‘Not in nation’s interest’: SC on judicial interference in mega foreign-funded projects

The Supreme Court on Monday said delay in mega projects, which are funded by foreign countries under a bilateral agreement, “may not be in the larger public interest, and also not in the nation’s interest”.

The top court’s stance came as it set aside a Delhi High Court judgment, directing National High Speed Rail Corporation Ltd (NHSRCL) to consider the bid of Montecarlo Ltd, for construction and development of a depot in connection with the Mumbai-Ahmedabad bullet train project.

A bench of Justices M.R. Shah and A.S. Bopanna said: “Such an interference by the courts midway and delay in the projects like these which are funded by the foreign countries on bilateral mutual understanding/agreement by the developed country to a developing country may affect the future investments/funding.

“Any delay in execution of such a mega project, which is a very important project for the developing country like India may not be in the larger public interest and in the nation’s interest.”

It pointed out that the high court ought to have appreciated that it is always advisable that in such a foreign-funded mega project, delay may have a cascading effect and many a time, lead to financial burden.

“Therefore, there shall be minimal interference and/or no interference till the entire tender process or till the award of contract is completed,” said Justice Shah, who authored the 82-page judgment on behalf of the bench.

The bench emphasised there shall be different considerations so far as the judicial interference is concerned between foreign-funded contracts and the ordinary public works contracts funded from public exchequer.

It noted that it is difficult for a developing country to go ahead with such a high cost project unless a developed country is ready to fund, more particularly, when the developed country is ready to fund a huge amount at a minimal concessional rate of interest and on suitable terms and conditions of repayment.

The bench said: “Before entertaining the writ petition with respect to such mega projects funded by the foreign countries, one has to appreciate that funds of such mega projects by the foreign country is followed by a detailed discussion between the Prime Ministers of both the countries and to strengthen bilateral cooperation in the rail sector.”

The NHSRCL had rejected Montecarlo’s bid and awarded the contract to another firm. Montecarlo moved the high court claiming that no reasons were assigned while rejecting its bid.

The bench said: “We are also of the opinion that in a mega project, which is funded by a foreign country, there shall not be any interference with the tender process midway till the final decision is taken to award the contract.”

It said it is required to be noted that a conscious decision was taken by JICC/JICA holding that the bid submitted by the original writ petitioner suffers from material deviation and the same cannot be said to be a substantially responsive technical bid, and emphasised it was not open for the high court to interfere with this decision.

“When the JICA has agreed to fund such a huge amount and the terms and conditions of the tender document are finalised by the JICC/JICA, and, therefore, when conscious decision has been taken by the JICC/JICA, the same was not required to be interfered with by the High Court lightly and when such a decision of the High Court would have a cascading effect on such a foreign-funded mega project,” said the bench.

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