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        REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.  2068  OF 2014 (Arising out of S.L.P. (C) No.19233 of 2013)

M/s Siemens Aktiengeselischaft & S. Ltd.            …Appellant

Versus

DMRC Ltd. & Ors. …Respondents

J U D G M E N T

T.S. THAKUR, J.

1. Leave granted.

2. A Division Bench of the High Court of Delhi has by a

common order passed in Writ Petition (C) No.1853 of 2013

filed by the appellant and Writ Petition No.2615 of 2013 filed

by Alstom Transport India Ltd. declined to interfere with the

award of a contract for the supply of 486 Standard Gauge

Cars Electrical Multiple Units meant for use in Phase-III of

the Mass Rapid Transit System (‘MRTS’ for short) for Delhi

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and its extension corridors. The High Court has taken the

view that the process of evaluation of the bids received from

eligible  bidders  culminating  in  the  award  of  a  contract  in

favour of respondent No.2-Hyundai Rotem Company  (‘HR’

for  short)  was  transparent  and  did  not  suffer  from  any

illegality, irregularity  or  perversity  of  any  kind  to  warrant

interference by it. The High Court held that the bidders were

well aware of and had accepted the tender conditions which

were  free  from  any  vagueness  or  uncertainty.  The

parameters of evaluation conditions were also held to have

been applied uniformly to all the bidders under a procedure

that was open, transparent and fair as required by law. The

present appeal assails the correctness of that judgment and

order.  Alstom Transport India Ltd. & Ors.-Writ-Petitioners in

connected  Writ  Petition  No.2615  of  2013  have,  however,

remained content with the view taken by the High Court and

have not chosen to appeal.

3. Respondent-Delhi  Metro  Rail  Corporation  (‘DMRC’  for

short) has planned to implement Phase-III of the MRTS for

Delhi to keep pace with the ever increasing traffic demands

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in  Delhi.   Phase-III  of  the  MRTS,  Delhi  comprises  metro

corridors  of  Mukundpur-Rajori  Garden-Dhaula  Kuan  -

Maujpur - Gokulpuri and Janakpuri (West)–Munirka - Kalkaji -

Kalindi Kunj - Botanical Garden - (Noida). The project, it is

common ground, is financed with the help of a loan secured

by the DMRC from Japan International Cooperation Agency

(‘JICA’ for short). The loan agreement,  inter alia, stipulates

the  bid  procedure  to  be  followed  by  DMRC.  What  is

noteworthy is  that  the  procedure,  inter  alia, provides  for

submission of tenders to JICA for review, concurrence and

analysis of bids by the DMRC and reserves with the JICA the

discretion to convey its views regarding the analysis of the

bids and the proposal for award of the works.

4. In  keeping  with  the  requirements  of  the  agreement

between DMRC and JICA, the former invited sealed tenders

in  two  parts  (Technical  &  Price  Bid)  on  International

Competitive  Bid  (‘ICB’  for  short)  basis  for  the  design,

manufacture, supply, testing, commissioning and training of

486 number of Standard Gauge Cars Electrical Multiple units

referred to earlier at an estimated budget cost of Rs.3500

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crores funded by JICA. Pre-bid meetings were held to answer

the queries, if any, raised by the bidders.  The DMRC in the

meantime issued as many as 9 Addenda which necessitated

the change in the dates fixed for submission of bids to enable

the bidders to formulate their offers and make their bids in

accordance with the terms and conditions finally stipulated

for  the  purpose.  DMRC  eventually  received  eight  bids

including one submitted  by the  appellant  before  us.   The

technical  bids  were  opened  on  18th September,  2012

whereupon only six of  the  bidders  including the  appellant

were  declared  to  be  eligible.  With  the  opening  of  the

technical bids GEC values which the bidders were required to

submit  as  a  part  of  their  technical  bid  and  which  were

relevant and to a great extent critical for evaluation of the

price  bid  under  the  applicable  terms  and  conditions  also

became known to the bidders. The financial bids offered by

these six bidders were then opened on 9th February, 2013

and the bid amount along with GEC values offered by each

bidder announced by the DMRC. The price quotations of the

six bidders found eligible were as under:

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Bidder Grand Total in INR

INR per Car (without loading)

Position before Loading due to

difference in GEC values

Siemens Consortium 3625,27,92,409 7,45,94,223 L-1 Bombardier  Consortium

4242,27,83,378 8,72,89,678 L-2

Hyundai ROTEM 4290,57,94,689 8,82,83,528 L-3 Alstom Consortium 4373,87,65,001 8,99,97,459 L-4 CAF Consortium 4614,18,66,794 9,49,42,113 L-5 Hitachi + BHEL 4891,32,60,656 10,06,44,569 L-6

5. Significantly, however, the above did not represent the

true  inter se position of the bidders.  That was so because

apart from the price quotation, the terms and conditions of

the  tender  notice  required  loading  of  GEC  values  duly

converted into Indian rupee to the price quotation of each

eligible bidder. The GEC values in turn comprised two distinct

components,  namely, ‘X’  factor  representing the  electricity

consumption for the operation of the train without HVAC and

‘Y’ factor for operation of HVAC. The GEC values offered by

the six bidders found technically compliant were as under:  

S.No. Bidder Other than HVAC (‘X)

HVAC (‘Y’) Total

1 ALSTOM 1434 595 2029 2 BTC 1621 564 2185 3 CAFC 1159 790 1949

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4 HBC 1767 514 2281 5 HRC 1259 567 1826 6 SIEMENS 1560 786 2346

6. In  terms  of  Annexure  ITT-8  the  GEC  value  of

respondent  No.2  which  was the  lowest  was taken  as  the

baseline for the purpose of loading the rupee equivalent of

the higher values offered by other bidders on to their price

bids. The Indian rupee conversion of the said value above the

baseline, proportionate to the higher GEC values was worked

out as under:

S.No .

Bidder GEC (‘X’ + ‘Y’)

KWH

GEC for loading

INR

1 ALSTOM 2029 203 6,911,264,587.08 2 BTC 2185 359 12,222,384,171.24 3 CAFC 1949 123 4,187,613,518.28 4 HBC 2281 455 15,490,765453.80 5 HRC 1826 O (baseline) 0 6 SIEMENS 2346 520 17,703,731,947.20

7. The  position  that  emerged  after  the  GEC  values

component was loaded to the price bid of the bidder was as

under:

Bidder Grand Total in INR

INR per  Car  (without  loading)

Positio n  before  Loadin g

Grand Total  (with energy  loading) in INR

INR per Car  (with  loading)  

Position after  loading

Total  Energy  (kWH)

SEC  value  (kWH/ 1000G TKM)

Siemens  Consortium

3625,27,92,409 7,45,94,22 3

L-1 5395,65,24,355 11,10,21,655 L-4 2346 55.71

Bombardier Consortium

4242,27,83,378 8,72,89,67 8

L-2 5464,51,67,548 11,24,38,616 L-5 2185 51.89

Hyundai  ROTEM

4290,57,94,689 8,82,83,52 8

L-3 4290,57,94,690 8,82,83,528 L-1 1826 43.36

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Alstom  Consortium

4373,87,65,001 8,99,97,45 9

L-4 5065,00,29,588 10,42,18,168 L-3 2029 48.18

CAF  Consortium

4614,18,66,794 9,49,42,11 3

L-5 5032,94,80,313 10,35,58,601 L-2 1949 46.28

Hitachi +  BHEL

4891,32,60,656 10,06,44,569 L-6 6440,40,26,108 13,25,18,572 L-6 2281 54.17

8. It  is  evident  from a  comparative study of  the  charts

extracted above, that while the appellant was L-1 in the price

bid, it went down to L-4 after GEC value was loaded to its

price bid.  On the contrary respondent No.2-HR who was L-3

in the price bid rose to L-1 position on account of its low GEC

value in comparison to a higher GEC value offered by the

appellant.   

9. Allotment of the award in favour of HR as the lowest

bidder,  thus,  appeared  as  a  writing  on  the  wall  to  the

appellant  who sent  a  communication  dated  12th February,

2013 to DMRC alleging that the GEC values offered by HR

were  untenable  and  unsustainable  and  pointing  out  that

since the appellant’s price bid was lesser than that of the HR

by 665 crores (approx.) it should be taken as L-1 instead of

determining the inter se position of the bidders on the basis

of  a  supposedly  anticipated  saving  in  the  consumption  of

energy on a lifecycle of 30 years.  Yet another letter dated

25th February, 2013  the  appellant  called  for  evaluation  of

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energy values by an independent third party agency so as to

ascertain  whether  the  GEC  values  offered  by  HR  were

achievable. Yet another letter dated 1st March, 2013 to the

same effect having failed to cut any ice with the DMRC, the

appellant preferred Writ Petition No.1853 of 2013 before the

High  Court  of  Delhi.  That  writ  petition  was  notified  for

hearing on 1st May, 2013.  In the meantime DMRC issued a

Letter of Acceptance in favour of HR under intimation to the

appellant. The appellant, therefore, sought a restraint order

against the award of the contract before the High Court who

in turn accepted an undertaking given by the counsel for the

DMRC and HR that they will not act in pursuance of the letter

of award pending disposal of the writ petition.   

10. Alstom Transport India Ltd. was the only other bidder

aggrieved by the award of the contract who filed Writ Petition

No.2615 of 2013 challenging the tender process.  Both the

writ petitions were eventually heard by the High Court on 1st

May, 2013 and dismissed by the order under appeal before

us.

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11. Appearing  for  the  appellant,  Mr.  U.U.  Lalit,  learned

senior counsel,  fairly conceded that  the appellant  had not

alleged any mala fides, bias or bad faith in the matter  of

evaluation of the bids by the DMRC or any process connected

therewith nor even in the award of the contract in favour of

HR,  the  successful  bidder. He  contended  that  the  tender

notice no doubt required GEC values to be offered by the

bidders to be made use of in the process of the evaluation of

the  bids but  such values  were  not  sacrosanct  or  immune

from scrutiny and evaluation to determine whether the same

were at all achievable. He submitted that since all the six

bidders competing for the contract are significant players in

the  international  market,  they  could  with  a  reasonable

amount  of  certainty  say  whether  or  not  the  GEC  values

offered by the bidders were sustainable.  It was contended

by Mr. Lalit that while the GEC value offered by the appellant

was  the  highest,  the  one  offered  by  the  respondent

successful  bidder  for  ‘X’  factor  was  wholly  untenable.  He

urged that the terms of the tender notice required the GEC

values offered  by the  bidders  to  be  validated before  they

could be used for processing the bids. He drew considerable

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support from a report submitted by the Director, Ministry of

Urban Development, Government of India, to suggest that

the  stimulation test  conducted by DMRC as  a  part  of  the

process of verification and validation of the GEC value offered

by HR was not accurate and urged that the Government of

India had appointed a two-member Committee to check the

evaluation process of the bids.  The report of the Committee

filed by the Government in this Court in a sealed cover could,

according to the learned Counsel, throw considerable light on

the  subject  and  help  this  Court  in  deciding  whether  an

independent verification of the GEC values was necessary.

12. Mr.  Andhyarujina,  learned  counsel  for  the

respondent-DMRC, on the other hand, argued that the bids

offered  by the  eligible  tenderers  were  evaluated  by three

different  Committees  i.e.  the  Evaluation  Committee,  the

Appraisal Committee and finally by the Tender Committee in

a  fair  and  transparent  manner.  On  receipt  of  the

representations  from  the  appellant-Siemens,  Bombardier,

Alstom and Hitachi regarding the GEC values offered by HR,

the Board of Directors of DMRC constituted a sub-Committee

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to  consider  the  said  representations.  The  Board

sub-Committee consisted of six directors out of whom three

were  Functional  Directors  besides  MD  of  the  DMRC,  a

nominee  Director  of  MoUD  of  Indian  Railways  and  one

independent Director.  The Sub-Committee met on 4th and 5th

March, 2013 and thoroughly examined the issues raised in

the  representation  and  found  the  detailed  explanations

provided in the Tender Committee Minutes to be satisfactory.

The  Sub-Committee,  therefore,  agreed  with  the

recommendations  of  the  Tender  Committee  culminating in

the issue of a Letter of Acceptance to respondent-HR.  Our

attention  was drawn to  the  counter-  affidavit  filed  by  the

DMRC in which the process of evaluation of the bids and the

GEC values has been set out.  The counter-affidavit further

states  that  the  DMRC  was  fully  satisfied  about  the

achievability of the GEC values offered by HR.  There was,

therefore, no room for validation of the GEC values by any

outside agency.

13. It was further contended by Mr. Andhyarujina that the

tender conditions specifically provide for levy of a penalty in

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case of failure of the committed GEC values.  He referred to

ERTC 3.24.1  according  to  which  the  defaulting  Contractor

shall be liable to pay penalty at the rate of Rs.4.03 crores per

unit  of  electricity  committed  in  excess  of  the  GEC  values

declared by it.  The penalty stipulated thus works out to be

approximately 18.47% which is significantly higher than the

rupee component loaded for each unit, argued the learned

counsel.  This implies that the lowest tenderer is under an

onerous obligation to make good the GEC values or else end

up  paying  a  penalty  at  a  rate  which  is  higher  than  the

amount by which the financial bid has been loaded on a per

unit of energy basis.  The Letter of Acceptance issued to HR

also makes a specific provision for levy of penalty and, thus,

fully secures the interest of the DMRC.

14. Reliance upon the additional documents and the report

of the Committee appointed by the MoUD was, according to

Mr. Andhyarujina, wholly misplaced.  He submitted that there

was no occasion for the Government to appoint a Committee

for evaluation of the bids received by DMRC which was an

autonomous entity.  The appointment of the Committee at

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the instance of the Minister in disregard of the observations

made by the Secretary MoUD was not  proper, argued the

learned  counsel,  especially  when  the  matter  was pending

adjudication before the High Court. The appointment of the

Committee was in any case not disclosed to the High Court

by the Union of India on 1st May, 2013 when the matter was

taken up for hearing. It was contended that the DMRC had at

all  times  maintained  that  there  was  no  question  of  any

enquiry by an outside body regarding the evaluation of the

bids received by it not even by the Government of India.  He

drew  support  for  that  submission  from  the  following

statement made in the affidavit filed by the Union of India in

this Court:

“All tenders are floated and finalized by respective Metro Rail Corporations including DMRC. MoUD has no  role  in  award/cancellation  of  any contract/tender.”

15. It was argued that the DMRC had also in its reply dated

14th August, 2013 sent to the Government clearly stated that

it would not respond to the preliminary observations of the

Committee as the matter had in the meantime travelled to

this Court and was sub judice.  Legal opinion obtained by the

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DMRC from a Senior Advocate of this Court, also advised that

in a matter  that  is  sub judice,  any report  by any outside

Enquiry Committee appointed by the Government would be

impermissible  and  improper  nor  would it  be  advisable  for

DMRC to participate in any such exercise.  In the premises it

was contended that the Report by the Enquiry Committee

submitted to this Court in a sealed cover need not be looked

into as the same was wholly extraneous to a judicial review

of  the  process  of  evaluation  and  eventual  award  of  the

contract by DMRC, the authority competent to do so.  Relying

upon the decisions of this Court in  Amrik Singh Lyallpuri

v. Union of India & Ors. (2011) 6 SCC 535 and Union

of India v. K.M. Shankarappa (2001) 1 SCC 582, it was

argued that administrative review of a judicial decision was

not  legally  permissible.   It  was  also  contended  by  Mr.

Andhyarujina  that  pursuant  to  the  allotment  made  in  his

favour,  HR  had  taken  substantial  steps  towards

implementation of the project and that interference with the

award of the contract at this belated stage was neither in

public  interest  nor  otherwise  justified  in  the  facts  and

circumstances of the case.   

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16. Appearing for the respondent No.2-HR, Mr. Venugopal,

learned  senior  counsel  adopted  the  submissions  of  Mr.

Andhyarujina and took strong exception to the constitution of

a  Committee  by  the  Minister  of  Urban  Development,

Government of India on a subject which was subjudice before

the High Court.  It was contended by Mr. Venugopal that the

constitution of the Committee was not only against the sound

advice  tendered  by  the  Secretary  to  the  Government,

Minister  of  Urban  Development  Department  but  was

tantamount  to  interference  with  the  course  of  justice.

Relying upon the decision of the Full Bench of the High Court

of Patna in  The King v. Parmanand and Ors.  AIR 1949

Patna 222 and D. Jones Shield v. N. Ramesam & Ors.

AIR 1955 AP 156;  In Re: P.C. Sen AIR 1970 SC 1821

and Jang Bahadur Singh v. Baij Nath Tiwari AIR 1969

SC 30, Mr. Venugopal argued that when a matter is pending

adjudication  before  a  Court  of  law,  nothing  can  be  done

which might disturb the course of justice by either interfering

with the judicial process or prejudging the merits of the case

or by usurping the functions of the Court having seisin over

the  proceedings.   Any  such  practice,  argued  the  learned

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counsel,  was  fraught  with  danger  and  would  amount  to

opening the door for contempt for those responsible for such

interference. It was further contended by Mr. Venugopal that

judicial review in tender cases was limited to examining the

decision-making process and not the decision itself. Reliance

in  support  of  that  submission  was placed  by  the  learned

counsel upon the decisions of this Court in Tata Cellular v.

Union of India (1994) 6 SCC 651;  Asia Foundation &

Construction  Ltd.  v.  Trafalgar  House  Construction

(1997) 1 SCC 738;  Monarch Infrastructure (P) Ltd. v.

Ulhasnagar  Municipal  Corpn., (2000)  5  SCC  287;

Jagdish Mandal v. State of Orissa (2007) 14 SCC 517

and Heinz India (P) Ltd. v. State of U.P. (2012) 5 SCC

443.  It was submitted that the decision making process in

the instant case was transparent,  fair  and reasonable and

that the High Court had after  a careful examination of all

aspects  correctly  held  that  there  was  no  illegality  or

irregularity in the said process to warrant interference.   

17. Principles  governing  judicial  review  of  administrative

decisions  are  now  fairly  well-settled  by  a  long  line  of

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decisions rendered by this Court, since the decision of this

Court  in  Ramana  Dayaram  Shetty  v.  International

Airport Authority of India and Ors. (1979) 3 SCC 489

which is one of the earliest cases in which this Court judicially

reviewed  the  process  of  allotment  of  contracts  by  an

instrumentality of the State and declared that such process

was  amenable  to  judicial  review.  Several  subsequent

decisions followed and applied the law to varied situations

but among the latter decisions one that reviewed the law on

the subject comprehensively was delivered by this Court in

Tata Cellular’s  case (supra) where this Court once again

reiterated that judicial review would apply even to exercise of

contractual  powers  by  the  Government  and  Government

instrumentalities  in  order  to  prevent  arbitrariness  or

favouritism. Having said that this Court noted the inherent

limitations in the exercise of that power and declared that

the State was free to protect its interest as the guardian of

its  finances.   This  Court  held  that  there  could  be  no

infringement of Article 14 if the Government tried to get the

best  person or the best  quotation for  the right to  choose

cannot be considered to be an arbitrary power unless the

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power is exercised for any collateral purpose.  The scope of

judicial  review,  observed  this  Court,  was  confined  to  the

following three distinct aspects:

(i) Whether  there  was  any  illegality  in  the  decision which  would  imply  whether  the  decision  making authority  has  understood  correctly  the  law  that regulates his decision making power and whether it has given effect to it;

(ii) Whether there was any irrationality in the decision taken by the authority implying thereby whether the decision is so outrageous in its defiance of logic or accepted  moral  standards  that  no  sensible  person who  had  applied  his  mind  to  the  question  to  be decided could have arrived at the same; and

(iii) whether  there  was  any  procedural  impropriety committed  by the  decision making authority  while arriving at the decision.

18. The  principles  governing  judicial  review  were  then

formulated in the following words:

(i) The  modern  trend  points  to  judicial  restraint  in administrative action.

(ii) The  court  does  not  sit  as  a  court  of  appeal  but merely  reviews  the  manner  in  which  the  decision was made.

(iii) The court does not have the expertise to correct the administrative  decision.  If  a  review  of  the administrative  decision  is  permitted  it  will  be substituting its own decision, without the necessary expertise which itself may be fallible.

(iv) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is  reached  by  process  of  negotiations  through

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several  tiers.  More often  than  not,  such  decisions are made qualitatively by experts.

(v) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere. However, the decision must  not  only  be  tested  by  the  application  of Wednesbury  principle  of  reasonableness  (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides.

(vi) Quashing  decisions  may  impose  heavy administrative  burden  on  the  administration  and lead to increased and unbudgeted expenditure.

19. In  M.P.  Oil  Extraction  v.  State  of  M.P.  &  Ors.

(1997) 7 SCC 592, this Court held that if an objective and

rational foundation for the fixation of royalty is disclosed, the

Court  will  not  interfere  with the  exercise  of  governmental

decision by undertaking an exercise to determine whether or

not a better fixation was possible in the circumstances. This

Court struck a note of caution that in economic and policy

matters the scope of judicial review was limited.   

20. It is unnecessary and platitudinous for us to burden this

judgment with reference to the decisions of this Court on the

subject for the governing principles are so well-known and

well-settled  that  any review of  the  law on  the  subject  is

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bound  to  be  simply  repetitive  without  any  meaningful

contribution to the existing legal literature on the subject.

We remain content by referring to two only of a plentitude of

judicial pronouncements on the subject  in which the legal

position has been succinctly restated. One of these decisions

was delivered in Jagdish Mandal v. State of Orissa & Ors.

(2007) 14 SCC 517, where too this Court was dealing with

the exercise of power of judicial review in matters relating to

tenders  and  award  of  contracts.  This  Court  identified  the

special  features  should  be  borne  in  mind  while  judicially

reviewing award of contracts.   We can do no better  than

extract the following observations of this Court in this regard:

“22. Judicial  review  of  administrative  action  is intended  to  prevent  arbitrariness,  irrationality, unreasonableness, bias and mala fides. Its purpose is  to  check  whether  choice  or  decision  is  made “lawfully”  and  not  to  check  whether  choice  or decision  is  “sound”.  When  the  power  of  judicial review is invoked in matters relating to tenders or award of contracts,  certain  special  features should be  borne  in  mind.  A  contract  is  a  commercial transaction.  Evaluating  tenders  and  awarding contracts  are  essentially  commercial  functions. Principles  of  equity  and  natural  justice  stay  at  a distance. If the decision relating to award of contract is bona fide and is in public interest, courts will not, in  exercise  of  power  of  judicial  review,  interfere even  if  a  procedural  aberration  or  error  in assessment or prejudice to a tenderer, is made out. The power of judicial review will not be permitted to

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be invoked to protect private interest at the cost of public interest, or to decide contractual disputes.”  

(emphasis supplied)

21. More recently in Heinz India (P) Ltd. & Anr. v. State

of  U.P.  & Ors.  (2012) 5 SCC 443, this  Court  speaking

through one of us (Thakur, J.) examined the legal dimensions

of  judicial  review  and  quoted  with  approval  the  following

passage from Reid v. Secy. of State for Scotland (1999)

1 All ER 481 which succinctly sums up the law.

“Judicial review involves a challenge to the legal validity of the decision. It does not allow the court of review  to  examine  the  evidence  with  a  view  to forming its own view about the substantial merits of the case. It may be that the tribunal whose decision is being challenged has done something which it had no lawful  authority  to do. It  may have abused or misused  the  authority  which  it  had.  It  may  have departed  from  the  procedures  which  either  by statute or at common law as a matter of fairness it ought  to  have  observed.  As  regards  the  decisions itself it may be found to be perverse, or irrational or grossly  disproportionate  to  what  was  required.  Or the  decision  may  be  found  to  be  erroneous  in respect  of  a  legal  deficiency,  as  for  example, through  the  absence  of  evidence,  or  of  sufficient evidence,  to  support  it,  or  through  account  being taken of irrelevant matter, or through a failure for any reason to take account of a relevant matter, or through some misconstruction of the terms of the statutory  provision  which  the  decision-maker  is required to apply. But while the evidence may have to  be  explored  in  order  to  see  if  the  decision  is vitiated by such legal deficiencies it is perfectly clear that in case of review, as distinct from an ordinary

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appeal, the court may not set about forming its own preferred view of evidence.”

22. There  is  no  gainsaying  that  in  any challenge  to  the

award of contact before the High Court and so also before

this  Court  what  is  to  be  examined  is  the  legality  and

regularity of the process leading to award of contract.  What

the Court has to constantly keep in mind is that it does not

sit in appeal over the soundness of the decision.  The Court

can only examine whether the decision making process was

fair, reasonable and transparent.  In cases involving award of

contracts, the Court ought to exercise judicial restraint where

the decision is bonafide with no perceptible injury to public

interest.    

23. The High Court has, in the case at hand, undertaken

that  exercise  and  concluded  that  there  was  neither  any

illegality nor any irregularity in the process of evaluation of

the bids or the final allotment of the contract.  That view has

come to be assailed by the appellant on what is essentially a

short point raised by Mr. Lalit in support of the appeal. The

contention, as noticed earlier, is that while no malafide or

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extraneous  considerations  have  prevailed  to  vitiate  the

decision of the DMRC allotting the contract in favour of HR,

the process of evaluation of the bids offered by the eligible

bidders should have in the facts and circumstances of the

case included validation of the GEC values offered by HR to

determine whether  they were achievable having regard to

the ground realities and the laws of physics relevant to the

consumption of energy.  That contention does not suggest

any illegality in the process of allotment of the contract in

favour of HR, for no violation of any law, rule or regulation

governing the process of invitation of tenders by the DMRC

or its evaluation and acceptance has been alleged or argued

before us.  No such statutory or other provision has been

brought to  our  notice  which could possibly provide to the

appellant  a  reason  to  contend  that  the  allotment  of  the

contract was itself illegal or in breach of any such provision or

procedure prescribed thereunder.  It is no body’s case that

the decision-making authority had not  understood the law

that  regulates  its  decision making power  or  failed to  give

effect to it.  We have, therefore, no hesitation in holding that

the allotment of contract did not suffer from any illegality as

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it  is  understood  in  the  matter  of  judicial  review  of

administrative action and as that expression has been used

by this Court in Tata Cellular’s case (supra).  It is also not

the  case  of  the  petitioner  that  the  decision  taken  by the

DMRC is so outrageous in its defiance of logic or accepted

moral standards that no sensible person who had applied his

mind  could  have  arrived  at  the  same.  Perversity  or

irrationality in the decision or the decision making process is

also not a ground that can be invoked in the case at hand.

24. The contention urged by Mr. Lalit may at best constitute

an irregularity in the process of evaluation of the bids. That

an  irregularity  can  itself,  in  certain  situations  result  in

invalidating a process,  cannot be disputed.   The question,

however,  is  whether  there  was  any  irregularity  in  the

evaluation of the bids in the present case and if so whether

the same was sufficient to invalidate the evaluation process

or the ultimate award of the contract.  Whether or not there

was any irregularity in the process of evaluation of the bids

shall  in  turn  have to  be  examined  by a  reference  to  the

conditions of the tender notice under which the tenders were

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invited,  received,  processed,  evaluated  and  eventually

accepted.  It is common ground that the price bid offered by

the tenderers was not itself determinative. What was equally

important was the GEC values comprising X and Y factors

which the tenderers had to disclose in their technical bids.

That  the  values  offered  had  to  be  converted  into  Indian

Rupees and loaded to the price bid of the tenderers is also

beyond question. That each one of the bidders had offered

their GEC values comprising X and Y factors separately was

also beyond doubt. There is no error even in the conversion

of such values in terms of Indian Rupees nor is there any

dispute about the effect of such loading of values to the price

bid of  all  the  tenderers  because  of  which loading the  bid

offered  by  HR  eventually  emerged  as  L-1  with

appellant-Siemens sliding to L-4 position. That being so, the

process  of  evaluation  of  bids  could not  be  faulted  as  the

same was strictly in accordance with the norms stipulated for

such evaluation. Even Mr. Lalit fairly conceded that there was

nothing that could be criticized in that process. What DMRC,

according to him, should have done was to check whether

the  GEC  values  offered  by  the  bidders  were  achievable.

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Inasmuch  as  no  such  verification  was  undertaken  the

evaluation process was flawed.  There is, in our opinion, no

merit in that contention.  The reasons are not far to seek.  In

the first place, the contention urged by Mr. Lalit does not find

support  from any provision in  the  tender  notice.  There  is

nothing in  the  tender  document  to  suggest  that  the  GEC

values  had  to  be  tested  for  their  achievability. As  rightly

contended by Mr. Lalit all the six bidders declared eligible are

world leaders in the field and have sufficient expertise and

know-how not only about the design and technology which

they  use  but  also  about  their  capacity  to  validate  their

respective  GEC  values.  If  that  be  so,  DMRC  could  be

supremely confident that the GEC values offered by HR were

achievable especially when such values offered by some of

the bidders for X and Y factors were lower than those offered

by HR.  At any rate the DMRC had sufficiently protected itself

because  under  the  terms and conditions stipulated  in  the

tender notice failure of the successful tender to make good

the GEC values offered by them would result in a penalty

which was higher than the GEC value factor that was loaded

to the price bid. We, therefore, do not see any real basis for

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the  contention  that  the  DMRC  was  supposed  to  go  any

further than it did in protecting its interest. In the absence of

any specific stipulation or requirement for validation of the

GEC values by the DMRC and its experts or by any outside

agency such a  requirement  could not  be  implied into  the

tender  process.   Inasmuch  as  the  DMRC  found  the  bid

offered by HR to be acceptable,  keeping in view the GEC

values offered by it, the former had committed no illegality in

the  evaluation  of  the  bids  or  in  making  its  choice  of  the

contractor.   

25. Secondly, because even assuming that the process of

validation of the GEC values and their achievability was an

implied condition in the evaluation process, DMRC had on the

basis of an internal simulation satisfied itself that the GEC

values were not unachievable. The High Court has referred to

the simulation results and so has our attention been drawn

to the said result from the original record produced by DMRC.

We do not see any illegality or irregularity in the process of

verification conducted by the DMRC to test the achievability

of the GEC values.  It is true that DMRC had conducted the

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simulation in regard to the GEC values offered by HR only but

then in the absence of any condition in the tender  notice

requiring DMRC to conduct such verification even in regard to

other GEC values, there was no need for it to undertake any

such exercise. DMRC was, in our opinion, entitled to adopt

such  methods  as  were  reasonable  to  satisfy  itself  above

about  the  GEC  values  and  their  achievability  offered  by

lowest tenderer in whose favour it was considering the award

of  the  contract.   The  upshot  of  the  above  discussion,

therefore,  is  that  the  process  by  which  the  bids  were

evaluated and eventually accepted was transparent, fair and

reasonable and does not, therefore, call for any interference

from this Court.   

26. That brings us to the question whether the Government

of India was justified in appointing a Committee to test the

evaluation of bids and, if so, whether this Court ought to look

into the Report of the Committee. There is more than one

aspect that needs to be kept in view in this regard.  The first

and foremost is the fact that the Committee was appointed

at a stage when the matter was already pending before the

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High Court.  Considerable time was spent by learned counsel

for the parties in debating whether the constitution of the

Committee  by  the  Government  itself  tantamounted  to

interference with the course of justice, hence contempt. We

do not, however, consider it  necessary to pronounce upon

that aspect in these proceedings especially because we have

not been called upon to initiate such contempt proceedings.

All that we need say is that once the Government had known

that  the  entire  issue regarding the  validity of  the  process

adopted by DMRC including the transparency and fairness of

the process of evaluation of the bids was  subjudice before

the High Court of Delhi and later before this Court, it ought

to have kept its hands off and let the law take its course. It

could have doubtless placed all such material as was relevant

to that question before the High Court and invited a judicial

pronouncement on the subject instead of starting a parallel

exercise.   The  Government  could even approach the High

Court  and  seek  its  permission  to  review  the  process  of

evaluation either by itself or through an expert Committee if

it  felt  that  any  such  process  would  help  the  Court  in

determining the  issues  falling for  consideration before  the

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Court more effectively.  Nothing of that sort was, however,

done.  On the contrary even when the Secretary to the MoUD

pointed  out  that  the  matter  is  subjudice and  any further

action in the matter could await the pronouncement of the

Court,  the  Hon’ble  Minister  heading  MoUD  directed  the

constitution of the Committee with the following terms:

“2(1) To examine if a fair, equitable and transparent tender process was followed by DMRC, as per the prescribed guidelines”.

27. We  have  no  manner  of  doubt  that  the  terms  of

reference give a clear indication that the process initiated by

the Government was a parallel process of the adjudication of

the very same issue as fell for consideration before the High

Court  and at  a  later  stage  before  this  Court.   We fail  to

appreciate  how the  Government  could have possibly done

this.   Confronted with this  situation Mr. Mohan Parasaran,

learned  Solicitor  General,  argued  that  a  reference  to  the

Committee was not meant to subvert judicial process but to

only  find  ways  and  means  to  formulate  policies  and

procedures  for  future  allotment  of  contracts.  We have no

hesitation in rejecting that submission. The Reference Order

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extracted above speaks for itself. It no where states that the

Committee has to look at  anything beyond the process of

evaluation of tenders received by DMRC.  It does not even

remotely suggest that the Government is concerned about

the procedures that may be followed in the future or anxious

to devise transparent methods by which such contract should

be allotted.  What is notable is that the Committee’s hands

were  not  stayed by the  Government  even when the  High

Court had pronounced upon the validity of the procedures

adopted by the DMRC and the matter reached this Court.

Continuance of the process of review even after  the High

Court had delivered its judgment amounted to subjecting the

judicial pronouncement to an administrative review.  There

was  no  question  of  any  such  judicial  determination  or

adjudication  being  subjected  to  any  administrative  review

albeit  in  the  name  of  a  Committee  constituted  for  the

purpose.   

28. Mr. Parasaran argued that the Committee’s proceedings

did not amount to sitting in appeal over the judgment of the

High  Court.  The  Committee  may  have  not  said  anything

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adverse  to  view  taken  by  the  High  Court  but  if  the

Committee  were  to  find  fault  with  the  evaluation  process

which  the  High  Court  has  held  to  be  valid  it  indirectly

amounted to putting a question mark on the judgment of the

High  Court  itself.  Suffice  it  to  say  what  the  Government

ought to have stayed its hands once the matter landed in the

Court.  Inasmuch as the Government did nothing of this kind,

it did not act properly.  Beyond that we do not consider it

necessary or proper to say anything at this stage.   

29. It was contended by Mr. Lalit that the report submitted

by the Committee appointed by the Government ought to be

taken as expert opinion on the subject and given due weight.

That position was disputed by Mr. Andhyarujina appearing for

DMRC  and  Mr.  Venugopal  appearing  for  HR.  That  the

Committee  comprised  a  former  Finance  Secretary  to  the

Government  of  India and a  Civil  Engineer, none  of  whom

could  claim  to  be  expert  in  the  field  relevant  to  the

achievability  of  the  GEC  values,  was  not  disputed  by  Mr.

Parasaran who urged that the Committee may have taken

the opinion of some experts on the subject.  Even assuming

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that the Committee has taken expert advice regarding the

tenability of the GEC values offered by HR, it would simply

mean that there is a conflict between the views taken by the

experts  of  DMRC and  those  consulted  by  the  Committee.

Any such conflict cannot be resolved by this Court in exercise

of its powers of judicial review.  So long as the view taken by

the  experts  of  the  authority  competent  to  take  a  final

decision is  a  possible view the  very fact  that  some other

experts  have expressed doubts  about  the  sustainability of

the GEC values will not be enough for us to declare that the

values offered by HR are indeed unachievable.  This Court

has  in  Federation  of  Railway  Officers  Association  v.

Union of India (2003) 2 SCR 1085, stated the wholesome

principle applicable in such situations in the following words:

“Further, when technical questions arise and experts in  the  field  have  expressed  various  views  and all those aspects have been taken into consideration by the Government in deciding the matter, could it still be  said  that  this  Court  should  re-examine  to interfere  with  the  same.  The  wholesome  rule  in regard  to  judicial  interference  in  administrative decisions  is  that  if  the  Government  takes  into consideration  all  relevant  factors,  eschews  from considering  irrelevant  factors  and  acts  reasonably within the parameters of the law, courts would keep off the same.”

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30. Reference  may  also  be  made  to  the  decision  of  this

Court in N.D. Jayal v. Union of India (2004) 9 SCC 362

where this Court observed:

“This Court cannot sit in judgment over the cutting edge of scientific  analysis relating to the safety of any  project.  Experts  in  science  may  themselves differ  in  their  opinions  while  taking  decisions  on matters  related  to  safety  and  allied  aspects.  The opposing viewpoints of the experts will also have to be given due consideration after full  application of mind.  When  the  Government  or  the  authorities concerned after due consideration of all  viewpoints and full application of mind took a decision, then it is not appropriate for the court to interfere.”

31. Reliance  by  the  appellant  upon  the  report  of  the

Committee is misplaced also for the reason that the same

was  ex  parte.  It  is  common  ground  that  HR  was  never

associated with the process of evaluation or verification if any

conducted by the Committee.  In the absence of any such

opportunity to the party whose GEC values were being test

checked for their achievability, the report can hardly provide

a sound basis for a writ court to upset a decision which the

competent authority has taken after due deliberations by not

one but four different Committees including experts in the

field. That apart, Mr. Parasaran fairly submitted that even the

Government have not accepted the report submitted by the

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Committee  so  far.  He  urged  that  since  the  matter  was

pending in this Court, the Government has simply placed the

report of the Committee in a sealed cover for the Court to

decide as to what value has to be attached to it.  That being

the position, the preparation and submission of a report that

does not even take the view point of the party affected by it

into consideration can hardly provide to this Court a good

reason to scuttle the entire process at this stage when HR,

the successful bidder, has already taken substantial steps in

the direction of executing the works allotted to it.

32. Last  but  not  the  least,  if  the  note  submitted  by the

Director in the MoUD is an indication of what the Committee

may have said, the difference in the GEC values pointed out

in the report of the Director, may have led to CAF which was

also an eligible bidder emerging as L-1 and not the appellant.

In terms of cost of the project it would hardly make a sizable

difference so as to justify a reversal of the steps that have

already  been  taken  for  execution  of  a  project  that  is  of

utmost importance for the people living in the national capital

execution whereof can brook no delay especially when the

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same  is  being  financed  by  an  agency  from  outside  the

country.    

33. In the result this appeal fails and is, hereby, dismissed

with costs of Rs.5,00,000/- to be deposited within six weeks

from today  with  the  Supreme  Court  Advocates-on-Record

Welfare Fund.

………………………….……….…..…J.            (T.S. THAKUR)

     ……………….…………………..…..…J. New Delhi                 (C. NAGAPPAN) February 14, 2014

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