Madras High Court
Otis Elevator Company (India) vs Union Of India on 11 March, 2025
Author: S. M. Subramaniam
Bench: S. M. Subramaniam
2025:MHC:1036
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 11-03-2025
CORAM
THE HONOURABLE MR JUSTICE S. M. SUBRAMANIAM
AND
THE HONOURABLE MR.JUSTICE K.RAJASEKAR
WA Nos. 2026 & 2028 of 2024
and
WP No. 21995 OF 2024
and
CMP Nos. 14412, 14415, 14420 & 14421 of 2024,
and
WMP No. 23969 & 23970 of 2024, WMP No. 5305 OF 2025,
WA No.2026 of 2024:
OTIS Elevator Company (India)
Limited
having its registered office at
9th Floor, Magnus Towers, Mindspace,
Off. Malad Link Road, Malad (West),
Mumbai – 400 064.
Appellant(s)
Vs
1. Union Of India
Ministry of Housing and Urban Affairs,
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Nirman Bhawan, C-Wing,
Rajpath Area, Central Secretariat,
New Delhi – 110 011.
2.State Of Tamil Nadu
Ministry of Housing and Urban
Development, Secretariat,
Fort St. George, Chennai – 600 009.
3.Chennai Metro Rail Limited
METROS, No.327, Anna Salai,
Nandanam, Chennai – 600 035.
Respondent(s)
WA No. 2028 of 2024
OTIS Elevator Company (India)
Limited
having its registered office at
9th Floor, Magnus Towers, Mindspact,
Off. Malad Link Road, Malad (West),
Mumbai – 400 064.
Petitioner(s)
Vs
1. Union Of India
Ministry of Housing and Urban Affairs,
Nirman Bhawan, C-Wing,
Rajpath Area, Central Secretariat,
New Delhi – 110 011.
2.State Of Tamil Nadu
Ministry of Housing and Urban
Development, Secretariat,
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Fort St. George, Chennai – 600 009.
3.Chennai Metro Rail Limited
METROS, No.327, Anna Salai,
Nandanam, Chennai – 600 035.
Respondent(s)
WP No. 21995 of 2024
OTIS Elevator Company (India)
Limited
Having Its Registered Office At
9th Floor, Magus Towers, Mindspace,
Off Malad Link Road, Malad (west)
Mumbai-400 064.
Petitioner(s)
Vs
1. Union Of India
Ministry Of Housing And Urban
Affairs, Nirman Bhawan, C-wing,
Rajpath Area, Central Secretariat,
New Delhi-110 011
2.State Of Tamil Nadu
Ministry Of Housing And Urban
Development, Secretariat,
Fort St. George, Chennai-600 009.
3.Chennai Metro Rail Limited,
METROS, No.327, Anna Salai,
Nandanam, Chennai-600 035,
Tamil Nadu, India.
4.Japanese International Cooperation
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Agency (JICA)
JICA India Office, 16th Floor,
Hindustan Times House,
18-20, Kasturba Gandhi Marg,
New Delhi-110 011, India.
Respondent(s)
WA No. 2026 of 2024
PRAYER
To set aside the Impugned Order dated 19-06-2024 passed by this Court in
WP.No.10934/2024
WA No. 2028 of 2024
PRAYER
To set aside the impugned Order dated 19-06-2024 passed by this Court in
WP.No.10948/2024
WP No. 21995 of 2024
PRAYER
Call for the records pertaining to the JICA Loan Agreement dated 21.12.2018
and inter alia, declare schedule 4-Procurement Procedure Section 2 (Eligible
Nationality) of the same as illegal, arbitrary and unconstitutional and violative
of Articles 14, 19(1)(g), 21, 298 and 299 and other applicable Articles of the
Constitution of India, 1950 r/w. Section 27 and other applicable sections of the
Indian Contract Act, 1872 and consequently direct the respondent No.1 to
modify, amend or/alter the terms of the JICA Agreement dated 21.12.2018 for
Clause Schedule 4-Procurement Procedure, Section 2(Eligible Nationality) in
accordance with the same.
WA Nos. 2026 & 2028 of 2024
For Appellant(s): Mr.A.K.Sriram Senior Counsel
For Mr.Gaurav Chatterjee
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For Respondent(s): Mr.AR.L.Sundaresan ASGOI
Assist. By Mr.V.Ashok Kumar
SPC For R1
Mrs.E.Ranganayaki AGP For R2
Mr.P.S.Raman AG Assist. By
Mr.Raghavendra Ross Divakar
and Mr.B.Gautham For M/s. Dua
Associates For R3
WP No. 21995 of 2024
For Petitioner(s): Mr.A.K.Sriram Senior Counsel
For Mr.Gaurav Chatterjee
For Respondent(s): Mr.AR.L.Sundaresan ASGOI
Assist. By Mr.V.Ashok Kumar
SPC For R1
Mrs.E.Ranganayaki AGP For R2
Mr.P.S.Raman AG Assist. By
Mr.Raghavendra Ross Divakar
and Mr.B.Gautham For M/s. Dua
Associates For R3
Mr.S.Sathish For R4
COMMON JUDGMENT
(Order of the Court was made by S.M.Subramaniam J.)
The Intra-Court Appeals have been instituted challenging the common
order dated 19.06.2024 passed in W.P.Nos.10934 and 10948 of 2024.
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2. Additionally, the writ petition in W.P.No.21995 of 2024 has been filed
by the same appellant by the OTIS Elevator Company (India) Limited
challenging the JICA Loan Agreement dated 21.12.2018. The petitioner seeks to
declare schedule 4, Procurement Procedure, Section 2 (Eligible Nationality) of
the same as illegal, arbitrary and unconstitutional and violative of Articles 14,
19(1)(g), 21, 298 and 299 of the Constitution of India, 1950 read with Section
27 and other applicable Sections of the Indian Contract Act, 1872. The
petitioner further seeks a direction to 1st respondent to modify, amend or alter
the terms of the Japan International Cooperation Agency (JICA) Agreement
dated 21.12.2018, specifically Clause Schedule 4, Procurement Procedure,
Section 2 (Eligible Nationality) in accordance with law.
3. As far as the writ appeals are concerned, the Writ Court has dismissed
the writ petitions filed by the appellant challenging the eligibility criteria
contemplated in tender notification. Thus, the writ appeals and writ petition are
taken up together for hearing.
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4. The learned Senior Counsel appearing on behalf of the writ appellant
and the writ petitioner would mainly contended that the eligibility criteria fixed
in the tender notification is not only arbitrary but lack in transparency and
depriving opportunity of many companies to participate in the tender process.
Specifically, Section V of the Tender Notification provides “Eligible source
countries of Japanese ODA Loans”. Clause A(3)(iii) stipulates that “The prime
Contractor or, in the case of joint venture, the Indian partners shall be nationals
of India or juridical persons incorporated and registered in India, and have their
appropriate facilities for producing or providing the goods and services in India,
and actually conduct their business there; in the case of a juridical person, a
majority of the subscribed shares shall be held by nationals of India; and a
majority of the full-time directors of the company are nationals of India
(hereinafter referred to as the “Indian Company”)”.
5. Clause 4 stipulates that “Procurement of goods/services from Japanese
manufacturer is mandatory under this contract as below:
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a) Any goods/services of value, minimum 75% of Contract Price
excluding CAMC, Taxes & Duties shall sourced from Japanese manufacturers
/Companies/Suppliers/Sub-Contractors”.
6. Clause 5(b) stipulates that “Not less than ten percent (10%) of shares
are held by a single Japanese Company or juridical person stipulated in Section
A. 3. (a) (ii)”.
7. Relying on the above eligibility criteria, the learned Senior Counsel for
the appellants / writ petitioners would contend that the above Clauses are
discriminatory and paving way for a single company to be a successful tenderer
thereby denying equal opportunities to other eligible and capable companies
that meet the technical requirements to implement the project.
8. In the context of eligibility criteria, the Writ Court has taken a view
that Chennai Metro Rail Limited (CMRL) has no roll since it is an international
agreement between the Government of India and the JICA. Since, the
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Government of India was not a party to the writ proceedings, the Writ Court
held that it could not grant relief as such sought for by the appellant, which was
declined as the Metro Rail project is only adopting the policy decision of
Government and Government of India not being a party to the writ proceeding,
the relief as such sought for is beyond the scope. Thus, the writ petition was
rejected. That is one of the ground for instituting a separate writ petition
challenging the international agreement between Government of India and JICA
in the year 2018.
9. Mr.P.S.Raman, the learned Advocate General appearing on behalf of
the State would mainly oppose the contentions on the ground that the contract
between the Government of India and JICA is an international agreement. The
Government of India borrowed funds from JICA at a low interest of 0.02% per
annum for regional development, and as part of this agreement, certain
conditions were imposed by JICA and accepted by the Government of India as a
policy decision in the public interest. Thus, such nature of conditions stalling
under the policy decision of Government of India in an international contract,
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cannot be called in question in a writ petition before the High Court in India. It
is far beyond the realm of judicial review as certain conditions cannot be
effectively adjudicated by the Indian Courts. Therefore, the Writ Court has
rightly rejected the plea on the ground that the JICA was not a party and the writ
petition instituted by the very same appellant is not entertainable.
10. In support, the case of National High Speed Rail Corporation
Limited vs. Montecarlo Limited and Another1, wherein the international
contract between the Government of India and JICA was adjudicated by the
Hon'ble Supreme Court of India. In paragraph 3.2, the submission of
Shri.Metha, the learned Solicitor General was recorded as follows:
“3.2 It is further submitted by Shri Mehta,
learned Solicitor General that in the present case
when the original writ petitioner submitted its
bid/technical bid and when the same was evaluated at
the technical evaluation stage, the technical bid
submitted by the original writ petitioner was found to
be non-responsive on the ground of (i) non-signing of
1. (2022) 6 SCC 401
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Form CON: 2.0 pending litigation; and ii) non-
signing of 3.0 litigation history in the physically
submitted bid by the authorised representative of the
original writ petitioner. It is submitted that as such the
bid document was prepared by JICC and approved by
JICA. It is submitted that in the present case when the
bids submitted by the respective bidder were
evaluated by JICC as per JICA'S International
Guidelines, the same was approved by the Tender
Committee of the appellant, which was finally
concurred and approved by JICA. It is submitted that
the decision to hold that the bid was non-responsive
was of JICC, which has been approved by JICA.”
11. In paragraphs 17 and 18, the Hon'ble Supreme Court made the
following observations:
“17. From the impugned judgment and order2
passed by the High Court, it appears that what is
weighed by the High Court is that some of the bidders
were called for negotiation and the original writ
petitioner was not called for the negotiation and
2. 2021 SCC Online Del 4112
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therefore the High Court has held that the action of
the appellant is discriminatory and violative of Article
14 of the Constitution of India. However, the High
Court has not appreciated that it was the decision of
JICC concurred by JICA that the bid submitted by the
original writ petitioner was non-responsive and non-
compliant to the technical requirements of the
bidding documents. It appears that JICC thought it fit
to call clarification from some of the bidders at the
initial stage, however, it was found that the bid
submitted by the respondent-original writ petitioner
was suffering from material deviation, JICC thought it
fit not to call for any explanation and/ or clarification
from the original writ petitioner and the bid submitted
by the respondent-original writ petitioner was
rejected at the first stage itself i.e. at the stage of
technical evaluation.
18. At the cost of repetition, it is observed that
the appellant herein acted as per the decision of JICC
concurred by JICA. As per the contractual obligation
and the terms and conditions of the loan agreement as
well as the Guidelines for procurement under the
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Japanese ODA loans and the memorandum of
understanding and the terms and conditions on which
JICA agreed to fund a huge sum of approximately Rs
1 lakh crores, JICC and JICA can be said to be the
final authority and no contrary decision to the
decision of JICC/JICA could have been taken by the
appellant, more particularly, with respect to the
bidding process, etc. It cannot be disputed that being
the funding agency, who has agreed to fund such a
huge amount, role of JICA is very important and JICA
would always have an upper hand and the say in the
entire Project. From the material on record, we are
satisfied that the bidding procedure adopted is
transparent, fair and does not suffer from any
arbitrariness. It is required to be noted that as such
there are no allegations of mala fides and/or
favouritism either against the appellant or against
JICC and/or JICA.”
12. With reference to the contentions raised by the learned Advocate
General, the learned Senior Counsel for the appellant would solicit the attention
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of this Court to paragraph 29 of the very same judgment, where the Hon'ble
Supreme Court posed a specific issue, and the relevant extract from paragraph
29 is as follows:
“29. Thus, from the aforesaid decisions, it can
be seen that a court before interfering in a contract
matter in exercise of powers of judicial review should
pose to itself the following questions:
(i) Whether the process adopted or decision
made by the authority is mala fide or intended to
favour someone; or whether the process adopted or
decision made is so arbitrary and irrational that the
court can say: “the decision is such that no
responsible authority acting reasonably and in
accordance with relevant law could have reached"?
And
(ii) Whether the public interest is affected?
If the answers to the above questions are in the
negative, then there should be no interference under
Article 226.”
13. Relying on the above issue framed by the Apex Court, the learned
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Senior Counsel would reiterate that in the event of challenge on the ground of
process adopted or a decision being arbitrary or irrational, the High Court can
interfere. Therefore, there is no absolute bar to entertain a writ petition. The
learned Senior Counsel emphasised that the merits raised by the appellant
should be taken into consideration.
14. This Court is of the considered opinion that to establish arbitrariness
and irrationality, the appellant/writ petitioner's contention that opportunities
have been denied to several other companies to participate in the tender process.
is insufficient, more specifically, in cases involving international agreements /
contracts with special or specific conditions between two countries, mala fide
arbitrariness or irrationality must be apparent and to be established factually for
the purpose of granting relief. Even if established, relief cannot interfere with
contractual obligations between two countries when one party to the
contract/agreement is not a party to the proceedings in Indian Courts.
15. Therefore, the Hon'ble Supreme Court considered two key aspects in
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the said case:
(1) The scope of power of judicial review of the High Court under Article
226 of the Constitution of India to adjudicate terms and conditions of
an international contact / agreement between two countries.
(2) Whether the Indian Authorities while executing the agreement /
contract have taken a decision in an arbitrary manner, so as to deprive
any person to participate in the tender or otherwise.
16. The scope of adjudication in respect of second issue is limited to the
implementation of the contract and cannot be extended to interfere with the
terms and conditions agreed upon between the two countries, especially when
one party is a foreign country.
17. In the present case, the Writ Court found that the eligibility criteria
fixed in the tender notification were based on the contract between the
Government of India and JICA and consequently, the Court held that the relief
sought for by the appellant cannot be granted.
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18. Let us now consider the observations further made by the Hon'ble
Supreme Court of India in the case of National High Speed Rail Corporation
Limited, cited supra. In paragraph 30 of the said judgment, it is held as follows:
“30. Applying the law laid down by this Court
in the aforesaid decisions to the facts of the case on
hand and when a conscious decision was taken by
JICC/JICA holding the bid submitted by the original
writ petitioner as non-responsive/non-compliant to the
technical requirements of the bidding documents and
suffering from material deviation, we are of the
opinion that the High Court has erred in interfering
with the tender process and interfering with the
decision of JICC/JICA rejecting the bid submitted by
the original writ petitioner at technical stage.”
19. The scope of judicial review has been considered by the Apex Court
in paragraphs 37 and 38 of the judgment as under;
“37. The scope of judicial review in such
foreign funded contract should be far much less than
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the ordinary Government funded contracts funded
from Consolidated Fund of India. The scope of
judicial review in such foreign funded
contracts/projects would be restricted and minimal. In
such foreign funded contracts, the only ground for
judicial review ought to be on a limited aspect i.e. the
action of the executing authority does not suffer from
favouritism or nepotism and based on the grounds
which have been concealed from the foreign financing
authority, if disclosed, would have persuaded the
financing authority to cancel the contract.
38. The High Court ought to have appreciated
that the Bullet Train Project is a result of long-drawn
deliberations between the Government of India on the
one hand and the Government of Japan on the other.
That thereafter a loan agreement came to be executed
between Japan International Cooperation Agency
("JICA") and Hon'ble the President of India and JICA
agreed to fund approximately Rs.1 lakh crores for the
project on the terms and conditions mentioned in the
loan agreement and the other agreed terms including
the terms and conditions of the bid document shall be
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finalised by JICA/JICC. The bidding documents are
based on JICA's standard bidding documents as well
as based on JICA's procurement guidelines, which
form an integral part of the loan agreement.
Therefore, any decision contrary to the terms and
conditions of the bidding document would be altering
the terms and conditions of the loan agreement, which
would not be permissible. JICA has a vital role to play
in such contracts.”
20. Pertinently, the case cited supra also pertained to an agreement
between Government of India and JICA. Therefore, the said principles laid
down in that case are applicable to the present case.
21. The learned counsel appearing on behalf of the 4th respondent in the
writ petition in addition to relying on the judgment in the case of National High
Speed Rail Corporation Limited cited supra also cited the judgment of the
Hon'ble Supreme Court in the case of Arun Kumar Agrawal vs. Union of India
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and Others3, wherein, the Apex Court made the following observations to a
question raised:
“30. The question that falls for consideration in
this case is whether this Court sitting in this
jurisdiction is justified in interfering with a complex
economic decision taken by a State or its
instrumentalities in the absence of violation of any
statutory provision or proof of mala fide or on
extraneous and irrelevant considerations.
22. The response provided by the Apex Court reads as under:
“38. We notice that the ONGC and the
Government of India have considered various
commercial and technical aspects flowing from the
PSC and also its advantages that ONGC would derive
if the Cairn and Vedanta deal was approved. This
Court sitting in the jurisdiction cannot sit in judgment
over the commercial or business decision taken by
parties to the agreement, after evaluating and
assessing its monetary and financial implications,
3. CDJ 2013 SC 417
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unless the decision is in clear violation of any
statutory provisions or perverse or for extraneous
considerations or improper motives. States and its
instrumentalities can enter into various contracts
which may involve complex economical factors. State
or the State undertaking being a party to a contract,
have to make various decisions which they deem just
and proper. There is always an element of risk in such
decisions, ultimately it may turn out to be a correct
decision or a wrong one. But if the decision is taken
bona fide and in public interest, the mere fact that
decision has ultimately proved to be a wrong, that
itself is not a ground to hold that the decision was
mala fide or done with ulterior motives.
39. Matters relating to economic issues, have
always an element of trial and error, so long as a trial
and error are bona fide and with best intentions, such
decisions cannot be questioned as arbitrary,
capricious or illegal. This Court in State of M.P. and
others v. Nandlal Jaiswal and others (1986) 4 SCC
566 referring to the Judgment of Frankfurter J. in
Morey vs. Dond 354 US 457 held that “we must not
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forget that in complex economic matters every
decision is necessarily empiric and it is based on
experimentation or what one may call "trial and error
method" and, therefore, its validity cannot be tested
on any rigid “a priori” considerations or on the
application of any straight jacket formula.” In
Metropolis Theatre Co. v. State of Chicago 57 L Ed
730 the Supreme Court of the United States held as
follows:
“The problem of government are practical ones and
may justify, if they do not require, rough
accommodation, illogical, if may be, and unscientific.
But even such criticism should not be hastily
expressed. What is best is not discernible, the wisdom
of any choice may be disputed or condemned. Mere
errors of government are not subject to our judicial
review. It is only its palpably arbitrary exercises
which can be declared void.”
23. Loan agreement for Chennai Metro Project (Phase-2) between Japan
International Corporation Agency and the Hon'ble President of India dated
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21.12.2018 states that “the Exchange of Notes between the Government of
Japan and the Government of India dated December 2, 2018, concerning a
Japanese loan to be extended with a view to promoting the economic
stabilization and development efforts of India”.
24. Article 1 is about Amount and Purchase of loan indicate that JICA
agrees to lend the Borrower an amount not exceeding Seventy Five Billion Five
Hundred and Niteen Million Japanese Yen (¥75,519,000,000) as the principal
for the implementation of Chennai Metro Project (Phase 2) described in
Schedule 1 attached to the agreement.
25. Interest and method of payment agreed between Government of India
and JICA is that “the Borrower shall pay the interest to JICA semi-annually on
December 20 and June 20 each year in arrears at the rate of zero point two
percent (0.2%) per annum on the principal corresponding to categories (a) and
(b) below disbursed and outstanding for each interest period: (a) the principal of
the Loan allocated to Category (A) (Provided for in Section 1 of Schedule 2
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attached): and (b) any principal reallocated to Category (C) (provided for in
Section 1. of Schedule 2 attached) and disbursed with respect to Section 2. (1)
(a) above”.
26. In the context of the terms and conditions of loan procurement
procedures also contemplated in the agreement and it reads as under:
“Section 1. Guidelines to be used for procurement
under the Loan
(1) Procurement of all goods and services,
except consulting services, to be financed out of the
proceeds of the Loan shall be in accordance with the
Guidelines for Procurement under Japanese ODA
Loans dated April 2012 (hereinafter referred to as the
“Procurement Guidelines”).
(2) Employment of consultants to be financed
out of the proceeds of the Loan shall be in accordance
with the Guidelines for the Employment of
Consultants under Japanese ODA Loans dated April
2012 (hereinafter referred to as the "Consultant
Guidelines")
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Section 2. Eligible Nationality
(1) The Eligible Nationality of the Supplier(s)
for procurement of all goods and services (including
consulting services) to be financed out of the proceeds
of the Loan shall be the following:
(a) Japan and India in the case of the
prime contractor; and
(b) All countries and areas in the case of
the sub-contractors).
(2) With regard to Section 2. (1) above, in case
where the prime contractor is a joint venture, such
joint venture will be eligible provided that the
nationality of a partner is Japan and/or India.”
27. A reading of the agreement reveals that the Government of India
agreed to specific terms and conditions for borrowing a loan from JICA. This
agreement was a policy decision aimed to implement Chennai Metro Rail
Project in the public interest.
28. The tender conditions, which was under challenge reveals that those
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conditions agreed between Government of India and JICA, as contemplated
under procurement procedures has been adopted. Since these conditions align
with the contract between The Hon'ble President of India and JICA, High Court
cannot adjudicate in exercise of powers of judicial review under Article 226 of
the Constitution of India, more specifically, JICA is not a party to the legal
proceedings in India.
29. In view of the above legal position, this Court finds no arbitrariness or
illegality in prescribing the eligibility criteria in the tender notification.
30. Perusal of the eligibility criteria in terms of the agreement between
Government of India and JICA is sufficient enough to form an opinion that the
criteria is falling in line with the agreed conditions between two countries,
which cannot be a subject matter of judicial review before this Court.
31. Therefore, this Court is not inclined to interfere with the writ order
impugned and declines to grant the relief as such sought for. Consequently, the
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Writ Appeals and Writ Petition are dismissed. The connected Miscellaneous
Petitions are closed. There shall be no order as to costs.
(S.M.SUBRAMANIAM J.)(K.RAJASEKAR J.)
11-03-2025
Jeni
Index:Yes/No
Speaking/Non-speaking order
Internet:Yes
Neutral Citation:Yes/No
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WA Nos. 2026 & 2028 of 2024
To
1.Union Of India
Ministry of Housing and Urban Affairs,
Nirman Bhawan, C-Wing, Rajpath
Area, Central Secretariat, New Delhi -
2.State Of Tamil Nadu
Ministry of Housing and Urban
Development, Secretariat, Fort St.
George, Chennai - 009.
3.Chennai Metro Rail Limited
METROS, No.327, Anna Salai,
Nandanam, Chennai - 035.
To
1.Union Of India
Ministry Of Housing And Urban
Affairs, Nirman Bhawan, C-wing,
Rajpath Area, Central Secretariat, New
Delhi-110 011
2.State Of Tamil Nadu
Ministry Of Housing And Urban
Development, Secretariat, Fort St.
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George, Chennai-600 009.
3.Chennai Metro Rail Limited,
Metros, No.327, Anna Salai,
Nandanam, Chennai-600 035, Tamil
Nadu, India
4.Japanese International Cooperation
Agency (JICA)
JICA India Office, 16th Floor,
Hindustan Times House, 18-20,
Kasturba Gandhi Marg, New Delhi-110
011 India.
https://www.mhc.tn.gov.in/judis ( Uploaded on: 23/04/2025 12:42:56 pm )
S.M.SUBRAMANIAM
J.
AND
K.RAJASEKAR J.
Jeni
WA Nos. 2026 & 2028 of
11-03-2025
https://www.mhc.tn.gov.in/judis ( Uploaded on: 23/04/2025 12:42:56 pm )
