Holding

The employer’s interpretation of the tender documents is binding unless perverse or mala‑fide, and an inter‑city high‑speed railway does not qualify as a metro civil construction work, rendering GYT‑TPL JV ineligible.

Summary

The Nagpur Metro Rail Corporation Ltd. (NMRCL) invited bids for a viaduct and disqualified the joint venture GYT‑TPL on the ground that its experience on an inter‑city high‑speed railway in China did not satisfy the tender’s requirement of experience in "metro civil construction work" with a minimum contract value of INR 3,200 million and a viaduct length of at least 5 km. The Bombay High Court held the disqualification arbitrary and allowed GYT‑TPL to bid. On appeal, the Supreme Court emphasized that the employer who drafts the tender documents is best placed to interpret them and that courts may intervene only if the decision is perverse, mala‑fide or irrational. It held that an inter‑city high‑speed railway is not a "metro" project under the statutory definitions, so the disqualification was valid. Consequently, the High Court’s order was set aside and NMRCL’s original decision restored.

Issues considered

The meaning of "metro civil construction work" under Clause 4.2(a) of the tender documents.
Whether the High Court erred in interpreting the tender requirements and in its standard of judicial review of the employer’s eligibility decision.
Whether the decision to disqualify GYT‑TPL JV was perverse, arbitrary or mala‑fide warranting Supreme Court interference.

Legislation cited

Constitution of Indias. Article 226
Metro Railways (Construction of Works) Act, 1978s. 2(i)
Metro Railways (Operation and Maintenance) Act, 2002s. 2(i)

Subjects

tender eligibilitymetro railadministrative lawjudicial reviewinterpretation of tender documentsperverse decisionmala fidepublic procurement

Judgment

l j

[2016] 3 S.C.R. 551

AFCONS INFRASTRUCTURE LTD. A
v.
NAGPUR METRO RAIL CORPORATION LTD. & ANR.
(Civil Appeal No. 9078of2016)
SEPTEMBER 15, 2016 B
[MADAN B. LOKUR AND R.K. AGRAWAL, JJ.)
Contract: Tender - Bids invited for design and construction
of a viaduct for Nagpur Metro Rail Project - GYT-TPL JV having
experience of executing Inter-City High Speed Railway Project in
China, gave its bid - Bid was disqualified on the ground that Inter-
c
City High Speed Railway Project did not meet the requirements of a
Metro civil construction work - High Court held that
disqualification of bid was arbitrmy - Held: The owner or the
employer of a project, having authored the tender documents, is
the best person to understand and appreciate its requirements and D
interpret its documents - Although, there did not appear to be any
ambiguity or doubt about the inte1pretation given by owner ofthe
project to the tender conditions, however, even if there was any
ambiguity or doubt, High Court ought to have refrained from giving
its own interpretation unless it had come to a conclusion that the
E
interpretation given by owner of project ·was perverse or ma/a fide
or intended to favour one of the bidders - This was certainly not
the case either before the High Court or before the Supre111e Court
- Therefore, GYT-TPL JV was rightly held to be not eligible to bid
for the contract under consideration.
F
Administrative law: Decision 111aking process - Scope of
interference - Held: Interference is permissible only if the decision
making process is ma/a fide or is intended to favour someone -
Mere disagreement with the decision making process or the decision .
of the ad111inistrative authority is no reason for a constitutional Court
to interfere - Constitution of India, 1950 - Article 226. G
Deeds and documents: Tender docu111e11ts - Interpretation of
- Held: Author of tender document is best person to illterprel it.
Allowing the appeals, the Court
HELD: 1. Interference is permissible only if the decision H
551
552 SUPREME COURT REPORTS [2016] 3 S.C.R.

A making process is mala fide or is intended to favour someone.
Similarly, the decision should not be interfered with unless the
decision is so arbitrary or irrational that the Court could say that
the decision is one which no responsible authority acting
reasonably and in accordance with law could have reached. In
other words, the decision making process or the decision should
8
be perverse and not merely faulty or incorrect or erroneous. No
such extreme case was made out by GYT-TPL JV in the High
Court or before the Supreme Court. [Para 11] [557-F-G]
Central Coalfields Ltd. v. SLL-SML (Joint Venture
Consortium) 2016 (8) SCALE 99; Dll'arkadas Mmfatia
c and Sons v. Board of Trustees of the Port of Bombay
(1989) 3 SCC 293 : 1989 (2) SCR 751; Tata Cellular
1~ Union of India (1994) 6 SCC 651 : 1994 (2) Suppl.
SCR 122; Jagdish Manda! v. State of Orissa (2007) 14
SCC 517 : 2006 (10) Suppl. SCR 606 - relied on.
D 2. The words used in the tender documents cannot be
ignored or treated as redundant or superfluous ...,. they must be
given meaning and their necessary significance. The use of the
word 'metro' in Clause 4.2 (a) of Section III of the bid documents
and its connotation in ordinary parlance cannot be overlooked.
The owner or the employer of a project, having authored the
E tender documents, is the best person to understand and
appreciate its requirements and interpret its documents. The
constitutional Courts must defer to this understanding and
appreciation of the tender documents, unless there is mala fide
or perversity in the understanding or appreciation or in the
F application of the terms of the tender conditions. lt is possible
that the owner or employer ofa project may give an interpretation
to the tender documents that is not acceptable to the constitutional
Courts but that by itself is not a reason for interfering with the
interpretation given. In the present appeals, although there does
not appear to be any ambiguity or doubt about the interpretation
G given by NMRCL to the tender conditions, even if there was
such an ambiguity or doubt, the High Court ought to have
refrained from giving its own interpretation unless it had come
to a clear conclusion that the interpretation given by NMRCL
was perverse or mala fide or intended to favour one of the bidders.
H This was certainly not the case either before the High Court or
AFCONS INFRASTRUCTURE LTD. v. NAGPUR METRO RAIL 553
CORPORATION LTD. & ANR.

before the Supreme Court. GYT-TPL JV was not eligible to bid A
for the contract under consideration. The High Court was of
· opinion that the eligible bidders were not entitled to be either
impleaded in the petition filed in the High Court by the ineligible
bidder GYT-TPL JV or were not entitled to be heard. This is not
the appropriate view to take in matters such as the present. [Paras
B
14 to 18] [558-E-G; 559-A-D)
Ramana Dayaram Shetty v. International Airport
Authority of India (1979) 3 SCC 489 : 1979 (3)
SCR 1014 - relied on.
Case Law Reference c
2016(8) SCALE 99 relied on Para 11
1989 (2) SCR 751 relied on Para 12
1994 (2) Suppl. SCR 122 relied on Para 12
2006 (10) Suppl. SCR 606 relied on Para 12 D
1979 (3) SCR 1014 relied on Para 14
CIVIL APPELLATE JURISDICTION: Civil.Appeal No. 9078
of2016.
From the Judgment and Order dated 28.07.2016 of the High Com1
E
of Bombay, at Nagpur in Writ Petition No. 4273 of2016
WITH
C. A. No. 9079 and 9080-9081 of 2016.
P. Chidambram, V. Giri, K. V. Viswanathan, S. K. Mishra, Salman
Khurshid, Gopal Jain and Guru Krishna Kumar, Sr. Advocates, Man·u F
Seshadri, Mrs. Meenakshi Iyer, Sharad Sharma, lshan Bisht, Satya Mitra,
SatyajitA. Desai, Ms. Anagha S. Desai,Akash Kakade, Sridhar Potaraju,
Gaichangpou Gangmei and Arjun Singh, Advocates for the appearing
parties.
The Judgment of the Court was delivered by G
MADAN B. LOKUR, J. I. In Civil Appeal No. 9078 of 2016
and Civil Appeal No. 9079 of2016 filed.by Afcons Infrastructure Ltd.,
the challenge is to the judgment and orders dated 28th July, 2016 and
11th August, 2016 passed by the Bombay High Court. In Civil Appeal
Nos. 9080-9081 of 2016 filed by the Nagpur Metro Rail Corporation H
554 SUPREME COURT REPORTS [2016] 3 S.C.R.

A Ltd., the challenge is to the judgment and orders dated 28th July, 2016
and 12th August, 2016 passed by the Bombay High Court. The combined
effect of all the impugned orders is that the High Court held that Mis.
Guangdo11g Yuantian Engineering Company (GYT) of China and Mis.
TATA Projects Limited (TPL) as a Joint Venture (hereinafter referred
to as the 'GYT-TPL JV') are eligible to bid for a tender invited by the
B
Nagpur Metro Rail Corporation Limited (for sho11 'NMRCL') on 12th
May, 2016.
2. Bids were invited by NMRCL for the design and construction
of a viaduct in Reach-3 between Jhansi Rani Square and Lokmanya
Nagar Stations from CH 7825M to CH 18212M on the East-West
c Corridor ofNagpur Metro Rail Project.
3. GYT-TPL JV gave its bid for the contract but NMRCL, by an
e-mail dated 23rd July, 2016 communicated to GYT-TPLJV that its bid
was disqualified at the technical bid opening. The comment/remark
relating to the disqualification stated that the documents submitted by
D GYT-TPLJV do not meet the eligibility conditions as stipulated in Clause
4.2 (a) of Section Ill of the bid documents.
4. The controversy on the eligibility of GYT-TPL JV arises in
view of Clause 4.2 (a) of Section Ill of the tender conditions which
reads inter alia as follows:
4.2 (a) Specific Construction A minimum number of
E
& Contract Management similar contracts specified
experience below that have been
satisfactorily completed as a
prime contractor, joint
venture member during last
I 0 (ten) years i.e. up till
F 31.05.2016 (a) Should have
rccci ved minim um IN R 3 200
Million from I contract in a
metro civil construction work
and should have completed
viaduct length not less than 5
km in the same contract.
G
5. According to GYT-TPL JV, it had executed the Pearl River
Delta intercity high speed railway project in China; it had received INR
3200 million from that project and it had constructed a viaduct of7.284
km length under that contract. Before the High Court and before us,
there was no controversy that GYT-TPL JV had received a minimum of
H INR 3200 million from its Pearl River Delta Intercity High Speed Railway
AFCONS INFRASTRUCTURE LTD. v. NAGPUR METRO RAIL 555
CORPORATION LTD. & ANR. [MADAN B. LOKUR, J.]

Project and that whether it had completed a viaduct having a length of A
not less than 5 km. The sole question before the High Court was whether
the Pearl River Delta Intercity High Speed Railway Project met the
requirement of a 'metro civil construction work'. According to NMRCL,
an inter-city high speed railway project did not meet the requirements of
a metro civi I construction work.
B
6. The High Court disagreed with NMRCL in the following words:
·'The civil construction work completed by the petitioner
[GYT-TPL JV] in terms of condition no. 4.2 (a) was for an
intercity high speed railway project in China and in the said
contract, the petitioner had completed a viaduct of 7.284 c
km length .... The petitioner has admittedly constructed ·a
viaduct of not less than 5 km for the prestigious Pearl River
Delta Intercity 'high speed railway project in China. We
find on a reading of the tender conditions and pa1ticularly
clause 4.2(a) thereof that a contractor or a joint venture
company is required to have the experience in Metro Civil D
Construction work and of completing a viaduct having a
length of not less than 5 kms. We do not appreciate the
submission on behalf of the respondent that since the
petitioner had constructed the viaduct for a high speed
railway project, the petitioner would not have the experience
E
of constructing a viaduct for a metro. It is not disputed by
the respondent that 'metro' would mean a railway or an
underground railway. Ifthat be so, we fail to fathom as to
why the technical bid ofthe petitioner was disqualified though
the petitioner has constructed a viaduct for Pearl River Delta
Intercity high speed railway project in China of the length F
of7.2,84 km. In our view, the petitioner has the experience
of constructing a viaduct of not less than 5 kms. in length in
a Metro Civil Construction work contract and had also
received more than INR 3200 million for satisfactorily
completing the said contract. The distinction sought to be
G
made by the respondent NMRCL between the construction
of a viaduct for Intercity High Speed Railway Project and
the construction of a viaduct for the metro rail project, is
illusory and not real. The action on the part of the NMRCL
of disqualifying the petitioner's technical bid is clearly
arbitrary and is liable to be set aside" H
. .. . :

556 SUPREME COURT REPORTS [2016] 3 S.C.R.

A 7. There is no dispute before us that the Metro Railway
(Construction of Works) Act, 1978 and The Metro Railways (Operation
and Maintenance) Act, 2002 extend to Nagpur and are applicable to the
Nagpur Metro Rail Project. The expression 'metro railways' has been
defined in Section 2(i) of the Metro Railways (Construction of Works)
Act, 1978 in the following words:
B
"(i) "metro railway" means a metro railway or any portion
thereof for the public carriage of passengers, animals or
goods and includes,-
(a) all land within the boundary marks indicating the limits
c of the land appurtenant to a metro railway.
(b) all lines of rails, sidings, yards or branches worked
over for the purposes of, or in connection with, a metro
railway,
(c) all stations, offices, ventilation shafts and ducts, ware-
D houses, workshops, manufactories, fixed plants and
machineries, sheds, depots and other works constructed
for the purpose of, or in connection with, a metro
railway;"
A clearer definition is to be found in The Metro Railways
E (Operation and Maintenance) Act, 2002 in Section 2(i) thereof and this
reads as follows:
"(i) "metro railway" means rail-guided mass rapid transit
system having dedicated right-of-way, with steel wheel or
rubber-tyred wheel coaches, but excluding tramways, for
F carriage of passengers, and includes-
(A) all land within the boundary marks indicating the
limits of the land appurtenant to a metro railway,
(B) all rail tracks, sidings, yards or branches wo-rked
over for the purposes of, or in connection with, a metro
G railway,
(C) all stations, offices, ventilation shafts and ducts,
warehouses, workshops, manufactories, fixed plants and
machineries, sheds, depots and other works constructed
for the purpose of, or in connection with, a metro
H railway;"
AFCONS INFRASTRUCTURE LTD. v. NAGPUR METRO RAIL 557
CORPORATION LTD. & ANR. [MADAN B. LOKUR, J.]

8. In view of the extension of these two statutes to the city of A
Nagpur, there can be no doubt that the definition of 'metro railway' or
'metro' would apply to the tender conditions floated for the purposes of
the metro rail project ofNMRCL.
9. It is submitted before us that an inter-city rail is completely
different from a metro rail. An inter-city rail is between two cities and B
the trains are usually high speed trains. A metro rail is intra-city, it has a
dedicated right-of-way, normally it does not have high speed trains and
the frequency of trains is much greater that of inter-city trains.' A metro
rail may extend, in some cases, to a suburb of a metropolitan city but it
essentially remains an intra-city project. There is, therefore, a qualitative
difference between an inter-city rail and a metro rail. By itself, this c
indicates a qualitative difference in a railway project that is inter-city
and a railway project that is intra-city and the construction of a viaduct
for a railway project that is inter-city and a railway project that is intra-
city.
I 0. The fact that GYT-TPL JV made constructions in a D
metropolitan city or in a metropolitan area during the execution of the
Pearl River Delta inter-city high speed railway project, does not make
that project an intra-city metro rail project - it continues to be an inter-
city railway project. However, it not necessary for us to delve into these
issues or even adjudicate on them.
E
11. Recently, in Central Coalfields Ltd. v. SLL-SML (Joint
Venture Consortium)1 it was held by this Comt, relying on a host of
decisions that the decision making process of the employer or owner of
the project in accepting or rejecting the bid of a tenderer should not be
interfered with. Interference is permissible only if the decision making
process is ma/a fide or is intended to favour someone. Similarly, the F
decision should not be interfered with unless the decision is so arbitrary
or irrational that the Court could say that the decision is one which no
responsible authority acting reasonably and in accordance with law could
have reached. In other words, the decision making process or the decision
should be perverse and not merely faulty or incorrect or erroneous. No G
such extreme case was made out by GYT-TPL N in the High Court or
before us.
1
In Delhi the time duration is approximately to 2-3 minutes during peak hours and 5-
10 minutes during ofT peak duration in the city. Source: http://mnr.delhicapital.com/
del hi-metro-train-ti 111 in gs.ht m1
'2016(8) SCALE 99 H
558 SUPREME COURT REPORTS [2016] 3 S.C .R.

A 12. In Dwarkadas Mmfatia and Sons v. Board of Trustees of
the Port..of Bomhay 3 it was held that the constitutional Courts are
concerned ·with the decision making process. Tata Cellular v. Union of
India' weht a step further and held that a decision if challenged (the
decision· having been arrived at through a valid process), the constitutional
Courts can interfere if the decision is perverse. However, the
B
constitutional Courts are expected to exercise restraint in interfering
with the.administrative decision and ought not to substitute its view for
that of the administrative authority. This was confirmed in Jagdis/l
Ma11dal 1•. State of Orissa-' as mentioned in Central Coalfields.
13. In other words, a mere disagreement with the decision making
c process or the decision of the administrative authority is no reason for a
constitutional Court to interfere. The threshold of ma/afides, intention
to favour someone or arbitrariness, irrationality or perversity must be
met before the constitutional Court interferes with the decision making
process or the decision.
D 14. We must reiterate the words of caution that this Court has
stated right from the time when Ramana Dayaram Shetty v.
International Airport Authority ofIndia 6 was decided almost 40 years
ago, namely, that the words used in the tender documents cannot be
ignored or treated as redundant or superfluous - they must be given
E meaning and their necessary significance. In this context, the use of the
word 'metro' in Clause 4.2 (a) of Section III of the bid documents and
its connotation in ordinary parlance cannot be overlooked.
15. We may add that the owner or the employer of a project,
having authored the tender documents, is the best person to understand
F and appreciate its requirements and interpret its documents. The
constitutional Courts must defer to this understanding and appreciation
of the tender documents, unless there is mala fide or perversity in the
understanding or appreciation or in the application of the terms of the
tender conditions. It is possible that the owner or employer of a project
may give an interpretation to the tender documents that is not acceptable
G to the constitutional Courts but that by itself is not a reason for interfering
with the interpretation given.

' ( 1989) 3 sec 293
• ( 1994 J 6 sec 65 1
'(2007) 14 sec s11
H '' ( 1979) 3 sec 489
AFCONS JNFRASTRUCTURE LTD. v. NAGPUR METRO RAIL 559
CORPORATJON LTD. & ANR. [MADAN B. LOKUR, J.]

16. In the present appeals, although there does not appear to be A
any ambiguity or doubt about the interpretation given by NMRCL to the
tender conditions, we are of the view that even if there was such an
ambiguity or doubt, the High Cou1i ought to have refrained from giving
its own interpretation unless it had come to a clear conclusion that the
interpretation given by NMRCL was perverse or mala fide or intended
B
to favour one of the bidders. This was certainly not the case either
before the High Court or before this Court.
17. Under the circumstances, we find merit in the appeals filed
by the appellants and set aside the judgment and orders passed by the
High Court and restore the decision ofNMRCL to the effect that GYT-
TPL JV was not eligible to bid for the contract under consideration. c
18. Before we conclude, it is necessary to point out that the High
Court was of opinion that the eligible bidders were not entitled to be
either imp leaded in the petition filed in the High Court by the ineligible
bidder GYT-TPL JV or were not entitled to be heard. With respect, this
is not the appropriate view to take in matters such as the present. There D
are several reasons for this, one of them being that there could be
occasions (as in the present appeals) where an eligible bidder could
bring to the notice of the owner or employer of the project that the
ineligible bidder was ineligible for additional reasons or reasons that were
not within the contemplation of the owner or employer of the project. It E
was brought to our notice by Afcons Infrastructure in these appeals that
GYT-TPL JV did not have any experience in the construction of a viaduct
by the segmental construction method and that the translations of
documents in Mandarin language filed in the High Court were not true
English translations. Submissions made by learned counsel for Afcons
Infrastructure in this regard are important and would have had a bearing F
on the decision in the writ petition filed in the High Court but sinceAfcons
Infrastructure was not a party in the High Court, it could not agitate
these issues in the writ petition but did so in the review petition which
was not entertained. It is to avoid such a situation that it would be more
appropriate for the constitutional Courts to insist on all eligible bidders G
being made parties to the proceedings filed by an unsuccessful or ineligible
bidder.
19. We make it clear that we have not considered the submissions
of learned counsel for Afcons Infrastructure on the two issues of the
segmental construction method and faulty translation of documents since H
560 SUPREME COURT REPORTS [2016] 3 S.C.R.

A they were not before the High Court and also because we do not find it
necessary to adjudicate on them in the view that we have taken.
20. The appeals are allowed. The parties are left to bear their
own costs.

B
Devika Gujral Appeals allowed.