SC confirms NHAI’s decision to cancel the bidding process for the project

The Supreme Court on Tuesday upheld the decision of the National Highways Authority of India (NHAI) to cancel its bidding process for the construction of the six-lane Kagal-Satara section of NH48 in Maharashtra. The NHAI, the court said, is free to determine what it considers to be a reasonable offer and may also, at any time, decide to withdraw the offer.

NHAI had canceled the bidding process in March this year citing “administrative reasons/problems” as the reason for cancellation on its website.

The Malaysian company IJM Corporation Berhad, which had become the sole bidder for the NHAI tender, had challenged the decision, alleging that the cancellation of the tender was arbitrary and illegal, and contrary to all existing policy guidelines. He further stated that he had met all the requirements of the Request for Proposals (RFP) as well as the NHAI Policy Circular, and should have been awarded the work for Lot 1.” In accordance with established law, the NHAI does not have absolute discretion to reject offers and cannot act arbitrarily against its own directives and also deprive the IJM of its constitutional and legal rights,” the appeal said, while challenging the May 12 ruling of the Delhi High Court. judgment dismissing the company’s motion.

A bench headed by Judge Indira Banerjee also rejected the IJM’s appeal, reiterating that the foreign company had no right to know of the business estimate and decision that the NHAI may arrive at. , as this is a matter on which the NHAI has the right to maintain confidentiality. to safeguard its financial interests. He said there is no case of changing the rules of the game halfway.

“It is open to the entity launching the call for tenders to determine for itself what it considers to be the reasonable offer expected in this call for tenders. This exercise may be undertaken by it at any time during the bidding process, as no vested interest in the award of a bid is created in favor of any party solely because it is found whether it is L1 or H1 in the offer. The entity launching the tender may at any time decide to withdraw the tender, provided that it is for a valid and relevant reason and not motivated by any malice,” the HC said.

While the authority refused to allow inspection of the original documents as instructed by the HC, on May 2, the NHAI hinted to the company that it expected a premium at the rate of 10.77% , and its board of directors did not agree to award the project to IJM and headed for the restructuring and new bid for the project.

This alleged expectation by NHAI was contrary to the bidding documents and amounted to changing the rules of the game when it had already begun, argued senior lawyer Ranjit Kumar on behalf of the IJM.

“… In PPP projects in the road sector under BOT (toll model), it is the concessionaire, who bears the entire cost of constructing the road and operates and maintains it at its own expense. fees, and transfers the entire asset to NHAI at the end of the concession period,” he said.

While the concessionaire recovers the full cost of construction, operation and maintenance (which includes its equity interest and debt) as well as reasonable profits, by collecting the toll, NHAI, without investing, obtains a road duly built and maintained at the end of the concession. period, which it can then use for commercial exploitation, the Malaysian company said in its appeal filed through lawyer Abhishek Singh. He added that in a PPP project, no public money is involved and therefore there is no loss to the public treasury.

Lead Attorney Prag Tripathi and Attorney Abhay Gupta appeared for NHAI.

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