Afcons Infrastructure Ltd has scored a legal victory in a case involving a joint venture of China’s Guangdong Yuantian Engineering Co. (GYT) and India’s Tata Projects Ltd for a metro rail project in Nagpur.
The Supreme Court has allowed an appeal by Afcons against a Bombay High Court ruling that had dismissed a decision by the Nagpur Metro Rail Corporation Ltd to disqualify GYT-Tata Projects joint venture for a contract. Afcons has emerged as the lowest bidder for the contract.
Interestingly, Afcons is part of the Shapoorji Pallonji Group, the business conglomerate controlled by Pallonji Mistry, father of Tata Group chairman Cyrus Mistry. Cyrus Mistry’s elder brother, Shapoor Mistry, is the chairman of Afcons.
Nagpur Metro had invited bids to design and construct a viaduct in May last year. Six companies bid for the project. These included Afcons, Larsen & Toubro, NCC Ltd and GYT-Tata. Nagpur Metro rejected GYT-Tata’s bid on the ground it did have the necessary experience in the metro civil construction work and so did not meet the technical eligibility requirement. Subsequently, Afcons emerged as the lowest bidder after quoting around Rs 478 crore.
The joint venture, which had mentioned in its bid that it had experience of working on high-speed rail projects, approached the Nagpur bench of the Bombay High Court against Nagpur Metro. The high court held that the work to be done under the contract was civil work and it was immaterial as to whether it concerned high-speed rail or metro rail. It held Nagpur Metro’s decision to disqualify GYT-Tata as arbitrary and unreasonable.
Afcons was not made a party to the proceedings before the high court and so filed a review petition before the court, which didn’t hear its plea. Afcons then approached the Supreme Court.
A division bench of the Supreme Court comprising Justice Madan Lokur and Justice RK Agrawal ruled in favour of Afcons on 15 September, and said that an inter-city rail project is different from a metro rail project.
“A mere disagreement with the decision making process or the decision of the administrative authority is no reason for a constitutional Court to interfere,” the top court said in its order. “The threshold of mala fides, 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.”
The apex court said that courts should insist on all eligible bidders being made parties to the proceedings filed by an unsuccessful or ineligible bidder. It also observed that even if there were any ambiguity or doubt, the Bombay High Court should not have given its own interpretation unless it had come to a clear conclusion that the interpretation given by Nagpur Metro was perverse or mala fide or intended to favour one of the bidders.
Afcons was represented by senior counsel P Chidambaram, V Giri and Meenakshi Iyer, partner at law firm Advaya Legal in the case. Senior counsel and politician Salman Khurshid argued for GYT-Tata.
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