved out: 23. From the above decisions the following principles emerge: a) The basic requirement of Article 14 is fairness in action by the State and non arbitrariness in essence and substance is the heartbeat of fair play. These actions are amenable to the judicial review only to the extent that the State must act validly for a discernible reason and not whimsically for any ulterior purpose. If the State acts within the bounds of reasonableness it would be legitimate to take into consideration the national priorities b) Fixation of a value of the tender is entirely within the purview of the executive and the courts hardly have any role to play in this process except for striking down such action of the executive as is proved to be arbitrary or unreasonable. If the Government acts in conformity with certain healthy standards and norms such as awarding of contracts by inviting tenders in those circumstances the interference by courts is very limited W.P.(C) 3743 2020 c) In the matter of formulating conditions of a tender document and awarding a contract greater latitude is required to be conceded to the State authorities unless the action of the tendering authority is found to be malicious and a misuse of its statutory powers interference by courts is not warranted d) Certain preconditions or qualifications for tenders have to be laid down to ensure that the contractor has the capacity and the resources to successfully execute the work and e) If the State or its instrumentalities act reasonably fairly and in public interest in awarding contract here again interference by court is very restrictive since no person can claim a fundamental right to carry on business with the Government." It is also well settled that the owner of the project being the author of the tender documents is the best person to appreciate its requirement and interpret the documents and the High Court must defer to the understanding of the author in matters of appreciation of the terms and conditions of the tender documents. Unless there are some mala fides or perversity in the understanding or appreciation of the author the interpretation given by the author must be given primacy. In Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corpn. Ltd. reported as16 SCC 818 the Supreme Court has observed as under: “15. We may add that the owner or the employer of a project having authored the tender documents is the best person requirements and its documents. The constitutional courts must defer to this understanding and appreciation of the tender documents unless to understand and appreciate W.P.(C) 3743 2020 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.” The aforesaid judgment has been cited and followed in JSW Infrastructure Ltd. v. Kakinada Seaports Ltd. reported as4 SCC 170. In Nabha Power Ltd. v. Punjab SPCL reported as 11 SCC 508 the Supreme Court made the following observation: “72. We may however in the end extend a word of caution. It should certainly not be an endeavour of commercial courts to look to implied terms of contract. In the current day and age making of contracts is a matter of high technical expertise with legal brains from all sides involved in the process of drafting a contract. It is even preceded by opportunities of seeking clarifications and doubts so that the parties know what they are getting into. Thus normally a contract should be read as it reads as per its express terms. The implied terms is a concept which is necessitated only when the Penta test referred to aforesaid comes into play. There has to be a strict necessity for it. In the present case we have really only read the contract in the manner it reads. We have not really read into it any “implied term” but from the collection of clauses come to a conclusion as to what the contract says. The formula for energy charges to our mind was quite clear. We have only expounded it in accordance to its natural grammatical contour keeping in mind the nature of the contract.” W.P.(C) 3743 2020 The view expressed above has been followed in Caretel Infotech Ltd. v. Hindustan Petroleum Corpn. Ltd. reported as 14 SCC 81 where after quoting the abovementioned paragraphs in Nabha Power Ltd.(supra) the Supreme Court has observed as under: “43. We have considered it appropriate to once again emphasise the aforesaid aspects especially in the context of endeavours of courts to give their own interpretation to contracts more specifically tender terms at the behest of a third party competing for the tender rather than what is propounded by the party framing the tender. The object cannot be that in every contract where some parties would lose out they should get the opportunity to somehow pick holes to disqualify the successful parties on grounds on which even the party floating the tender finds no merit”. 16. A perusal of the aforementioned judgments would show that constitutional courts must show restraint in interfering with administrative actions. The correctness of the decision taken by the employer cannot be interfered with. Only the decision making process can be subjected to judicial review. The soundness of the decision may be in question only if it is irrational or so perverse that no responsible authority acting reasonably and in accordance with law could have reached such a decision or it is found that the process was meant to favour someone. Keeping these principles in mind the question that has to be considered is whether in the instant case rejection of the bid of the petitioner would warrant any interference or not 17. The records placed before us would show that the tender submitted by 19 bidders have been accepted by the respondent NHAI as responsive and W.P.(C) 3743 2020 they have cleared the first stage of evaluation. Their financial bids are yet to be opened. They could not be opened because of the order dated 25.06.2020 passed in the present proceedings restraining the respondent NHAI from proceeding ahead with opening of the financial bid. The principle argument of the petitioner hinges on Clause 2.2.2.5 (a) of the tender documents which states that highway sector would be deemed to include railways construction re construction of railway tracks yards for keeping containers etc.). The petitioner therefore states that the projects which it has executed should be considered as „similar work‟ to satisfy the requirements of the Notice inviting tender. 18. The Request For Proposalissued by respondent NHAI is for executing a road project. Under Section 2.2.2.2of the RFP the bidder has to demonstrate that over the past five years preceding the bid due date it has received payments for construction of eligible projects or has undertaken construction works by itself in a PPP project and that payment received by the bidder after adjustment as provided for under the RFP is more than Rs.504.96 crores. Under Clause 2.2.2.2the bidder has to further establish that he has undertaken at least one similar work" of 25% of estimated cost of Rs.84.16 crores from eligible projects in Category 1 and or Category 3 as specified in Clause 2.2.2.5. The short question that arises for consideration is as to whether the projects undertaken by the petitioner shows that it has undertaken a „similar work‟ in Category 1 and or Category 3 as specified in Clause 2.2.2.5 of the RFP. 19. Category 1 and Category 3 mentioned in Clause 2.2.2.5 deal with projects in the highway sector that qualify under Clause 2.2.2.6 or construction in the highway sector that qualify under Clause 2.2.2.6 3743 2020 to: Though Clause 2.2.2.5 states that highway sector would be deemed to include railways Clause 2.2.2.5 (IV) states that the project in the highway sector shall constitute the following for the purposes of consideration under Category 1 and or Category 3 as applicable if it relates i. Widening reconstruction up gradation works on NH SH or on any category of road taken up under CRF ISC EI SARDP LWE ii. Widening reconstruction up gradation works on MDRs with loan assistance from multilateral agencies or on BOT basis iii. Widening reconstruction up gradation work of roads Municipal corporation limits construction of Bypasses iv. Construction of stand alone bridges ROBs tunnels w.r.t. roads v. Long term OMT works of NHAI MoRT&H. 20. A conjoint reading of Clause 2.2.2.2 Clause 2.2.2.5 Clause 2.2.2.5 (a) and Clause 2.2.2.5 (IV) would show that in order to qualify under Clause 2.2.2.2 even though highway sector includes railways and a company which has done projects in railways would be eligible but the bidder must satisfy the requirements prescribed in Sub clauseof Clause 2.2.2.5of Clause 2.2.2.5it will not be eligible under Clause 2.2.2.23743 2020 In reply the pre bid query raised by the petitioner respondent NHAI had specified that Clause 2.2.2.5 (a) is amply clear. That the respondent NHAI in its clarification did not mention Clauseof 2.2.2.5by itself can not lead to a conclusion that the decision making process has not been fair. It must be kept in mind that 19 other parties have successfully cleared the first step of the bidding process. Nor can it be said that the petitioner has been discriminated against. Failure on the part of the respondent NHAI to refer to Clause 2.2.2.5 (IV) in their reply to the pre bid query will not vitiate the entire bidding process. 22. Vide order dated 02.11.2020 the petitioner was called upon to file an affidavit stating inter alia as to whether it has fulfilled any of the works specified in sub clausestoof Clause 2.2.2.5(IV) of the RFP. The affidavit filed by the petitioner does not specify that it has indeed executed any of the works which can fall under Clause 2.2.2.5 (IV). The reasoning given by learned counsel for the petitioner that the railway track project executed by it would be a project that can be considered in Category 3 and that alone must be considered for purposes of eligibility is unacceptable. The bidder must have executed a work mentioned in Clause 2.2.2.5 (IV) in order to be eligible under Clause 2.2.2.2 is misplaced in view of the fact that there is no ambiguity in the terms of the subject RFP. Even though the language used in the RFP is not happily worded it cannot be said that these clauses have resulted in an unequal or discriminatory treatment vis à vis the petitioner or W.P.(C) 3743 2020 that it violates the doctrine of providing a level playing field to all the bidders. We may reiterate the view expressed by the Supreme Court in Caretel Infotech Ltd.(supra) that constitutional courts cannot give their own interpretation against the terms of the tender at the behest of a third party competing for the tender rather than what is propounded by the party issuing the tender being its author. In the result this court is of the opinion that the decision of the respondent NHAI in declaring the bid of the petitioner as non responsive does not warrant any interference. The petitioner has not been able to the decision making process adopted by respondent NHAI is perverse irrational or tainted with mala fides or is designed to favour a particular party. 25. The writ petition is dismissed as meritless but with no orders as to costs. DECEMBER 14 2020 SUBRAMONIUM PRASAD J HIMA KOHLI J W.P.(C) 3743 2020 

Summary: The decision taken by the National Highway Authority of India for accepting/rejecting the bids for tenders cannot be interfered by the Court. However, the court was of the opinion that the decision is not subject to judicial scrutiny, but the process is subjected to judicial review. The Delhi High Court presided over J. H. Kohli &amp; J. S. Prasad laid down the ratio in the case of Track &amp; Towers Infratech Pvt. Ltd. Vs. National Highway Authority of India, [W.P.(C) 3743/2020]. The brief facts of this case are that the Respondents i.e. NHAI issued a tender notice for construction of a highway. The Petitioner in a Pre-Bid Meeting submitted its bid and sought for a clarification from the Respondent. In the clarification the Petitioner asked whether construction of railway tracks is considered a “similar work” for qualifying in the eligibility criteria. The Respondents asked the Petitioners to rely on the clause provided by them in the tender contracts as it clearly laid down all the details. The Respondents further sought a clarification from the Petitioner asking them how the projects carried out by them satisfy the terms and conditions laid down in the tender documents. The Petitioner replied by referring the clause earlier cited by the Respondents. The Respondents rejected the bid of the Petitioners on the basis that construction of railway track did not qualify as similar work for the said tender. The Petitioner filed a writ in the Court contending that the highway sector would deem to include the railways and the grounds for rejection was baseless. The court after analyzing the arguments of both the parties relied on the landmark judgment of Jagdish Mandal Vs. State of Orissa. As laid down in the case the court was of the opinion that the owner of the project is the author of the tender documents and is the best person to interpret and appreciate its requirements. The Court further stated that the decision made by any such authority cannot be interfered with to determine its correctness but the process it adopted to make the particular decision can be subject to judicial review. Hence, the Court dismissing the writ petition filed by the Petitioner stated that, “The petitioner has not been able to demonstrate that the decision-making process adopted by the respondent/NHAI is perverse, irrational or tainted with mala fides or is designed to favor a particular party.” Click here to read the judgment