JUDGEMENT
SIDDHARTH MRIDUL, J. -
(1.)The Petitioner has filed the instant writ petition, inter alia, seeking writ of certiorari for quashing the letter dated 20th February, 2009 vide which the National Highways Authority of India (NHAI), Respondent No.3 herein have disqualified the Petitioner, and also seeking writ of mandamus to restrain the NHAI from inviting the second round of bids from the other bidders.
(2.)The brief facts as are relevant for determination of the present writ petition are as follows.
(a) The NHAI decided to undertake development of six laning of Kishangarh-Ajmer-Beawar section of National Highway No.8 from Km. 364.125 to Km. 58.245 (length 93.56 Km.) in the State of Rajasthan under NHDP, Phase-III (Project) through public-private/ Public Sector Partnership (PPP) on Design, Built, Finance, Operate and Transfer (DBFOT) basis and decided to carry out the bidding process for selection of the bidder to whom the Project may be awarded.
(b) The process of selection of bidders comprised of the following two stages:- (i) Pre-qualification of interested applicants as per parameters laid down in the Request For Qualification (RFQ). This was the qualification stage. (ii) The applicants declared successful at RFQ stage, subject to a maximum of six would be allowed to participate in the second stage of bidding, namely bid stage i.e. Request For Proposal (RFP).
(c) In March, 2008 the NHAI invited applications for above Project through RFQ published in newspaper/website with an intention to pre-qualify and shortlist the applicants as per the provisions of the RFQ document. The due date for submission of the RFQ was 8th May, 2008. The said date for submission was thereafter extended to 29th May, 2008 and subsequently to 19th June, 2008.
(d) In response to the RFQ invitation, 23 firms, JVs, consortiums submitted the RFQ applications by the due date of submission. The Petitioner alongwith its consortium partner, Atlantia S.p.A of Italy submitted the RFQ on the due date to NHAI.
(e) The duly constituted evaluation committee of the NHAI evaluated the applications submitted by all the 23 applicants and on the basis of evaluation, the NHAI shortlisted the following six applicants:
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(f) The above mentioned shortlisted applicants including the Petitioner were duly informed by the NHAI about their shortlisting in accordance with Clause 1.2.1 and Clause 3.5.2 of RFQ document by way of NHAIs letter dated 26th August, 2008 with an intimation that all the above shortlisted applicants are eligible for participation in the (ii) stage of bidding process subject to continuing compliance to various provisions of the RFQ. It was clearly stipulated in the said letter dated 26th August, 2008 that the provisions of the RFQ would apply mutatis mutandis to this announcement regarding shortlisting and subsequent bidding.
(g) Subsequently, the NHAI issued RFP document to the above shortlisted applicants with last date of submission as 14th October, 2008, which was extended from time to time and the last date of submission was 23rd December, 2008.
(h) On the 23rd December, 2008 the NHAI opened the bids submitted by the parties and noticed that out of six shortlisted applicants the following four bidders had submitted their bids:- 1. M/s ISOLUX-SOMA Consortium 2. M/s HCC-Laning Consortium 3. M/s Mytas-China Railway 18th Bureau (Group) Corporation Limited. 4. M/s Navinya Buildcon Pvt. Limited-Atlantia S.p.A. Consortium.
(i) Here it is relevant to note that both the RFQ as well as the RFP contained a Clause pertaining to "Conflict of Interest". The RFQ document in Clause 2.2 provided for eligibility of the applicants. Clause 2.2.1(c) defined "Conflict of Interest" as follows: "An applicant shall not have a conflict of interest (the "Conflict of Interest") that affects the Bidding Process. Any Applicant found to have a Conflict of Interest shall be disqualified. An Applicant shall be deemed to have a Conflict of Interest that affects the Bidding Process, if: (i) The Applicant, its Member or Associate (or any constituent thereof) and any other Applicant, its Member or Associate (or any constituent thereof) have common controlling shareholders or other ownership interest; provided that this disqualification shall not apply in cases where the direct or indirect shareholding of an Applicant, its Member or Associate (or any shareholder thereof having a shareholding of more than five percent of the paid up and subscribed share capital of such Applicant, Member or Associate, as the case may be) in the other Applicant, its Member or Associate, as the case may be, is less than one per cent of the paid up and subscribed share capital thereof; provided further that this disqualification shall not apply to a bank, insurance company, pension found or a public financial institution referred to in section 4A of the Companies Act. 1956; (emphasis ours) Or (ii) a constituent of such Applicant is also a constituent of another Applicant; or (iii) such Applicant receives or has received any direct or indirect subsidy from any other Applicant, its Member or Associate or has provided any such subsidy to any other Applicant; or (iv) such Applicant has the same legal representative for purposes of this Application as any other Applicant; Or (v) such Applicant has a relationship with another Applicant, directly or through common third party/parties, that puts either or both of them in a position to have access to each others information about, or to influence the Application of either or each other; or (vi) such Applicant has participated as a consultant to the Authority in the preparation of any documents, design or technical specifications of the Project." All the applicants at the RFQ stage also had to submit before the NHAI an undertaking as prescribed in Appendix-I to the RFQ document. In terms of the said requirement the Petitioner submitted an undertaking before the NHAI stating therein that the Petitioner did not have any "Conflict of Interest" in accordance with the above Clause 2.2.1(c) of the RFQ document.
(j) The RFP document contained a similar provision pertaining to "Conflict of Interest" as herein below: "2.1.14 A Bidder shall not have a conflict of interest (the "Conflict of Interest") that affects the Bidding Process. Any Bidder found to have a Conflict of interest shall be disqualified. In the event of disqualification, the Authority shall forfeit and appropriate the Bid Security or Performance Security, as the case may be, as mutually agreed genuine pre- estimated compensation and damages payable to the Authority for, inter alia, the time, cost and effort of the Authority, including consideration of such Bidders proposal, without prejudice to any other right or remedy that may be available to the Authority hereunder or otherwise. Without limiting the generality of the above, a Bidder shall be considered to have a Conflict of Interest that affects the Bidding Process, if: (i) such Bidder (or any constituent thereof) and any other Bidder (or any constituent thereof) have common controlling shareholders or other ownership interest; provided that this qualification shall not apply in cases where the direct or indirect shareholding in a Bidder or a constituent thereof in the other Bidder(s) (or any of its constituents) is less than 1% of its paid up and subscribed capital; or (emphasis ours) (ii) a constituent of such Bidder is also a constituent of another Bidder; or (iii) such Bidder receives or has received any direct or indirect subsidy from any other Bidder, or has provided any such subsidy to any other Bidder; or (iv) such Bidder has the same legal representative for purposes of this Bid as any other Bidder; or (v) such Bidder has a relationship with another Bidder, directly or through common third parties, that puts them, in a position to have access to each others information about, or to influence the Bid of either or each of the other Bidder; or (vi) such Bidder has participated as a consultant to the Authority in the preparation of any documents, design or technical specifications of the Project." All the shortlisted bidders were required in terms of the RFP documents to submit another undertaking as contained in Appendix 1 to the RFP document wherein the bidder had to declare that they did not have any "Conflict of Interest" in accordance with Clause 2.1.14 and 2.1.15 of the RFP document. In terms of the above requirement, even the Petitioner submitted an undertaking before the NHAI clearly stating that it did not have any "Conflict of Interest" as provided in Clause 2.1.14 of RFP document.
(k) In the meantime before submission of the bid the Petitioner wrote a letter dated 8th October, 2008 to the NHAI with regard to Clause 2.1.14 of the RFP and inter alia pointed out that a similar clause had posed problems in the bid for re-development of New Delhi Station in the tenders invited by Indian Railways. It was brought to the notice of NHAI that the Railway Land Development Authority under the Ministry of Railways had modified the said clause and accordingly the limit of 1% cross holding was increased to 10%. Since the Petitioner did not receive a response to the letter dated 8th October, 2008, a further letter was addressed by the Petitioner to the NHAI on the 4th November, 2008. Vide this letter the Petitioner once again pointed out to the NHAI that the issue of "Conflict of Interest" as defined under Clause 2.1.14 of the RFP needed to be modified. Further the Petitioner drew the attention of NHAI that the above mentioned cross holding could happen without the knowledge of the bidder since it was not possible to check all such investment in all the constituents at the time of submission of RFQ. On the 18th November, 2008, the Petitioner wrote to NHAI further to its letter dated 8th October, 2008 and 4th November, 2008 with regard to Clause 2.1.14 of the RFP and pointed out that no response had been received from NHAI so far.
(l) On 28th November, 2008 NHAI wrote to the Petitioner stating that the Petitioners letter dated 18th November, 2008 and other letters on similar issues with regard to the percentage of the common shareholding were under consideration. In the meantime, it informed the Petitioner that the last date of submission of RFP was the 3 rd December, 2008 and further stated that in the meantime the Petitioner should abide by the provisions of the RFP document.
(m) On the submission of the RFP document the NHAI received representations from rest of the three shortlisted bidders M/s ISOLUX-SOMA-Consortium by way of its letter dated 24th December, 2008, M/s Maytas-China railway 18th Bureau (Group) Corporation Ltd. by way of their letter dated 23rd December, 2008 and M/s HCC John Laing by way of its letter dated 26th December, 2008, representing to the NHAI that the consortium led by the Petitioner had M/s Atlantia as one of its members and consortium led by IDFC as M/s Abertis as a member. It further pointed out that Abertis being part of the consortium led by IDFC had 6.68% shareholding in Atlantia which was part of consortium led by the Petitioner. Having disclosed the above facts the three bidders requested that the bid submitted by the consortium led by the Petitioner and IDFC should be rejected and they may be disqualified from bidding.
(n) Before the NHAI could verify from the Petitioner the correctness of the above allegations made by the above three bidders, the Petitioner suo moto by its letter dated 8th January, 2009 addressed to the NHAI clarified the following:- "i. That they were aware of the representations made by the competitors regarding the "Conflict of Interest" and the factum of questioning the participation of the Petitioner. ii. Till the time the Petitioner was shortlisted to submit the proposal, they were not aware of the details of other applicants. iii. That they had made representations for modification of the "Conflict of Interest" Clause in the RFP document to avoid future complication in the Bidding Process. iv. That the Petitioner had received the response from Respondent No.3 wherein it was made clear that the Petitioner should continue to abide by the Clauses of RFP document and that the violation of the clause shall be dealt with as per provisions of RFP document. v. That the Petitioner had no "Conflict of Interest" with other three Bidders who have submitted their bids."
(o) The Petitioner was orally informed in the meeting between the Chairman of NHAI and the representative of the Petitioner company held on 23rd February, 2009 that the Petitioners bid was rejected. In the meantime by the impugned letter dated 20th February, 2009 addressed to the shortlisted bidders NHAI informed the shortlisted bidders that it had decided not to accept the bid of the Petitioner who had quoted the highest price due to non- adherence of the requirements of the RFP. NHAI further, in terms of Clause 3.3.3 of the RFP, requested the said bidders to match the bid of the Petitioner. The NHAI in the said letter stated that all the bids which will be received in the "second round of bidding" would be opened at 1130 Hours on the 27th February, 2009 in the presence of the bidders who choose to attend.
(3.)Mr. Mukul Rohtagi, learned senior advocate appearing on behalf of the Petitioner made the following submissions. His first submission was that the condition with regard to the "Conflict of Interest" had been waived by the NHAI, since the Petitioner had already been shortlisted for the second stage. The second submission was that the conditions stipulated in the RFQ and the RFP are not mandatory and that the same should be read down so as to be read pragmatically. Mr. Rohtagis third submission was that the Petitioner at the time of applying for the request for qualification was not aware of the fact that, Abertis which held 6.68% share in Atlantia, the Petitioners partner, was one of the members of the consortium that had also applied in response to the RFQ. Further, it was contended by the Petitioner that the principles of natural justice had not been followed by the NHAI, inasmuch as, the Petitioner had not been informed of its disqualification prior to the remaining bidders being called to participate in the second round of bidding. The last submission made on behalf of the Petitioner was that since the consortium of which Abertis was a constituent did not participate in the second stage of bidding and did not submit its financial bid, therefore, the Petitioner consortium did not incur any disqualification at the stage of the RFP.