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Consortium of Titagarh Firema Adler S.P.A. - Titagarh Wagons Ltd. v. Nagpur Metro Rail Corporation Ltd.

Civil Appeal · 2017 INSC 460Decided 9 May 2017
Civil Appeal Nos. 1353-1354 of 2017
Justice Dipak Misra · Justice Amitava Roy

Background

Nagpur Metro Rail Corporation (NMRCL) invited tenders for rolling stock for the Nagpur Metro project, funded by Germany's KfW Development Bank. Of three bidders, one was disqualified, leaving the appellant consortium (Titagarh) and a second bidder in contention; on opening financial bids, the appellant's bid of Rs. 852 crores was higher than the respondent's Rs. 851 crores, and the tender committee recommended awarding the contract to the lower bidder. Before the work order was issued, the appellant challenged this in the Bombay High Court, arguing that the winning bidder did not independently meet the tender's experience criteria and was impermissibly relying on the track record of its wholly-owned subsidiary, and also that a tender clause blocking disclosure of competitors' technical qualifications before contract award was arbitrary. The High Court rejected both contentions, prompting this appeal.

Decision Breakdown

The Supreme Court held that the appellant could not challenge the confidentiality clause after having participated in the tender with full knowledge of its terms, and that its objection was raised only after its own bid proved to be the higher (and thus losing) one. On the substantive eligibility question, the Court held that NMRCL's commercial decision to treat the winning bidder's wholly-owned subsidiary's experience as attributable to the parent was a reasonable interpretation within the tendering authority's own commercial wisdom, especially since the tender document itself contemplated a Parent Company Guarantee under which the parent would step in and perform if the subsidiary failed. Since there was no perversity, bias, or mala fide shown in NMRCL's interpretation, and the decision had the concurrence of the project's financing bank, the Court held that judicial review should not interfere with the tendering authority's commercial judgment, and dismissed the appeals as devoid of merit with no order as to costs.

Lesson Learnt

Courts give significant deference to a tendering authority's own reasonable interpretation of its tender conditions, especially on commercial matters like crediting a parent company with its wholly-owned subsidiary's experience, and a bidder who participates in a tender without objecting to its terms generally cannot challenge those terms only after losing on price.

Official source (sci.gov.in)View Judgment (PDF)

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