Facts of the Case

The petitioner, a special purpose vehicle formed by a GMR-Punj Lloyd consortium, held a 25-year Concession Agreement (dated 09.10.2009) to design, build, finance, operate and maintain the Hyderabad-Vijayawada section of NH-9. Under Article 16.5.1 of that agreement, the petitioner (as “Existing Concessionaire”) enjoyed a contractual Right of First Refusal (ROFR) for any additional “Change of Scope” works NHAI might award through open bidding on that highway corridor — allowing it to match the first-ranked bid and secure the work, subject to twin conditions: participating in the bidding process, and not exceeding the first-ranked bid (L1) by more than 10%.

When NHAI issued an RFP dated 21.12.2022 (amended 16.02.2023) for rectification of 17 identified blackspots on an NH-65 section, it expressly carried over the petitioner's ROFR into Clause 1.2.6 of the RFP — but subject to the same twin conditions. The RFP's Clause 1.2.4 required all bidders to furnish a Bid Security of Rs. 3.24 crore along with their bid, refundable later (a requirement from which the petitioner, seeking to rely on its pre-qualified status as Concessionaire, claimed exemption). The petitioner made several representations on this point but ultimately did not submit a bid at all, and instead approached the High Court seeking either a direction to let it match the first-ranked bid without furnishing Bid Security, or quashing of the RFP.

Issues Involved

  1. Whether the petitioner's contractual Right of First Refusal under Article 16.5.1 of the Concession Agreement could be exercised without first submitting a qualifying bid, including the Bid Security.

Petitioner's Arguments

  • As the pre-qualified 'Existing Concessionaire' under Clause 1.2.6 of the RFP, the petitioner was not required to meet the technical/financial eligibility criteria or furnish Bid Security under Clause 1.2.4 in order to exercise its ROFR.
  • Requiring Bid Security from an SPV bound by an escrow arrangement under its existing Concession Agreement would violate its contractual obligations and render the ROFR illusory.
  • Relying on Agmatel India (P) Ltd. v. Resoursys Telecom, (2022) 5 SCC 362 and Silppi Constructions v. Union of India, (2020) 16 SCC 489, the petitioner argued the RFP should be interpreted to give real effect to its bargained-for ROFR.

Respondent's Arguments

  • Clause 1.2.6 of the RFP itself made clear that the ROFR could be exercised only subject to the “Twin Conditions” — participation in the bidding process, and the petitioner's bid not exceeding the first-ranked bid by more than 10% — both of which presupposed the petitioner had actually submitted a bid.
  • Clause 2.20.2 of the RFP expressly provided that any bid submitted without the requisite Bid Security would be summarily rejected; the bidding process had two stages, and participation in the first (uniform) stage was mandatory before the ROFR (second stage) could be exercised.

Court Order / Findings

  • The Court, applying the settled principle that the author of a tender document is best placed to interpret its own requirements (Silppi Constructions; N.G. Projects Ltd. v. Vinod Kumar Jain, (2022) 6 SCC 127), held there was no ambiguity in the RFP's language.
  • It held that Clause 1.2.6 of the RFP, by its own terms, conditioned exercise of the ROFR on the petitioner having participated in the bidding process and not exceeding L1 by more than 10% — meaning the petitioner first had to qualify as a bidder, including by furnishing Bid Security.
  • Since the petitioner admittedly never submitted a bid — precisely because it did not furnish the Bid Security — it never became a 'bidder' in the first place, and could not fall back on the ROFR at all.
  • The writ petition was accordingly dismissed.

Important Clarification

GST appears in this judgment only in Clause 1.2.6 of the RFP, which stated that the bid price would be evaluated exclusive of GST — a routine pricing convention, not a point of dispute. The substantive ruling is about tender interpretation: a contractual right of first refusal conditioned on 'participation in the bidding process' cannot be exercised by a party that never actually submits a qualifying bid.

Sections Involved

  • Constitution of India, 1950 — Article 226
  • Indian Contract Act, 1872 — principles of contractual interpretation applied to the Concession Agreement and RFP

Decision – In Favour of

Disposed of against the petitioner — the writ petition was dismissed, and the petitioner's claim to exercise its Right of First Refusal without submitting a bid was rejected.

Case Details

  • Court: High Court of Delhi at New Delhi
  • Case No.: W.P.(C) 8335/2023 with C.M. Nos. 31900-31901/2023 & 32166/2023
  • Coram: Chief Justice Satish Chandra Sharma and Justice Saurabh Banerjee
  • Date of Judgment: Reserved on 08.08.2023; Delivered on 28.08.2023

Link to Download the Order

Click here to view/download the full order

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.