CONSORTIUM OF TITAGARH FIREMA ADLER S.P.A. - TITAGARH WAGONS LTD. THROUGH AUTHORIZED SIGNATORY, TITAGARH TOWERS, 756, ANANDAPUR, E. M. BYPASS, KOLKATA- 700 07, WEST BENGAL versus NAGPUR METRO RAIL CORPORATION LTD. (NMRCL) HAVING ITS HEAD OFFICE AT METRO HOUSE, BUNGALOW NO. 28/2, ANAND NAGAR, C.K. NAIDU ROAD, CIVIL LINES, NAGPUR THROUGH ITS GENERAL MANAGER (PROCUREMENT) & ANR.

Citation: [2017] 5 S.C.R. 337 · Decided: 09-05-2017 · Supreme Court of India · Bench: DIPAK MISRA · Disposal: Dismissed

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Judgment (excerpt)

[20 I 7] 5 S.C.R. 337 
CONSORTIUM OF TITAGARH FIREMA ADLER S.P.A. -
A 
TITAGARH WAGONS LTD. THROUGH AUTHORIZED 
SIGNATORY, TITAGARH TOWERS, 756, ANANDAPUR, E. M. 
BYPASS, KOLKATA- 700 I 07, WEST BENGAL 
v. 
NAGPUR METRO RAIL CORPORATION LTD. (NMRCL) 
HAVING ITS HEAD OFFICE AT METRO HOUSE, BUNGALOW 
NO. 28/2, ANAND NAGAR, C.K. NAIDU ROAD, CIVIL LINES, 
NAGPUR THROUGH ITS GENERAL MANAGER 
(PROCUREMENT) & ANR. 
(Civil Appeal Nos. 1353-1354of2017) 
MAY09,2017 
[DIPAK MISRA AND AMITAVA ROY, JJ.] 
Contract: 
Award of contract - By Government body (respondent No. 
1) - To a company (respondent No. 2) owned by Government of 
Peoples Republic of China - In preference to the appellant-company 
- Challenged on the ground that respondent No. 2 company was 
not technically qualified as its bid was not that of a 'single entity' 
and it had relied on the experience of its subsidiaries - Held: 
Respondent No. 2 being a Government Company, was the owner of 
its subsidiary companies and came within ambit of Cl. 4.1 of the bid 
document as a 'Government owned entity' - 1" respondent applied 
its commercial wisdom in the understanding and interpretation which 
has been given concurrence by the concerned Committee and the 
Financing Bank - In absence of any perversity. bias or malafide, 
interpretation placed by 1"' respondent need not be interfered with 
in exercise of power of judicial review. 
Judicial Review: 
B 
c 
D 
E 
F 
Judicial review of administrative decision in respect of G 
contractual matters - Scope of - Held: Judicial review of 
administrative decisions of Government bodies in respect of 
contractual matters is intended to prevent arbitrariness or favoritism 
and is exercised in larger public interest - There should be judicial 
restraint on administrative action as the court lacks expertise to 
H 
337 
338 
A 
B 
c 
D 
E 
F 
G 
H 
SUPREME COURT REPORTS 
[2017] 5 S.C.R. 
correct the administrative decision - Administrative decision must 
not only be tested by the application of Wednesbury principle or 
reasonableness, but also must be free from arbitrariness not affected 
by bias or actuated by mala tides - If the decision relating to award 
of contract is bona fide and in public interest, courts will not, in 
exercise of power of judicial review, interfere even if a procedural 
observation or error in assessment or prejudice to a tenderer, is 
made out - In the facts of the present case, decision of awarding 
the contract in question should not be interfered with in absence of 
any perversity, bias or mala fide. 
Dismissing the appeals, the Court 
HELD: 1. Though the principle of judicial review cannot 
be denied so far as exercise of contractual powers of Government 
bodies are concerned, but it is intended to prevent arbitrariness 
or favouritism and it is exercised in the larger public interest or 
if it is brought to the notice of the court that in the matter of 
award of a contract power has been exercised for any collateral 
purpose. There should be judicial restraint on administrative 
action. The role of the court is only to review the manner in 
which the decision has been taken. The Court lacks expertise 
to correct the administrative decision. The Government is 
conferred freedom of contract which recognizes a fair play in the 
joints as a necessary concomitant for an administrative body 
functioning in an administrative sphere or quasi-administrative 
sphere. The administrative decision must not only be tested by 
the application of Wednesbury principle of reasonableness but 
also must be free from arbitrariness not affected by bias or 
actuated by malafides. If the decision relating to award of contract 
is bona fide and is in public interest, courts will not, in exercise of 
power of judicial review, interfere even if a procedural aberration 
or error in assessment or prejudice to a tenderer, is made out. 
[Paras 27, 29) [359-C-E; 361-F-G] 
Tata Cellular v. Union of India (1994) 6 SCC 651 : 
[1994) 2 Suppl. SCR 122; Montecarlo Ltd. v. NTPC 
Ltd. 2016 (10) SCALE 50; Jagdish Manda! v. State of · 
Orissa & Ors. (2007) 14 SCC 517: [2006) 10 Suppl. 
SCR 606; Master Marine Services (P) Ltd. v. Metcalfe 
& Hodgkinson (P) Ltd. and another (2005) 6 SCC 138 : 
CONSORTIUM OF TITAGARH FlREMA ADLER S.P.A. v. 
NMRCL 
(2005) 3 SCR 666; B.S.N. Joshi & Sons Ltd. v. Nair 
Coal Services Ltd. and others (2006) 11 SCC 548 : 
[2006] 8 Suppl. SCR 11; Michigan Rubber (India) Ltd. 
v. State of Karnataka (2012) 8 SCC 216 : (2012] 8

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