Supreme Court of India (Division Bench (DB)- Two Judge)

Appeal (Civil), 1353-1354 of 2017, Judgment Date: May 09, 2017

                                                                  REPORTABLE

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                     CIVIL APPEAL NOS. 1353-1354 OF 2017
                 (@ S.L.P. (CIVIL) NOS. 35104-35105 OF 2016)


Consortium of Titagarh Firema Adler                         ... Appellant(s)
S.P.A. – Titagarh Wagons Ltd.
through Authorized Signatory,
Titagarh Towers, 756, Anandapur,
E.M. Bypass, Kolkata - 700 107,
West Bengal

                                   Versus

Nagpur Metro Rail Corporation Ltd.                         ... Respondent(s)
(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.


                                    WITH
                        CIVIL APPEAL NO. 1355 OF 2017
                    (@ S.L.P. (CIVIL) NO. 36308 OF 2016)




                               J U D G M E N T

Dipak Misra, J.
      Nagpur Metro Rail Corporation Ltd., the 1st 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  on
29.09.2016, 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  1st  respondent  agreed  with  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 of  work  order,
the appellant filed Writ Petition No. 5818 of 2016  before  the  High  Court
contending  that  respondent  No.  2  was  not  technically  qualified  and,
therefore, its financial bid could not have been opened.
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 of India[1], Tata Cellular v. Union of  India[2],  Central  Coalfields
Ltd. v. SLL-SML (Joint Venture  Consortium)[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  of
Chief  Project  Manager/RS,  General  Manager/Procurement,   Chief   Project
Manager/Signaling and the General Manager /Finance. The said  Committee  has
evaluated the documents with 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 Noida 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 G8 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 that the  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.
6.    It is pertinent to mention that  in  the  course  of  hearing  of  the
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 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
fides.  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  of  2016)  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 of Wednesbury 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 of relevant 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  of  the
petitioner, submitted that when an action would fall in the 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. 1 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 of a 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.”

9.    On the basis of the aforesaid analysis, the High Court  dismissed  the
application for review with costs of Rs. 1 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. 1355 of 2017, Mr. Mukul Rohatgi,  learned  Attorney  General  for
India, Mr. Gopal Subramaniam, learned senior counsel with  Mr.  R.P.  Gupta,
learned counsel appearing for the 1st 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  Balwant  Rai  Saluja  and
another v. Air India Ltd.                 and others[5], Rohde  and  Schwarz
Gmbh and Co.                   K.G. v. Airport  Authority  of  India[6]  and
Core Projects and Technologies Ltd. v. State of Bihar and another[7].
12.   Mr. Gopal Subramaniam, learned senior counsel for the 1st  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  IB
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  1st
respondent seeking amendment to clause 12.1 of  Annexure  III-A  (PQ-Initial
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  1st  respondent  extended
the date of submission of tender from 14th June to 24th June at the  request
of the appellant; that all the bid documents were given to  the  independent
General Consultant of the 1st respondent consisting  of  M/s.  Systra,  M/s.
RITES, M/s. AECOM and M/s. Egis for  Pre-qualification  (PQ)  and  Technical
approval which held respondent No. 2 as qualified and Appraisal  and  Tender
Committee of   the  1st  respondent  also  gave  their  reports  which  were
forwarded on 29.8.2016 to KfW 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 1st 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-à-vis  its  experience;  and  that   on  4.10.2016  the
appellant filed the Writ Petition before the High  Court  contending,  inter
alia, that the appellant 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 favour of  respondent  No.  2  was
mala  fide,  which  was  dismissed  by  the  High  Court  vide  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 100% 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
of lifting 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  Horizons
Ltd. (supra). Mr. Gopal Subramanium  would  further  contend  that  the  bid
documents have been  thoroughly  examined  by  the  1st  respondent  and  it
satisfied  itself  of  the  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  100%  wholly
owned subsidiaries; that 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; 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  in  Montecarlo
Ltd.  v.  NTPC  Ltd.[9],  Michigan  Rubber  (India)   Ltd.   v.   State   of
Karnataka[10], Jagdish Mandal v. State  of  Orissa  &  Ors.[11]  and  Afcons
Infrastructure Ltd. (supra).
14.   Mr. Shyam Divan, learned senior counsel  for  the  respondent  No.  2,
submitted  that  the  respondent  No.  1,   being   a   government   entity,
participated in the tender  and  gave  all  the  details,  which  were  duly
accepted by the respondent No. 2 and after examining the entire  details  of
supplies and commissioning of various contracts executed by  the  respondent
No. 2 and its 100% 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-1 to the effect that it had supplied 606 metro cars in  the  last
10 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  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 ITB 43, 43.1 to 43.4,  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 even 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 1st 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[12].
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.  M/s.  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 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 III of the tender documents, which  would  have  required  the  1st
respondent to disqualify respondent No. 2 from the tender process.
17.   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:-
“4.1  A bidder may be a firm that is a private  entity,  a  government-owned
entity – subject to ITB 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, all 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 BDS, 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 Clause 4.1, 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, 12.2 and 43.3.
19.   Clauses 12 and 12.1 being relevant are reproduced below:-
“12.  Delivery Record
Has the bidder/consortium/joint venture  of  its  members,  individually  or
jointly as a member of other consortia/joint venture have experience of  and
carried out vehicle design, interface  (with  other  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 (10) 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:-

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.


29. Determination of Responsiveness

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 ITB 11.

29.1.1 General Evaluation: Prior to 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  based  on  Initial  Filter
criteria indicated in these  documents.  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 Responsibility

A ‘NO’ answer to any of the above items will disqualify the Bid/ Bidder.

29.1.2 Evaluation of Technical  Package:  The  Employer  will  evaluate  the
technical proposal to determine the technical suitability and  acceptability
as  per  Works  Requirements  -   General   Specifications   and   Technical
Specifications of only such Bidders who qualify  based  on  BDS  ITB  29.1.1
above.

The Technical Proposal as submitted in accordance with BDS 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  VII-A
and VII-B, as well as against the back of the parameters provided in  Part1,
Annexure  IV-C.   Furthermore,  the  adequacy  and  appropriateness  of  the
Bidder’s  responses  to  the  related  requirements  in  Part  1  shall   be
evaluated.

29.2  A substantially responsive bid is one that meets the  requirements  of
the bidding documents without material deviation, reservation, or  omission.
 A material deviation, reservation, or omission is one that,

(a)   if accepted, would:

Affect in any substantial way, the scope, quality,  or  performance  of  the
Works specified in the contract; or
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  other
bidders presenting substantially responsive bids.


29.2.1   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  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

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 29.1.1 above,
not substantially responsive as per ITB 29.2 above
having material deviation or reservation as per ITB 29.2 above
not fulfilling the qualifying conditions as per ITB 29.2.1 above, and
not fulfilling the  Employer’s  Requirements  –  General  Specification  and
Technical Specification  as  per  ITB  29.1.2  above  will  be  deemed  non-
conforming and shall be rejected by the Employer, and shall not  be  allowed
subsequently to be made  responsive  by  correction  or  withdrawal  of  the
nonconforming deviation or reservation.

29.5 If any Bid is rejected, pursuant  to  ITB  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  ITB  29.4
above, in case the Bidder (applies to each individual member in  case  of  a
Joint  Venture/Consortium)  is   debarred/blacklisted   by   Government   of
India/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   solely
responsible for all 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:-
“1.   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  appellant
wrote to the 1st respondent seeking amendment to the “operation  performance
clause”, i.e., Clause  12.1  of  the  Annexure  III-A  (PQ-Initial  Filter).
According to the said Clause, the bidder is required to have  satisfactorily
delivered at least 30 metro cars  outside  the  country  of  manufacture  or
delivered  in India.  The amendment that was sought related to inclusion  of
the condition that delivery to any  of  the  G8  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 G8 countries.  The  request  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  1st   respondent  and  we  are
required to address  the  same  solely  on  the  touchstone  of  eligibility
criteria regard being had to the  essential  conditions.   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  that  the  respondent  No.  2  does  not  really  fulfil  the
eligibility criteria but the 1st 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 2nd respondent.
26.   What is urged before this Court is that the  respondent  No.  2  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 Balwant Rai Saluja (supra) and also the judgment  of  the
Delhi High Court in Rohde and  Schwarz  Gmbh  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 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, for the said purpose, inspiration has been drawn from the authority  in
Western Coalfields Limited v. Special Area Development Authority, Korba  and
another[14]. 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 Emperor[15].

27.   Before we proceed to deal with the concept of single  entity  and  the
discretion used by the 1st respondent, we intend to deal with  role  of  the
Court when the eligibility criteria is required to be scanned and  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 of Wednesbury principle of reasonableness but  also  must
be free from arbitrariness not affected by bias or actuated by  mala  fides.
The two-Judge Bench took note of the fact that in Jagdish Mandal (supra)  it
has been held that, 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.   The  decisions  in
Master Marine Services (P) Ltd.  v.  Metcalfe  &  Hodgkinson  (P)  Ltd.  and
another[16], B.S.N. Joshi &  Sons  Ltd.  v.  Nair  Coal  Services  Ltd.  and
others[17]  and Michigan Rubber (India) Ltd. (supra) have been referred  to.
The Court quoted a passage from Afcons 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 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  ascertain  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  will  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  appreciating  tender
documents  relating  to  technical  works  and  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  another  v.  CSEPDI-Trishe
Consortium, rep. by its Managing Director and another[18], the Court,  after
referring to Jagdish Mandal (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 of completion  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
another[19], the Court referred  to  the  authority  in  Asia  Foundation  &
Construction Ltd. v. Trafalgar House Construction (I)  Ltd.  and  others[20]
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 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 service.”

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.  Patel  Engineering  Co.  Ltd.[21]
wherein it has been ruled:

“24.  … The appellant, Respondents 1 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 ITB, 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  condition
exists under the rules, it has to be done strictly in  compliance  with  the
rules. We have, therefore, no hesitation in  concluding  that  adherence  to
the ITB 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  works  to
contractors. ... Merely because a bid is  the  lowest  the  requirements  of
compliance with the rules and conditions. …”

31.   Having stated this, we  have  to  see,  how  the  1st  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 ITB  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  number  of
reasons 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. 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   1st
respondent has scanned Article164 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  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 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  doctrine  of
“piercing the veil” and  in  that  context,  reliance  has  been  placed  on
Littlewoods Mail Order Stores, Ltd. v. McGregor[22], DHN  Food  Distributors
Ltd.  and  others  v.   London  Borough  of  Tower  Hamlets[23]  and  Harold
Holdsworth & Co. (Wakefield) Ld. v. Caddies[24].    Learned  senior  counsel
has also placed reliance upon the principles stated in Renusagar  Power  Co.
(supra) that have been reiterated in  New  Horizons  Ltd.  (supra).  In  the
written submission filed on behalf  of  the  1st  respondent,  the  relevant
paragraphs from Renusagar 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 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 1st  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 and Tender Committee  of
the 1st 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. 1, 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
Cars; 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 100% subsidiaries as one entity.  This understanding of the  clause  has
been at the ends of both parties viz. R 1 and R 2, who were ad  idem  vis-à-
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
100% 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 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 project.  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, the 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 respondent  No.
2, a Government company, is the owner  of  the  subsidiaries  companies  and
subsidiaries companies have experience.  The 1st respondent, as it  appears,
has applied its commercial wisdom in the  understanding  and  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 the 1st respondent  in  the  absence
of any kind of perversity, bias or mala 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 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.

                                             .............................J.
                                                               [Dipak Misra]



                                              ............................J.
                                                               [Amitava Roy]
New Delhi;
May 09, 2017
-----------------------
[1]     (1995) 1 SCC 478
[2]     (1994) 6 SCC 651
[3]     2016 (8) SCALE 99 : (2016) 8 SCC 622
[4]     2016 (8) SCALE 765
[5]     (2014) 9 SCC 407
[6]     (2014) 207 DLT 1
[7]     2011 (59) BLJR 183
[8]     (1988) 4 SCC 59
[9]      2016 (10) SCALE 50
[10]    (2012) 8 SCC  216
[11]    (2007) 14 SCC 517
[12]    AIR 1955 SC 74
[13]   (1986) 1 SCC 264
[14]   (1982) 1 SCC 125
[15]   AIR 1936 PC 253
[16]   (2005) 6 SCC 138
[17]   (2006) 11 SCC 548
[18]   2016 (10) SCALE 69
[19]   2017 (1) SCALE 453
[20]    (1997) 1 SCC 738
[21]   (2001) 2 SCC 451
[22]   (1969) 3 All ER 855
[23]   (1976) 3 All ER 462
[24]   (1955) 1 WLR 352