Delhi High Court - Orders
Jmc Projects (India) Ltd & Anr vs National Highways Authority Of India & ... on 11 April, 2022
Author: Vipin Sanghi
Bench: Navin Chawla, Vipin Sanghi
$~5
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ LPA 154/2022 & CM APPL. 10729/2022
JMC PROJECTS (INDIA) LTD & ANR. ..... Appellants
Through: Mr.Arvind Nigam, Sr. Adv. with
Mr.Shamik Sanjanwala, Mr.Sunil
Mittal, Mr.Amit Sagar, Advs.
versus
NATIONAL HIGHWAYS AUTHORITY
OF INDIA & ORS. ..... Respondents
Through: Mr.Parag P.Tripathi, Sr. Advocate
with Ms.Gunjan Sinha, Adv. for
NHAI/R-1.
Ms.Manisha Agrawal Narain, CGSC
with Mr.Aditya Singh Deshwal and
Ms.Rakshita Goyal, Advocates for
UOI/R-2.
Mr.Rishi Agrawala & Ms.Shruti
Arora, Advs. for R-3.
CORAM:
HON'BLE THE ACTING CHIEF JUSTICE
HON'BLE MR. JUSTICE NAVIN CHAWLA
ORDER
% 11.04.2022
1. This appeal has been filed challenging the judgment dated 04.02.2022 passed by the learned Single Judge of this Court in WP(C) 13160 of 2021, inter alia rejecting the challenge of the petitioners/appellants to the communication dated 18.11.2021 whereby the respondent no. 1 informed the appellants that its security clearance in terms of Clause 2.1.12(a) of the Signature Not Verified Digitally Signed By:SHALOO BATRA Signing Date:13.04.2022 19:40:46 LPA 154/2022 Page 1 Request for Proposal for „construction of four laning of Part of Ramban to Banihal Section of NH-1A (Now NH-44), from Ch.154+210 to Ch.158+650 (North Bound) and from Ch.155+940 to Ch.160+282 (South Bound) including Construction of Twin Tube Tunnels (Package-I) in the UT of Jammu & Kashmir on EPC Mode‟ (hereinafter referred to as the „RFP‟) has been denied by the Competent Authority.
2. The impugned order further directs the respondent no. 1 to forward the proposal for grant of the security clearance to respondent no. 3 for consideration by the respondent no. 2, and a further direction to the respondent no. 2 to take a decision on such request within a period of three weeks. The impugned order clarifies that, in case, the security clearance to respondent no. 3 is declined for any reason whatsoever, the respondent no. 1 will be free to proceed further as per the terms of RFP to award the contract to the next bidder, subject to its meeting the criteria under Clause 2.1.12(a) of the RFP, if applicable.
3. The above-mentioned writ petition was filed by the petitioners/appellants seeking the following reliefs:
"(i) Issue a writ of mandamus/certiorari or a writ in the nature of mandamus/certiorari or any other writ, order or direction quashing and setting aside the impugned communication dated 18.11.2021 and actions of the Respondents 1 and 2, disqualifying it from further participation in the tender process and award of contract to JMC-AGE JV, for the construction of construction of four laning of part of Ramban to Banihal Section of NH-1A (now NH-44), from CH.154+2.0 to CH.158+675 (North Bound) and from CH.155+940 to CH.l60+282 (South Bound) including construction of Twin Tube Tunnel (Package-1) in the Union Territory of Jammu Signature Not Verified Digitally Signed By:SHALOO BATRA Signing Date:13.04.2022 19:40:46 LPA 154/2022 Page 2 & Kashmir by EPC Mode;
(ii) Issue a writ of mandamus or a writ in the nature of mandamus or any other writ, order or direction directing the Respondents to award the contract to JMC-AGE JV, pursuant to the tender issued and bid submitted by JMC-AGE JV, for the consumption of four laning of part of Ramban to Banihal Section of NH-1A (now NH-44), from CH.154+2.0 to CH.158+675 (North Bound) and from CH.155+940 to CH.160+282 (South Bound) including construction of Twin Tube Tunnel (Package-1) in the Union Territory of Jammu & Kashmir by EPC Mode;"
4. It was the case of the appellants that the appellant no. 2 is a Joint Venture (in short, „JV‟), of which the lead member, holding 74% participation share, is an Indian company, that is, appellant no. 1. The minority participation partner with the remaining 26% share is a Turkish company, M/s Age Insaat Ve Ticaret Anonim Sirketi (hereinafter referred to as the „M/s Age‟).
5. The said JV was declared as technically qualified in the RFP and, thereafter, was declared as a L-1 bidder in the financial bids.
6. At that stage, the respondent no. 1 issued the impugned communication dated 18.11.2021, informing the petitioners/appellants that their security clearance was denied by the Competent Authority.
7. It is the case of the appellants that in terms of Clause 2.1.12(a) of the RFP, since the JV had an Indian partner holding more than 50% share therein, Clause 2.1.12(a) of the RFP was not attracted. It was further contended that the respondent no. 1 had adopted a pick and choose policy for obtaining security clearance, inasmuch, as, for the respondent no. 3, which also had a Ukrainian JV partner, respondent no. 1 did not obtain Signature Not Verified Digitally Signed By:SHALOO BATRA Signing Date:13.04.2022 19:40:46 LPA 154/2022 Page 3 security clearance and proceeded to issue a Letter of Acceptance in its favour.
8. As noted hereinabove, the learned Single Judge has rejected the submission of the appellants that Clause 2.1.12(a) of the RFP, for obtaining the security clearance, was not attracted. The learned Single Judge has held that the respondent no.1 has rightly sought security clearance for the appellants. The learned Single Judge has also rejected the submission of the respondent no.1, that no security clearance was required for respondent no. 3, wherein a Ukraine company was a JV partner. The learned Single Judge has held that Clause 2.1.12(a) of the RFP was equally applicable to the respondent no. 3 and, therefore, has made the grant of Letter of Acceptance to respondent no. 3 subject to respondent no. 2 granting security clearance to the respondent no. 3.
9. The learned senior counsel for the appellants submits that the finding of the learned Single Judge on application of Clause 2.1.12(a) to the appellants, is incorrect inasmuch, as, it is applicable only where not less than 50% of the aggregate issued, subscribed and paid-up equity share capital in the L-1 bidder is held by persons resident outside India, or where the bidder itself is controlled by persons resident outside India. He submits that this is also evident from reading of Clause 2.1.12(b) of the RFP.
10. The learned senior counsel for the appellants further submits that the only reason for referring the appellant no. 2 for grant of security clearance from the respondent no. 2, was that the junior partner in the appellant no. 2 was a Turkish company, that is, a „country of concern‟. The RFP, however, does not list out the „country of concern‟. He submits that the only condition in this regard is contained in Clause 2.1.2(I) of the RFP, which provide that Signature Not Verified Digitally Signed By:SHALOO BATRA Signing Date:13.04.2022 19:40:46 LPA 154/2022 Page 4 „bidder from a country which shares a land border with India‟ will be eligible to bid only if the bidder is registered with the Competent Authority. The said clause was not applicable to the appellant no. 2. The RFP did not contain a list of either „Eligible Source Countries‟, as was a case in the RFP floated by Chennai Metro Rail Project, or of „ineligible source countries‟ or a list of countries for whom security clearance would be mandatorily required. He submits that in an absence of such a list, the case of the appellants could not have been referred to the respondent no. 2 for security clearance, only because the junior partner in the appellant no. 2 was a Turkish company.
11. The learned senior counsel for the appellants further submits that the communication dated 18.11.2021 does not disclose the reasons for denying security clearance to the appellants. He submits that M/s Age is presently executing a Railway line project of much more sensitivity and importance in the Jammu & Kashmir - Udhampur-Srinagar-Baramulla line, wherein, in fact, it is a lead partner. He submits that, therefore, M/s Age must have been cleared from security point of view before granting it the said contract. There is no material placed on record by the respondent no. 2 for denying security clearance now to M/s Age.
12. He further submits that merely because M/s Age is a Turkish company can also not be a ground for rejecting security clearance, inasmuch as the Detailed Project Report (in short, „DPR‟) for the very project was done by a Turkish company. He submits that, therefore, denial of security clearance to the appellants is arbitrary and cannot be sustained.
13. The learned senior counsel for the respondent no. 1, on the other hand, submits that in terms of Clause 2.1.12(a) of the RFP, as M/s Age, Signature Not Verified Digitally Signed By:SHALOO BATRA Signing Date:13.04.2022 19:40:46 LPA 154/2022 Page 5 which is a member of appellant no. 2 - JV/bidder, is admittedly under control of persons resident outside India, and, therefore, security clearance was rightfully sought for the appellants from the respondent no. 2. He submits that once the security clearance was rejected, the respondent no. 1 had no option but to declare the appellants as unqualified for the grant of Letter of Acceptance.
14. The learned senior counsel for the respondent no. 1 further submits that the appellants cannot be heard to challenge the rejection of security clearance in their favour inasmuch, as, the same was never put in question before the learned Single Judge. In this regard, he has drawn our attention to paragraph 19 of the impugned judgment.
15. As far as the respondent no. 3 is concerned, he submits that the respondent no. 1 has accepted the impugned judgment of the learned Single Judge and has applied to the respondent no. 2 for seeking security clearance for the respondent no. 3, and shall act further only in compliance with the impugned judgment by the learned Single Judge.
16. We have considered the submissions made by the learned senior counsels for the appellants and the respondent no. 1.
17. Clauses 2.1.12 (a) and (b) of the RPF are quoted hereinbelow:
"2.1.12 While bidding is open to persons from any country, the following provisions shall apply:
(a) Where, on the date of the Application, not less than 50% (fifty percent) of the aggregate issued, subscribed and paid up equity share capital in the L-1 Bidder or its Member is held by persons resident outside India or where a Bidder or its Member is controlled by persons resident outside India, then the eligibility and award of the Signature Not Verified Digitally Signed By:SHALOO BATRA Signing Date:13.04.2022 19:40:46 LPA 154/2022 Page 6 project to such L-1 Bidder shall be subject to approval of the competent authority from national security and public interest perspective as per the instructions of the Government of India applicable at such time. The decision of the authority in this behalf shall be final and conclusive and binding on the Bidder.
(b) Further, where the LoA of a project has been issued to an agency, not covered under the category mentioned above, and it subsequently wishes to transfer its share capital in favour of another entity who is a resident outside India or where a Bidder or its Member is controlled by persons resident outside India and thereby the equity capital of the transferee entity exceeds 50% or above, any such transfer of equity capital shall be with the prior approval of the competent authority from national security and public interest perspective as per the instructions of the Government of India applicable at such point in time."
(Emphasis Supplied)
18. A reading of the above Clause(s) would clearly show that the approval of the Competent Authority from national security and public interest perspective - as per instructions of the Government of India, would be required where not less than 50% of the aggregate issued, subscribed and paid-up equity share capital in the L-1 bidder "or its Member" is held by persons resident outside India, or where a bidder "or its Member" is controlled by persons resident outside India. Clearly, the expression "or its member" refers to the JV partners of the Bidder-JV. There is no denial by the appellants that M/s Age would be covered by the above Clause, it is under control by persons resident outside India. Acceptance of the Signature Not Verified Digitally Signed By:SHALOO BATRA Signing Date:13.04.2022 19:40:46 LPA 154/2022 Page 7 submission of the learned counsel for the appellants would, in fact, mean deletion of the words "or its Member" from Clause 2.1.12(a) of the RFP. We see no ground having been made by the appellants warranting such deletion.
19. Insofar as the challenge to the denial of security clearance is concerned, we may first take note of the observation of the learned Single Judge in paragraph 19 of the impugned judgment, which is quoted hereinbelow:
"19. In the light of the aforesaid, I have no hesitation in accepting the respondent no.1's plea that the award of any contract in favour of the petitioner was necessarily to be subject to the grant of security clearance by the respondent no.2, which unfortunately for the petitioners, has not been granted. The petitioners have not seriously made, and in my view rightly so, any challenge to the non- grant of security clearance by the respondent no.2 except urging that since the Turkish member of the petitioner no.3 JV is already carrying out work on various other projects in the country, it was entitled to security clearance as a matter of course. I do not find any merit in this submission. Firstly, because nothing has been placed on record to show that obtaining such a security clearance was a condition to be fulfilled in the past projects which it is claimed the Turkish member of the petitioner no.3 JV is executing. Moreover, as stated by respondent no.2, the grant of security clearance to a foreign entity would depend upon various factors, including international relations at the relevant time with concerned country, which keep changing from time to time. I am therefore inclined to accept the respondent's plea that the mere grant of security clearance to a foreign entity at a given time would not entitle it to claim security clearance as a matter of right for all times to come. The fact remains that the petitioner has not been granted security clearance which was a specific condition for issuance of the LOA in its favour as per the RFP and therefore, I do not find any infirmity in the impugned communication dated 18.11.2021."Signature Not Verified Digitally Signed By:SHALOO BATRA Signing Date:13.04.2022
19:40:46 LPA 154/2022 Page 8
(Emphasis Supplied)
20. As noted by the learned Single Judge, the only plea taken before the learned Single Judge was that as M/s Age is executing another contract, it was entitled to security clearance as a matter of course. The learned Single Judge has rightly rejected the said argument. We concur with the reasons recorded by the learned Single Judge for the same. Mere fact that M/s Age are carrying out another contract, per se, does not lead to the conclusion that such a requirement existed in respect of the other contract. Even if security clearance was required, and granted in respect of the other contract, it does not follow that such clearance would automatically stand granted for all other projects.
21. As far as the new grounds of challenge regarding lack of reasons for denial of security clearance etc. are concerned, we are afraid we cannot allow the same to be agitated in the present appeal. The prayers made by the petitioner in the writ petition have also been quoted hereinabove. From a reading of the same, it would be apparent that the appellants have not sought any specific prayer challenging the denial of security clearance to it. Its entire focus was on its submission that such security clearance was not required. Having failed in such submission, it cannot now be allowed to set up a new case in the present appeal and convert this court into a court of first instance.
22. As far as the submission of the learned senior counsel for the appellants - that in the absence of there being a list of eligible or ineligible countries, the appellants could not have been singled out for seeking security clearance only because of its partner/Member being a Turkish company, is Signature Not Verified Digitally Signed By:SHALOO BATRA Signing Date:13.04.2022 19:40:46 LPA 154/2022 Page 9 concerned, the learned Single Judge has, in fact, held in favour of the appellants. The learned Single Judge has held that Clause 2.1.12(a) does not distinguish on the basis of the country of the Member of the Joint Venture. It is equally applicable where the Member of the Joint Venture is a Ukraine company. We, therefore, find no merit in the submission made by the learned senior counsel for the appellants.
23. For the above stated reasons, we find no merit in the present appeal. The same is dismissed. There shall be no order as to costs.
VIPIN SANGHI, ACJ
NAVIN CHAWLA, J
APRIL 11, 2022
RN/P
Signature Not Verified
Digitally Signed By:SHALOO
BATRA
Signing Date:13.04.2022
19:40:46 LPA 154/2022 Page 10