Srijib Chakraborty; Subhasish Chakraborty v. IRCON International Limited

(d) Package-4: Gudivada (Excl) – Machilipatnam (36.74 kms)

2. Name of the Executing Agency: Rail Vikas Nigam Ltd.

3. Total Value of work done: Rs.4307.35 Cr.

4. Detailed Estimate/sanctioned Cost: Rs.1503.71 crores.

13. It was contended that the tender qualification required work to be completed within seven years though the same had been started way back in 2016 and the completion was in 2022 and, therefore, arguably the ‘seven years criteria’ would not have been met. However, the main focus, of the Senior Counsel for petitioner, was on the nature of the Completion Certificate and the lack of ‘execution’ by respondent no.6/RVNL. Each of the five packages was executed through sub-contractors and not by respondent no.6/RVNL, while completion was awarded to each of the sub-contractors by respondent no.6/RVNL. Some of these Experience Certificates issued by respondent no.6/RVNL to the sub-contractors have been placed on record by the petitioner.

14. As an illustration, the Experience Certificate issued to a joint venture of M/s Sri SCL Infratech Limited, Hyderabad and M/s China Railway 21st Bureau Group Company Ltd., was issued relating to balance work of Package-1. For ease of reference, the same is extracted as under: TO WHOM SO EVER IT MAY CONCERN No: RVNUSC/BZA-GDV-OTRIPackage-1/172/Agmt/ Package-1, Dt: 20.07.2023 This is to certify that, Mis. SCL-CRC21 B (JV), H.No.8-2-502/1/A, 1st Floor, JIVI Towers, Road No.7, Banjara Hills, Hyderabad - 500 034, Telangana State has been carried out the following:

1. Name of the work Balance works of Package-1 for Construction of Roadbed, Major and Minor Bridges, Track Linking (Excluding supply of Rails and PSC Line sleepers), General Electrical, Traction and Signal & Telecommunication works (Outdoor); in connection with Doubling with Railway Electrification of Vijayawada - Bhimavaram Section from Km.0.00 to Km. 51.50 Between Vijayawada and Moturu Stations (Including Gudivada & Moturu Yards) on Vijayawada division of South-Central Railway

2. Name of Client Rail Vikas Nigam Limited, Block Nos. 227 & 228, Satyanarayanapuram Railway: Colony, Vijayawada 520 001. Office Phone: 0866-2532154.

3. Name of the Contractor M/s. SCL-CRC21B (JV), H.No.8-2-502/1/A, 1st Flo or, JIVI Towers, Road No.7, Banjara Hills, Hyderabad - 500 034

4. Share of JV M/s. Sri SCL Infratech Limited, Hyderabad: 70% M/s China Railway 21st Bureau (Group) Co. Ltd: 30% (M/s.Sri SCL Infratech Limited, Hyderabad has taken subcontractor from CRC21B)

5. JV Partners Responsibilities M/s. Sri SCL Infratech Limited, Hyderabad Entire Earthworks, Bridges, Buildings, Ballast Supply, Platform, Passenger amenities & miscellaneous works, procurement, General Services Electrical works, other miscellaneous works M/s. China Railway 21st Bureau (Group) Co. Ltd.: P.Way Supply, Linking of Pay-way items, Signalling Supply group items, Signalling Execution and OHE works. (M/s. Sri SCL Infratech Limited, Hyderabad has taken subcontractor from CRC21B)

6. Letter of Acceptance No./ Agreement No. LOA No. RVNL/SC/BZA-GDV-OTR/Package-1/172, dated 24.08.2016 Agreement No. RVNL/SC/BZA-GDV-OTR/Package-1, dated 21.10.2016

7. Contract Value as per: LOA/Agreement Rs.329. 92 Crores

8. Total value of work done so far (including PVC) Rs. 511.23 Crores (Rs.436.96 + Rs.74.27 PV)

9. Value of work done Year Amount in Crores of Rs. Civil Electrical S&T Total 2016-17 0 0 0 0 2017-18 18.15 0.42 8.86 27.43 2018-19 27.76 16.01 6.04 49.81 2019-20 192.25 43.86 12.72 248.83 2020-21 53.81 30.06 8.76 92.63 2021-22 4.47 0.65 2.12 7.24 2022-23 1.81 6.01 3.[2] 11.02 Total in Cr. 298.25 97.01 41.[7] 436.96 Price Variation Amount in Crores of Rs. Value of PVC Civil Electrical S&T Total Total in Cr. 46.89 21.69 5.69 74.27

15. Similarly, there are other Completion Certificates relating to Packages- 2, 3, 4 & 5. One of the sub-contractors was also a bidder in the subject tender.

16. Senior Counsel for petitioner then stated that the relevant experience for the purpose of tender, being execution of contracts and not sub-contracting, was clearly borne out from Clause 13.0 of the General Conditions of Contract (‘GCC’) of the instant tender. Clause 13.[1] of GCC provided for conditions for sub-contracting by contracting party in the existing tender as part of conditions. Those conditions are specified as under: “13.0 SUBCONTRACTING 13.[1] Subcontracting i. The Contractor shall not subcontract the whole of the works. Except where otherwise provided in the Contract, the Contractor shall not subcontract any part of the works without the prior consent of the Engineer in writing and in any case not beyond 30% of the contract value. Any such consent shall not relieve the Contractor from any of his liability or obligation under the Contract and he shall be responsible for the acts, defaults and neglects of any subcontractor, his representative, servants or workmen as fully as if they were the acts, defaults or neglects of the Contractor. ii. Provided that the Contractor shall not be required to obtain such consent for: a) The provision of labour, or b) The purchase of materials which are in accordance with the specifications/standards specified in the Contract, or c) The subcontracting of any part of the works for which the subcontractor is named in the contract. d) The purchase of Plants and Equipment for execution of the works. e) The hiring of Plants and Equipment for execution of the works. Any breach of the above conditions shall entitle the Employer/Engineer to rescind the contract.” (emphasis added)

17. Senior Counsel for petitioner, therefore, contended that if the tendering authority itself was so restrictive about sub-contracting by the contracting party, and had prohibited it, unless there was consent, and in any case not beyond 30% of the contract value, the intention clearly was that the experience required was of ‘execution’ and not merely of ‘project management’ or as a ‘management contractor’. Respondent no.6/RVNL, per the petitioner, had performed the role of project management by virtue of sub-contracting in the South-Central Railway’s tender.

18. Importantly, it was emphasized that respondent no.6/RVNL had transferred its credentials to its sub-contractors, thereby creating an anomaly where not only respondent no.6/RVNL but all the five sub-contractors would be claiming the same credentials, whereas respondent no.6/RVNL had not really done and executed the work.

19. Focus was also on the ‘qualifying criteria’ as extracted above which specified the meaning of “similar work” towards the end of the Clause. It stated that works are considered similar if “executed work” involves the supply, installation, testing and commissioning of indoor and outdoor S&T work. Submissions on behalf of Respondent n o.1/IRCON

20. Respondent no.1/IRCON’s counsel, however, contended that, firstly, mala fides cannot be ascribed to respondent no.1/IRCON merely by granting work to respondent no.6/RVNL; respondent no.6/RVNL was a reputed ‘Navratna Company’ of the Government, and not a fly-by-night operator; and secondly, that Public Sector Undertaking’s (PSUs), as a matter of fact, do subcontract, particularly in large infrastructure projects, and it is a standard industry practice. Further, it was contended that the requirement, as per tender, was of the contractor possessing experience of “having successfully completed or substantially completed similar works”. The requirement was of ‘completion’ of contracts of the specified amount and the specified period, which respondent no.6/RVNL did satisfy.

21. The fact that respondent no.6/RVNL had been given the contract by the South-Central Railway and had completed the contract successfully and been given a Completion Certificate, there was no reason as to why it should not take the benefit of it. Ascribing a condition in the tender qualification that the experience should involve executed works only and not include completed works simpliciter, would be unnecessarily imposing a tender condition without regard to the expertise of the tender giving authority.

22. Respondent no.1/IRCON’s counsel further contended that the verification process had been carried out and both the petitioner and respondent no.6/RVNL qualified, but respondent no.6/RVNL being the L-1 bidder, they were bound to execute the contract with them. Reliance was placed on Minutes of the Meeting of the Tender Committee, which noted the process of verification, in that respondent no.6/RVNL had submitted its credentials in the earlier tender in which verification had already been carried out.

23. Counsel for respondent also placed reliance upon Sahakar Global Limited JV and Another v. Municipal Corporation of Delhi 2025 SCC OnLine Del 2273 and N.G. Projects Limited v. Vinod Kumar Jain & Ors. (2022) 6 SCC

127.

24. Counsel for respondent no.6/RVNL contended that allusion to ‘management contractor’ phraseology was not existing in the tender and the Court cannot manufacture a disqualification if it did not exist. The Completion Certificates showed that they had actually done the work and got the benefit of it. The sub-contracting was a regular part of infrastructure contracts and there is no condition, in the tender, that such could not be considered.

25. In this relation, counsel for respondent handed over some industryspecific articles to the Court, which note that, based on statistics, it was found that 80% value of building contracts are undertaken by smaller contractors and involve high scale contracting.

26. Further, it was argued that there was delay by petitioner in approaching the Court. The letter was issued on 25th March 2025 after the technical bid had opened up on 7th February 2025, while the Writ Petition was filed on 26th May 2025, after the financial bids had opened up on 16th May 2025. Petitioner was a disgruntled bidder and, therefore, there was no merit in their petition. Submissions in rejoinder

27. Senior Counsel for petitioner relied on Afcons Infrastructure Limited.

V. Nagpur Metro Rail Corporation Ltd. & Anr. (2016) 16 SCC 818, to contend that a constitutional courts’ interference with interpretation of authority’s decision is permitted if it is perverse. As regards Sahakar Global Ltd. (supra), it specifically recorded that judicial review was permissible. Regarding N.G. Projects (supra), it was distinguished on the grounds that the facts were different and that the party had not completed the work. This was later clarified by the Supreme Court vide an order dated 18th May 2022 in Jai Bholenath Construction v. The Chief Executive Officer, Zilla Parishad, Nanded & Ors. The petitioner’s counsel submitted that they were willing to meet the offer and, therefore, there would be no escalation of price or financial prejudice for respondent no.1/IRCON.

28. Reliance was also placed on Tata Cellular v. Union of India (1994) 6 SCC 651, on the aspect that though the tendering authority has expertise to assess the bids, what can be examined is, if it has not acted in a fair and reasonable manner.

29. Reliance was also placed on PKF Sridhar & Santhanam vs. Airports Economic Regulatory Authority of India 2022 SCC OnLine Del 122, by the petitioner, canvasing that the tender document is to be read as whole and no clause can be read in isolation. Therefore, the condition in Clause 13.[1] of GCC restricting sub-contracting in the awarded work would naturally mean that precondition for experience would also not accommodate mere sub-contracting, but would insist on execution of work. Analysis

30. The issue concerns a tender floated by respondent no.1/IRCON on 11th June 2024 (Tender no. IRCON/2060/CGRP/e-TENDER/24-25/CEWRL/GAD- PND/SnT/PKG-B), for S&T works at multiple stations in the, Chhattisgarh East West Railway Limited (CEWRL section), as part of the Pendra Road- Gevra Road Double Line project (‘earlier tender’).

31. The ‘essential qualifying criteria’ under the earlier tender were identical to the criteria stipulated under the impugned tender. Both the petitioner and respondent no.6/RVNL, along with other entities, submitted their bids under the earlier tender. In support of its bid in the earlier tender, respondent no.6/RVNL submitted a Performance Certificate dated 21st October 2022 issued by the South-Central Railway.

32. As part of its evaluation, respondent no.1/IRCON carried out due diligence of the documents submitted by all bidders by issuing verification letters to the authorities who issued the certificates. On 12th July 2024, respondent no.1/IRCON issued a letter to the South-Central Railway seeking a response to specific queries and enclosing the Performance Certificate submitted by respondent no.6/RVNL in support of the eligibility criteria.

33. On 26th July 2024, the South-Central Railway responded to the letter of respondent no.1/IRCON and confirmed the contents of Performance Certificate submitted by respondent no.6/RVNL. The earlier tender was scrapped due to efflux of time, and the impugned tender was floated on 8th January 2025, which was for the same project. Bids were again submitted, and besides petitioner and respondent no.6/RVNL, four other entities submitted the bids.

34. Respondent no.6/RVNL again gave the same Performance Certificate. After opening of technical bids on 7th February 2025, respondent no.1/IRCON conducted due diligence for verification of documents, including that of the petitioner. Four bidders were declared technically qualified; this has been recorded in the Minutes of the Meeting of the Tender Committee.

35. As regards the Performance Certificate of respondent no.6/RVNL, it was noted in the said certificate (particularly in paragraph 9) that “the entire project has been commissioned for traffic” and, therefore, have been qualified for ‘successfully completed works’ rather than ‘substantially completed works.’ The date of commencement of the work was 14th July 2016 and was completed in October 2022, which fell within the period of the past seven year’s eligibility period. The nature of the work was of similar nature i.e. S&T work. The value of the work amounted to Rs.364.52 crores, which was significantly above the 60% threshold of the impugned tender.

36. Paragraph 6(b) of the Performance Certificate provided year-wise expenditure from F.Y. 2019 till F.Y. 2023 (of last seven years), cumulatively amounting to Rs.294.41 crores, which was significantly higher than the 60% threshold.

37. Respondent no.1/IRCON’s argument, therefore, was that the decisionmaking process was properly followed and they had legitimately concluded that respondent no.6/RVNL fulfilled the technical criteria. Respondent no.1/IRCON also submitted that the project executed by respondent no.6/RVNL for the South-Central Railway involved a substantial scope of work of significant financial value, and that the engagement of sub-contractors was not out of the ordinary. Moreover, the responsibility and accountability, along with risk, has always been on respondent no.6/RVNL and, therefore, it could not be said that they were merely a ‘management contractor’. The Performance Certificate issued by the South-Central Railway explicitly acknowledged that respondent no.6/RVNL had completed the work and their performance was satisfactory.

38. The Court, in its assessment, has taken judicial notice of two facts: firstly, that respondent no.6/RVNL is a Navratna PSU and, therefore, not a fly-by-night operator but a large public sector cooperation which is necessarily regulated by its own internal mechanisms; and secondly, the aspect of sub-contracting is a normal occurrence in large infrastructure projects, and it is quite impossible for one entity to execute the large manifold of works which, in modern times, are involved in an infrastructure project.

39. However, aside from this, principally the Court has to assess whether the challenge to the tender process should be entertained, as foisted by the petitioner. In these circumstances, whether the tendering authority had envisaged a situation where they would only accept bids from agencies submitting experience of 100% execution of works rather than ‘completion of works’ needs to be considered. This assessment and right itself resides in the tendering authority, as being the author of the tender and an expert in the matter.

40. It is for the tendering authority to understand, appreciate, and assess what it requires for its works. This aspect in tender jurisprudence is fairly well settled. Reliance is often placed on the decision in Tata Cellular v. Union of India (supra), wherein the Supreme Court held that judicial review of administrative actions is limited to examining the decision-making process rather than the merits or fairness of the decision itself. Relevant paragraph is extracted as under: “77. ……Therefore, it is not for the court to determine whether a particular policy or particular decision taken in the fulfilment of that policy is fair. It is only concerned with the manner in which those decisions have been taken. The extent of the duty to act fairly will vary from case to case. Shortly put, the grounds upon which an administrative action is subject to control by judicial review can be classified as under:

(i) Illegality: This means the decision-maker must understand correctly the law that regulates his decision-making power and must give effect to it.

(ii) Irrationality, namely, Wednesbury unreasonableness.

(iii) Procedural impropriety……”

41. Moreover, in Tata Motors Ltd. v. Brihan Mumbai Electric Supply & Transport Undertaking (2023) 19 SCC 1, the same aspect has been embellished in the following paragraphs:

57. As observed by this Court in Jagdish Mandal v. State of Orissa [Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517], that while invoking power of judicial review in matters as to tenders or award of contracts, certain special features should be borne in mind that evaluations of tenders and awarding of contracts are essentially commercial functions and principles of equity and natural justice stay at a distance in such matters. If the decision relating to award of contract is bona fide and is in public interest, courts will not interfere by exercising powers of judicial review even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. Power of judicial review will not be invoked to protect private interest at the cost of public interest, or to decide contractual disputes.”

42. Even, in Agmatel India (P) Ltd. v. Resoursys Telecom (2022) 5 SCC 362, it has been stated by the Supreme Court as under: “26. The abovementioned statements of law make it amply clear that the author of the tender document is taken to be the best person to understand and appreciate its requirements; and if its interpretation is manifestly in consonance with the language of the tender document or subserving the purchase of the tender, the Court would prefer to keep restraint. Further to that, the technical evaluation or comparison by the Court is impermissible; and even if the interpretation given to the tender document by the person inviting offers is not as such acceptable to the constitutional court, that, by itself, would not be a reason for interfering with the interpretation given.”

43. The issue, therefore, is whether the Court can replace its opinion on what is in the best interest of the tendering authority with its own. Further embellishment is provided by the Supreme Court in Afcons Infrastructure (supra). Relevant paragraphs are extracted as under:

Consortium), (2016) 8 SCC 622: (2016) 4 SCC (Civ) 106: (2016) 8 Scale 99].

13. In other words, 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 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.

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 of India [RamanaDayaram Shetty v. International Airport Authority of India, (1979) 3 SCC 489] 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 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 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 to the constitutional courts but that by itself is not a reason for interfering with the interpretation given.

16. In the present appeals, although there does not appear to be 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 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. This was certainly not the case either before the High Court or before this Court.”

44. It may be instructive to note a decision of the Division Bench of this Court in Sahakar Global Limited JV (supra), where after traversing through legal principles on tenders, the Court states the scope and extent of judicial review of the action of the State, in exercise of its jurisdiction under Article 226 of the Constitution. Relevant paragraph is extracted as under:

unreasonable, being contrary to the principle enunciated under Article 14 of the Constitution of India. (E) The writ court, while exercising judicial review in relation to disputes arising at a stage prior to the award of contract, can undertake scrutiny, however, such judicial review/scrutiny would be undertaken within the nature of judicial review as declared by the Supreme Court in the decision in Tata Cellular(supra). (F) The writ Court can judicially review a contractual dispute where one of the parties to the contract is a public authority and also in such a situation where there is a violation of principles of natural justice, where the action complained against does not serve any public interest and the public authority has not acted in good faith.

(ii) The highest bidder has no vested right to have the contract concluded in his favour.”

45. The Court does not find anything in the tender conditions that prohibits a previous experience involving sub-contracting. If it was so, the same would have been provided. The attempt by the Senior Counsel for petitioner to conflate Clause 13.0 of the GCC of the instant tender, which restricted sub-contracting for the purposes of this contract, is in the opinion of this Court an unnecessary and tedious extrapolation.

46. Regards contract of the South-Central Railway, considered for the purpose of previous experience, it would be the prerogative of the South-Central Railway as to how it wishes to conduct works inter alia through subcontracting. The fact that the South-Central Railway issued a Performance Certificate and also issued a verification in this regard on a query by respondent no.1/IRCON endorses and precipitates the issue qua respondent no.6/RVNL. As to how respondent no.1/IRCON deals with its own contract/works in the subject tender has no connect, links or tether with the works under the South- Central Railways contract.

47. It is for the author of the documents i.e. the tendering authority, to assess what it wants, both in terms of previous experience and how it requires a successful party to work, and any condition it wishes to impose on the execution of its own works. These two aspects cannot be conflated, as it would be illogical and irrational; if permitted, would cause havoc in many tendering processes.

48. As rightly argued by respondent no.1/IRCON & respondent no.6/RVNL, there was no terminology of ‘management contractor’ used in the tender document, and, therefore, that imposition/interpolation sought by petitioner, through implication, is unmerited. Accepting petitioner’s contention would amount to introducing an artificial disqualification, which the tendering authority has considered and rejected. Furthermore, it would lead to a situation where a successful bidder would be disenfranchised from the tender and the works without any legitimate reason.

49. The Court does not find any infirmity with the decision-making process, considering that, for the purpose of tender evaluation, verification of the experience certificate was sought. It cannot be ignored that technical experts, who evaluate tenders of such large values, would understand the difference between completion of works through sub-contracting and execution of works. These are matters that would be par for the course, for technical experts, and the Court does not wish to enter into that thicket.

50. Whether the transfer of credentials by respondent no.6/RVNL to its subcontractors would disentitle them from claiming the experience is not an issue which the Court needs to delve into, for the reason that the South-Central Railway’s verification endorsed the experience in the hands of respondent no.6/RVNL. The imputation of ‘transfer of credentials’ cannot invite an opinion from the Court to supersede the opinion of the South-Central Railway in relation to its own works. Once the verification was given, which provided for completion, in fact successful and satisfactory completion, the ‘qualifying criteria’ would have been met.

51. Petitioner adverting to a stray line in the proviso to Clause 1(iii) for qualifying criteria referring to “meaning of similar works” containing the word and phrase “executed” in support of their contention, is neither merited nor accepted. A bare perusal of the clause would bear out that “executed” is used in a particular context, and it does not impose a specific qualification or disqualification in any manner relating to ‘execution’ of works, as opposed to “subcontracting.”

52. The proviso to Clause 1(iii) is merely to embellish the phrase “similar works” and is not a provision which can override the principal part of the Clause 1 itself. Accepting petitioner’s contention would be effectively using the ‘tail to wag the dog’ and would be against all tenets of contractual interpretation.

53. Accordingly, the petition is dismissed. Pending applications are rendered as infructuous.

54. Judgement be uploaded to the website of this Court.

ANISH DAYAL, J DEVENDRA KUMAR UPADHYAYA, CJ AUGUST 1, 2025/ak/tk