S A INFRASTRUCTURE CONSULTANTS PVT LTD vs. NATIONAL HIGHWAY AUTHORITY OF INDIA

$~18
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 30.08.2016

+ W.P.(C) 7214/2016 & CM No.29721/2016
S A INFRASTRUCTURE CONSULTANTS PVT LTD ..... Petitioner
versus

NATIONAL HIGHWAY AUTHORITY OF INDIA ..... Respondent

Advocates who appeared in this case:
For the Petitioner : Mr Joy Basu, Senior Advocate with Mr Alok Agarwal,
Mr Sudhir Mishra, Ms Ritwika Nanda, Mr Milan Tomar
and Mr Abhinav Pandey, Advocates
For the respondent : Mr S. Nanda Kumar with Mr Parivesh Singh and Mr P.
Srinivasan, Advocates


CORAM:-
HON’BLE MR JUSTICE BADAR DURREZ AHMED
HON’BLE MR JUSTICE ASHUTOSH KUMAR

JUDGMENT

BADAR DURREZ AHMED, J (ORAL)

1. This writ petition has been filed in respect of the Request for
Proposal („RFP‟) for procurement of Independent Engineer Services
for 8-Laning of a Section of NH-1 (new NH-44) from Mukarba
Chowk at km 15.500 to Panipat at km 86.000 on BOT (Toll) basis in
the state of Haryana.

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2. The petitioner participated in the bidding process pursuant to
the said RFP. However, the respondent decided to open the financial
bids by excluding the petitioner. The methodology of the evaluation
process was that there would be two stages. The first stage would be
the technical evaluation stage and the next would be the opening of
the financial bids. A marking system was devised whereby marks
were to be awarded at the technical evaluation stage as well as at the
financial evaluation stage. The bidders, who got the top five highest
marks at the technical evaluation stage, would be the only bidders
whose financial bids would be opened. Thereafter marks would be
awarded to these five bidders for their financial bids and the total
marks given to the bidders, both in respect of the technical evaluation
and financial evaluation, would be considered for award of the
contract. One more aspect which needs to be mentioned is that the
weightage to be given to the technical evaluation marks was 80% and
the remaining 20% weightage was to be given to the marks obtained
in the financial evaluation.
3. It may also be pointed out that the petitioner (S A Infrastructure
Consultants Pvt. Ltd.) obtained 94.97 marks in the final technical

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scores after technical evaluation and was ranked third. Therefore,
based on the technical evaluation marks, since the petitioner was
within the top five bidders, it would, under normal circumstances,
have progressed to the next stage and its financial bid would also be
opened. However, by a letter dated 09.08.2016 issued by the NHAI
(the respondent herein) all bidders were informed about the opening
of the financial bids of the eligible firms which was slated to take
place at 11:30 a.m. on 17.08.2016 at the NHAI Headquarter, New
Delhi. The letter dated 09.08.2016 is of vital significance and
therefore the same is reproduced herein below:-
“NHAI/BOT/IE/11023/1/MC-P/2015/HR/362
09.08.2016
To,
The Bidders
Sub: Procurement of Independent Engineer Services for
8-Laning of Section of NH-1 (New NH-44) from
Mukarba Chowk at Km 15.500 to Panipat at Km
86.000 on BOT (Toll) basis in the State of Haryana:
Finalization of Technical Evaluation and Opening of
Financial Bids-Reg.

1. Vide letter no.NHAI/BOT/IE/11023/1/MC-
P/2015/HR181 dt.13.04.2016, the summary of Technical
Evaluation was displayed on E-tender portal of NHAI for
information of bidders wherein bidders were given
opportunity to respond by 20.04.2016 (upto 11:00 hrs.) in
case of any objection. The objections raised by some of
the bidders were scrutinised and with the approval of

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* There was Vigilance enquiry on account of submission
of false/altered work experience certificates by M/s.
Nicholas O‟Dwyer Ltd. JV with M/s SA Infrastructure
Consultants Pvt. Ltd. Competent Authority approved
initiating action against the Firm. Legal Opinion was
sought. On the basis of Legal opinion, Competent
Authority approved not to open the Financial Bid of M/s.
SA Infrastructure Consultants Pvt. Ltd. It is further
informed that the Financial Bids of eligible Firms shall
be opened on 17.08.2016 at 11.30 AM, NHAI HQ New
Delhi.
This issues with the approval of Competent
Authority.
(P.K.Sabat)
Manager (Tech)-H.”
(underlining added)

4. Insofar as this case is concerned, the note given after the
asterisk mark is what is relevant. It comprises of several parts:-
(i) There was a vigilance enquiry on account of submission
of false/altered work experience certificates by Nicholas
O‟ Dwyer & Co. Ltd. which had a joint venture with S A
Infrastructure Consultants Pvt. Ltd. (the petitioner
herein);
(ii) The competent authority approved initiating action
against the firm (presumably the petitioner herein);

(iii) Legal opinion was sought;

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(iv) On the basis of legal opinion, the competent authority
approved not to open the financial bids of the petitioner.
5. It is clear that a vigilance enquiry was initiated by the Vigilance
Division of NHAI with regard to four work experience certificates
submitted by Nicholas O‟ Dwyer & Co. Ltd. with whom the petitioner
undertook projects on a joint venture basis. The final investigation
report was submitted by the Vigilance Division of the NHAI and
thereafter on 24.02.2016 the competent authority i.e., the Chairman,
NHAI had approved initiation of action against Nicholas O‟ Dwyer &
Co. Ltd. which had a joint venture with the petitioner (including its
subsidiary).
6. The minutes of the meeting held on 24.02.2016, a copy whereof
was placed before us, clearly indicate that the Vigilance Department
was to make available the documents and proof with regard to the said
allegations to the concerned technical division for taking necessary
action against the alleged defaulter consultants “after following due
process i.e. by issuing show cause notice and dealing with the case as
per the RFP/bid document”. Pursuant to this, three show cause
notices were issued on 25.04.2016, 12.05.2016 and 16.05.2016 in

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respect of the very same four certificates which had allegedly been
submitted by Nicholas O‟ Dwyer & Co. Ltd. to indicate its work
experience. The said show cause notices were issued in respect of a
Bihar project, an Orissa project and a Jammu & Kashmir project,
respectively. All these projects were awarded in 2010-2011. It was
pointed out by the petitioner that insofar as the Bihar project was
concerned, the initial JV with Nicholas O‟ Dwyer & Co. Ltd. was
with one Upham International Corporation Ltd. and the petitioner was
not party to the bidding process and in that the four alleged certificates
of Nicholas O‟ Dwyer & Co. Ltd. had already been submitted.
7. In any event, the petitioner submitted replies to the said show
cause notices on 09.05.2016, 25.05.2016 and 26.05.2016,
respectively. These were interim replies inasmuch as the petitioner
had asked for further information and also for copies of the relied
upon documents. Personal hearing was also requested and a request
was also made for cross-examination. However, nothing happened
after the replies were received by the respondent. Admittedly, till date
there has been no determination pursuant to the show cause notices
mentioned above. In other words, there is no conclusive decision as

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to whether Nicholas O‟ Dwyer & Co. Ltd. had submitted false/forged
certificates of work experience and more importantly as to whether
there was any complicity on the part of the petitioner herein in the
submission of such certificates, even if it were to be concluded, that
they were fake or forged.
8. Thereafter, the present request for proposal (RFP) was being
processed, the bid by the petitioner having been submitted as far back
as on 26.10.2015. A copy of the minutes of the evaluation committee
held on 12.07.2016 was handed over to us by the learned counsel for
the respondent which we are taking on record. As per the said
minutes, the RFP for the subject project had been invited on
15.09.2015 on e-tender basis and the bid submission due date was on
26.10.2015. Thirteen bids had been received by the bid due date. A
meeting of the evaluation committee was held on 12.07.2016 to
deliberate upon the legal opinions and to finalise the technical
evaluation.

9. It is evident from the said minutes that the committee had a
meeting on 11.04.2016 and recommended to post the draft results of
the technical evaluation on the e-tender portal to give an opportunity

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to the bidders to respond within seven days in case they had any
objection to the marks thereunder. After the approval of the
competent authority, the marks of the technical evaluation of the
bidders were uploaded on the e- tender portal of NHAI on 13.04.2016
and the bidders were given opportunity to respond by 20.04.2016 in
case they had any objection. After considering the objections which
had been received, the financial consultant submitted its report dated
21.04.2016 and the evaluation committee in its meeting held on
21.04.2016 itself deliberated upon the report and prepared the revised
summary of the final evaluation scores which is the same as appears
in the letter dated 09.08.2016 which we have already extracted above.
It will be remembered that the petitioner was shown at rank No.3
having obtained 94.97 marks.
10. Thereafter, the recommendation of the evaluation committee to
seek legal opinion regarding the opening of financial bids of the
petitioner was approved by the competent authority and accordingly
the legal opinion of the Legal Department of NHAI was obtained on
19.05.2016 whereby the Legal Department opined as under:-
“Legally speaking NHAI‟s action of not opening of
financial bid of said two firms may not be legally tenable.

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However, the terms and conditions of RFP of the specific
bid could only be referred to in each case on merit and
decided objectively whether the bid submitted be declared
as responsive. It may be noted that any action out of
extraneous influence may invite litigation.”

11. The evaluation committee deliberated upon the said opinion on
01.06.2016 and thought it fit to obtain a second opinion from a
Government empanelled advocate firm before taking a final decision
in the matter. Accordingly the legal opinion was obtained from the
said firm. The opinion was submitted through a letter dated
16.06.2016 and was to the following effect:-
“In view thereof, in our opinion, the financial bid of M/s.
SA Infrastructure Consultants Pvt. Ltd. may be opened.
However, M/s. SAICPL, may be informed that the
opening of its Financial Bid is subject to the pending
proceedings.

Generally, considering that the issue is long pending, it
would be advisable that the matter is dealt expeditiously as
pendency of such matters are likely to have an adverse
view being taken against NHAI, in both the cases where
the contract is awarded to SAICPL or otherwise.”

12. The evaluation committee after considering the said opinion
discussed the matter with the member (PPP) (public private
partnership) (who also happens to be the Chief Vigilance Officer in
the Vigilance Department of NHAI).

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13. It appears that the said Member (PPP) advised the committee
that legal opinion from a named senior central Government standing
counsel be also obtained. The opinion of such a senior central
Government standing counsel was obtained and was to the following
effect:-
“In the opinion of the undersigned, it is always advisable
given the circumstances that the Chairman of NHAI has
directed to initiate inquiry into the allegations against the
company that it has used fraudulent means to gain the
work contracts with NHAI and which inquiry is still
pending shows a taint upon the company that during the
pendency of the inquiry, the financial bid of the company
should not be opened.”

14. Thereafter the evaluation committee was apprised that the
technical division sought a final opinion in the matter from the Chief
General Manager (Legal), NHAI and the opinion so given was as
under:-
“The Bidder has used fraudulent mean/misrepresented in
NHAI project therefore not to be entertained and be
debarred in future projects also till he conclusively proves,
bonafide with documents including foreign origin
certificates. We may therefore not entertain this bid.”

15. Thereafter it was concluded in the said meeting of 12.07.2016
as under:-
“13. After deliberation of above legal opinions & on the

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basis of the final legal opinion dt. 11.07.2016 of CGM
(Legal), Evaluation Committee recommends as under:-

(a) Not to open the Financial Bid of SA Infrastructure
Consultants Pvt. Ltd. subject to approval of Competent
Authority,

(b) To forward Legal Opinion dt. 11.07.2016 to GM
(Vig.) for further necessary action,

(c) Approval of the revised Technical Score of the
Firms as under:-

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* In view of above recommendations the Financial
Bid shall not be opened subject to approval of Competent
Authority.

(d) To hoist the revised summary of scores for
information of bidders.

(e) To open the Financial Bids of Top Five Technically
qualified bidders after excluding SA Infrastructure
Consultants Pvt. Ltd. in line with the final Legal opinion
are as under:-

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14. In view of above, approval of Competent Authority
may be solicited for the Minutes of the Meeting of
Evaluation Committee dt. 12.07.2016 and for opening of
Financial proposals of the Consulting Firms as per para
13(e) above.”
(underlining added)

16. The Chairman, NHAI being the competent authority approved
the above recommendation and thereafter the letter dated 09.08.2016
was issued to all the bidders informing them of the date of opening of
the financial bid on 17.08.2016 after excluding the petitioner.
17. After hearing counsel for the parties, we are of the view that the
course of action taken by the respondents insofar as the petitioner is
concerned cannot be accepted. There are several reasons for this.
First of all, there has been no determination on the show cause notices
which were issued to inter alia the petitioner. Thus, there is no
conclusive finding with regard to the four certificates of work
experience submitted by Nicholas O‟ Dwyer Limited were alleged to

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be false or fabricated. Apart from this, there is no finding that there
was any complicity on the part of the petitioner. The respondent
should have taken a final decision in the matter and if and only if there
was a finding against the petitioner could the respondent have taken
the decision to exclude the petitioner from the stage of opening of
financial bids. The second reason is that we get the impression that the
respondent was bent upon excluding the petitioner from the stage of
opening of financial bids and that is why it went on seeking opinions
after the first two opinions were against the course of action which
they have taken. We are of the view that the first two opinions given
by the Vigilance Department of NHAI in the first instance and by the
legal consulting firm of NHAI were correct and sufficient to enable
the respondent to open the financial bid of the petitioner. The
respondent ought to have followed that course of action and permitted
the petitioner to participate in the second stage i.e., opening of the
financial bids yet, it persisted and sought further opinion from a
Senior Government Standing Counsel and furthermore from the CGM
(Legal), NHAI. We do not understand as to how the CGM (Legal)
could have given an opinion that the petitioner had used fraudulent

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means/misrepresented in the NHAI projects and that therefore the
petitioner should not be entertained and be debarred from future
projects also till he conclusively proves his bona fides with
documents. This understanding of the law is completely contrary to
what it actually is. Once show cause notices had been issued to the
petitioner, unless they were taken to their logical end, there could not
be any finding against the petitioner. Furthermore, we do not know
how the CGM (Legal), NHAI could have given an opinion that the
petitioner be debarred from future projects without even considering
petitioner‟s replies to the show cause notices. This would clearly
militate against the principles of natural justice. Even the opinion
given by the Senior Central Government Standing Counsel to the
effect that it is always advisable that during the pendency of enquiry
the financial bids of the company should not be opened is erroneous
and contrary to law. Thirdly, we do not see as to why the respondents
did not take heed of the earlier two opinions and sought to rely on the
latter two opinions which we have already indicated are contrary to
settled legal principles.

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18. Therefore, the decision of the competent authority not to open
the financial bids of the petitioner in the circumstances narrated above
is clearly not warranted in law. Consequently, we direct that the
petitioner would be entitled to participate in the next stage and that the
petitioner‟s financial bids would be opened because it is otherwise
placed at rank No.3.
19. We are making it clear that we have not made any observation
with regard to the merits of the show cause notices and the replies
given by the petitioner and the final decisions to be taken in the
matter.
20. The writ petition stands allowed as above. There shall be no
order as to costs.

BADAR DURREZ AHMED, J


AUGUST 30, 2016 ASHUTOSH KUMAR, J
ns

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