Matter: National High Speed Rail Corporation Ltd v. Montecarlo Ltd & Anr.
Order dated: 31 January 2022
National High Speed Rail Corporation Ltd (“NHSRCL”) invited bids with regards to construction of Mumbai-Ahmedabad High Speed Rail (“Project”). The bid submitted by Montecarlo Limited (“Montecarlo”) was declared unsuccessful. Montecarlo sought reasons
for rejection of its bid and received a communication from NHSRCL that its bid was ‘not substantially responsive’. Aggrieved by the communication received and the rejection of its bid, Montecarlo filed a writ petition before the Delhi HC. Delhi HC set aside the rejection of Montecarlo’s bid and directed NHSRCL to reconsider the bid.
Delhi HC’s order was challenged before the SC. The issue before the SC was whether the Delhi HC was justified in interfering with the tender process in the absence of any specific allegations of mala fides and/or favouritism against NHSRCL. SC noted that the Project is a national project which is fully foreign funded pursuant to a Memorandum of Understanding between the governments of Japan and India. A loan of Indian Rupees One Trillion was provided by the Japan International Cooperation Agency (“JICA”) for the Project. SC observed that the bids were evaluated by the Japan International Consultants Consortium (“JICC”) as per JICA’s International Guidelines, and a conscious decision was taken by JICC that Montecarlo’s bid was not significantly responsive as it suffered from material deviation from the terms and conditions of the bid document. This decision was also approved by JICA.
SC opined that JICA, JICC and the NHSRCL took a conscious decision that Montecarlo’s bid was non-responsive and not in conformity with the bid document. SC found that NHSRCL’s action of acting upon the recommendations of JICA and JICC and relying upon the Technical Bid Evaluation Report to reject Montecarlo’s bid was not unfair. SC further held that Montecarlo had no authority to deviate from the evaluation of its bid done on the basis of contractually agreed guidelines which were transparent, fair and non-arbitrary. Therefore, SC opined that the rejection of Monetcarlo’s bid could not have been the subject matter of scrutiny by the Delhi HC and that the scope of judicial review in such foreign funded contracts/projects should be minimal and limited to the ground that the action of the authority suffers from mala fide / favouritism.
Accordingly, SC quashed the order of the Delhi HC while emphasising that HCs should exercise judicial restraint while entertaining writ petitions challenging a tender process, more specifically, in fully foreign funded contracts of national importance.