Afcons Infrastructure Ltd. Vs. Nagpur Metro Rail Corporation Ltd. [Supreme Court of India, 15-09-2016]

Metro Railway (Construction of Works) Act, 1978 – Metro Railways (Operation and Maintenance) Act, 2002 – East-West Corridor of Nagpur Metro Rail Project – The owner or the employer of a project, having authored the tender documents, is the best person to understand and appreciate its requirements and interpret its documents. The constitutional Courts must defer to this understanding and appreciation of the tender documents, unless there is mala fide or perversity in the understanding or appreciation or in the application of the terms of the tender conditions. It is possible that the owner or employer of a project may give an interpretation to the tender documents that is not acceptable to the constitutional Courts but that by itself is not a reason for interfering with the interpretation given.

Metro Rail

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

(Madan B. Lokur) and (R.K. Agrawal) JJ.

September 15, 2016

CIVIL APPEAL NO. 9078 OF 2016

Afcons Infrastructure Ltd. .…Appellant versus Nagpur Metro Rail Corporation Ltd. & Anr. ….Respondents

WITH

C.A. NO. 9079 OF 2016 WITH C.A. NOS. 9080-9081 OF 2016

J U D G M E N T

Madan B. Lokur, J.

1. In Civil Appeal No. 9078 of 2016 and Civil Appeal No. 9079 of 2016 filed by Afcons Infrastructure Ltd., the challenge is to the judgment and orders dated 28th July, 2016 and 11th August, 2016 passed by the Bombay High Court. In Civil Appeal Nos. 9080-9081 of 2016 filed by the Nagpur Metro Rail Corporation Ltd., the challenge is to the judgment and orders dated 28th July, 2016 and 12th August, 2016 passed by the Bombay High Court. The combined effect of all the impugned orders is that the High Court held that M/s. Guangdong Yuantian Engineering Company (GYT) of China and M/s. TATA Projects Limited (TPL) as a Joint Venture (hereinafter referred to as the ‘GYT-TPL JV’) are eligible to bid for a tender invited by the Nagpur Metro Rail Corporation Limited (for short ‘NMRCL’) on 12th May, 2016.

2. Bids were invited by NMRCL for the design and construction of a viaduct in Reach-3 between Jhansi Rani Square and Lokmanya Nagar Stations from CH 7825M to CH 18212M on the East-West Corridor of Nagpur Metro Rail Project.

3. GYT-TPL JV gave its bid for the contract but NMRCL, by an e-mail dated 23rd July, 2016 communicated to GYT-TPL JV that its bid was disqualified at the technical bid opening. The comment/remark relating to the disqualification stated that the documents submitted by GYT-TPL JV do not meet the eligibility conditions as stipulated in Clause 4.2 (a) of Section III of the bid documents.

4. The controversy on the eligibility of GYT-TPL JV arises in view of Clause 4.2 (a) of Section III of the tender conditions which reads inter alia as follows:

4.2 (a) Specific Construction & Contract Management experience A minimum number of similar contracts specified below that have been satisfactorily completed as a prime contractor, joint venture member during last 10 (ten) years i.e. up till 31.05.2016 (a) Should have received minimum INR 3200 Million from 1 contract in a metro civil construction work and should have completed viaduct length not less than 5 km in the same contract.

5. According to GYT-TPL JV, it had executed the Pearl River Delta intercity high speed railway project in China; it had received INR 3200 million from that project and it had constructed a viaduct of 7.284 km length under that contract. Before the High Court and before us, there was no controversy that GYT-TPL JV had received a minimum of INR 3200 million from its Pearl River Delta Intercity High Speed Railway Project and that whether it had completed a viaduct having a length of not less than 5 km. The sole question before the High Court was whether the Pearl River Delta Intercity High Speed Railway Project met the requirement of a ‘metro civil construction work’. According to NMRCL, an inter-city high speed railway project did not meet the requirements of a metro civil construction work.

6. The High Court disagreed with NMRCL in the following words:

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

7. There is no dispute before us that the