Delhi High Court
Gmr Infrastructure Ltd. & Anr. vs National Highways Authority Of ... on 16 December, 2008
Author: Mukul Mudgal
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) NO. 6792/2008
Reserved on: 20th November, 2008
Date of Decision: 16th December, 2008
GMR INFRASTRUCTURE LTD. & ANR. .....Petitioners
Through: Mr. Arun Jaitley, Sr. Adv. with
Mr. Atul Sharma and
Mr. Milanka Chaudhury, Advs.
Versus
NATIONAL HIGHWAYS AUTHORITY OF INDIA & ORS. .....Respondents
Through: Mr. Dushyant Dave and Mr. Ramji Srinivasan, Sr. Advs. with Mr.
Ravi Kini, Mr. Krishan Kumar, Mr. Sumit Gupta, Mr. Mukesh Kumar, Ms.
Madhuri Diwan and Ms. Padma Priya, Advs. for respondent No. 1/NHAI.
Mr. Gopal Subramanium, ASG with Mr. Gaurav Duggal and Mr. Chetan
Chawla, Adv. for respondent No.2/UOI.
With
+ W.P.(C) NO. 6419/2008
MADHUCON PROJECTS PVT. LTD. & ANR. .....Petitioners
Through: Mr. C.A. Sundaram, Sr. Adv.
with Mr. Amitabh Chaturvedy, Mr.
Jeevesh Nagrath and Mr. Mohit
Chadha, Advocates.
Versus
UNION OF INDIA & ORS. .....Respondents
Through: Mr. Gopal Subramanium, ASG with Mr. Gaurav Duggal and Mr. Chetan
Chawla, Adv. for respondent No.1/UOI.
Mr. Dushyant Dave and Mr. Ramji Srinivasan, Sr. Advs. with Mr. Ravi Kini,
Mr. Krishan Kumar, Mr. Sumit Gupta, Mr. Mukesh Kumar, Ms. Madhuri Diwan
and Ms. Padma Priya, Advs. for respondent No. 2/NHAI.
CORAM:
HON'BLE MR. JUSTICE MUKUL MUDGAL
HON'BLE MR. JUSTICE MANMOHAN
1. Whether the Reporters of local papers may be allowed to see the
judgment?
2. To be referred to the Reporter or not?
3. Whether the judgment should be reported in the Digest?
% JUDGMENT
MUKUL MUDGAL, J.
1. The present petition challenges the letter No. NHAI/BOT/11012/66/2005/3940
dated 26th August, 2008 issued by the respondent no.1 National Highways
Authority of India (hereinafter referred to as 'NHAI') to the petitioner consortium
intimating the petitioner that it is not eligible to participate in the second stage of
the bidding process (the bid stage) in supercession of its earlier letter dated June
27, 2008 pursuant to which the consortium had been declared pre-qualified for
the project in question i.e. Design, engineering, construction, development,
finance, operation and maintenance of Hyderabad-Vijayawada section of the
National Highway 9 (hereinafter referred to as NH9) from KM 40.000 to KM
221.500 of NH 9 in the state of Andhra Pradesh under National Highways
Development Programme Phase IIIA on Build Operate and Transfer-toll Basis. The
petitioner No.1 GMR Infrastructure Ltd. had applied pursuant to the Request For
Qualification (RFQ), issued by the respondent No. 1 NHAI in December, 2007. It is
not in dispute that pursuant to the process of evaluation and after compliance of
the terms of the tender, and in particular Clause 3.5.2, the petitioner was short
listed as one of the six successful tenderers, entitled to be further considered.
2. A number of writ petitions have been filed challenging the tender issued by
the National Highways Authority of India, which can be broadly classified into
three parts. The first challenge through writ petitions relates to the petitioners,
i.e., those bidders, who were initially shortlisted but subsequently declared to be
not eligible to participate in the second stage of the bidding process after the
revaluation. The second challenge relates to those bidders, who were initially not
shortlisted but subsequently allowed to participate in the second stage of the
bidding process. The third challenge through the writ petitions relates to the
petitioners Reliance Infrastructure Ltd. and DLF-Gayatri-Lor Joint Venture, i.e.,
those bidders, who did not qualify either through the initial evaluation at the
qualification stage and who also did not qualify after the revaluation was done.
The present writ petitions correspond to those bidders, i.e., WP(C) 6792/08 titled
as GMR Infrastructure Pvt. Ltd. & Anr. Vs. NHAI & Anr. and WP(C) 6419/08 titled as
Madhucon Project Pvt. Ltd. & Anr. Vs. UOI & Anr., who were declared qualified at
the initial stage i.e. the qualification stage but subsequently declared to be not
eligible to participate in the second stage of the bidding process after the
revaluation. In the present petition, the bidders who were initially not shortlisted
but subsequently allowed to participate in the second stage of the bidding process
namely M/s Cintra Concessions De In Infraestruras De Tranporte S.A. and M/s
Isolux-Soma-Omaxe Consortium were impleaded as respondents and Mr. Rajiv
Nayar, who appeared for M/s Isolux-Soma-Omaxe Consortium was also heard.
3. Since common issues of law arise in the present writ petition and the Writ
Petition(C) 6419/2008 titled as M/s Madhucon Projects Pvt. Ltd. & Anr. Vs. Union of
India and Anr. we are taking into account only the facts of the present petition,
which are as follows:-
(a) The Petitioner No.1 GMR Infrastructure Ltd. and its group companies together
are one of the fastest growing infrastructure organizations in the country with
interests in airports, energy, highways and urban infrastructure (including special
economic zones).
(b) The Petitioner no. 2 Punj Lloyd Ltd. is in the business of Engineering,
Procurement, Construction /Developer. The various areas of operation of the
Petitioner No. 2 include Road/Highway and Bridge Construction, Industrial
Construction, Laying of Cross Country Pipelines, Tankage and Composite
Construction, EPC Contracts and Telecom Contracts.
(c) The Respondent No. 1 National Highways Authority of India is engaged in the
development of highways and as a part of this endeavor, the Respondent No. 1
decided to undertake development of four/six laning of Hyderabad - Vijayawada
section in the state of Andhra Pradesh from KM 40.000 to KM 221.500 of NH 9
through private participation on BOT basis and as such issued the RFQ in
December 2007 for selection of the preferred bidder/sponsor. By issuing the RFQ,
the Respondent No. 1 intended to pre-qualify suitable applicants who will be
eligible for participation in the bid stage for awarding the Project through open
competitive bidding process in accordance with the procedure set out in the RFQ.
(d) The Petitioner No. 1 and Petitioner No. 2 formed a consortium and entered into
a Joint Bidding Agreement dated 14th January, 2008 to participate in the bidding
process for the Project.
(e) As per the RFQ, the successful bidder shall be responsible for designing,
engineering, financing, procurement, construction, operation and maintenance of
the Project under and in accordance with the concession agreement to be entered
into between the successful bidder and the Respondent no. 1. The scope of work
as indicated in the RFP would include rehabilitation, upgradation and widening of
the existing carriageway to four/six lane standards with construction of the new
pavement, rehabilitation of the existing pavements, construction of major and
minor bridges, culverts, intersections, interchanges, underpasses, drains etc.
(f) As per the RFQ, the Respondent No. 1 intended to follow a two stage process
for the selection of the preferred bidder for the Project which is as under:-
i. At the first stage (the Qualification
Stage) the interested parties are invited to furnish the
information specified in the RFQ document. Upon submission of
the documents and information of the document as contained in
the RFQ, Respondent No. 1 announces/shortlists a list of bidders
for the next stage (the Proposal stage) who are then invited to
submit detailed proposals in respect of the project in
accordance with the Request for Proposal (RFP) document.
ii. In the second stage (the proposal
stage) the shortlisted applicants are requested to examine the
project in further detail and submit Proposals along with a bid
security. The pre-qualified applicants in the second stage
submitting a Proposal in accordance with the RFP document,
would then be evaluated on the basis of technical, other
submissions and financial bids as detailed in the RFP
documents. As part of the RFP documents, the Respondent No.
1 shall provide detailed instructions for applicants relating to
submission of the Proposals, a draft Concession Agreement and
project report/feasibility report containing other information
pertaining/relevant to the Project. The award of Project is based
on the lowest amount of grant sought from the Authority or the
highest premium/revenue share offered, as the case may be.
(g) Pursuant to the RFQ, the Petitioners, as a consortium, submitted a request for
qualification application dated January 19, 2008 to NHAI.
(h) Post evaluations of the RFQ Application, Respondent No. 1, vide its letter No.
NHAI/BOT/11012/66/2005/3349 dated June 27, 2008, conveyed to the Petitioners'
Consortium that the Consortium had been pre-qualified for the bid stage against
the RFQ Application submitted by the Consortium. In the very same letter, the
Petitioners' Consortium was called upon by the Respondent No. 1 to collect the
bid documents from July 2, 2008, onwards.
(i) Upon receipt of the above letter, the Petitioners' Consortium vide its letter
dated June 30, 2008 approached Respondent No.1 for issue of the RFP documents
but despite the Petitioners' Consortium tendering the requisite fee of Rs. 50,000/-
in the form of Bank Draft, the Respondent No. 1 failed/refused to accept the same
and also refused to issue the RFP documents.
(j) Thereafter, the Petitioners' Consortium received a letter from Respondent No. 1
bearing letter no. NHAI/BOT/11012/66/2005/3712 dated August 8, 2008, in terms
of which it was conveyed to the Petitioners' Consortium that in view of certain
representations in regard to the evaluation done by the Respondent No. 1,
although having been pre-qualified, the process of Petitioners' Consortium's pre-
qualification was being kept in abeyance and certain clarifications were sought
from the Petitioners' Consortium in relation to their RFQ Application.
(k) In response to the same, Petitioners' Consortium vide their letter No.
GIL/BD/SV/08-09 dated August 13, 2008, inquired if Consortium's pre-qualification
was being reviewed due to representations received and also whether the criteria
for pre-qualification remain unaltered. Alongwith the letter of the Petitioners'
Consortium, the Consortium also furnished to the Respondent No. 1 the
clarification asked for them vide letter dated August 8, 2008.
(l) Another letter was received by Petitioner bearing letter No,
NHAI/BOT/11012/66/2005/3940 dated August 26, 2008, impugned in this petition,
conveying to the Petitioners' Consortium that based on the clarifications
submitted by the applicants, the Respondent No. 1 has re-evaluated/reviewed the
submitted applications for the RFQ and as a result of the same the Petitioner has
not been short listed for the Project and that it is not eligible to participate in the
second stage of the bidding process .
4. The main grievance of the petitioner as articulated by Mr. Arun Jaitley, the
learned Senior Counsel in the present writ petition is as follows:
(a) The process of evaluation has been done on the basis of the representations
made by unsuccessful applicants and the said representations were forbidden by
Clause 2.21 of the RFQ:
Clause 2.21 reads as follows:
"2.21 Short listing and notification-
After the evaluation of Applications, the Authority
would announce a list of short-listed pre-qualified
Applicants (Bidders) who will be eligible for
participation in the Bid Stage. At the same time, the
Authority would notify the other applicants that they
have not been short-listed. The Authority will not
entertain any query or clarification from Applicants who
fail to qualify. (emphasis supplied)"
(b) Not only the representations from M/s Inolux Soma Omana Consortium, M/s
Reliance Infrastructure Ltd. and M/s Macquarie were entertained but also pursuant
to the said representations the petitioner was knocked out from the first six
names where he was placed subsequent to the initial evaluation in accordance
with Clause 3.5.2. The learned counsel for the petitioner has submitted that the
said representations and any action pursuant thereto are contrary to the mandate
of Clause 2.21.
(c) It has also been submitted that the receiving of the said representations from
the unsuccessful applicants amounted to 'an undesirable practice' as it clear from
Clause 4.2(d) of the RFQ:
Clause 4.2(d) reads as follows:
"(d) "Undesirable practice" means establishing contact
with any person connected with or employed by the
Authority with the objective of canvassing, lobbying or
in any manner influencing or attempting to influence the
Bidding Process."
(d) It has also been submitted that Clause 2.18 of the RFQ mandates that all the
information submitted to the respondent no.1 shall be treated in confidence. The
representations made by the unsuccessful applicants, however, clearly indicate
the breach of confidence, as the information qua the petitioner's tender is
available to the unsuccessful applicants.
(e) It is submitted that the petitioner's i.e. GMR Infrastructure Pvt. Ltd. project and
the construction work commissioned was not taken into account in order to
disqualify the petitioner. It has been submitted that the requirement of Clause
3.2.3(d) of the RFQ only required the commissioning of the constructed work and
payment there for. The commissioned project of the petitioner has not been
considered by the respondent on the ground that the project was not
commissioned.
(f) Even though the respondent no.1 sought the explanation which was
satisfactorily given by the petitioner, the marks for the projects in respect of
which clarification was given was not given including scores claimed by M/s
Sembawang Engineers and Constructors Pvt. Ltd., were not awarded. The
relationship between M/s Sembawang Engineers & Constructors Pvt. Ltd. pursuant
to the clarification sought by the respondent no.1 was given by the letter dated
13th August 2008 and that explanation was not taken into account. It is lastly
submitted that even if it is assumed that the Two Member Committee Report
could have been taken into account, the said recommendations have not been
fully implemented.
The said recommendations read as follows:
"(iii) As a result of above exercise there is likelihood of
change in the shortlist of top six bidders. In case it is
decided to issue RFPs on the changed list of six
shortlisted bidders, this may lead to further
representation and possible litigation. Under the
circumstances there could be two options for carrying
the project further:-
(a) NHAI Board may consider one time relaxation for
this particular package and may increase the number
of bidders in the shortlist to accommodate those who
qualify in the review exercise and whose experience
score in higher than the final score(after review) of the
present lowest scorer (M/s Madhucon-Galfar-SREI) in
the already declared shortlist. However, its implication
on other seven project packages where evaluation is
going on will also need to be kept in view as also the
legal implications.
(b) NHAI Board may consider annulling the whole
exercise and direct re-invitation of RFQ for this package
(Hyderabad-Vijayawada). This would also meet the
ends of justice as all prospective bidders would have an
opportunity to apply and be evaluated as per the
present evaluation procedure."
(g) The respondent accepted the first recommendation while brushing aside the
second recommendation and this could not been done. It is finally submitted that
there is a gross disparity of the marks awarded by the respondent no.1 for
different projects for almost same experience.
(h) The documents filed by the respondent No. 3 Cintra Concessions De In
Infraestruras De Tranporte S.A. and Shapoorji Pallonji & Co. Ltd. in reply to the
clarification sought on 8th August, 2008 clearly shows that the said documents
specifically the certificate issued by the Statutory Auditors were ready much
before 8th August, 2008, i.e. on 24th July, 2008 and 28th July, 2008. The
respondent No. 3, therefore, had prior knowledge of the fact that clarification was
to be sought by the respondent No. 1.
5. The main grievances of the petitioner in WP(C) No.6419/2008 titled as M/s
Madhucon Projects Pvt. Ltd. & Anr. Vs. Union of India & Anr. as articulated by Mr.
C.A. Sundram, the learned senior counsel is as follows:
(a) The Government could not have directed NHAI to seek
clarifications because as per Clause 2.20, clarifications, if any, are to
be sought by NHAI on its own and not on the directions of the
Government. In terms of clause 2.20, it was in the discretion of NHAI
as to whether or not to seek clarifications. In other words, NHAI was
not obliged to seek clarifications. The defence taken by Union of India
(UOI) in its counter-affidavit that NHAI ought to have taken
clarifications is thus contrary to clause 2.20(i) of the RFQ.
(c) Such clarifications could not have been sought after the
completion of the shortlisting process. Clarifications, in terms of
clause 2.20(i) of the RFQ were meant for the purpose of facilitating
the evaluation of the applications. The evaluation process was
completed on 27th June 2008 when the shortlisted candidates were
declared. No clarifications could have been asked for or entertained
thereafter. Thus, in terms of Clause 2.20(ii) all the applicants were
barred from questioning the interpretation arrived at by NHAI.
Additionally, it needs to be noted that NHAI had sought clarifications
earlier, i.e. before completing the shortlisting and after receiving the
response to such clarifications, NHAI evaluated the applications and
then announced the names of shortlisted bidders on 27th June 2008.
(d) No clarifications could have been sought by NHAI on the basis of
representations received by Government from applicants, who had
failed to qualify, which representations were forwarded by the
Government to NHAI for consideration, comment and subsequently for
further action of seeking clarifications. The making of any
representation to NHAI was specifically barred under clause 2.21,
which is reproduced as under:
"2.21 Short-listing and notification
After the evaluation of Applications, the Authority would
announce a list of short-listed pre-qualified Applicants
(Bidders) who will be eligible for participation in the Bid Stage.
At the same time, the Authority would notify the other
Applicants that they have not been short-listed. The Authority
will not entertain any query or clarification from Applicants
who fail to qualify."
(e) The entire decision making process was vitiated, defective,
illegal, and contrary to the terms of the RFQ. Further, once
clarification had been sought for, and decision was taken, the
applicants were debarred from questioning the interpretation of
NHAI. Once the decision was taken, no representation or clarification
could have been entertained from applicants who had failed to qualify
as per clause 2.21 of the RFQ.
(f) Once the evaluation process was completed and the short list
was declared by the letter dated 27th June 2008, NHAI had no further
role to play insofar as evaluation under the RFQ was concerned.
There is no power of re-evaluation of review given in the RFQ.
(g) The respondents, particularly UOI has stated in its counter
affidavit that in terms of clause 2.20 of the RFQ, NHAI could have
sought clarifications from applicants. Since, this was not done, UOI
directed NHAI to seek clarification. There is no provision in the RFQ
which gives UOI the power to supervise the tender process and
further clarification in terms of clause 2.20 could have been sought by
NHAI for the purposes of evaluation of the applications. It was in the
discretion of NHAI whether or not to call from clarification and NHAI
could not have been directed to do so. A necessary corollary is that
clarifications, if any, could have been sought only till such time that
the process of evaluation was not complete. Once the evaluation
process was completed and the short-list was declared, there was no
provision in the RFQ under which clarification could have been sought
or entertained and there is no provision under which UOI could have
directed NHAI to call for clarifications.
(h) The entire process of re-evaluation was undertaken on the basis
of representations received from the unsuccessful bidder, who had
not been shortlisted for the Bid Stage. This was contrary to the
express terms of the RFQ, namely clause 2.20(ii) which barred any
applicant from questioning the decision arrived at by NHAI after
clarifications had been sought, and clause 2.21 thereof, which
provided that no clarification or query from any unsuccessful
applicant would be entertained.
(i) According to well established practice and procedure, NHAI had
no power to recall/review its order/decision once it had informed
petitioner that it had been pre-qualified for the Bid stage. NHAI by
seeking to consider representations received by from unsuccessful
applicants was acting in breach of Clause 2.21 of the RFQ. In terms of
Clause 2.21 of the RFQ, NHAI could not consider any representation
made by unsuccessful applicants. Furthermore, there was no
provision in the RFQ to keep the pre-qualification into abeyance.
(j) The arguments of the UOI regarding the inherent power of the
NHAI to carry out 're-evaluation or review', at least to the extent of
self-correction, to achieve the object of "seeking the best man for the
project" and the inter-linked argument of the inherent power of the
Government to intervene and direct NHAI to carry out 're-evaluation
or review', at least to the extent of self-correction, is wholly fallacious.
(l) The entertaining of representations from unsuccessful bidders;
constituting a committee to give recommendations; calling for
clarifications after the process of evaluation was over and list of short-
listed candidates had been declared; and carrying out re-evaluation,
was contrary to the terms of the RFQ and amounted to changing the
rules.
(m) The reliance by the respondents on Section 33 of National
Highway Authority of India Act, 1988 is totally misplaced since the
said section applies only to laying down of policy which admittedly in
the instant case is not applicable. The said section only permits the
issuance of a generic fiat on policy matters alone and does not permit
the issuance of person-specific directions based on individual
grievances brought to its notice. Should the said clause be read so
widely as to include the right to interference in every decision making
process with regard to award of any particular contract by giving a go-
by to the RFQ, the entire independence and autonomy of the authority
so created under National Highway Authority of India Act, 1988 would
be negated.
6. The learned Additional Solicitor General Shri Gopal Subramanium on behalf
of the Union of India (UOI) contended as follows:-
(a) By virtue of Section 3 of the National Highways Authority of India Act, 1988,
the NHAI has been constituted. Section 11 of the said Act empowers the Central
Government to vest in or to entrust to NHAI such national highway or stretch
thereof as may be specified in a notification to be published in the official gazette.
Proviso to Section 15 of the said Act states that no contract exceeding such value
or amount as the Central Government may prescribe shall be entered into by
NHAI without the prior approval of the Central Government. By virtue of Section
17 of the said Act, the Central Government has been empowered to provide any
capital that may be required by NHAI or pay to NHAI by way of loans or grants
such sums of money as it may consider necessary for the efficient discharge of
the functions by NHAI. Section 21 of the said Act mandates that the consent of the
Central Government is necessary before NHAI borrows money from any source.
By virtue of Section 24, the Central Government has an obligation to place the
annual report and auditor's report of NHAI before each House of Parliament.
Section 31 empowers the Central Government to temporarily divest NHAI of the
management of any national highway if it is of the opinion that in the public
interest it is necessary to do so. Section 32 empowers the Central Government to
supersede NHAI in specified situations. Section 33 empowers the Central
Government to issue directions on questions of policy to NHAI and NHAI shall be
bound by such directions. Sections 37 states that the rules and regulations made
under the said Act have to be placed before each House of Parliament.
(b) A perusal of the aforesaid provisions of the National Highways Act, 1956 and
the National Highways Authority of India Act, 1988 and Government of India
(Allocation of Business) Rules, 1961 clearly shows that national highways vest in
the Central Government and NHAI is an implementing agency of the Government
of India in matters relating to development of highways. In the present case, the
highway in question vests with the Central Government by virtue of the Schedule
to the National Highways Act, 1956. A perusal of the 1988 Act clearly shows that
the Central Government has the power to ensure that NHAI functions efficiently
and in a transparent manner. The provision relating to the consent of Central
Government being required before NHAI enters into contracts of a specified value
and the provision mandating prior approval of the Central Government clearly
shows the role played by the Central Government in the functioning of NHAI.
(c) In the present case, in December 2007, based on the model RFQ published by
the Planning Commission, NHAI invited applications from prospective bidders for
their pre-qualification of the project. As per clause 3.5.2 of the RFQ document
(which has been upheld by this Hon'ble Court), NHAI had the power to pre-qualify
and prepare a shortlist of 5 bidders which could go upto 6. NHAI constituted an
Evaluation Committee and took the help of financial consultants for carrying out
the evaluation. After the evaluation, 6 applicants were shortlisted and were
informed of the same by NHAI by letter dated 27th June 2008.
(d) After the shortlisting of the said 6 applicants, the Central Government received
representations from various unsuccessful applicants stating that they have been
wrongfully disqualified. On 2nd July 2008, the Central Government forwarded the
said representations to the Chairman, NHAI requesting him to look into the matter
and give his comments on the said representations. It was also requested that the
process of issue of RFP may be deferred by 10 days. On 4th July 2008, NHAI sent
its comments on the representations forwarded to it by the Central Government.
Along with the said letter, NHAI enclosed a representation received from another
unsuccessful applicant. In order to ensure that transparency is maintained, the
Central Government constituted a Committee on 11th July, 2008 consisting of two
members who were in the Board of NHAI to go into all the representations that
have been received. The report of the said Committee was required to be placed
before the NHAI Board which had to take a final decision in the matter. Since the
examination by the said Committee would take some time, the Central
Government by its letter dated 11th July 2008 requested the NHAI to defer the
issue of RFP. The two member Committee examined the matter and submitted its
report on 28th July 2008. By a letter dated 29th July 2008, the Central Government
forwarded the report of the Committee to NHAI. It was requested that the said
report may be placed before the NHAI Board along with the
recommendations/comments of the Chairman, NHAI. On 7th August, 2008, the
Central Government sent a letter to NHAI requesting NHAI to obtain necessary
clarifications and to immediately re-evaluate the applications. NHAI was
requested to place the findings of the re-evaluation before the NHAI Board for a
decision in the matter. Accordingly, the applications were re-evaluated and the
result of the re-evaluation exercise was considered by the NHAI Board in its
meeting held on 19th August 2008 which decided to qualify the six most qualified
applicants pursuant to the re-evaluation.
(e) The aforesaid chronology of events has been described only to show that the
role of the Government in the entire exercise has been to ensure that
transparency and fair play are adhered to. As the administrative Ministry of NHAI,
it is the duty and obligation of the Ministry of Shipping, Road Transport and
Highways, Government of India to intervene to ensure that the process of
tendering takes place in a transparent manner. As submitted earlier, if any
questions are raised with respect to the tender process in Parliament, it is the
Ministry of Shipping, Road Transparent and Highways, Government of India which
has to answer the said questions in Parliament. The Government of India is not
concerned with individual applicants and is only concerned with the process of
arriving at the shortlist of six most qualified applicants. In a project of such
magnitude, it is in public interest that the most qualified applicant gets the
contract and it is the duty of the Government to ensure that NHAI undertakes the
process in such a way that the most qualified applicant gets the project.
(f) There is a difference between 'intervention' by the Government and
'interference' by the Government in the functioning of NHAI. In the present case,
the Central Government has intervened by writing letters to NHAI forwarding the
representations received by the Government from unsuccessful applicants.
Further, the Government intervened by constituting a Committee consisting of
members of NHAI Board to look into the representations. The ultimate decision of
accepting the report of the said Committee was not that of the Government but of
the NHAI Board. The Government by its letters had only requested the NHAI Board
to take appropriate decision after considering the report of the Committee. The
ultimate decision for undertaking the re-evaluation based on the report of the
Committee was undertaken by the NHAI Board in its meeting held on 19th August,
2008. The attempt of the Petitioners to portray the intervention of the Central
Government to ensure transparency as interference in the functioning of NHAI is
misconceived.
(g) Therefore, it is submitted that the role of the Government was limited to
pointing out to NHAI the representations received by the Government and
constituting a Committee to look into the said representations. The argument that
the Government cannot intervene at all under any circumstance whatsoever in a
tender process being undertaken by NHAI is too farfetched and has far reaching
consequences. The Government definitely has a right and is in fact duty bound to
intervene if it is of the view that certain aspects need to be brought to the
attention of NHAI in order to ensure transparency and fair play. Needless to say,
as the administrative Ministry of NHAI, the Ministry of Shipping, Road Transport
and Highways, Government of India was well within its rights to write the letters
dated 11th July 2008, 29th July 2008 and 7th August 2008 to NHAI and was also
justified in constituting the aforesaid Committee on 11th July 2008. The intention
of the Government was bonafide and in any event no allegation of malafide has
been made by any of the parties.
7. The main plea of the petitioner which needs to be addressed by us is
whether the revaluation was legal and /or justified and indeed both the learned
counsel agreed that if this plea was held in favour of the petitioner, i.e., the power
to review at the behest of the unsuccessful applicants, then we need not go into
the other pleas raised by the learned counsel for the petitioners. It is necessary
therefore to consider the source of the process of revaluation. The revaluation
appears to have been subsequent to the letters dated 7 th July 2008 and 10th July
2008, which were preceded by the letter dated 30th June 2008 by M/s Reliance
Infrastructure Ltd. and other representations received from M/s Isolux-Soma-
Omaxe Consortium, M/s Macquarie and M/s Cintra. The said representation was
addressed to the Secretary, Ministry of Road, Transport and Highways.
8. However, a letter dated 2nd July 2008 was received by the NHAI from the
Government of India, Ministry of Shipping, Road Transport and Highways. By this
letter dated 2nd July 2008, the Government forwarded representations received
from certain unsuccessful aspirants for the tender and directed that the matter
may be reviewed by the NHAI and asked for forwarding of the comments of the
NHAI on the representations to the ministry within three days. It was also directed
that the issue of Request for Proposal (RFP) document may be deferred for at
least 10 days. The said letter was replied to and comments sent by the NHAI by
its letter dated 4th July 2008. The relevant portion of the said letter reads as
follows:-
"Sub.: Representations from M/s. Isolux-Soma-Omaxe
Consortium, M/s. Reliance Infrastructure Ltd., M/s. Macquarie
and M/s. Cintra in respect of RFQ process for four laning of the
Hyderabad-Vijayawada and Vijayawada - Machilipatnam
Sections on NH-9 under NHDP Phase-IIIA.
Ref.: Ministry letters No. RW/NH-37011/33/2008 - PIC dated
2nd July 2008.
Sir, With reference to Ministry's three letters on the subject
cited above, it is submitted that the matter in respect of
representations of M/s. Isolux-Soma-Omaxe Consortium, M/s.
Reliance Energy Ltd. and M/s. Macquarie Securities Asia Pvt.
Ltd. in respect of RFQ process for four laning of the Hyderabad-
Vijayawada and Vijayawada - Machilipatnam sections on NH-9
under NHDP Phase III has been reviewed and following
submissions are made:
(i) Prequalification process for following 3 stretches has
been completed by NHAI till date:-
(a) Hyderabad-Vijayawada
(b) MP/Maharashtra Border-Dhule
(c) Pimpalgaon-Gonde
(ii) The evaluation of RFQs for Vijayawada-
Machilipatnam is still under process.
2. NHAI has also received a representation from M/s.
Cintra (copy enclosed for ready reference) in this regard.
3. Evaluation of RFQ for Hyderabad-Vijayawada stretch
has been carried out by M/s. Almondz Global Securities Ltd.,
the Financial Consultants. Consultants have mentioned in
their report that while carrying out evaluation, in the event of
related document being deficient in certain aspects, attempts
were made to evaluate by interpreting the
information/documents available elsewhere in the application
for qualification. It has further been mentioned by the
Consultants that at times, different documents could be
interpreted in different ways thereby introducing an element of
subjectivity in the evaluation process and accordingly
evaluation has been carried out based on the information as
brought by the relevant documents e.g. Statutory Auditors
certificate relating to Associate status and quoted experience.
This approach had also become inevitable due to too
voluminous documents submitted by the applicants so as to
pre-qualify in top six short-listed applicants.
4. The applications of all responsive applicants have been
evaluated as per Clause 2.2.9 of RFQ road with the reply given
in the pre-bid meeting with respect to Associate status and the
eligibility criteria prescribed in Clause 3 of RFQ. Further,
evaluation is Annexure IV instructions No. 13 and 14.
5. Applicant-wise comments on the reply them
representations made by them are as under:-
(a) M/s. Isolux-Soma-Omaxe Consortium
Name of Claimed Evaluated Comments
member/Asso score Score (response for
ciates all difference)
4047.13 3205.80 (i) Experience
M/s. Isolux-
claimed for the
Corsan
period not
Concessions
related to
S.A. (member)
prescribed five
year period has
been excluded.
(ii) Experience
claimed relating
to project "not
commissioned"
under category 1
&2 has been
excluded.
Corsan Corviam 6048.85 0 There is no
Construction, document
S.A. certified by
(associates) Statutory Auditor
to establish
"Associate"
relationship
Isolux 895.56 0 There is no
Ingenieria, document
S.A.(associate) certified by
Statutory Auditor
to establish
"Associate"
relationship.
Soma 642.32 0 The applicant has
Enterprise submitted
Ltd.,(member) certificates from
a Charted
Accountant,
which does not
mention that it is
from the
Statutory
Auditor.
Omaxe 0 0 -
Infrastructure
and
Construction
(P) Ltd.
(member)
Omaxe Ltd. 2929.19 0 The applicant has
(associate) submined
certificates from
a Charted
Accountant,
which does not
mention that it is
from the
Statutory Auditor.
Omaxe 1122.80 0 The applicant has
Buildhome (P) submined
Ltd. (associate) certificates from
a Charted
Accountant,
which does not
mention that it is
from the
Statutory Auditor.
It is relevant to refer to the clarification given by NHAI to the
quarries received from applicants. It was clearly stated that in
case of an Associate, supporting statement s certified by
Statutory Auditor should be provided.
Annexure-IV of the RFQ specifies two Formats
(a) Certificate from the Statutory Auditor regarding BOT
Projects and
(b) Certificate from the Statutory Auditor/Client regarding
construction experience on eligible projects.
Instructions contained in Annexure-IV Sl. No. 12 states that
certificate from the Client or the Statutory Auditor must be
furnished as per format. Similarly, instruction contained in
Annexure-IV Sl. No. 13 & 14 states that if the applicant is
claiming for experience under the Category 1 and 2, or
Category 3 an4 4 it should provide a certificate from its
Statutory Auditor regarding BOT projects or certificate from its
Statutory Auditor/Client regarding construction works
respectively.
The applicant has not provided the mandatory Statutory
Auditors Certificate while claiming their individual, as well as
their Associates technical capacity. This has resulted in
reduction of their claimed technical score.
Besides total experience score, as per Clause 2.2.2 (A)(iii)
Para-3 the applicants are required to have at least 1/4th of the
Threshold Technical from the eligible project in Category 1 and
/ or Category 2, specified in Clause 3.2.1 (i.e. Highway Sector)
The applicant has scored nil in his category due to deficient
certificate and were declared ineligible
(b) M/s. Reliance Energy Ltd.
Name of Claimed Evaluated Remark
score Score
member/Associ
ates
Reliance Energy 16708.47 0 In the experience
Ltd. (member) Certificate it is
not mentioned
that it is not
mentioned that it
is from Statutory
Auditor
Reliance 32501.22 0 Certificate in
Communication support of
s Ltd. Associate
(associate) relationship with
AAA
Communication
(P) Ltd. (member)
is from Charted
Accountant but it
has not been
mentioned that it
is from Statutory
Auditor
JPTEGOL 418.98 439.19 Due to the
Applicable
Foreign Currency
Conversion rate
there is as
increase in the
Technical Store.
The reduction in score is due to (i) non-submission of
"documents certified by Statutory Auditor" in support of
Associate Status and (ii) submission of certificates from a
Charted Accountant, which does not mentioned that it is from
the Statutory Auditor. In addition, the experience relating to
electricity business has been quoted in consolidated form
without giving the required project specific details.
(c) Gammon Infrastructure Projects Limited-Macquarie
Securities (Asia) PTE Limited
Name of Claimed Evaluated Remark
member/Ass score Score
ociates
Gammon 1841.58 0 • In the Experience
Infrastructure Certificate it is not
Projects Ltd. mentioned that it is
(member) from Statutory
Auditor.
• Statutory Auditor
Certificate not
submitted in some
cases.
• Experience
claimed relating to
project "not
commissioned"
under category 1 & 2
has been excluded.
Gammon 1848.18 1742.48 Experience claimed for
India Ltd. the period not related
to prescribed five year
period has been
excluded.
Macquarie 0 0 -
Securities
(Asia) Pte.
Ltd.
(member)
Macquarie 24616.25 0 There is no document
Infrastructure certified by Statutory
Group Auditor to establish
(associate) "Associate
relationship".
Macquarie 37372 0 There is no document
Airports certified by Statutory
(associate) Auditor to establish
"Associate
relationship".
The reduction in score of M/s. Gammon Infrastructure Projects
Ltd. is due to (i) non submission of Statutory Auditor
Certificate, (ii) submission of certificates in which it is not
mentioned that they are from Statutory Auditor and (iii)
experience claimed relating to project not commissioned
under category 1 & 2. In case of M/s. Gammon India Ltd., the
reduction is due to exclusion of claimed experience not
relating to the prescribed five years period.
In case of M/s. Macquarie Securities (Asia) Pte. Ltd., the
claimed score has not been taken into account in the absence
of a document certified by Statutory Auditor to establish
associate relationship with M/s. Macquaire Infrastructure
Group Group and M/s. Macquaire Airports, the entities whose
experience has been claimed as associate.
The applicant score therefore, relates to M/s. Gammon
Infrastructure Projects Ltd. & M/s. Gammon India Ltd. and the
score of M/s. Macquarie is Nil.
It will not be out of place to mention here that NHAI has
completed evaluation in two more projects namely
MP/Maharashtra Border to Dhule and Pimpalgaon to Gonde in
the State of Maharashtra in which this consortium is an
applicant and M/s. Pricewater House Coopers are the
Financial Consultants. The consortium has been shortlisted in
the above two projects. However, their inclusion is solely on
account of score of M/s. Gammon Infrastructure Projects Ltd.
and the score of M/s. Macquarie Securities (Asia) Pte. Ltd. has
been evaluated Nil in these case as well.
(d) Cintra Concessioners De Infrastructuras
De Transporte S.A.
A representation from Cintra Concesiones De Infrastructuras
De Transporte S.A. has also been received in the office of
Chairman, NHAI. In their representation the applicant has
stated that they have submitted all documents in due
compliance of RFQ (copy enclosed). However, during
evaluation it was noted that the applicant in this case has
submitted "independent Reasonable Assurance Report" by a
Charted Accountant instead of a certificate in the prescribed
format from the Statutory Auditor.
Further, M/s. Cintra has stated under item 3 on page 1 of their
representation that in the said report, on page 2 to 8 it is
mentioned that for "Statutory Auditor Certificate see page 9",
whereas in the documents submitted it is written for "Statutory
Auditor Certificate see page 9". Further, pages 2 to 8 have not
been authenticated by the signatory of the report.
It has also been stated that PWC has issued "Statement of
Associates". The details have been rechecked, but no such
statement in support of claimed experience could be found.
This letter is being issued with approval of the Competent
Authority."
9. Another letter dated 11th July 2008 was received by the NHAI from the
Government of India, Ministry of Shipping, Road Transport and Highways wherein
the Government has directed the NHAI to place the matter before the Board of
NHAI and requested the authority that the process of issue of RFP be deferred
until further intimation. The letter of 11 July, 2008 to the NHAI by the Ministry of
Shipping, Road Transport and Highways reads as under:-
"Sub.: Representation from M/s. Reliance Infrastructure
Ltd. in respect of RFQ process from four laning of the
Hyderabad-Vijayawada section on NH-9 under NHDP
Phase IIIA. Reg.
Sir, Please refer to your reply submitted vide letter dated
4th July 2008, in response to our letters dated 2nd July
2008 regarding representations/complaints of some
applicants on the evaluation process for aforesaid
stretch.
The reply mentions that the applicant has submitted
certificates from a Charted Accountant which does not
mention that it is from the statutory auditor. Generally,
RFQs allows employer to seek clarifications in case of any
doubt/ambiguity in the information provided by bidders.
In this case it appears that such clarifications were not
obtained by NHAI while seeking other clarification. It
would not be out of the context to mention here that
NHAI had earlier sought clarification from the bidders in
similar cases. During bid evaluation under NHDP - V,
some discrepancies were observed in the ECs submitted
by bidders and NHAI had sought clarifications after
seeking legal advice which had opined as under:-
'Rejection of the bid on this account alone may be
challenged on the ground that the NHAI is acting in the
technical manner and without due application of mind.'
It appears that different approach/yardstick has been
followed in the evaluation of bids of aforesaid package
and under NHDP-V.
Meanwhile on more representation from M/s. Reliance
Infrastructure Ltd., dated 7th July 2008 (copy enclosed)
has been received. It has been indicated in the
representation that some other companies have been
qualified / shortlisted though they submitted documents
with many other serious irregularities, in addition to the
so called irregularities in the documents of M/s. Reliance.
It is, therefore, requested that the matter may be placed
before the Authority (Board). It is also requested that the
process of issue of RFP may be deferred until further
intimation."
10. Further thereto the Government of India, Ministry of Shipping, Road
Transport and Highways appointed a two Member Committee comprising of the
Director General (Road Development) and Special Secretary and Member-
Technical, NHAI to review the entire matter. The said committee submitted its
Report, which was forwarded by the Government of India, Ministry of Shipping,
Road Transport and Highways under cover of its letter dated 29th July 2008 which
reads as under:-
"Sub.:- Representations against RFQ process for four
laning of the Hyderabad - Vijayawada section of NH-9
under NHDP Phase-III-Report of the Committee-
regarding.
Sir, Kindly find enclosed herewith a copy of the report of
the two member Committee constituted in the Ministry
on the above mentioned subject vide its OM dated
11.07.2008.
It is, therefore, requested that the report of the said
Committee may by placed before the NHAI Board along
with the recommendations / comments of the Chairman,
NHAI urgently for a decision of the matter."
11. One of the recommendations of the Two Member Committee to the
Authority was to re-look into the qualification exercise for the project package
following the same procedure as for the other seven project packages and ask the
bidders for clarification on the qualification aspects without allowing them to
submit additional document and without any addition in further claims of score as
was being followed in other seven project packages.
12. The learned counsel for the UOI Mr. Gaurav Duggal was directed on 20th
November 2008 to hand over the list of dates showing the passage of the
representation of the tender process through the Ministry within three days. The
order was complied only on 8th December 2008. However, since we have to
examine the validity of the decision making process, we consider it necessary to
take on record and analyse the documents relating to the passage of
representation of the entire tender process as filed by the learned counsel for
NHAI and particularly the file notings of the Project Implementation Cell of the
Ministry of Shipping, Road Transport and Highways which are as under:
"(A) Para-5 of file noting dated 11th July, 2008
5. In this context note of Hon'ble Minister at page 4/ante
may kindly be referred. It has been desired by Hon'ble Minister
that "with reference to all representations in this project, once
the report is received if required clarification on technical
issues could be sought from Planning Commission/Ministry of
Finance.
(B) Para-2 of file noting dated 30th July, 2008
2. In the matter relating representations against the RFQ
process completed by NHAI in respect of four laning of
Hyderabad-Vijayawada section on NH-9 in Andhra Pradesh on
BOT basis, a two member Committee consisting of DG (RD) &
SS and Sh. Nirmaljit Singh, Member (Tech.) NHAI was
constituted with the approval of the Hon'ble Minister (S, RT&H)
on 11.07.2008. The report of the Committee has been
received vide their letter dt. 28.07.2008.
(C) File noting dated 5th August, 2008
A meeting was taken by Hon'ble Minister (S, RT&H) on
5.8.2008 to review the progress of evaluation of RFQ and
award of concessions for projects under NHDP. The meeting
was attended by Secretary (RT&H), DG (RD) & SS, Advisor to
Dy. Chairman, NHAI and concerned officials of NHAI and the
Ministry. In the subsequent meeting taken by Secretary
(RT&H), the matter relating to Hyderabad-Vijayawada project
was also discussed. In this regard, it was mentioned that the
report of the two Member Committee in the matter has already
been forwarded to NHAI vide this Minister's letter of even no.
dated 29.7.2008. During the discussion, it was mentioned by
the Chairman, NHAI and the concerned Member (Tech.) that as
per the committee report the queries/clarification to be asked
from the applicants of the project have already been prepared
and are ready for issue. However, it was indicated that the
previous decision taken by Chairman, NHAI can't be changed
at the same level suo-motto."
13. A letter dated 7th August 2008 was received by NHAI from the Government
of India, Ministry of Shipping, Road Transport and Highways wherein it was stated
as follows:
"Sub.: RFQ process for four laning of the Hyderabad-
Vijayawada section of NH-9 under NHDP Phase-III-
regarding.
Sir, A meeting was taken by Hon'ble Minister (S,RT&H)
on 05.08.2008 to review the progress of evaluation of
RFQ and award of concessions of projects under NHDP.
In the meeting taken by Secretary (RT&H) subsequent
the above meeting, the matter relating to Hyderabad -
Vijayawada project was also discussed. In this regard, it
may be recalled that the report of the two Member
Committee has been forwarded vide this Ministry's letter
of even no. dated 29.07.2008. During the discussion, it
was mentioned by you and the concerned
Member(Tech.) that as per the committee report the
queries/clarification to be asked from the applicants of
the project have already been prepared and are yet to
be issued.
In order to expedite the process, it is requested that
necessary clarifications from the applicants may be
obtained immediately and the applications re-evaluated.
The findings of the re-evaluation may be placed before
the NHAI Board for a decision in the matter."
14. It is thus clear from the above letter dated 7th August, 2008 that the Union
of India has not only forwarded the representations received from the
unsuccessful bidders who failed to qualify after the first evaluation conducted by
the NHAI, but also issued directions to NHAI to put the process on hold and the
Ministry had pursuant to the report of the two member committee to look into the
evaluation, directed the NHAI to seek clarifications from the bidders and re-
evaluate the bids. In fact, it is apparent from the letter dated August 7, 2008 that
the Ministry of Shipping, Road Transport and Highways has itself been reviewing
the progress of evaluation of RFQ and award of concessions for projects under
NHDP. The above action on the part of Union of India is not contemplated by the
provisions of the NHAI Act which envisages the NHAI as an autonomous statutory
body. The actions of the Union of India in the present case indicates that not only
the autonomy granted to NHAI by the Parliament by a statute enacted in this
regard been curtailed and eroded, but the NHAI is sought to be reduced to a mere
department of the Government with the Ministry of Shipping, Road Transport and
Highways. The mandate of the letter dated 7th August, 2008 clearly spells out the
course of action in no certain terms and merely ask the NHAI to endorse formally
the decision expressed in the said letter. The entire process adopted from 2 nd July
2008 to 26th August 2008 clearly shows that the mandate of section 33 had been
abrogated and the decision had already been taken to re-evaluate the bid and the
NHAI was merely asked to formally act on such a decision.
15. Considerable emphasis has been laid upon Section 33 of the National
Highways Authority of India Act, 1988 (hereinafter referred to as "the NHAI Act").
In fact, in our view, it is necessary to extract Sections 31, 32 in addition to Section
33 of the NHAI Act which read as follows:
"31. Power of the Central Government to
temporarily divest the Authority of the
management of any national highway - (1) If, at
any time, the Central Government is of opinion that in
the public interest it is necessary or expedient so to do,
it may, by order, direct the Authority to entrust the
development, maintenance or management of any
national highway or a part thereof with effect from such
date and for such period and to such person as may be
specified in the order and the Authority shall be bound
to comply with such direction.
(2) Where development, maintenance or management
of any national highway or part thereof is entrusted to
any person specified under sub-section (1) (hereafter in
this section referred to as the authorized person), the
Authority shall cease to exercise and discharge all its
powers and functions under this Act in relation to such
national highway or part thereof and such powers and
functions shall be exercised and discharged by the
authorized person in accordance with the instructions,
if any, which the Central Government may give to the
authorized person from time to time:
Provided that no such power or function as may be
specified by the Central Government by a general or
special order shall be exercised or discharged by the
authorized person except with the previous sanction of
the Central Government.
(3) The Central Government may reduce or extend the
period mentioned in sub-section (1) as it considers
necessary.
(4) During the operation of an order made under sub-
section (1), it shall be competent for the Central
Government to issue, from time to time, such
directions to the Authority as are necessary to enable
the authorized person to exercise the powers and
discharge the functions of the Authority under this Act
in relation to the national highway or part thereof, the
management of which has been entrusted to him and
in particular, to transfer any sum of money from the
Fund of the Authority to the authorized person for the
management of the national highway or part thereof
and every such direction shall be complied with by the
Authority.
(5) On the cesser of operation of any order made under
sub-section(1) in relation to any national highway or
part thereof, the authorized person shall cease to
exercise and perform the powers and functions of the
Authority under this Act in relation to such national
highway or part thereof and the Authority shall
continue to exercise and perform such powers and
functions in accordance with the provisions of this Act.
(6) On the cesser of operation of any order made under
sub-section (1) in relation to any national highway or
part thereof, the authorized person shall hand over to
the Authority any property (including any sum of
money or other asset) remaining with him in
connection with the management of such national
highway or part thereof.
32. Power of the Central Government to
supersede the Authority - (1) If, at any time, the
Central Government is of opinion -
(a) that on account of a grave emergency the Authority
is unable to discharge the functions and duties
imposed on it by or under the provisions of this Act; or
(b) that the Authority has persistently made default in
complying with any direction issued by the Central
Government under this Act or in the discharge of the
functions and duties imposed on it by or under the
provisions of this Act; or
I that circumstances exist which render it necessary in
the public interest so to do, the Central Government
may, by notification in the Official Gazette, supersede
the Authority for such period, not exceeding one year,
as may be specified in the notification:
Provided that before issuing a notification under this
sub-section for the reasons mentioned in Clause (b),
the Central Government shall give a reasonable
opportunity to the Authority to show cause why it
should not be superseded and shall consider the
explanations and objections, if any, of the Authority.
(2) Upon the publication of a notification under sub-
section (1) superseding the Authority -
(a) all the members shall, as from the date of
supersession, vacate their office as such;
(b) all the powers, functions and duties which may, or
under the provisions of this Act, be exercised or
discharged by or on behalf of the Authority, shall, until
the Authority is reconstituted under sub-section (3) be
exercised and discharged by such person or persons as
the Central Government may direct;
I all property owned or controlled by the authority shall,
until the Authority is reconstituted under sub-section
(3), vest in the Central Government.
(3) On the expiration of the period of supersession
specified in the notification issued under sub-section
(1), the Central Government may-
(a) extend the period of supersession for such further
term, not exceeding one year, as it may consider
necessary; or
(b) reconstitute the Authority by fresh appointment and
in such a case, any person who vacated office under
clause (a) of sub-section (2) shall not be deemed
disqualified for appointment:
Provided that the Central Government may, at any time
before the expiration of the period of supersession
whether as originally, specified under sub-section (1) or
as extended under this sub-section, take action under
clause (b) of this sub-section.
(4) The Central Government shall cause a notification
issued under sub-section (1) or sub-section (3) and a
full report of any action taken under this section and
the circumstances leading to such action to be laid
before both Houses of Parliament as soon as may be.
33. Power of the Central Government to issue
directions: - (1) Without prejudice to the other
provisions of this Act, the Authority shall, in the
discharge of its functions and duties under this Act, be
bound by such directions on questions of policy as the
Central Government may give to it in writing from time
to time.
(2) The decision of the Central Government whether a
question is one of policy or not shall be final."
16. In our view, the mandate of the above statutory provisions is clear and
indicates beyond doubt the nature and extent of the control of the Government
over a statutory authority such as the National Highway Authority of India which is
a Public Sector Undertaking, meant for construction and maintenance work of the
roads and highways. The NHAI being a Public Sector Undertaking certainly could
be given policy directions under Section 33 of the NHAI Act.
17. We have no hesitation in agreeing with the plea of Shri Gopal
Subramanium, the learned Additional Solicitor General appearing for the Union of
India that the Act mandates as under:
a) Sections 3, 11, proviso to Section 15, Section 17 clearly indicate that NHAI is a
creature of the Central Government created by the medium of NHAI Act.
b) Section 21 also indicates the control of the Central Government of any
borrowing by NHAI.
c) Section 24 places an obligation on the Ministry to place annual report and the
auditor's report of the NHAI before the Parliament.
d) Section 31 also extends the control of the Ministry to temporarily divest NHAI of
the management of any national highway, if it is thought that in public interest it
is necessary to do so.
e) Section 32 empowers the Central Government to supersede NHAI in specified
situation;
f) Section 37 states that the rules and regulations made under the Act are to be
placed before each House of Parliament.
g) The provisions of the National Highways Act, 1956, the National Highways
Authority of India Act, 1988 and the Government of India (Allocation of Business)
Rules, 1961 clearly show that the national highways vest in the Central
Government and NHAI is an implementing agency of the Government of India
created by the Parliament in matters relating to development of highways.
We agree with the plea of the learned ASG that the Central Government has the
power to ensure efficiency and transparency of the functioning of the NHAI. The
financial sanction of the specified amounts from the Government also shows the
role of the Central Government in the functioning of the NHAI. We have no
hesitation even in agreeing with the above plea of the learned ASG but, in our
view, the aforesaid plea indeed shows the nature and extent of the statutorily
mandated administrative control, the financial control and the power to divest
certain highways vesting with the Government of India. In our view, the nature
and extent of the control having been specified by the various provisions of the
Act delineated by the learned ASG, leave no further scope for intervention save
and except in the manner indicated by Section 33.
18. In our view, the nature, extent, control and intervention of the Government
are clearly specified in the above provisions noted by us. Since the Parliament has
prescribed the nature and manner of control of the Ministry over the NHAI, such
control, in our view, is sufficient to ensure the proper, transparent, efficient and
independent functioning of NHAI. The very nature and detailed extent of the
above control clearly indicates that apart from the above control there can be
policy directions by the Ministry to the NHAI under Section 33 of the Act. The
crucial question which arises in the present writ petition is whether the impugned
intervention by the Ministry can fall within the scope of Section 33 or whether the
actions or complaints are counter to the scheme delineated by Section 33 of the
Act. However, the very nature of the power vested in the Government through
administrative Ministry, i.e., Ministry of Shipping, Road, Transport & Highway
under Section 31 and 32 of the Act clearly shows that the powers of the NHAI are
not unbridled and the Government can in public interest effectively divest a
malfunctioning NHAI from the control of a particular National Highway. An even
stronger power to supersede the NHAI also exists with the Government. If either
under Section 31 the Hyderabad-Vijaywada Highway was taken over by the
Central Govt. from the control of the NHAI or the authority had been superseded
for persistent misconduct under Section 32, then the impugned actions of the
Government to ensure the revaluation of the bids through the NHAI could have
been sustained in law. However, since action was admittedly not taken under
Sections 31 and 32 of the Act and purportedly taken under Section 33 of the Act,
we are satisfied that the impugned action of revaluation could not have been
directed by the Ministry to be taken by the NHAI in the present case.
19. However, the petitioner has rightly submitted that such policy directions
could not extend to giving of detailed directions in respect of a particular tender
by the Government of India. This plea of the petitioner is in addition to the plea
that while it was open to the UOI to seek clarification from the bidders this could
not be done at the behest of an unsuccessful applicant which is clearly proscribed
by Clause 2.21. Reliance has been laid upon a decision of the Division Bench of
this Court in the case of Arun K. Saraf & anr. V. Lt. Governor of Delhi, 52
(1993) DLT 307, and in particular, paragraphs 10 and 11 which read as follows:
"10. The Vice-Chairman had requested the Secretary,
Ministry of Urban Development that the decision of the
Government be communicated on or before 13.3.93. In
the file of the Ministry there is nothing on record as to
on what basis the State Minister for Urban
Development issued the direction to the DDA not to
accept the valid bid. When the reserved price has
specifically mentioned and adequate publicity had
been made and the tender was accepted following the
procedure with the approval of the LG of Delhi who is
Chairman of DDA and the DDA itself has represented to
the Ministry that if this tender is not accepted the DDA
is apprehensive that there would be financial loss
leading to the audit and other objections. The Secretary
has also opined that the Government should not
interfere in this matter.
11. We feel that the action of the State Minister in
issuing a directive under Section 41 of the DDA Act was
rather arbitrary. No material whatsoever was with him
to move in such a manner. Normally such a note by the
Minister should show as to how he got the information
and whether he considered the same to be reliable.
Minister should have been aware that DDA is a creation
of statute of the Parliament and there has to be no
interference by the Central Government otherwise as
provided by law, i.e., DDA Act, particularly in matters
which have been examined at all level by appropriate
authority and no mala fide is alleged or involved.
Undue interference by the Central Government in areas
which are occupied by rules and regulations of DDA is
to be avoided otherwise the whole purpose of enacting
a Central Act and to incorporate a statutory body would
become redundant and nugatory. This may result in
uncalled for decision and arbitrary actions. In the
circumstances of the case, we find the impugned action
of the Central Government neither fair nor just and
rather arbitrary."
20. In the present case, the Union of India/ Ministry's direction to NHAI to put
the process of selection on hold, appointment of the two member committee to
look into the evaluation at the behest and instance of the unsuccessful applicant
contrary to clause 2.21 of the RFQ and giving of directions to the NHAI to seek
clarifications from the bidders and re-evaluation of the bids, does not involve any
matter of policy as envisaged by Section 33 of the NHAI Act. Such intervention in
policy matters fetters the administrative autonomy. Jurisdiction statutorily vested
in the NHAI by the Parliament under Section 33 is not to be exercised for
interfering with the routine functions of the NHAI or in its day to day business of
which evaluation of bids received from interested parties pursuant to a Request
for Proposal issued by NHAI is a part.
21. The approach to the Secretary of Ministry of Shipping, Road Transport and
Highways by the unsuccessful bidders amounted to circumventing the bar
imposed by clause 2.21. Thus, the unsuccessful bidders in order to achieve what
was forbidden by clause 2.21 adopted the route of approaching the Ministry. In
our view this is not permissible as it is an indirect recourse to power of review
which is not permissible under clause 2.21. Such unsuccessful bidders could
always challenge their wrongful exclusion by recourse to a court of law. However,
this case demonstrated that a route adopted by the unsuccessful bidders by
approaching the Ministry and in particular the manner and method by which the
evaluation process was practically directed by the Ministry demonstrates that the
action of the Ministry travelled beyond the mandate of Section 33.
22. However, we make it clear that our findings should not be construed to
mean that the Ministry of Shipping, Road Transport and Highways, as an
administrative Ministry of the NHAI cannot forward what appear to be genuine
complaints to the NHAI. To adopt such a construction would in our view denude
the Ministry of any administrative control over the NHAI. However, in our view if
such a complaint/grievance/representation is forwarded by the Ministry to the
NHAI, it could and should be processed in terms of the process given in the tender
terms as per Clause 2.20 which reads as under:-
"2.20 Clarification
(i) To facilitate evaluation of Applications, the
Authority may, at its sole discretion, seek
clarifications from any Applicant regarding its
Application. Such clarification(s) shall be provided
within the time specified by the Authority for this
purpose. Any request for clarification(s) and all
clarification(s) shall be in writing.
(ii) If an Applicant does not provide clarifications
sought under Sub-Clause (i) above within the
prescribed time, its Application shall be liable to be
rejected. In case the Application is not rejected, the
Authority may proceed to evaluate the Application
by construing the particulars requiring clarification
to the best of its understanding, and the Applicant
shall be barred from subsequently questioning such
interpretation of the Authority."
(emphasis supplied)
It is for the NHAI then to raise queries and seek clarification in accordance with
Clause 2.20. This interpretation of the interplay of the power and jurisdiction and
the extent of the Ministry's control would in our view adequately protect the
public interest inherent in the mandate of Section 33 without in any manner
denuding the administrative control of the Ministry and the statutory autonomy
granted by the NHAI Act.
23. The NHAI Act indicates that to execute vital infrastructural projects
involving massive outlay of funds and resources and considering the nature of the
work required to be executed, the participation of international bidders is
anticipated and expected. It is evident that the NHAI Act was enacted to
constitute an autonomous body such as the NHAI to lend assurance of the
autonomy of the NHAI to large scale investors and in particular international
infrastructure companies. Such an assurance was inherent in the highway project
and the regulator being bound only by the statute without any other interventions
except Section 33. Section 33 clearly expresses the parliamentary concern about
the nature of intervention and control of the Ministry and the preservation of the
autonomy of the NHAI in its day-to-day functioning.
In the present case, while no lack of bonafide can be attributed to the manner of
intervention by the Ministry which may have been motivated to redress a
grievance, which in one or two cases may appear to be entirely genuine,
nevertheless, such intervention was not contemplated by the Act. The Ministry
could have certainly forwarded the representation as part of its administrative
control over the Ministry for consideration by the NHAI, who then could have
considered it as mandated by Clause 2.20 which permits NHAI to seek
clarification. However, the appointment of a Committee and the day-to-day
monitoring and control by the Ministry, in our view, does not accord with the
mandate of Section 33 of the Act. A policy matter under the mandate of Section
33 would contemplate a general policy direction, such as, to indicate the choice of
field generally.
24. The learned counsel for the petitioner GMR Infrastructure Ltd. has raised
the plea that as per the RFQ, those projects ought to have been considered by the
NHAI where even part of the project had been commissioned/completed and not
the whole project itself. However, we are unable to agree with the plea raised by
the petitioner as this formula of exclusion of non-completed/commissioned
projects has been uniformly applied by the NHAI to all parties taking part in the
tender proceedings. It is also to be seen that if partial work is taken into account,
it could lead to a major problem itself as in the event of the project either being
abandoned or not being completed satisfactorily, the bidder would have already
got the benefit of the marks for such an incomplete project, thus making the
whole process vulnerable to error.
25. In view of the above findings, the rule in the writ petition is made absolute.
We quash the letter dated 26th August, 2008 issued by the NHAI to the
petitioners, i.e., GMR Infrastructure Ltd. and Madhucon Projects Pvt. Ltd. We also
uphold the validity of the letter dated 27th June, 2008 informing the
petitioners that they have pre-qualified for the bid stage of the tender. Any action
taken by the Respondent NHAI subsequent to the letter dated 27th June, 2008
stands quashed and set aside. Consequently, the writ petitions bearing Nos.
6792/2008 and 6419/2008 filed by GMR Infrastructure Ltd. and Madhucon Project
Pvt. Ltd. respectively are allowed and accordingly disposed of.
26. It is also pertinent to note that a public authority needs freedom from
controls applicable to ordinary governmental department to the extent that such
controls are unduly restrictive for an agency with commercial functions. Thus, the
autonomy of a public sector enterprise constitutes an important facet of modern
governance of State. This issue has been dealt with felicitously and in great detail
in the concurring judgment. The view in the concurring judgment are fully
endorsed and adopted for arriving at the conclusions in this judgment.
MANMOHAN, J. - (CONCURRING)
1. While I concur with the conclusions in the Division Bench judgment
delivered by my learned brother Justice Mukul Mudgal, but keeping in view the
importance of the issues involved, namely, the interse relationship between the
Central Government and a public enterprise and the power of Central Government
to intervene in tenders floated by public enterprise, I wish to place on record my
views in the matter.
2. 'Public Enterprise' is a very broad term. It includes all the regulatory,
promotional and productive activities of the modern State. However, Public
Enterprise may be organized and managed either as a departmental undertaking
like Railways or a local body like New Delhi Municipal Council (NDMC) or a
company registered under the Companies Act, like National Thermal Power
Corporation (NTPC) or a statutory corporation like Life Insurance Corporation (LIC)
or statutory authority like National Highways Authority of India (hereinafter
referred to as 'NHAI').
3. A statutory authority is one that is created by an Act of Legislature, which
defines its power, liabilities and prescribes the form of management as well as its
relationship with the Government. Admittedly, a statutory authority though
wholly owned by the State has a legal personality separate and independent from
the Government.
4. The learned Additional Solicitor General, Mr. Gopal Subramaniam, as
recorded by my learned brother, Justice Mukul Mudgal, submitted that the intent
behind the Ministry of Shipping, Road Transport and Highways' (hereinafter
referred to as 'the Ministry') direction to revaluate the bids was only to ensure
that NHAI acts fairly and in a transparent manner. He submitted that the Ministry,
keeping in view its accountability to Parliament and its statutory control over NHAI
had only corrected a manifest error and its direction to revaluate under Section 33
was only an intervention and not an interference with the day-to-day functioning
of a statutory authority. He further submitted that the said direction did not dilute
the essential tendering purpose and process.
5. Though, Mr. Subramaniam submitted that the Ministry had not interfered in
the functioning of NHAI, the counter affidavit of NHAI candidly admits that the
revaluation of the bids had been done only in accordance with the directions of
the Ministry. The relevant extract of the counter affidavit of NHAI is reproduced
hereinbelow:-
"That it is the humble and respectful submission of the
Respondent No. 1 that the entire sequence of events as
aforesaid confirm that the Respondent No. 1 Authority has
acted as per the directions of the Government of India,
Ministry of Shipping, Road Transport and Highways.....
The whole exercise of re-evaluation was subsequent to the
directions of the Government of India by which the
Respondent No. 1 is bound under the provisions of Section 33
of the National Highways Authority of India Act, 1983............."
(emphasis supplied)
6. Mr. Rajiv Nayyar, learned senior counsel who appeared for Respondent
Isolux Corsan Concesiones S.A., (the bidder who was shortlisted at the subsequent
revaluation) after referring to various provisions of the National Highways Act,
1956, the rules framed thereunder and the National Highways Authority of India
Act, 1988, submitted that NHAI was under continuous and all pervasive control of
the Central Government, in particular the Ministry. He further submitted that the
power to issue directions under Section 33 should not be confined to policy
issues. In this context he relied upon three judgments of the Hon'ble Supreme
Court which are referred to hereinbelow along with their relevant paragraphs:-
(a) AIR India Ltd. vs. Cochin International Airport Ltd. & Ors. (2000) 2
SCC 617
"Even when some defect is found in the decision making
process the Court must exercise its discretionary power under
Article 226 with great caution and should exercise it only in
furtherance of public interest and not merely on the making
out of a legal point. The Court should always keep the larger
public interest in mind in order to decide whether its
intervention is called for or not. Only when it comes to a
conclusion that overwhelming public interest requires
interference, the Court should intervene."
(b) Real Food Products Ltd. & Ors. vs. A.P. State Electricity Board &
Ors. (1995) 3 SCC 295.
"8. The only surviving question is with regard to the nature
and effect of the direction given by the State Government
under Section 78A of the Act. The question has to be
examined in the context of the facts of the present case which
is confined to the charging of a flat rate per H.P. for
agricultural pump sets. The nature of the function of the board
in fixing the tariffs and the manner of its exercise has been
considered at length in the earlier decisions of this Court and it
does not require any further elaboration in the present case.
Section 78A uses the expression "the Board shall be guided by
such directions on questions of policy as may be given to it by
the State Government." It does appear that the view
expressed by the State Government on a question of policy is
in the nature of a direction to be followed by the Board in the
area of the policy to which it relates. In the context of the
function of the Board of fixing the tariffs in accordance with
Section 49 read with Section 59 and other provisions of the
Act, the Board is to be guided by any such direction of the
State Government. Where the direction of the State
Government, as in the present case, was to fix a concessional
tariff for agricultural pump sets at a flat rate per H.P., it does
relate to a question of policy which the Board must follow.
However, in indicating the specific rate in a given case, the
action of the State Government may be in excess of the power
of giving a direction on the question of policy, which the
Board, if its conclusion be different, may not be obliged to the
bound by. But where the board considers even the rate
suggested by the State Government and finds it to be
acceptable in the discharge of its function of fixing the tariffs,
the ultimate decision of the Board would not be vitiated
merely because it has accepted the opinion of their State
Government even about the specific rate. In such a case the
Board accepts the suggested rate because that appears to be
appropriate on its own view. If the view expressed by the State
Government in its direction exceeds the area of policy, the
Board may not be bound by it unless it takes the same view on
merits itself."
(c) Food Corporation of India & Ors. vs. Bhanu Lodh & Ors. (2005) 3 SCC
"12. In our view, the words of Sub-section (2) of Section 6 of
the Act are very material and direct that the Board of Directors
in discharging its functions "shall act on business principles"
having regard to the "interests of the producer and consumer"
and shall be guided by "such instructions on questions of
policy" as may be given to it by the Central Government. First,
the expression "business principles" is one of widest import.
We see no reason as to why the policy of recruitment of
officers/staff, which would obviously have serious financial
impact on the Corporation, is not subsumed under this
expression. Secondly, the Board of management is required to
have regard to the interest of the 'producers and the
consumers', and not merely of the officers and employees of
the FCI. Finally, the Board is required to discharge all its
functions and be guided by the instructions on questions of
policy, which may be given to it by the Central Government.
Questions of policy could be, not only with regard to the
organization of the FCI, its management and function, but also
with regard to its employment policy, recruitment and many
other details which would, in the long run, affect the interests
of the consumers/producers for whom alone the FCI is
established under the Act. Testing it on this anvil, we find no
difficulty in holding that the directive dated 21st August, 1995
followed by the directive dated 6th November, 1995 are well
within the ambit of Sub-section (2) of Section 6 of the Act. The
directive dated 21st August, 1995 indicates that the policy was
not to have any creation/upgradation of posts of any level
except where completely unavoidable. The policy was that
"the existing vacancies shall not be filled up by fresh
recruitment", and that there shall be no further revision in the
conditions of service without the prior approval of the Central
Government. The policy directive issued on 6th November,
1995 was a sequel and highlighted something being done
contrary to the Regulations. While the maximum age
prescribed under the Recruitment Rules is 35/40 years for the
concerned posts, departmental candidates in the age of 52-53
years were proposed to be appointed. Even assuming that
there is a power of relaxation under the Regulations, we think
that the power of relaxation cannot be exercised in such a
manner that it completely distorts the Regulations. The power
of relaxation is intended to be used in marginal cases where
exceptionally qualified candidates are available. We do not
think that they are intended as an 'open Sesame' for all and
sundry. The wholesale go by given to the Regulations, and the
manner in which the recruitment process was being done, was
very much reviewable as a policy directive, in exercise of the
power of the Central Government under Section 6(2) of the
Act."
7. Therefore, the main issue that arises for consideration in the present
proceedings is the extent of Government interference in the administration of
statutory authorities. In fact, even in England, interference by the Ministries in
the administration of nationalized industries has been an issue of debate.
Professor Wade in his book "Administration Laws", 6th Edition, has stated as
under:-
"To judge by the small number of formal directions, however,
would be highly misleading. In reality ministerial interference
is frequent and pervasive. The important financial powers can
be exercised informally; and in the background are the more
general powers, which cast a deep shadow over the
corporations' precarious independence. The minister has a
powerful lever in his control over the appointment and tenure
of the chairman and members. A chairman who is appointed
for short term, perhaps three years, and who hopes for
renewal of his appointment, is in no position to resist pressure
from the minister, however informally applied. The
supervising ministries are in constant touch with the
corporations and they exercise much influence merely by
holding the trump cards, without having to play them.
Chairmen feel unable to act as public spokesmen for their
industries, in case they may offend the minister. The
Governor of the Bank of England is no longer the public
mouthpiece of the City of London. Chairmen complain (usually
after retirement) that the corporations have no genuine
commercial independence and no freedom to follow long-term
policies, since they are under constant political pressure and
ministers do not look beyond the immediate crisis of the
moment. The commercial independence that the corporations
were intended to enjoy has therefore failed to materialize.
They have fallen prey to political and bureaucratic influence.
This is objectionable constitutionally as well as managerially,
since ministers have exercised a great deal of power without
accounting for it publicly and without giving Parliament the
opportunity to comment.
This state of affairs was many times criticized by the House of
Commons' Select Committee on Nationalised Industries while
it still existed. The Committee reported, for instance, that the
Air Corporations were subject to 'a degree of control far in
excess of that envisaged by the statutes'. Thus, BOAC,
against their commercial judgment ordered too many Super
VC-10 aircraft. Similarly, ministerial control was established
over gas prices, although Area Boards were by statute
responsible for fixing their own prices and were advised that
the minister had no legal power to control them. In 1968 the
Select Committee made a long report on ministerial control,
condemning confusion and uncertainty of purpose, and saying
that, despite the good intentions proclaimed in the
government's white papers of 1961 and 1967, the position
was almost the exact opposite of what Parliament intended:
instead of laying down broad policies and leaving
management to the industries, the government had constantly
interfered with management and given little clear guidance on
policies. The same theme recurred in later reports: ministerial
interference with British Steel was of dubious benefit to the
national interest but did patent damage to the Corporation,
and in controlling capital investment the attempts to observe
the policy of the white papers were far from successful. A
minister himself told the Select Committee that there was 'an
appalling record of private arm-twisting' in the relations
between ministers and corporation chairmen.
With a view to bringing the situation into open the government
in 1978 proposed that ministers should be given power to
issue specific as well as general directions to the corporations,
but that the directions should be laid before Parliament at the
time and, in suitable cases, made subject to affirmative
resolutions; and that where directions led to financial loss, the
corporations should be compensated. The Select Committee
welcomed these proposals, but before action was taken on
them there was a change of government and the emphasis
shifted to denationalization."
8. In our view, in order to ensure that the affairs of the authority are
conducted in the best interests of society, a general governmental control over
the working of the authority is highly desirable, but such a control does not mean
governmental interference in the day-to-day working of the authority, which is
highly destructive of the idea of autonomy necessary for the success of any
commercial or service undertaking. We are further of the view, if the
governmental control is so extensive as to convert an authority into a
Government department, there is no point of having a statutory authority distinct
from the Government. A public authority needs freedom from controls applicable
to ordinary governmental department to the extent that such controls are unduly
restrictive for an agency with commercial functions.
9. According to Jain & Jain's Principles of Administrative Law, an important
technique evolved by the Legislature to reconcile government control with the
autonomy of a public authority is to authorize the Government to issue directives
to public authorities on matter of 'policy' without interference with matters of day-
to-day administration.
10. In our opinion, the purpose of directions as a technique of governmental
control can prove beneficial only if these directions serve as a policy direction to
the authority. If the Government, through directions, interferes with the day-to-
day functioning of the authority, it would be a self-defeating technique.
11. In fact, in order to protect and safeguard the impartiality, independence
and objectivity of quasi- judicial bodies, our courts have held that directions ought
not to be issued to such bodies so as to restrict or control their discretion and best
judgment. The government should not issue directions to quasi- judicial bodies so
as to clog the exercise of their independent judgment in matters entrusted to
them for adjudication under the statute. This is regarded as "essential to
fundamentals of fair play in the administration of law." [refer to: B. Rajgopala
Naidu v. State Transport Appellate Tribunal, AIR 1964 SC 1573 : 1964 (7) SCR 1;
Ravi Roadways v. Asia Bi, AIR 1970 SC 1241, (1970) 2 SCC 259; Raman & Raman
Ltd. v. State of Madras, AIR 1959 SC 694: 1959 Supp (2) SCR 227; R. Abdulla
Rowdier v. State Transport Appellate Tribunals, Madras, AIR 1959 SC 896; and
Senior Supdt. of Police v. Izhar Hussain, AIR 1989 SC 2262 : (1989) 4 SCC 318.]
12. We are also not in agreement with Mr. Rajiv Nayyar's submission that the
Central Government and particularly the Ministry has an all pervasive control over
NHAI. It is pertinent to mention that one of the objectives behind The National
Highways Authority of India Act, 1988 as outlined in its Statement of Objects and
Reasons was to create 'an autonomous National Highways Authority'.
Consequently, in our opinion Parliament while enacting the NHAI Act, consciously
intended to limit the scope of interference by the Central Government under
Section 33 by limiting the role of Central Government to only issue directions to
NHAI on matters of 'policy'. It would be unfair to deny flexibility to statutory
authorities, particularly in tender matters. We are also of the opinion that the
nature and extent of government control depends on the provisions of the statute
creating the authority. In our view, acceptance of Mr. Nayyar's submission that
the Central Government has the power to issue directions not just confined to
policy issues, would amount to doing 'violence with the provisions of the statute',
especially when the language used in the statute is clear and unambiguous.
13. As far as the judgment of Real Food Products Ltd. (supra) is concerned,
we are of the view that the Apex Court in the facts of the said case, reached the
conclusion that the direction of the State Government to fix a concessional tariff
for agricultural pump sets related to a question of policy. In the present case, the
direction by the Ministry to revaluate the bids was certainly not a policy direction
within the four corners of Section 33 as the issue as to whether a Statutory
Auditor's certificate for the purposes of networth and experience is a mandatory
or directory provision can certainly not be termed as a 'policy decision'. In fact, in
Commissioner of Police, Bombay Vs. Gordhandas Bhanji reported in AIR
1952 SC 16 the Supreme Court has held, "It is clear to us from a perusal of these
Rules that the only person vested with authority to grant or refuse a license for
the erection of a building to be used for purposes of public amusement is the
Commissioner of Police. It is also clear that under Rule 250 he has been vested
with the absolute discretion at any time to cancel or suspend any license which
has been granted under the Rules. But the power to do so is vested in him and
not in the State Government and can only be exercised by him at his discretion.
No other person or authority can do it."
14. Even in the case of Food Corporation of India (supra), the Hon'ble
Supreme Court found that the direction in that case related to a question of policy
as it would in the long run affect the interest of the consumers/producers for
which Food Corporation of India had been established. But admittedly, in the
present case, the repeated directions of the Ministry were not related to a policy
issue and, therefore, to our mind, the said judgment has no relevance.
15. In our opinion, undue interference by the Ministry in areas which are within
the domain of the NHAI and which are governed by the NHAI Act is to be
discouraged otherwise the whole purpose of enacting a Central Act and to
incorporate a statutory body would become redundant and nugatory. Having
regard to the various letters written by the Ministry as well as the letter dated 7 th
August, 2008 we are of the view that the specific direction by the Ministry to
revaluate the bids was not only contrary to the statutory mandate but it also
amounted to usurping the jurisdiction of a statutory authority and amounted to
interference in its day-to-day commercial functioning. The short listing of bidders
was to be conducted by NHAI in accordance with the terms of its tender and the
Ministry could not behave like an Appellate body by reversing a decision to
shortlist the bidders - a decision which had been arrived at not only by an
independent Financial Consultant but which had also been approved by NHAI's in-
house Evaluation Committee of five members, which comprised of four technical
and one financial member. While reaching this conclusion, we are of the view
that overwhelming public interest requires interference with the Ministry's
decision making process. We are doing this not merely to make out a legal point,
therefore, even the test for interference stipulated by the Hon'ble Supreme Court
in AIR India Ltd. (supra) is satisfied in the present case.
16. Before we conclude we may mention that it was brought to our notice by
the Counsel for the Petitioners that in the last two and a half years, NHAI has had
as many as five chairmen. The names of the five chairmen and their tenure are as
under:-
Sl. No. Name Tenure
(i) Mr. S.N. Das July 2006 - October 2006
(ii) Mr. Pradeep Kumar October 2006 - July 2007
(iii) Mr. J.S. Maini August 2007 - Sept. 2007
(iv) Mr. N. Gokulram October 2007 - Sept. 2008
(iv) Mr. B. Singh October 2008 to till date.
17. According to us, frequent changes of chairman of a public authority
militates against the concept of an independent authority and makes any
chairman vulnerable to pulls and pressures, besides creating administrative chaos
and preventing implementation of any long term strategy. Learned ASG informed
us that the reason for frequent changes of Chairman of NHAI was on account of
the promotion of the individual officers to a higher post in the Government. Be as
it may, we are of the view that only those officers should be appointed to the post
of Chairman who are likely to act in that capacity for a substantial time. We
would suggest to the Law Commission and the Central Government to examine
the feasibility of incorporation of statutory provisions with regard to three to five
years fixed tenure of chairman of public enterprises and further laying of all the
directions issued by the Ministries/Central Government to the public enterprises
before Parliament in a fixed time frame. This, in our opinion, would ensure
transparency, efficiency and accountability to Parliament.
18. Thus in the present case we are of the opinion that the power under Section
33 could not have been exercised for interference with evaluation of bids received
from interested parties pursuant to RFQ issued by NHAI as the same amounted to
interference with NHAI's functioning as well as with its day-to-day business. With
these concurring observations the rule is made absolute and the Petitioners are
entitled to the relief as granted by my learned brother.
(MUKUL MUDGAL)
JUDGE
(MANMOHAN)
JUDGE
16th December, 2008 dr/s/rkb/rn
