"Very Important National Project": What SC Said On Bullet Train Setting Delhi HC's Order Aside

The Supreme Court set aside a judgment of the Delhi High Court which had directed the National High Speed Rail Corporation Limited (NHSRCL) to consider the bid of infrastructure company Montecarlo Limited for construction and development of a depot in relation to the Mumbai-Ahmedabad bullet train project [NHSRCL v. Montecarlo Ltd].

What does it mean and what does the verdict say? Let's understand.

What does the verdict say?

In a verdict pertaining to the Japan-funded Bullet train project, the Supreme Court said no company and even the Republic of India can be permitted to deviate from any terms and conditions of the agreements including the loan deed about the Mumb

Bullet Train

"The project is not just important but of national importance. It is to be noted that under the contractual obligation, it was not open for the appellant corporation and/or even the Republic of India to deviate from any of the terms and conditions of the loan agreement and/or the decision of JICC/ the Japan International Cooperation Agency (JICA). Therefore, in absence of any allegation of mala fides/arbitrariness and/or favouritism, we are of the opinion that the High Court has committed a grave error in interfering with a conscious decision taken by the JICC/JICA, which has been followed by the appellant," the 82-page judgement said.

What was Delhi HC's verdict set aside by SC?

The top court set aside the Delhi High Court's verdict in favour of a firm called Montecarlo Limited whose technical bid was rejected by an expert committee appointed by the JICA for several works about the Bullet train project.

A bench comprising Justices M R Shah and A S Bopanna was dealing with the question whether in the facts and circumstances of the case and concerning such a foreign-funded project, the High Court was justified in "interfering with the tender process in absence of any specific allegations of mala fides and/or favouritism".

PTI

But, why shouldn't there be any interference?

It underlined that in a mega project funded by a foreign country, there shall not be any interference in the tender process midway till the final decision is taken to award the contract. ¡°The reason behind this is that any delay in such a project may increase the ultimate project cost and it may affect the future investment by the foreign country, which would never be in the larger interest of the nation,¡± said the bench.

It highlighted that a mega project like the Bullet Train project is entered into following a detailed discussion between the heads of the States and therefore, such projects invite different considerations so far as the judicial interference is concerned between the foreign funded contracts and the ordinary public works contracts funded from the public exchequer.

The high court had quashed the communications of April 27 and 28, 2021 by which the private firm was informed that its technical bid has been rejected on the ground that the same is non-responsive.

PTI

What govt says on the matter?

NHSRCL is a government Company incorporated under the Companies Act, 2013 with equity participation of the Government of India, Government of Gujarat, and Government of Maharashtra, incorporated to finance, construct, maintain and manage the upcoming Bullet train project.

Solicitor general Tushar Mehta, appearing for NHSRCL, informed the Supreme Court that the Bullet Train Project is a foreign sovereign contract, fully funded by the JICA for an amount of ?1 lakh crore with a very negligible rate of interest and by providing repayment in instalments of 27 years and above.

Mehta said that as per the memorandum of corporation, the process of bidding and the subsequent decisions were to be vetted by JICA, which recommended rejection of the bids by five companies, including Montecarlo. He faulted the high court with failing to draw a distinction between an ordinary government contract and a sovereign foreign funded development contracts where the government has no room of any deviation from essential conditions of tender proposed by the investor.

AFP/ File Image

Accepting S-G¡¯s submissions, the Supreme Court set aside the HC order, noting that the interference by the high court was bad also because the terms of bidding were clear to Montecarlo from the very beginning and that there was no allegation of malafide or nepotism in awarding the contract to any other party. Further, the bench said that the HC ought not to have interfered since the ultimate decision in such matters had to rest with the investor, who was of the view that the bid submitted by Montecarlo suffered from material deviation.

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