HIGHWAYS AUTHORITY OF INDIA versus GWALIOR JHANSI EXPRESSWAY LIMITED on 13 July 2018

SUPREME COURT REPORTS[2018] 9 S.C.R. 1024

[2018] 9 S.C.R.

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NATIONAL HIGHWAYS AUTHORITY OF INDIA

v.

GWALIOR JHANSI EXPRESSWAY LIMITED

(Civil Appeal No. 3288 of 2018)

BJULY 13, 2018

[DIPAK MISRA, CJI, A. M. KHANWILKAR ANDDR. D. Y. CHANDRACHUD, JJ.]

Tenders – Agreement between the appellant and therespondent for widening the existing two-la ne portion of NationalCHighway No.75 to four lanes – Appellant alleged breaches on partof the respondent – Arbitral Tribunal constituted – Appellant movedapplication u/s.17 of the 1996 Act before the Tribunal seekingpermission to complete the balance work of the project in view ofloss to the public at large – Respondent also filed application u/Ds.17 – Arbitral Tribunal disposed of the applications by commoninterim order dtd. 23[rd] July 2016 – Appellant issued a tender forthe balance work – In consonance with the tender documents,technical and financial bids were opened – Respondent movedapplication before the Tribunal u/s.17, seeking, inter alia, permissionof the Tribunal to complete the balance work at its risk and cost–ETribunal allowed the application – Appeal filed by appellant beforethe High Court, dismissed – Plea of appellant that the respondentcannot be permitted to exercise Right Of First Refusal (ROFR)without participating in the bidding process – On appeal, held:Right of the respondent to match the bid of L-1 or to exercise ROFRFwould come into play only if the respondent was to participate inthe tender process pursuant to the notice inviting tenders from theinterested parties – Respondent was required to participate in thetender process by submitting its sealed bid (technical and financial)– Having failed to participate in the tender process, despite theexpress terms in the tender documents, validity whereof was notGchallenged, the respondent cannot be heard to contend that it hadacquired any right whatsoever – There was nothing in theapplication (filed by the respondent u/s.17) to even remotely suggestthat the respondent had prayed that it be exempted from participatingin the proposed tender process as such, and could yet exercise ROFRHbefore the letter of intent was to be issued to the lowest bidder –

NATIONAL HIGHWAYS AUTHORITY OF INDIA v. GWALIORJHANSI EXPRESSWAY LIMITED

Exemption in this regard cannot be inferred and has to be express –No express exemption was granted to the respondent vide order ofthe Tribunal dtd. 23[rd] July, 2016 to exercise ROFR or match thelowest bid without participating in the bidding process – Decisionof the Tribunal as confirmed by the High Court cannot becountenanced – Arbitration and Conciliation Act, 1996 – ss.9, 17and 37(2)(b).

Allowing the appeal, the Court

Conclusion

HELD: 1.1 By the terms and conditions in the tenderdocuments, the right of the respondent to match the bid of L-1 orto exercise ROFR would come into play only if the respondentwas to participate in the tender process pursuant to the noticeinviting tenders from the interested parties. The objective oftender process is not only to adhere to a transparent mechanismbut to encourage competition and give equal opportunity to alltenderers with the end result of getting a fair offer or value formoney. The plain wording of the eligibility clause in the tenderdocuments and the incidental stipulations make it explicit thatthe respondent was required to participate in the tender processby submitting its sealed bid (technical and financial). The factthat a deeming clause has been provided in the tender documentthat if the respondent was to participate in the bidding process, itshall be deemed to fulfill all the requirements of the tender clauses3 to 6 of the RFP, being the existing concessionaire of the Project,does not exempt the respondent from participating in the tenderprocess; rather the tenor of the terms of the documents made itobligatory for the respondent to participate in the tender processto be considered as a responsive bidder, along with others.Having failed to participate in the tender process and, more so,despite the express terms in the tender documents, validitywhereof has not been challenged, the respondent cannot be heardto contend that it had acquired any right whatsoever. Only theentities who participate in the tender process pursuant to a tendernotice can be allowed to make grievances about the non-fulfillmentor breach of any of the terms and conditions of the concernedtender documents. The respondent who chose to stay away fromthe tender process, cannot be heard to whittle down, in anymanner, the rights of the eligible bidders who had participated in AB

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Athe tender process on the basis of the written and express termsand conditions. At the culmination of the tender process, if therespondent had not participated, in law, the offer submitted bythe eligible bidders is required to be considered on the basis ofthe stated terms and conditions. Thus, if the claim of therespondent was to be strictly adjudged on the basis of the termsBand conditions specified in the subject tender document, therespondent has no case whatsoever. [Para 18] [1046-C-H; 1047-A]

1.2 There is nothing in the entire application (filed by therespondent under Section 17 of the Arbitration and ConciliationCAct, 1996) to even remotely suggest that the respondent hadprayed that it be exempted from participating in the proposedtender process as such, and could yet exercise ROFR before theletter of intent was to be issued to the lowest bidder. Theexemption in this regard cannot be inferred. It has to be anDexpress exemption sought and so granted and disclosed in thetender documents. Such exemption ought to have been prayedand expressly granted by the Court. In absence of such expressexemption, the respondent was obliged to comply with the termsand conditions of the tender documents publicly notified by theappellant as per its understanding of the order of the High Court.EHaving failed to participate in the bidding process in consonancewith such notified terms and conditions, the respondent lost theopportunity granted under the order dated 23[rd] July, 2016 to matchthe lowest bid or to exercise ROFR. Any other view would fallfoul of the fundamental policy of the Indian law and cannot beFcountenanced. [Para 19] [1047-C-G]

1.3 It is not the case of the respondent that an expressexemption has been granted to the respondent, from participatingin the bidding process. In the matter of tender process, therecan be no tacit or implied exemption from participating. In theGfirst place, whether such direction can be issued by the ArbitralTribunal under Section 17 of the Act itself is debatable. However,since the order dated 23[rd] July, 2016 has remained unchallenged,one does not wish to dilate on that aspect. Indeed, the appellantaccepted the order with a sanguine hope that a proper tenderprocess can be resorted to, wherein the respondent would alsoH

NATIONAL HIGHWAYS AUTHORITY OF INDIA v. GWALIORJHANSI EXPRESSWAY LIMITED

participate, for awarding the contract of unfinished and balanceworks of the subject Project. For effectuating that order, tenderdocuments were issued by the appellant on 28[th] November, 2016which, as aforesaid, explicitly stipulated that the respondent wasexpected to submit its bid within the specified time. Admittedly,the fact that tender notice was issued, came to be disclosed beforethe Arbitral Tribunal on 10[th] December, 2016. Surprisingly, therespondent neither took any clue nor bothered to follow up thetender documents which were placed in public domain (as is donein respect of any other tender process). Further, the respondentwaited till the opening of technical bids on 5[th] January, 2017 andfinancial bids on 29[th] March, 2017 and rushed to the ArbitralTribunal by way of an application under Section 17 of the Act,only on 25[th] April, 2017 stating that on the previous day, it hadcome to its notice that the appellant was likely to issue letter ofintent to the lowest bidder, without giving opportunity to therespondent to match the lowest bid or exercise ROFR. To opposethe said application, the appellant in the reply affidavit had assertedthat the respondent was fully aware about the terms and conditionsof the tender documents and yet chose not to participate in thebidding process. The respondent did not think it necessary tocounter the said assertion by filing any rejoinder thereto.Notwithstanding that, the Arbitral Tribunal was impressed by theplea taken by the respondent and allowed the application of therespondent vide order dated 24[th] May, 2017. The Arbitral Tribunalwas more impressed by the fact that the respondent had completedsubstantial works of the Project and it would be just and properto allow the respondent to complete the balance work. TheArbitral Tribunal made no effort to ascertain as to whether theorder dated 23[rd] July, 2016 was a blanket and unconditional orderentitling the respondent to straightaway exercise ROFR withoutparticipating in the bidding process. The Arbitral Tribunal merelyadverted to the objection of the appellant and rejected the sameon the finding that involvement of a third party in the Projectwould create serious problems. It took the view that giving optionto the respondent to match the lowest bid and to complete thebalance work, with a condition to periodically submit the progressreport to the Arbitral Tribunal for monitoring whether the balancework was successfully completed to the satisfaction of the NHAI,

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Awould be a proper and equitable arrangement. This approach isnot in conformity with the fundamental policy of Indian law. [Para20] [1047-G-H; 1048-A-H; 1049-A]

1.4 The approach of the High Court in the appeal preferredby the appellant was no different. The High Court did not findBany error, much less manifest error, in the view taken by theArbitral Tribunal. Further, the High Court was more eager toknow as to what prejudice would be caused to the appellant if therespondent had not participated in the bidding process. This queryof the High Court is begging the question. For, that cannot bethe primary basis to answer the relief claimed by the respondentCin the application under Section 17 of the Act. An entity who staysaway from the bidding process and fails to comply with the expressterms and conditions of the tender documents cannot claim anyright to match the lowest bid or exercise ROFR. Only aresponsive bidder could do so. The High Court overlooked theDfact that the appellant is a body corporate under the 1988 Act. Ithas to act in a just and fair manner in the matter of allocation ofcontract albeit the balance and unfinished work of the Project.No express exemption has been granted to the respondent videorder of the Arbitral Tribunal dated 23[rd] July, 2016 – to exerciseROFR or match the lowest bid without participating in the biddingEprocess. The respondent had the option to participate in thebidding process which was not availed of for reasons best knownto the respondent. The High Court also overlooked the fact thatthe tender process was not an empty formality and with theinitiation of the same, third parties, who participated in the bidding Fprocess, were likely to be prejudiced by allowing the respondentto match the lowest bid or exercise ROFR, without participatingin the bidding process despite the express stipulation in thatbehalf in the tender documents. The High Court committed thesame error as committed by the Arbitral Tribunal in not examining the core issues for grant or non-grant of the relief to theGrespondent, in conformity with the fundamental policy of Indianlaw. [Para 21] [1049-B-G]

1.5 The decision of the Arbitral Tribunal as confirmed bythe High Court, falls foul of the fundamental policy of Indian lawand cannot be countenanced. [Para 24] [1051-A]H

NATIONAL HIGHWAYS AUTHORITY OF INDIA v. GWALIORJHANSI EXPRESSWAY LIMITED

M/s. Raj West Power Limited & Anr. vs. RajasthanElectricity Regulatory Commission & Ors. 2013 SCCOnline APTEL 46 – held inapplicable.

VHCPL-ADCC Pingalai Infrastructure Pvt. Ltd. & Anr.vs. Union of India & Ors. 2010 SCC Online Del 2687– referred to.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3288of 2018

From the Judgment and Order dated 21.08.2017 of the High CourtDelhi at New Delhi in ARB. A. (Comm.) No. 20 of 2017

K. K. Venugopal, AG, Ms. Kanika Tandon, Ms. Madhu Sweta,Rohit Bhat, Ms. Astha Tyagi, Advs. for the appellant.

Mukul Rohatgi, Sr. Adv., Deepak Khurana, Ms. Manali Singhal,Tejasv Anand, Umesh Kumar Khaitan, Advs. for the respondent.

The Judgment of the Court was delivered by

A. M. KHANWILKAR, J. 1. This appeal emanates from thedecision of the High Court of Delhi at New Delhi dated 21[st] August,2017 in Appeal ARB.A (Comm.) No.20 of 2017 whereby the appealfiled by the appellant under Section 37(2)(b) of the Arbitration andConciliation Act, 1996 (for short, “the Act”) seeking to quash the orderdated 24[th] May, 2017 passed by the Arbitral Tribunal under Section 17 ofthe Act came to be dismissed. The Arbitral Tribunal vide order dated24[th] May, 2017 allowed the application preferred by the respondent(claimant) under Section 17 of the Act seeking a direction to the appellantto allow the respondent to exercise an option to match the lowest bid interms of the order dated 23[rd] July, 2016 passed by the Arbitral Tribunaland including to exercise Right of First Refusal (“ROFR”) and for otherconsequential reliefs.

2. Shorn of unnecessary details, some of the relevant facts arethat the appellant (a body corporate, constituted under the NationalHighways Authority of India Act, 1988) entered into a ConcessionAgreement dated 17[th] December, 2006 with the respondent (a consortiumcomprising of Apollo Enterprises Limited and D.S. Construction Limited)for works of widening the existing two-lane portion of Km 16.000 to Km96.127 on National Highway No.75 to four lanes in the States of UttarPradesh and Madhya Pradesh on the terms and conditions specified A

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Atherein. The appellant asserts that the respondent failed to undertakethe project work at the requisite pace, inter alia, due to inadequatedeployment of machinery, plant, material and manpower. The respondenthad merely achieved 62% progress and eventually abandoned the projectsite in March, 2012. The appellant, therefore, had to issue a Cure PeriodNotice dated 19[th] October, 2013 requiring the respondent to cure theBbreaches within 30 days from receipt of the notice, failing which theappellant may be forced to initiate further action to terminate the contractin terms of the Concession Agreement. The respondent denied thecorrectness of the stated notice by a written reply. The appellant thenissued letters dated 27[th] February, 2014 and 7[th] March, 2014 expressingCits intention to issue termination notice of the Concession Agreement.The respondent immediately rushed to the court by filing a petition underSection 9 of the Act seeking stay of the Cure Period Notice dated 19[th]October, 2013 as well as the notice expressing the intention to issuetermination notice. The High Court of Delhi passed an interim stay on12[th] March, 2014 restraining the appellant from taking any coercive action.DThe petition under Section 9 of the Act was finally disposed of on 22[nd]April, 2015 with a direction to the Arbitral Tribunal, which was alreadyconstituted in the meantime, that the interim order dated 12[th] March,2014 would continue during the pendency of the arbitral proceedingswith liberty to the parties to seek its modification or revocation beforeEthe Arbitral Tribunal.

3. The appellant accordingly moved an application dated 8[th] April,2016 under Section 17 of the Act before the Arbitral Tribunal seekingpermission to complete the balance works of the project as it was causinghuge distress due to traffic congestion, unsafe highway, increase in Fexpenditures, higher wear and tear of the vehicles and, in particular,national loss to the public at large. The respondent also filed an applicationunder Section 17 of the Act on 17[th] May, 2016 seeking interim directionsagainst the appellant to pay Rs.400 crores to the respondent at the riskand costs of the respondent for completing the balance works of theproject. The reliefs claimed in the application filed by the respondentGread thus:

“a) Allow the present application and as an interim measuredirect the Respondent to pay a sum of Rs.400 Crores to theClaimant at the risk and cost of the Claimant so as to completebalance/remnant works of the project;H

b) In the alternative and strictly without prejudice to theprayer (a), as an interim measure permit the Respondentto invite tender/bid for executing the balance work underthe Concession Agreement on Engineering Procurementand Construction basis subject to Claimant being grantedthe right of First Refusal for matching the lowest bid andin the event the Claimant matches the said lowest bidpermit the Claimant to complete the said balance/remnantworks on the terms and conditions of the tender/bid invitedon Engineering Procurement and Construction basisexcept for the provision, if any, for furnishing BankGuarantees;

c) In alternative and strictly without prejudice to the prayer (a)& (b), direct the Respondent to act in terms of their letter dated19.01.2016 and the Circular dated 09.06.2015 in the event priorto the award of contract of the balance work on EngineeringProcurement and Construction basis the Project Lenders of theClaimant agree to provide first charge to the Respondent;

d) Pass such further order and other relief(s) as this Hon’bleTribunal may be deem fit, just, necessary and appropriate in thefacts and circumstances of the case.”

4. During the pendency of the aforementioned proceedings beforethe Arbitral Tribunal, a meeting was held on 19[th] April, 2016 in theChamber of Member (P) at NHAI – HQ to discuss and conclude theissues of Gwalior-Jhansi project pursuant to Ministers’ meeting dated15[th] March, 2016 in order to get the work restarted without furtherdelay. Another meeting was convened on 27[th] April, 2016 before thesaid Authority, as a result of which the hearing of the matter was deferredtill 18[th] May, 2016. On the adjourned date, the advocate appearing forthe appellant placed reliance on the minutes of the meetings held on 19[th]April, 2016 and 27[th] April, 2016. The hearing of the applications wasthen deferred till 29[th] May, 2016, as the respondent submitted aconstruction-linked financial plan for completing the balance work withina maximum period of 24 months from the date of receipt of advancepayment from the appellant. The appellant filed its response on 28[th]May, 2016 to the proposal submitted by the respondent. The appellant

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Aasserted that the financial plan submitted by the respondent was not inaccord with the NHAI Circular dated 19[th] June, 2015. In the meantime,on 25[th] May, 2016, the respondent filed its reply to the application filedby the appellant under Section 17 of the Act. The appellant had statedthat it was agreeable to infuse funds for completion of the project as perthe policy with condition of first charge of NHAI, considering the largerBpublic interest. The respondent accepted the offer given by the appellantincluding the conditions specified by the appellant. The conditionssuggested by the appellant have been noted by the Arbitral Tribunal asunder:

“(i) As the Respondent is a public body, in the event of theClowest bidder being denied the work, it will require to becompensated. For this purpose Claimant/Concessionaire shallpay to the authority a sum of Rs.2% of the bid amount, out ofwhich 75% shall be paid to the lowest bidder. This is on the linesagreed by the parties and provided in the Concession AgreementDbased on Model Concession Agreement (MCA).(ii)The Respondent shall not pay any ‘Mobilization Advance’without Bank Guarantee being furnished for the equivalentamount. The advance shall be at the interest at the rate of 2%more than the prevailing bank interest.

E(iii) The work shall be completed by the Claimant in a period of24 months from the date of LOA for the Construction Contract.

(iv) The terms and conditions of the Construction Agreementshall be in addition to and not in substitution of any terms andcondition of the Concession Agreement. In the event of anyFdisparity the terms of the Concession Contract shall prevail.

(v) The specifications and quality of construction shall not belower than stipulated in the Concession Agreement.

(vi) The Respondent shall be free to bring forward consequentialadditional claims for the expenses incurred and damagesGsuffered.”

The respondent, through counsel, informed the Arbitral Tribunal that therespondent would accept the aforementioned conditions except conditionNo.(ii).

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5. The arguments were heard by the Arbitral Tribunal on 28[th]May, 2016. Before the application filed by the parties under Section 17of the Act could proceed further, the appellant filed an application underSection 23 of the Act for amendment of its reply dated 25[th] May, 2016so as to withdraw its acceptance of prayer (b) for modification ofprocedure order No.9 dated 28[th] May, 2016, for the reasons mentionedtherein. Finally, the Arbitral Tribunal disposed of the applications by acommon order dated 23[rd] July, 2016. It accepted the relief claimed bythe respondent in terms of prayer clause (b) of its application, reproducedin paragraph 3 above.

6. The Arbitral Tribunal rejected the plea of the appellant towithdraw from its earlier offer noted in the reply affidavit. The ArbitralTribunal inter alia observed thus:

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NHAI had taken a specific stand before us that it would notagree to prayer (a) made by the Claimant. Tribunal thereforegranted time to NHAI to examine and come out with concreteproposals in respect of prayer (b) and on the unilateral conditionssuggested by NHAI itself, an order to that effect was passed bythe Tribunal on May 18, 2016. Conditions stipulated by NHAI, itis seen, are more stringent than what were suggested by CCEAin its meeting held on May 13, 2015, particularly in the CCEAdecision made on October 14, 2015, where in CCEA stated thatafter the constructions, loans can be recovered bi-annuallythrough execution of a tripartite agreement between NHAI,lender and concessionaire. Policy endorsed by CCEA takes noteof the comfort level of not only that of NHAI, citizens andtravellers, but also of the concessionaire. We have to take it, thatit was after taking into consideration all those aspects includingthe policy decisions taken by CCEA and the Claimant’s eligibilityfor one time fund infusion in terms of the Circular dated June 9,2015, the NHAI suggested various conditions and all thoseconditions were accepted by the Claimant including the furnishing,of Bank Guarantee for the mobilization advance to be made byNHAI. We are of the view that by furnishing the unconditionalBank Guarantee, the interest of NHAI is also protected.

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We find that NHAI has no case that the Claimant has beenblacklisted or that it is incapable of completing the balance work.In our view, it would not be in public interest if the remainingwork is allotted to a third party and in the facts and circumstances,one cannot rule out the possibility of passing the same order,even if NHAI is allowed to withdraw the unilateral conditionssuggested by it.

The Tribunal in its order dated May 25, 2016, also made it clearthat only if the Claimant would agree to all the conditions stipulatedby NHAI, the Claimant would be granted permission to completethe balance work. The Claimant has now filed an affidavit beforethe Tribunal that all the conditions stipulated by NHAI areacceptable to it, that being the factual position, we find no reasonto entertain the application preferred by NHAI under Section 23of the Act seeking amendment in its reply dated May 25, 2016,to the Claimant’s Sec 17 application, so as to withdraw theconditions unilaterally suggested by it.

We are also of the view that the reasons stated for modificationof Procedural Order No.9 dated May 28, 2016, cannot besustained in the facts and circumstances of the case and we findit difficult to accept the contention that the specific conditionsstipulated by NHAI to the alternative prayer (b) made by theClaimant in Sec 17 Application have been made without applicationof mind or that the so called ‘higher management’ was unawareof the pendency of this arbitration proceedings as well as thependency of the Sec 17 applications filed by the parties and thevarious meetings held in respect of this matter at HQ of NHAIand the participation of Lead Bank, the Claimant and the officialsof NHAI and the meaning and content of the policy laid downby CCEA. Sec 17 Application preferred by NHAI wouldtherefore stand dismissed and prayer (b) made by the Claimantin its Sec 17 Application stands allowed subject to the conditionsstipulated by NHAI.

NHAI is directed to take up follow up action on the basis of thisorder, within two weeks from today and submit a report to thateffect within a month. Claimant is directed to scrupulously followthe conditions imposed by NHAI for accepting prayer (b).Claimant is further directed to submit quarterly reports before the Tribunal of the progress of the balance work undertaken byit on the basis of the order of this Tribunal. The Claimant isdirected to furnish Bank Guarantee from a nationalised bank onthe mobilization advance to be made by NHAI within the timestipulated. Both sec 17 Applications and the Application madeby NHAI under Sec 23 of the Act are disposed of as above,reserving all the contentions raised by the parties in the mainmatter.

This order as well as the observations and findings recorded willhave no bearing on the ultimate disposal of the main matter.”

7. The appellant acquiesced to the aforementioned interim orderpassed by the Arbitral Tribunal and allowed it to attain finality. For, thesubject project was on Build Operate and Transfer (“BOT”) basis, anyamount incurred by the Authority with regard to the project or in relationto the completion of the balance work was liable to be reimbursed by theConcessionaire (respondent).

8. The appellant accordingly issued a tender for the balance workvide Notice dated 28[th] November, 2016 which fact was brought to thenotice of the Arbitral Tribunal during the hearing on 10[th] December,2016. The tender notice was placed in the public domain, as is done inthe case of other tender process. Some of the pertinent clauses of thetender documents may be appositely reproduced for considering thematter in issue before us. In the bidding document, Volume I, regardingInvitation for Bids (“IFB”), it was noted that sealed bids were invited(technical and financial) from eligible bidders for the construction andcompletion of the balance work detailed in the table given in the saiddocument. Clause (1) postulated that eligibility of bidders would beassessed on post qualification basis, amongst others. The financial bid inthe second part would be opened of only those bidders whose technicalbids were responsive to eligibility and qualification requirements as perthe Request for Proposal (“RFP”). Further, clause (7) of the IFB readsthus:

“7. The Bidders may take notice of the following:

Notwithstanding anything to the contrary contained in this RFP,as per the direction of Hon’ble Arbitral Tribunal, if the BOT-Annuity concessionaire (M/s Gwalior Jhansi ExpresswayLtd.) of Four lane project (Gwalior-Jhansi section of NH- AB

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A75, is also a responsive bidder, the Concessionaire shallhave the option of matching the lowest bid in terms of theselection criteria, subject to payment of 2% (two per cent) ofthe bid amount to the Authority and thereupon becomes theselected Bidder. ……………...”

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In Section I of the bid document providing for procedure for tenderdocument of the Instructions to Bidders, the eligibility of bidders hasbeen specified in clause (3) thereof which reads thus:

“3.Eligible Bidders

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3.1Eligibility of bidders is based on bidder meeting the pass/fail criteria regarding their general and particular experience,financial position, personnel and equipment capabilities and otherrelevant information as demonstrated by the applicant’s responseson the forms attached.

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3.2. This invitation for bids is open to bidders meeting thefollowing requirements:- a)xxxxxxxxxb)xxxxxxxxxc)xxxxxxxxxd)xxxxxxxxx E

“(e)Notwithstanding anything to the contrary contained inthis REP, as per the direction of Hon’ble Arbitral Tribunal, if theBOT-Annuity concessionaire (M/s Gwalior JhansiExpressway Ltd.) of Four lane project (Gwalior-Jhansisection of NH-75, is also a responsive bidder, theConcessionaire shall have the option of matching thelowest bid in terms of the selection criteria, subject to paymentof 2% (two per cent) of the bid amount to the Authority andthereupon becomes the selected Bidder. Out of the amount soreceived by the Authority (ILLEGIBLE) 5% of the amount shallbe paid by the Authority to the lowest bidder. For the avoidanceof doubt, it is clarified that no claim for compensation, damages,loss of profits etc. by the lowest bidder for unbecoming selectedbidder, shall be admissible from the Authority.

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(f) Notwithstanding anything to the contrary contained inthis RFP, for the purposes of eligibility and qualification of theBOT-Annuity concessionaire (M/s Gwalior JhansiExpressway Ltd.), if it has participated in the biddingprocess, it shall be deemed to fulfill all the requirementsof Clauses 3 to 6 of the RFP, being the existing concessionaireof the Four lane project (Gwalior-Jhansi section of NH-75.”

Again in clause 26, it is stated thus:

“26. Examination of Technical Bids and Determination ofResponsiveness of Technical Bids x x xx x x x x xx x x 26.8 Notwithstanding anything to the contrary contained in thisRFP, as per the direction of Hon’ble Arbitral Tribunal, if theBOT-Annuity concessionaire (M/s Gwalior JhansiExpressway Ltd.) of Four Lane project (Gwalior-Jhansisection of NH-75, is also a responsive bidder, theConcessionaire shall have the option of matching thelowest bid in terms of the selection criteria, subject to paymentof 2% (two per cent) of the bid amount to the Authority andthereupon becomes the selected bidder, Out of the amount soreceived by the Authority, 75% of the amount shall be paid bythe Authority to the lowest bidder. For the avoidance of doubt, itis clarified that no claim for compensation, damages, loss of profitsetc. by the lowest bidder for unbecoming selected bidder, shallbe admissible from the Authority.

26.9 Notwithstanding anything to the contrary contained in thisRFP, for the purposes of eligibility and qualification of the BOT-Annuity concessionaire (M/s Gwalior Jhansi ExpresswayLtd.), if it has participated in the bidding process, it shallbe deemed to fulfill all the requirements of Clauses 3 to 6of the RFP, being the existing concessionaire of the Four laneproject (Gwalior -Jhansi section of NH-75).

27. Opening of Financial Bids.

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27.5 Notwithstanding anything to the contrary contained in thisRFP, as per the direction of Hon’ble Arbitral Tribunal, if theBOT-Annuity concessionaire (M/s Gwalior JhansiExpressway Ltd.) of Four lane project (Gwalior-Jhansisection of NH-75, is also a responsive bidder, theConcessionaire shall have the option of matching thelowest bid in terms of the selection criteria, subject to paymentof 2% (two per cent) of the bid amount to the Authority andthereupon becomes the selected Bidder. Out of the amount soreceived by the Authority, 75% of the amount shall be paid bythe Authority to the lowest bidder. For the avoidance of doubt, itis clarified that no claim for compensation, damages, loss of profitsetc. by the lowest bidder for unbecoming selected bidderadmissible from the Authority.

27.6 Notwithstanding anything to the contrary contained in thisRFP, for the purposes of eligibility and qualification of the BOT-Annuity concessionaire (M/s Gwalior Jhansi Expressway Ltd.),if it has participated in the bidding process, it shall be deemedto fulfill all the requirements of Clauses 3 to 6 of the RFP, beingthe existing concessionaire of the Four lane project (Gwalior-Jhansi section of NH-75).”

In clause 30, it is observed thus:

“30. Examination of Financial Bids and Determination ofResponsiveness of Financial Bids xxxxxxxxxxxx 30.4 Notwithstanding anything to the contrary contained in thisRFP, as per the direction of Hon’ble Arbitral Tribunal, if theBOT-Annuity concessionaire (M/s Gwalior JhansiExpressway Ltd.) of Four lane project (Gwalior Jhansi sectionof NH-75, is also a responsive bidder, the Concessionaire shallhave the option of matching the lowest bid in terms of the selectioncriteria, subject to payment of 2% (two per cent) of the bid amountto the Authority and thereupon becomes the selected Bidder.Out of the amount so received by the Authority, 75% of theamount shall be paid by the Authority to the lowest bidder. Forthe avoidance of doubt, it is clarified that no claim for compensation, damages, loss of profits etc. by the lowest bidderfor unbecoming selected bidder, shall be admissible from theAuthority.

30.5 Notwithstanding anything to the contrary contained in thisRFP, for the purposes of eligibility and qualification of the BOT-Annuity concessionaire (M/s Gwalior Jhansi ExpresswayLtd.), if it has participated in the bidding process, it shallbe deemed to fulfill all the requirements of Clauses 3 to 6of the RFP, being the existing concessionaire of the Four laneproject (Gwalior-Jhansi section of NH-75).”

9. In consonance with the tender documents as uploaded on E-Tender Portal 2016, technical bids were opened on 5[th] January, 2017and financial bids were opened on 29[th] March, 2017. It is only thereafteron 25[th] April, 2017, the respondent moved an application before theArbitral Tribunal under Section 17 of the Act, seeking, inter alia,permission of the Arbitral Tribunal to complete the balance work at itsrisk and cost. In the said application, it was asserted that the respondentverily believed that it would get an opportunity to exercise the option ofROFR and match the lowest bid, in terms of the order dated 23[rd] July,2016. However, to its utter shock, surprise and dismay, it was reliablylearnt on the previous day (to the filing of the application) that theappellant was proceeding to conclude the tender process by issuing LOI/LOA in favour of the L-1 bid behind the back of the respondent and in ahighly surreptitious and opaque manner. On the basis of the saidassertions, the respondent in its application filed under Section 17 of theAct prayed thus:

“a)Allow the present application and direct the respondentto grant first right of refusal to the claimant for matching thelowest bid, in terms of the order dated 23.07.2016 passed by thisHon’ble Tribunal;

b) Pending hearing and disposal of the present Application, passan ex-parte ad-interim Order, directing the Respondent to notissue LoI/LoA or award the works or take any further steps, inany manner, directly or indirectly, in favour of any party, pursuantto the Notice Inviting Tender published by the Respondent on28.11.2016;

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Ac) Confirm prayer (b) upon issuance of notice;d) Pass such further order and other relief(s) as this Hon’bleTribunal may be deemed fit, just, necessary and appropriate inthe facts and circumstances of the case.”

10. This application was resisted by the appellant by filing a replyBaffidavit. The appellant asserted that the respondent chose to remainsilent during the entire period and only at the belated stage when thetender process was nearing completion, it has chosen to file the applicationwith the intention of stalling the entire process. This approach cannot becountenanced. The appellant also asserted that it was unfathomable thatCthe respondent would get the right to match the lowest bid withoutparticipating in the bidding process. Further, an application such as thiswould delay the progress of the main arbitration proceedings which wasrequired to be completed within one year. It was thus asserted by theappellant that the ROFR could be invoked by the respondent only if ithad participated in the bidding process. The appellant adverted to theDterms and conditions of the tender documents which unambiguouslymandated the respondent to participate in the tender process, coupledwith the fact that there was no express direction given by the ArbitralTribunal so as to give any right or cause of action to the respondent tocontend to the contrary. The appellant beseeched the Arbitral TribunalEto allow it to take the tender process to its logical end.

11. Admittedly, no rejoinder was filed by the respondent to thespecific plea taken by the appellant in the reply affidavit that despitehaving knowledge of the condition in the tender documents requiring therespondent to participate in the tender process, it failed to do so forFreasons best known to the respondent.12. The Arbitral Tribunal vide order dated 24[th] May, 2017 allowedthe application preferred by the respondent by inter alia observing asfollows:

“The Tribunal while examining both the 17 Applications preferredGby the parties specifically noticed that the Claimant had completedmore than 65% of the work though, NHAI took the stand thatthe physical progress was only 62.13%. Claimant took the standthat it had completed more than 73% work. Considering the factthat so much of money and labour had been invested by theClaimant, and at the same time safeguarding the interest of NHAI,H

the Tribunal passed the order dated 23.7.2016 directing theRespondent to grant the Claimant the right of first refusal formatching the lowest bid. The Tribunal also felt that involvementof third parties would also create more problems. The Tribunal,therefore, ordered in the event Claimant matches the lowest bid,Claimant be permitted to complete the balance work that too byperiodically submitting reports before the Tribunal so that theTribunal can examine whether the Claimant is successfullycompleting the balance work to the satisfaction of NHAI. In ourview, the stand taken by the Respondent that the first right ofrefusal can be granted to the Claimant only if it had participatedin the bidding process cannot be sustained. Accordingly, reliefssought for by the Claimant in the Application dated 25.4.2017are granted”.

13. Against this decision, the appellant filed an appeal underSection 37(2)(b) of the Act before the High Court of Delhi at NewDelhi. The same was dismissed on 21[st] August, 2017. The High Courtupheld the view taken by the Arbitral Tribunal by inter alia observingthus:

“12. It is quite clear from a perusal of the earlier order dated23.07.2016 that the respondent was granted right of first refusalby matching the lowest bid, and if it matched the bid therespondent was to be permitted to complete the balance workas stated. There was no directions that the respondent was obligedto participate in the bid. They had been given the right to matchthe lowest bidder, subject to terms and conditions and in thateventuality of their matching the lowest bid, they were to begiven the right to carry out the balance work. The insistence ofthe appellant that the respondent ought to have participated inthe bid floated pursuant to the order of the learned ArbitralTribunal dated 23.07.2017 is misplaced.

13. Learned counsel for the appellant was, several times askedas to what prejudice is caused by the respondent by notparticipating in the bid. The only reply made by the learned counselfor the appellant was that in the absence of participation in thebid by the respondent, the appellant is unable to ascertain whetherthe respondent was eligible to be a bidder or not. In my opinionin the light of the orders of the Learned Arbitral Tribunal dated A

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A23.07.2016 the appellant was not to participate in the bid. Theapprehension of the appellant are entirely misplaced.

14. No prejudice is caused to the appellant. It is manifest thatother than insistence on compliance by the respondent of aprocedural requirement, there is no prejudice caused to theBappellant by non participation of the respondent in the biddingprocess. Further the impugned directions are passed inaccordance with the earlier orders of the Learned ArbitralTribunal dated 23.07.2016 which has not been challenged andattained finality. There is no merit in the present appeal and thesame is dismissed.”

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14. The appellant has assailed the decision of the Arbitral Tribunaldated 24[th] May, 2017 and of the High Court dated 21[st] August, 2017 onthe argument that the respondent cannot be permitted to exercise ROFRsans participating in the bidding process and in the teeth of the termsand conditions of the tender documents. According to the appellant, theDCourt cannot interfere with the tender process and in particular with themodalities adopted for re-tendering of the balance work of the project.The process of evaluation of tender and awarding the contract areessentially commercial functions for which reason the Courts shouldrefrain from exercising judicial review, especially when the decisionEtaken by the statutory authority is bona fide and taken in public interest.Further, the order of the Arbitral Tribunal dated 23[rd] July, 2016 in no way,much less expressly, exempts the respondent from participating in thebidding process nor has any stipulation been placed on the appellant torefrain from incorporating a condition requiring the respondent toparticipate in the tender process along with others. In that case, allFconcerned including the respondent, were bound by the terms andconditions specified in the tender documents. The fact that the respondentwas deemed to possess technical qualifications would not and does notdo away with the essentiality of participating in the subject biddingprocess, the purpose whereof is to ensure a fair competition amongstGthe participants and, more particularly, to get a fair offer and the bestvalue for money in a scientific and transparent manner, encouragingcompetition between the participants and also to give them equalopportunity. It is contended that the order of the Arbitral Tribunal, be itdated 23[rd] July, 2016 or dated 24[th] May, 2017, is in excess of jurisdictionas it transcends beyond the purport of Section 17 of the Act. For, it wasH

not open to the Arbitral Tribunal to pass an interim order concerning aseparate contract albeit facilitating completion of the unfinished andincomplete works of the project. It is contended that it is well settledposition that the prerogative to formulate the terms and conditions of thetender document is that of the employer and the Court cannot sit inappeal over such conditions. Nor can the same be re-written or modifiedmuch less when it has not been challenged by the respondent.

It is contended that the fact that the respondent qualified the technicalbids in 2006, will not by itself qualify it for re-tendering bid process in2016. Having failed to participate in the bid process in 2016, it was notpossible to examine the eligibility and qualification of the respondent inthe context of tender documents of 2016. Further, a person or entitywho stands out of the tender process or fails to comply with the termsand conditions of the tender documents cannot acquire any right or interestmuch less actionable claim in respect of such tender process. Accordingto the appellant, the respondent must take the consequences of non-participation in the subject tender process and cannot be allowed tointerdict the same in absence of an express exemption granted by thecompetent forum/Authority to the respondent not to participate in thetender process and yet exercise ROFR. To buttress the aforesaidsubmission, reliance has been placed on the decision of the Delhi HighCourt in VHCPL-ADCC Pingalai Infrastructure Pvt. Ltd. & Anr. Vs.Union of India & Ors.[1] and on the decision of the Appellate Tribunalfor Electricity in M/s. Raj West Power Limited & Anr. Vs. RajasthanElectricity Regulatory Commission & Ors.[2]

15. The respondent on the other hand, would contend that nointerference in this appeal is warranted in view of the concurrent viewtaken by the Arbitral Tribunal as well as the High Court that it was notnecessary for the respondent to participate in the tender process toexercise ROFR. For, the order dated 23[rd] July, 2016 does not prescribesuch a pre-condition nor does it prohibit the respondent from exercisingthe ROFR without participation in the bidding process. It is contendedthat the order dated 23[rd] July, 2016 is based on consent of the parties andhas never been challenged by the appellant and as such, the appellantwas obliged to comply with the same in its letter and spirit. According tothe respondent, having completed 78% work of the Project (which 1 2010 SCC Online Del 2687

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Aaccording to the appellant, is only around 62%) and having investedRs.715 crores on the Project, by no stretch of imagination can therespondent be termed as a non-serious contender. According to therespondent, the appellant cannot be heard to challenge the order dated23[rd] July, 2016, which confers ROFR, as it was based on consent of theparties and also attained finality. Further, the purpose of participating inBthe bidding process was only to ascertain as to whether the offer givenby the bidder was a responsive offer. The respondent having alreadycompleted substantial work of the Project, by no stretch of imagination,can be said to be incapable of completing the balance work. This aspecthad commended to the Arbitral Tribunal, as can be discerned from theCorder dated 23[rd] July, 2016. The Arbitral Tribunal in that order alsounambiguously recorded that it was not the case of the appellant hereinthat the respondent had been black listed or was incapable of completingthe balance work. Not only that, the Arbitral Tribunal went on to observethat it would not be in the public interest to allow a third party to take

over the balance work of the project. On that basis, direction was givenDto the appellant to allow the respondent to exercise ROFR, subject tocertain conditions. The order passed by the Arbitral Tribunal, in essence,was on the basis of consent of the respondent with unilateral conditionsimposed by the appellant, which the appellant should not be allowed toresile. According to the respondent, it was impermissible for the appellantEto incorporate conditions such as clauses 3, 26, 27 and 30 in the tenderdocuments, as the same are in the teeth of order dated 23[rd] July, 2016passed by the Arbitral Tribunal and, more so, without seeking libertyfrom the Arbitral Tribunal in that behalf. It is contended that the purposeof the tender process is only to evoke responsive offers. There would beno logic or rationale for participation of the respondent in the backdropFof clause 3.2(f) which is a deeming provision virtually declaring therespondent as eligible and qualified for the work. The capability of therespondent to complete the balance work was never in doubt as hasbeen recorded by the Arbitral Tribunal. In any case, in the absence ofliberty given by the Arbitral Tribunal, it was not open to the appellant toGincorporate such a pre-condition in the tender document. It is contendedthat such pre-condition would require the respondent to furnish bidsecurity amount in which case it would be a fait accompli situation forthe respondent if it were to refuse or fail to match the lowest bid. For, itwould result in forfeiture of its bid security and also entail in black listing.The order dated 23[rd] July, 2016, is one of ROFR and not for right toH

participate in the bidding process as such. Further, the submission offinancial bid by the respondent was not to find out whether it is L-1. Inthat, all the bidders participating in the subject tender process pursuantto tender notice, were made fully aware in the bid document itself thatthe respondent had ROFR and L-1 would be compensated by therespondent as provided in the order dated 23[rd] July, 2016. Therefore,the respondent was not expected to bid with itself by submitting a financialbid and then matching the same. The respondent would contend thatthe appellant has wrongly asserted that the respondent was aware ofthe conditions prescribed in the tender documents and yet did not chooseto participate in the bidding process. For, the bid documents were neitherfurnished to the respondent nor placed on record before the ArbitralTribunal. Thus, the conditions on which reliance has now been placed bythe appellant were never pointed out to the respondent or to the ArbitralTribunal at any point of time. In any case, the appellant had completelyfailed to show as to what prejudice would be caused by allowing therespondent to exercise ROFR without participating in the tender process.The learned Single Judge of the High Court repeatedly made queries inthat behalf which was not explained by the appellant, as is noted in theimpugned judgment. Resultantly, the High Court rejected the plea of theappellant and held that it was not necessary for the respondent toparticipate in the bidding process in terms of order dated 23[rd] July, 2016,to exercise ROFR. The respondent has distinguished the two decisionsrelied upon by the appellant and would contend that the same do not laydown any legal principle that participation in the bidding process is acondition precedent for exercise of ROFR. It is contended, in the presentcase, the ROFR, without condition of participation in the bid, was grantedby the Arbitral Tribunal on the basis of consent of the parties. It iscontended that in view of the concurrent view taken by the ArbitralTribunal as also the High Court, this Court should be slow in entertainingthis appeal.

16. We have heard Mr. K.K. Venugopal, learned Attorney Generalfor India and Mr. Mukul Rohatgi, learned senior counsel appearing forthe respondent.

17. The issue involved in the present appeal ostensibly concernsthe justness of the order passed by the Arbitral Tribunal and affirmed bythe High Court on an application moved by the respondent (claimant)under Section 17 of the Act in the pending arbitral proceedings. However, ABCDE

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Ain essence, the subject matter of the application under considerationrelates to the rights and liabilities of the parties in respect of a tenderprocess for awarding of a contract in relation to the unfinished and balancework of the Highway Project.

18. While considering the relief claimed by the respondentB(claimant), the same should have been tested on the touchstone of theprinciple governing the tender process, especially when the validity ofthe tender document has not been put in issue or challenged before anycompetent forum. Going by the terms and conditions in the tenderdocuments, as already alluded to in paragraph 8 above, there is no tittleof doubt that the right of the claimant (respondent) to match the bid ofCL-1 or to exercise ROFR would come into play only if the respondentwas to participate in the tender process pursuant to the notice invitingtenders from the interested parties. The objective of tender process isnot only to adhere to a transparent mechanism but to encouragecompetition and give equal opportunity to all tenderers with the end resultDof getting a fair offer or value for money. The plain wording of theeligibility clause in the tender documents and the incidental stipulationsmake it explicit that the respondent was required to participate in thetender process by submitting its sealed bid (technical and financial). Thefact that a deeming clause has been provided in the tender documentthat if the respondent was to participate in the bidding process, it shall beEdeemed to fulfill all the requirements of the tender clauses 3 to 6 of theRFP, being the existing concessionaire of the Project, does not exemptthe respondent from participating in the tender process; rather the tenorof the terms of the documents made it obligatory for the respondent toparticipate in the tender process to be considered as a responsive bidder,Falong with others. Having failed to participate in the tender process and,more so, despite the express terms in the tender documents, validitywhereof has not been challenged, the respondent cannot be heard tocontend that it had acquired any right whatsoever. Only the entities whoparticipate in the tender process pursuant to a tender notice can be allowed to make grievances about the non-fulfillment or breach of any of theGterms and conditions of the concerned tender documents. The respondentwho chose to stay away from the tender process, cannot be heard towhittle down, in any manner, the rights of the eligible bidders who hadparticipated in the tender process on the basis of the written and expressterms and conditions. At the culmination of the tender process, if theHrespondent had not participated, in law, the offer submitted by the eligible bidders is required to be considered on the basis of the stated terms andconditions. Thus, if the claim of the respondent was to be strictly adjudgedon the basis of the terms and conditions specified in the subject tenderdocument, the respondent has no case whatsoever.

19. The gravamen of the plea taken by the respondent is on theassumption that the interim order passed by the Arbitral Tribunal on 23[rd]July, 2016 bestows unconditional right on the respondent to exerciseROFR, in the event tender process in respect of the balance work isresorted to. For that, we may straightway advert to the order dated 23[rd]July, 2016. That is an order granting prayer clause (b) in the applicationpreferred by the respondent under Section 17 of the Act. The same hasbeen reproduced in paragraph 3 above. Notably, there is nothing in theentire application (filed by the respondent under Section 17 of the Act)to even remotely suggest that the respondent had prayed in clause (b)that it be exempted from participating in the proposed tender process assuch, and could yet exercise ROFR before the letter of intent was to beissued to the lowest bidder. The exemption in this regard cannot beinferred. It has to be an express exemption sought and so granted anddisclosed in the tender documents. The respondent may be right incontending that the interim order passed by the Arbitral Tribunal dated23[rd] July, 2016 neither prescribes that the respondent must participate inthe bidding process as a condition precedent for exercise of ROFR nordoes it prohibit the respondent from exercising ROFR withoutparticipation in the bidding process. The order is, indeed, silent in thatbehalf. But, that will be of no avail to the respondent. For, such exemptionought to have been prayed and expressly granted by the Court. In absenceof such express exemption, the respondent was obliged to comply withthe terms and conditions of the tender documents publicly notified by theappellant as per its understanding of the order of the High Court. Havingfailed to participate in the bidding process in consonance with such notifiedterms and conditions, the respondent lost the opportunity granted underthe order dated 23[rd] July, 2016 to match the lowest bid or to exerciseROFR. Any other view would fall foul of the fundamental policy of theIndian law and cannot be countenanced.

20. It is not the case of the respondent that an express exemptionhas been granted to the respondent, from participating in the biddingprocess. In the matter of tender process, there can be no tacit or impliedexemption from participating. In the first place, whether such direction A

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Acan be issued by the Arbitral Tribunal under Section 17 of the Act itselfis debatable. However, since the order dated 23[rd] July, 2016 has remainedunchallenged, we do not wish to dilate on that aspect. Indeed, the appellantaccepted the order with a sanguine hope that a proper tender processcan be resorted to, wherein the respondent would also participate, forawarding the contract of unfinished and balance works of the subjectBProject. For effectuating that order, tender documents were issued bythe appellant on 28[th] November, 2016 which, as aforesaid, explicitlystipulated that the respondent was expected to submit its bid within thespecified time. Admittedly, the fact that tender notice was issued, cameto be disclosed before the Arbitral Tribunal on 10[th] December, 2016.CSurprisingly, the respondent neither took any clue nor bothered to followup the tender documents which were placed in public domain (as is donein respect of any other tender process). Further, the respondent waitedtill the opening of technical bids on 5[th] January, 2017 and financial bidson 29[th] March, 2017 and rushed to the Arbitral Tribunal by way of an

application under Section 17 of the Act, only on 25[th] April, 2017 statingDthat on the previous day, it had come to its notice that the appellant waslikely to issue letter of intent to the lowest bidder, without givingopportunity to the respondent to match the lowest bid or exercise ROFR.To oppose the said application, the appellant in the reply affidavit hadasserted that the respondent was fully aware about the terms andEconditions of the tender documents and yet chose not to participate inthe bidding process. The respondent did not think it necessary to counterthe said assertion by filing any rejoinder thereto. Notwithstanding that,the Arbitral Tribunal was impressed by the plea taken by the respondentand allowed the application of the respondent vide order dated 24[th] May,2017. The relevant extract of the said order has been reproduced inFparagraph 12 above. The Arbitral Tribunal was more impressed by thefact that the respondent had completed substantial works of the Projectand it would be just and proper to allow the respondent to complete thebalance work. The Arbitral Tribunal made no effort to ascertain as towhether the order dated 23[rd] July, 2016 was a blanket and unconditionalGorder entitling the respondent to straightaway exercise ROFR withoutparticipating in the bidding process. The Arbitral Tribunal merely advertedto the objection of the appellant and rejected the same on the finding thatinvolvement of a third party in the Project would create serious problems.It took the view that giving option to the respondent to match the lowestbid and to complete the balance work, with a condition to periodicallyH

submit the progress report to the Arbitral Tribunal for monitoring whetherthe balance work was successfully completed to the satisfaction of theNHAI, would be a proper and equitable arrangement. This approach isnot in conformity with the fundamental policy of Indian law.

21. The approach of the High Court in the appeal preferred bythe appellant was no different. The relevant extract of the High Courtdecision has been reproduced in paragraph 13 above. The High Courtdid not find any error, much less manifest error, in the view taken by theArbitral Tribunal. Further, it can be gleaned from the observations ofthe High Court in the impugned judgment that the High Court was moreeager to know as to what prejudice would be caused to the appellant ifthe respondent had not participated in the bidding process. This query ofthe High Court is begging the question. For, that cannot be the primarybasis to answer the relief claimed by the respondent in the applicationunder Section 17 of the Act. An entity who stays away from the biddingprocess and fails to comply with the express terms and conditions of thetender documents cannot claim any right to match the lowest bid orexercise ROFR. Only a responsive bidder could do so. The High Courthas overlooked the fact that the appellant is a body corporate under the1988 Act. It has to act in a just and fair manner in the matter of allocationof contract albeit the balance and unfinished work of the Project. Noexpress exemption has been granted to the respondent vide order of theArbitral Tribunal dated 23[rd] July, 2016 – to exercise ROFR or match thelowest bid without participating in the bidding process. The respondenthad the option to participate in the bidding process which was not availedof for reasons best known to the respondent. The High Court alsooverlooked the fact that the tender process was not an empty formalityand with the initiation of the same, third parties, who participated in thebidding process, were likely to be prejudiced by allowing the respondentto match the lowest bid or exercise ROFR, without participating in thebidding process despite the express stipulation in that behalf in the tenderdocuments. Suffice it to observe that the High Court committed thesame error as committed by the Arbitral Tribunal in not examining thecore issues for grant or non-grant of the relief to the respondent, inconformity with the fundamental policy of Indian law.

22. The argument of the respondent that the order dated 23[rd] July,2016 passed by the Arbitral Tribunal was based on consent of the partiesand was never challenged by the appellant, does not take the matter any A

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Afurther. The respondent on the one hand, contends that the said orderwas based on consent of the parties and also in the same breath contendsthat the respondent consented to the unilateral conditions stipulated bythe appellant, which the appellant should not be allowed to resile asprayed by it. Be that as it may, on a fair reading of the order dated 23[rd]July, 2016, it is noticed that the same is the outcome of a contest and notBfounded on any concession. In any case, the order makes no expressmention about granting of exemption to the respondent from participatingin the proposed bidding process. The fact that the respondent has alreadyinvested a substantial amount in the subject Project and has alsocompleted substantial work can be no basis to overlook the fundamentalCpolicy of Indian law regarding the subject of tender process and therights and obligations of the parties involved. We are also not impressedby the argument of the respondent that the respondent was not expectedto refuse to match its own bid or that if it had participated in the biddingprocess and exercised ROFR, then it would have resulted in consequenceof black listing and forfeiture of bid security amount. The fact that theDrespondent would exercise ROFR would mean that the bid given by therespondent was not L-1. If it was not L-1, exercising ROFR wouldobviously neither entail in forfeiture of the bid security nor would visit theconsequence of black listing. This plea is obviously an argument of desperationand belated one to justify the failure to participate in the bidding process.E23. The appellant invited our attention to the dictum in VHCPL-ADCC Pingalai Infrastructure Pvt. Ltd., (supra). In that case, theCourt considered the question whether the petitioner had preferentialright to match the lowest bid without pre-qualifying or participating inthe bidding process. In that case, Article 14.1(c) of the concessionFagreement stipulated that the respondent No.1 could invite proposalsfrom eligible persons for capacity augmentation of the project whichrequired the petitioner to give an option to submit its proposal. The Courtafter noticing the precedents on the relevant aspects, went on to observethat if the concessionaire chose not to submit its proposal, it did not have the right to match the preferred offer as would be the case of theGrespondent herein, in view of the express stipulation in the tenderdocuments requiring the respondent to participate in the bidding process.The appellant has also placed reliance on the decision in M/s. Raj WestPower Limited, (supra). We agree with the respondent that this decisiondoes not lay down any principle which may have any bearing on theHcase in hand.

24. In view of the above, we have no hesitation in concludingthat the decision of the Arbitral Tribunal as confirmed by the High Court,falls foul of the fundamental policy of Indian law and cannot becountenanced.

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25. Accordingly, the order passed by the Arbitral Tribunal dated24[th] May, 2017 as also the order dated 21[st] August, 2017 passed by theBlearned Single Judge of the High Court, deserve to be quashed and setaside and resultantly, the application preferred by the respondent underSection 17 of the Act dated 25[th] April, 2017 ought to be dismissed. Weorder accordingly.

26. The appeal is allowed in the above terms with no order as tocosts.

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