Limited Scope of Judicial Review in Foreign Funded Mega Projects: Supreme Court

Limited Scope of Judicial Review in Foreign Funded Mega Projects: Supreme Court

(The Supreme Court recently overturned the Judgment of the Hon'ble High Court of Delhi wherein the Court had erred in interfering with the Tender Process of Foreign Funded Mega Projects and asked to apply the Principles of Judicial Restraints and finally set aside the Judgment and allowed the Civil Appeal accordingly.) (National High Speed Rail Corporation Limited vs. Montecarlo Limited & Anr.)

A recent decision by the two-judge bench at Supreme Court, comprising Hon'ble Mr Justice M.R Shah and Mr. Justice AS Bopanna in a Civil Appeal held "that the scope of judicial review in the foreign-funded contract should be far much less than the ordinary Government-funded contracts and, the only ground for judicial review ought to be on a limited aspect", i.e., if the action of the executing authority suffers from favouritism or nepotism and based on the grounds which have been concealed from the foreign financing authority if disclosed, would have persuaded the financing authority to cancel the contract.

The present matter pertains to the tender floated for the implementation of Mumbai-Ahmedabad High-Speed Rail, popularly known as the "Bullet Train Project", which is a fully foreign-funded project for which several bidders submitted their bids which were evaluated by JICC as per the JICA'S International Guidelines.

In the same manner, JICA, JICC and the Technical Evaluation Committee took a conscious decision that the bid submitted by the original writ petitioner, herein the Respondent, was non-responsive and was not in conformity with the relevant clauses of the Bidding Document, hence acting upon the Technical Bid Evaluation Report, the Appellant, NHSRCL, rejected the Bid submitted by the original writ petitioner.

The original writ petitioner filed a writ under Art.226 before the Delhi High Court and, having exercised the power of Judicial review, held that the bid submitted by the original writ petitioner was in substantial compliance and directed the Appellant herein to proceed in accordance with law qua the tender process by further examining the Bid of the original writ petitioner.

The learned Solicitor General, Shri Tushar Mehta, appearing on behalf of Appellant, while presenting his arguments before the bench, submitted that "The Hon'ble High Court has materially erred in interfering with such a fair and conscious decision of the JICC and

exceeded its jurisdiction by exercising powers under Article 226 of the Constitution of India". Besides, the Court has not considered the distinction between Foreign Sovereign Funded Contracts and the contracts funded from the Consolidated Fund of India, which are sui generis species of contracts and are entirely different and distinct from Government Contracts, Public Works Department Contracts / Public-Private Partnership Contracts etc.

Shri Anshin H. Desai, learned Senior Advocate appearing on behalf of the Respondent, submitted that in the present facts and circumstances of the case, the High Court has not committed any error in allowing the writ petition directing the appellant herein to proceed in accordance with law qua the tender process examining the Bid of the Respondent.

He further submitted that though JICA funds the project and the same being a foreign-funded project and the evaluation assistance is rendered by JICC, which upon being approved by the Ministry of Railways is subject to review of JICA, still, the project involves an outlay of a substantial amount of the public exchequer of this country and therefore the decision with respect to the tender process is always a subject matter of judicial review.

At this stage, the Apex court is posed with a question that in the facts and circumstances of the present case and with respect to such a foreign-funded project, whether the High Court was justified in interfering with the tender process in absence of any specific allegations of mala fides and/or favouritism?

While answering this question, it appears to the bench that the JICC has taken a conscious decision which was approved/concurred by the JICA on the Bid submitted by the Respondent as being non-responsive and noncompliant to the technical requirements of the Bidding Documents. At this stage, the High Court should not have interfered with such a conscious decision in the exercise of powers under Article 226 of the Constitution of India, and whether the Bid submitted by a Bidder suffers from any material deviation and/or any substantial deviation should be left to the author of the Bid document.

Unless such decisions if found to be based on mala fide and/or there are allegations of favouritism and/or arbitrariness, the Court must interfere, the bench noted.

P&A Law Offices represented the Petitioner, i.e., National High Speed Rail Corporation Limited, before the Supreme Court. The Firm was responsible for drafting, representing and protecting the interests of NHSRCL, and contesting the matter before the Supreme Court. The matter was argued by Mr. Tushar Mehta (Solicitor General of India). Mr. Kunal Chatterjee was the Advocate on Record representing NHSRCL.

On behalf of P&A Law Offices, this matter was led by Amit Mishra (Partner), along with Gaurav Mahajan (Partner), Sanjeet Ranjan (Senior Associate), and Yash Kumar (Associate).