M. Jagannadha Rao, J.
(1) This appeal is preferred by the appellant company (writ petitioner) against the Judgment of the learned Single Judge dated 20.12.1996 in C.W.P. 2421/96, dismissing the writ petition.
(2) The dispute is in regard to the acceptance of lenders for laying a 4 lane road in West Bengal for the National Highway Authority of lndia (hereinafter called the NHAI) with the money given as soft loan by the Asian Development Bank (hereinafter called the ADB) to the Union of India.
(3) The respondents 1 to 4 in this appeal are (1) the National Highways Authority of India, (2) the Chairman of the said Authority, Mr. Yogendra Narain, (3) Union of India and (4) M/s B. Seenaiah & Co. The petitioner company has sought the issue of a Writ of Certiorari quashing the letter of acceptance, if any, issued by the Nhai in favor of the 4th respondent for laying of part of NH-2 Highway in West Bengal as per option A (bitumen road); for a Writ of Mandamus directing respondents 1 and 2 to give effect to the Resolution of the Nhai dated 9.3.96 for award of work to petitioner as per option B (cement concrete road); for a direction to respondent 3 (Union of India) to exercise its powers under Section 33 of the National Highway Authority of lndia.Act 1988 so that preference granted to an Indian citizen is not whittled down by any foreign body like the ADB.
(4) The dispute can be briefly summarised as follows: Bids were called by the Nhai for Contract Ii in West Bengal and the bids could be submitted either for option A (flexible option) (bitumen road) or for option B (rigid option) (cement concrete road). Petitioner submitted bids for both options. Petitioner's was the lowest for option B (cement concrete road) while 4th respondent's was the lowest for option A (bitumen road). The 4th respondent did not submit any bid for option B. According to the petitioner, the Nhai initially was for accepting the option B for cement concrete road as offered by the petitioner and for that option, petitioner's bid was lowest and so recommended the same to the ADB. But the Adb, in their reply dated 21.6.96 to the Nhai, preferred option A for flexible one (bitumen road) for which the 4th respondent's offer was the lowest. Consequently, the Nhai proposed acceptance of the option A (flexible one) of the 4th respondent and not the petitioner's lowest bid for option B (concrete road). So far- as option A (bitumen) was concerned, petitioner's bid was higher than that of the 4th respondent. That is why the petitioner is questioning the decision of the Adb and the consequential action, if any, of the Nhai to accept the bid of the 4th respondent for the flexible option A (bitumen).
(5) The facts in details are as follows: On 22.3.1995, a loan agreement was entered into between the Government of India and the Asian Development Bank at Manila, in Philippines, under which a loan of Us $ 245 million was to be given to the Government of India for laying down/developing etc. various roads in India. There were a large number of conditions attached to the loan given by the Adb to the Union of India which was to be repaid at a interest rate of 6.89% only p.a. over a period of 20 years with an initial moratorium of 4 years. We are mainly concerned with the conditions which relate to the Adb having a Final say with regard to the type of contracts to be entered into by the Indian Government or its agencies or the bids which could be finally accepted. In this context, we shall be referring to the provisions of Asian Development Bank Act, 1966 (Act xviii of 1966). Certain provisions of the said Act which confer immunities, exemptions and privileges on the Bank from legal process except for the cases provided, also fall for consideration. The Government of India has entrusted the works to the Nhai which is a statutory authority constituted under the National Highways Authority of India Act, 1988 (Act, 68 of 1988). In exercise of the powers vested on it, the Nhai decided to call for bids for five contracts I to V. In the present case, we are concerned with Contract No. 1I under which a 4-lane road has to be laid in certain parts of West Bengal.
(6) After the bids were called for by Nhai, the last date for submission of bids was initially 16.12.1995, which was extended to 5.1.1996. So far as Contract Ii was concerned, the bids could be offered for two options - the option A (flexible option) (for bitumen road), and also for option B (rigid option) (cement concrete road). So far as the rigid option is concerned the petitioner's bid at Rs. 228.69 crores was the lowest, and so far as the flexible option was concerned the bid of the 4th respondent was the lowest and was Rs. 161.077 crores. Petitioner quoted Rs. 190.28 crores for the said flexible option as against Rs. 161.077 of the 4th respondent. After evaluation, the Board of the Nhai met on 9.3.1996 to finalise their recommendations to the Adb for all Five contracts. For Contract No.ll, the Board considered the bids offered by the petitioner for the rigid option as well as the flexible Option offered both by the petitioner and the 4th respondent. The Board of the Nhai decided to send its recommendations to the Adb along with the bid evaluation report for both options for the latter's concurrence. Three months went by. Petitioner came to know that though the Nhai recommended acceptance of the petitioner's lowest bid for the rigid option B (cement concrete) at Rs. 228.69 crores, the Adb decided that the flexible option A (bitumen) of the 4th respondent be accepted by the Nhai, inasmuch as for that option, the 4th respondents' bid was the lowest. Actually Adb accepted the flexible option on 21.6.96.
(7) On 25.6.1996 the writ petitioner sent a letter to the Nhai and another letter to its Chairman Mr. Yogendra Narain staling that the petitioner had submitted its bids for both the options, that the bids were opened on 5.1.1996 and that it had learnt that the bid submitted by the petitioner was the most cost effective and was the lowest bid as required by the bidding documents, but that the Nhai had decided to award contract to the 4th respondent which, according to the petitioner, did not submit any quotation for the flexible option and had submitted its bid only for the rigid option. The petitioner stated that it did not understand the criteria upon which the bid submitted by the 4th respondent has been evaluated and as to how it had fitted within the parameters of the tender documents. The petitioner said that the decision of the Nhai to award the contract to the 4th respondent was arbitrary and unreasonable and not bona fide. On the very next day i.e. 26.6.1996, the present writ petition was filed.
(8) As stated above, the assumption of the petitioner in the writ petition that for Contract Ii, the Nhai sent the bids of the parties for the rigid option B alone to the Adb is factually incorrect. The resolution of the Nhai dated 93.96 shows that they sent the bids for the flexible option A given by petitioner and 4th respondent (4th respondents being the lowest) as also the bids for the rigid option B of the petitioner and others for which the petitioner's bod was the lowest bid.
(9) During the pendency of the writ petition before the learned single Judge it was desired that the Nhai may find out from the Asian Development Bank as to why they wanted that the flexible option A of the 4th respondent be accepted by the NHAI. Pursuant thereto the correspondence between the Nhai and Asian Development Bank has been filed. There was a letter dated 9.5.1996 from the Asian Development Bank to the Nhai stating that the Bank Would not be able to confirm the award until it had received confirmation on certain aspects relating to the contracts. The relevant parameters which were to be borne in mind by the Nhai are set out in the said letter. Then we have another letter dated 21.6.1996 addressed by the Bank to the Nhai which states that the bank had approved the award of contract to the lowest evaluated substantially responsive bidder for Option A (the flexible one) i.e. bituminous pavement tendered by the 4th respondent. After the Delhi High Court's order stated above asking the Nhai to obtain from the Adb, the reasons for preferring the flexible option, a letter dated 7.10.1996 was sent by the Chairman of the Nhai, Mr. Yogendra Narain to the Adb requesting the latter to mention the factors upon which the Bank had decided to approve the award of contract for the flexible option A in favor of the 4th respondent. On that, the Bank sent its communication dated 10.10.1996 and mentioned in sub-paras (iii) to (vii) of para 1 giving its reasons which read as follows:-
'(III)the Bank noted that the Executing Agency's recommendation to the Government and the bank was that: (a) Option B was better value for money on a life cycle cost basis although it involved higher initial expenditure under the Project; (b) the bid of the lowest evaluated bidder for Option B should be accepted; but that (c) the bid of the lowest evaluated bidder for Option A should be accepted if recommendation (a) was not accepted for implementation. (iv) the Bank noted that the Executing Agency had examined the life cycle cost implications of Options A and B although the bid documents did not permit this to be taken into account in determining the evaluated bid price (the Bank was also of the view that the live cycle costing was not robust as the assumptions about the pavement design, future traffic and maintenance appeared to be of doubtful validity); (v) the Bank noted that the lowest evaluated substantially responsive bid amongst all the bids was the lowest evaluated bid for Option .A identified by the Executing Agency; (vi) the Bank was mindful of the schedule and management arrangements for this Project which required, for economic and efficient implementation, that: (a) a single Project Implementation Unit be established by the Executing Agency to serve both civil works contracts 2 and 3; (b) a single construction supervision contract be placed with internationally led consulting engineers to act as Engineer for both civil works contracts 2 and 3; and (c) civil works contract 2 and 3 be awarded at the same time. (vii) The Bank understood that Option B, being substantially more costly than Option A, would definitely require a new Cabinet approval, which the Bank felt would delay the Project as it could not be secured within any reasonable certain timescale, whereas a contract award for the lowest acceptable corrected bid for Option A could be made quickly and hence was preferable having regard to the overall Project schedule and the period for which the loan was available.'
(10) After setting out the reasons for accepting the bids for the flexible option A and not the ones for the rigid option B, the Adb mentioned their conclusions in paras 2 and 3 of the said letter as follows:
'2.The Bank carefully reviewed the recommendations of the Executing Agency, the points noted above and the case for and against each bid being ruled as substantially responsive, eligible and qualified, as well as the determination of evaluated bid prices. Accordingly, the Bank gave its approval on 21 June 1996 for award of contract to the lowest evaluated substantially responsive bidder which was for Option A. The Bank was satisfied that (i) the Executing Agency had conducted bidding in accordance with the bank's Guidelines for procurement; (ii) the reasons for proceeding with Option A were sound and consistent with the Guidelines which required due attention to economy and efficiency; and (iii) the Executing Agency had properly determined the lowest evaluated substantially responsive bid being for Option A.'
(11) It is the impact of the above decision of the Adb on the consequential decision of the Nhai that falls for consideration in the present case.
(12) For the purpose of deciding the above dispute, it is necessary to consider (A) The relevant terms of the Loan Agreement between the Government of India and the ADB. (B) The provisions of the Adb Act, 1966. (C) The provisions of the Nhai Act, 1988 (D) The extent to which NHAI's decision can be legally controlled by the terms of the Loan agreement between the Government of India and the ADB. (E) If the Nhai decides to accept the option A as per the letter of Adb and consequently proposes to accept the lowest bid of the 4th respondent for option A, can it be interfered with under Article 226 of the Constitution of India as being opposed to its statutory duties under the Nhai Act?
'(A)the Loan Agreement between the Government of India and the Asian Development Bank and the Bid instructions.'
(13) The relevant terms of this Loan Agreement dated 22.3.95 between the Government of India and the Adb are as follows : The 'Borrower' is the Government of India. Sections 1.01 says that all the terms of the Loan Regulations of the Bank dated 1.7.86 are applicable to the Loan Agreement. Subject, however, to the modifications in the Loan Agreement. Section 3.03 says that: 'Except as the Borrower and the Bank may otherwise agree, all goods and services to be financed out of the proceeds of the loan shall be procured in accordance with the provisions of Schedule 4 and Schedule 5 to the Loan Agreement' and that
'THE Bank may refuse to finance a contract where goods or services have not been procured under procedures substantially in accordance with those agreed between the Borrower and the Bank or where the terms and conditions of the contract are not satisfactory to the Bank.'
(14) Section 4.01 says (a) that the Borrower shall cause the Project Executing Agency to carry out the Project with due diligence and efficiency and in conformity with sound administrative, financial, engineering, environmental and road construction practices, and (b) that in carrying out the Project and operation of the Project facilities, the Borrower shall perform, or cause to be performed, all obligations set forth in Schedule 6 to the Loan Agreement.
(15) Schedule 4, para 4 says that 'all civil works, contracts, except contract for railway, over bridges, shall be awarded on the basis of international competitive bidding described in Chapter Ii of the guidelines for procurement. That for railway overbridges, there will be local competitive bidding, and the bidders shall be pre qualified for the bidding. Clause (B) says that for contracts to be awarded on the basis of international competitive bidding, these shall be submitted to the Board, a general procurement notice in such form and details as the Bank shall reasonably request. Under Clause (C) it is said that for such international comparative bidding, procurement actions shall be subject to review by the Bank in accordance with procedures in Chapter Iv of the guide lines for procurement.
(16) Then the 'Guidelines for procurement' are applicable to loans made by the Bank from its ordinary capital resources and special funds resources. Clause 1.05 says that the procedures to be followed in order to ensure effective international competitive bidding are described in Chapters Ii and Iv of these guidelines. Chapter Ii describes the circumstances under which methods other than international competition bidding may be employed in the interests of economy and efficiency. The use of any such methods will usually be provided in the Loan Agreement for the concerned project. In Chapter Ii, clause 20.11 says:
'THE purpose of International Competitive bidding is to provide the borrower with a wide range of choices in selecting the best bid from competing suppliers/contracts and to give to all prospective bidders from eligible source countries adequate, fair and equal opportunity to bid on goods and works which are being processed under Bank Loans. To achieve this, the bank requires its borrowers to observe guidelines in preparing bidding and contract documents and to follow certain procedure in advertising bid invitations and in accepting and evaluating bids. In addition, draft tender documents bid evaluation reports, and proposed awards of contract are subject to prior review and approval by the Bank as stipulated in Chapter Iv of these guidelines'.
(17) Under Chapter Iv of the guidelines, para 4.03 says that the method of pre-qualification bidding is to be approved by the Bank; para 4.04 deals with international competition bidding and says under clause (a) that the invitation to bid and tender documents are to be approved by the Bank and says clause (c) refers to the proposals for award of contract. It says that
'AS soon as the bids received and evaluated approval of the Bank should be obtained to the proposal for award of contract before a contract is awarded or a letter of-inlent is issued.'
(18) The above position has been summarised in the counter-affidavit dated 4.7.96 of Respondents I and 2 in the Cwp in para Ii (iv):
'(IV)The Adb Loan thus required that for any person to be eligible to bid for the work being funded by the Adb Loan to first pre quality and for which purpose the Borrower was required to evaluate the pre qualification applications and to obtain approval of Adb to , results of such pre qualification evaluation before the same are communicated to the applicants for pre qualification. Subsequent thereto, i.e. after such pre qualification the applicants who have thus been pre-qualified are issued invitation to bid for the award of the work in question and on receipt of their bids, the same are to be evaluated and Borrowers recommendation for award of contract or issue Letter of Intent submitted to Adb for approval before the same are issued by the Borrower and only after the Adb has approved of the recommendation that the Contract is awarded or the letter of Intent issued to the bidder who has been thus approved by ADB. If this procedure is not followed the Adb Loan would not be available.'
(19) BID-INSTRUCTIONS It is also pointed out in para Ii (ix) of the same counter that clause 2.1 of the 'Instructions for the Bidders' forming part of the Tender expressly stated that the Government of India has received the Adb loan and intends to apply part of the proceeds of the loan to payments under the contract and that payment will be made by Adb at the request of the Government and upon the approval of the Adb in terms of the Loan Agreement and will be subject in all respects to the terms and conditions of the Loan Agreement. Clause 31.3 says that the Nhai reserves the right to accept or reject any alternative offer.
(B)The provisions of the Adb Act, 1966: The Adb Act, 1966 states in the Statement of Objects and Reasons as follows: 'In pursuance of an International Agreement to which India will be a signatory, a new financial institution called Asian Development Bank is being established for accelerating the economic development of Asia and the Far East. Chapter 8 of the Articles of Agreement provides for the granting to the Bank and its officers and employees, certain status, immunities, exemptions and privileges in the territory of each member country. Article 57 of the Agreement stipulates that each member country, in accordance with its judicial system, shall promptly take such action as is necessary to make effective in its own territory, the provisions set forth in Chapter Viii of the Agreement. By this Bill, it is proposed to enact necessary legislation to give effect to the provisions of the said Chapter Viii of the Articles of the Agreement. Provision has also been made in the Bill empowering the Central Government to make payments to the Bank towards the subscriptions, fees and other charges and for matters connected therewith. The Adb Act in its preamble states that it is an Act to implement the international agreement for the establishment and operation of the Asian Development Bank and for matters connected therewith. The Schedule to the Act incorporates the provisions of Chapter Viii of the Agreement. Article 48 thereof deals with the purposes of the Chapter, Article 49 with legal status. Article 49 says that: 'The Bank shall possess full judicial personality and in particular, full capacity (i) to contracts (ii) to contracts, and dispose of immovable and moveable property; and (iii) to institute legal proceedings'. Article 50 deals with immunity from judicial proceedings. Clause (1) says 'the Bank shall enjoy immunity from any form of legal process except in cases arising out of or in connection with the exercise of its power to borrow money, to guarantee obligations or to buy and sell or underwrite the sale of securities, in which cases actions may be brought against the Bank in a Court of competent jurisdiction in the territory of a country in which the Bank has its principal or a branch office, or has appointed an agent for the purpose of accepting service or notice of process, or has issued or guaranteed securities. Clause 2 says that notwithstanding the provisions of para 1 of the Article, no sanction shall be brought against the Bank by any member, or by any agency or instrumentality of a member, or by any entity or person directly or indirectly acting for deriving claims from a member or from any agency or instrumentality of a member, members shall have recourse to such special procedures for the settlement of controversies between the bank and its Members as may be prescribed in this Agreement, in the bye-laws and regulations of the Bank,, or in contracts entered into with the Bank.' Article 54 deals with privilege for communications. The above provisions contains immunity of the Bank from actions in Court to the extent stated above. (C) The provisions of the Nhai Act, 1988: This is an Act to provide for the constitution of an Authority for the development, maintenance and management of national highways and for matters connected therewith and incidental thereto. Chapter contains Section 3 which deals with the Constitution of the NHAI. Section 10 says that in the discharge of its functions under this Act, the Authority shall act, so far as may be, on business principles. Chapter Iii deals with property and contracts. Under Section 14, Nhai can enter into contracts. Under Section 15(3) the contracts are to be as per the Act and regulations. Chapter Iv deals with functions of the Authority, Chapter V with finance. Accounts and Audit, Chapter Vi with Miscellaneous matters.'
(20) Section 29 says that the Authority may under take to carry out, on behalf of the Government or any local authority and works or services or class of works or services on such terms and conditions as may be agreed upon between the authority and the Government of local authority concerned.
(21) Section 33 deals with the power of the Central Government to issue directions. It reads:
'S.33(1) Without prejudice to the other provisions of this Act, the Authority shall, in the discharge of its functions and duties under this Act, be bound by such directions or questions of policy 'as the Central Government may give to it in writing from time to time. (2) The decision of the Central Government whether a question is one of policy or not, shall-be final.'
(22) Section 34 contains the rule making power, and Section 35 the power to make regulations.
Learned counsel for the petitioner relied upon Sections 10, 15(3), 29, 33 of the Act for the purpose of reinforcing his contention. In particular reliance was placed on Section 10 and the words 'business principles' used therein. We shall advert to them while dealing with the point under the heading E. (D) The Loan Agreement and its control on Nhai & its bidders We have set out, in detail, under the heading A, the terms of the Loan Agreement between the Government of India and the NHAI. Read Along with the provisions of the Adb Act, 1966 and the Nhai Act, 1988, it was clear that in respect of terms of the bid, the pre qualifications, and the financial bids, and the offers, there is general control over the contracts entered into by the Government of India or its instrumentalities like the NHAI. The word 'approval' of the Adb figures at almost every point of the contracts. We do not propose to refer again to the terms of the Agreement of Loan but suffice it to say that the Bank, as a creditor who is giving loans in millions of dollars at an interest rate of 6.88% and on 20 years repayment, with 4 year moratorium is retaining sufficient control over the procedure for awarding the contracts by the Borrower or its instrumentalities and also over the manner in which the contracts have to be executed.
(23) It is true that neither the Nhai nor the Bidders like the petitioner, are parties to the Loan Agreement between the Government of India and the ADB. But the agreement clearly manifests ADB's intention to exercise its control over the procedure for entering into contracts or their execution. After all, it is giving the money on concessional terms and the Government of India when it gives the money to Nhai, it passed on its obligations under the contract to the NHAI.
(24) Long before the invitation for the bids and even while sending revised estimates for contracts I to V, the Government of India wrote to hte Nhai on 14.6.96 that the contracts
'ARE subject to the condition that the concurrence of the Bank for the award of the work has been taken.'
(25) Then in the invitation for Bids, the Nhai clearly stales, as mentioned earlier, under heading A that in clause 21 that the Government of India has received the Adb loan and intends to supply part of the proceeds of the loan to payments under the contract and that the payment will be made by Adb at the request of the Government and upon the approval of the Adb in terms of the Loan Agreement and will be subject in all respects to the terms and conditions of the Loan Agreement.
(26) thereforee it is clear that the Nhai takes the loan subject to the above reservation of rights in favor of the Adb for approval of the contracts and the Nhai has, in its turn, kept the bidders like the petitioner in favor of the said condition. Once the bidders are put on notice that the bids are subject to the conditions of the Loan Agreement entered into by the Government of India and the Adb, in law and in equity, the bidders are also fastened with the conditions and limitations contained in Loan Agreement. A person who is told of the conditions before the bids are offered naturally bids subject to the conditions. It is not necessary that the Nhai or the bidder must be .parties to the Loan Agreement. In effect, the Loan Agreement gives control to the Bank in regard to the approval of the contracts covers the bids and that may be invited by the Nhai with the funds given by the Government of India by way of its borrowing from the ADB.
(E) If the Nhai decides to accept option A (bitumen) as per the letter of Adb and consequently proposes to accept the lowest bid of the 4th respondent for option A, can it be interfered with under Article 226 of the constitution of India as being opposed to its statutory duties under the Nhai Act?
(27) This is the crucial question. Now it may be that among the 5 contracts, only for Contract Ii, the Nhai had invited bids for 2 options i.e. A (bilumen) and B (cement concrete). The fact remains that for Contract Ii choice was given to the tenderers for offering their quotations for option A as well as option B. The tenderer knew thereforee that either of the option could be accepted. While the bid of the appellant for the option B (cement concrete) was lowest at Rs. 228.69 crores, the option of the appellant for option B (bitumen) was not the lowest. For option A, the offer of the 4th respondent was the lowest.
(28) The contention of the appellant that the Nhai in its meeting dated 9.3.96 decided to accept option B and not option A and it ought not have forwarded both options to the Adb is not correct. In fact the conditions of the bids were also to be accepted by the Bank. Two options were given. Once they were so given, the Nhai forwarded the bids for both options A and B to the ADB. This is quite clear from the resolution of the Nhai dated 9.3.1966. It is stated in para thereof as follows:
'FOR Contract Ii, the Member (Technical) explained that the bids were invited and received for two options i.e. Rigid and flexible pavements. The bids in both the cases have to be evaluated. The detailed comparative cost analysis of Rigid and flexible pavement based on life cycle period of 30 years has been done and it was found that the rigid pavement was cheaper in comparison to flexible pavement for the total life cycle, though it was initially costlier. The details are at Enclosure V. the lowest evaluated bid price amount to Rs. 2,280,945.088 of M/s HCC-John Laing (MF) for the Rigid pavement option (at Enclosure VI) was approved by the Authority. It was, however, decided that if the Bank and the Government decides that the work is to be executed with the flexible pavement option then the lowest evaluated bid amounting to Rs. 1,610,795.084 was of M/s Bsc - RBM.- Pati (Vide Enclosure Vii enclosed). Both the evaluated options should be sent to the AdB for consideration.'
(29) It was decided also as follows:-
'IT was decided these minutes Along with Bid Evaluation Report will be sent to the Adb for their concurrence'
(30) The above minutes show that while the Adb accepted and recommended option B, the rigid option, they also sent the option A also as evaluated. They said that option B (cement concrete) which they accepted was cheaper over 30 years but costly immediately. They said that as it was possible that the Government of India and the Adb might decide to accept option A, they are sending both options to the Adb for 'consideration' and 'for their concurrence'. The use of the words 'concurrence' does not mean seeking concurrence for option B accepted by the NHAI. The word 'consideration' in the earlier paragraph and the fact that both options were sent shows that it was not as if only concurrence for option B was sought. In fact, as per the terms of the Loan Agreement, the Nhai though not party thereto but as the authority which got the money - subject to the contracts of Nhai being approved by the AdB - the Nhai was bound to submit both options to the ADB.
(31) We shall then come to the reasons given by the Adb as disclosed in their letter dated 10.10.96 to the NHAI. It is not as if no reasons are given by the Adb for going by option A and not by option B. Even according to the Nhai option a (bitumen road) was chapter at the present stage. While option B (cement concrete road) would work out cheaper if we go by a life cycle of 30 years. In our view if the Adb gave more weight to immediate costs rather than long term gains, that is not a matter for interference. If among 2 options, each had its own plus points, then if an authority like the Adb accepts one of them based on the immediate cost, it cannot, in our opinion, be faulted with. As stated in the ADB's letter, the cost of the rigid option, even going by the appellants offer would be 228.69 crores while the acceptance of the 4th respondent's lowest bid for bitumen option A would be 161.07 crores. What appealed to the Bank was the saving in the immediate cost. The difference is about Rs. 67.62 crores. They kept in mind factors of efficiency and economy.
(32) It is argued for the appellant that the Nhai had abdicated its decision making functions in favor of the Adb and thereforee it acted contract to 'business principles' and thus violated Section 10 of the Act.
(33) It is necessary to reproduce Section 10 once again. That Section reads:
'S.IO:In the discharge of its functions under this Act, the Authority shall act, so far as may be, on business principles.'
(34) It is clear that the legislature has, while stating that the Authority is to discharge its functions on business principles, has used the words 'so far as may be'.
(35) The above words 'so far as may be' have come up for consideration before the Supreme court in several cases. In Dr. Partap Singh vs. Director of Enforcement, Fera, it was held that if certain principles have to be followed 'so far as may be', it has always been construed to mean that the principles are to be generally followed to the extent possible. 'If a deviation becomes necessary to carry out the purposes of the Act - it would be permissible' to do so but if the matter is challenged in Court, the reasons for deviation will have to be offered. It is said in Ujagar Prints vs. Union of India : [1989]179ITR317a(SC) that 'so far as may be' means to the extent necessary and practicable.
(36) In the present case, the Nhai has to use the funds flowing from the Adb through the Government of India and the funds are given with certain restrictions. In a situation where Government of India has no sufficient funds and is borrowing money, the question is whether Nhai uses the money for laying roads or whether it should say it wants only a cement concrete road and not a bitumen road and hence refuse to receive the grant. That would not surely be a wise course or expedient. In the circumstances it may not take the best financial option but may follow them to the extent possible. After all, the Court under Article 226 is concerned more with the decision making process. The Court has asked the Adb to give its reasons. The Adb has given .its reasons in its letter dated 10.10.96 already set out. The Adb has stated in its letter dated 10.10.1996 (extracted earlier) that it has noted that the Executing Agency had examined the life-cycle cost implications of both options, that the life-cycle costing was not robust as the assumptions appeared to be doubtful; that for the efficient and economic management, a single Project Implementation Unit was to be established by the Executing Agency to serve Contracts Ii and Iii, that a single Construction Supervision Contract was necessary for Contracts Ii and Iii, and that civil works for both contracts be awarded at the same time. Option B was substantially more costly than Option A and Option B would require a new cabinet approval which would delay the project whereas Option a could be worked out quickly, having regard to overall project schedule and period for which the loan was available. A reading thereforee shows that adequate reasons have been given as stated above. The Bank also wants to save on 60 crores and odd immediately for they too must be obviously having Financial constraints in lending monies to various countries. They are giving money at 6.88% interest with 20 years repayment schedule and 4 years moratorium and if they say, we give the money, we have the final say and if they have adequate reasons for what they do, this court cannot sit in judgment on the issue. Further the Adb is not a party here and it has several immunities as specified in the schedule to the Adb Act.
(37) We are thereforee of the view that it is not possible for this Court to go into the merits of the decision of the Adb, and embark on a process of evaluation of comparative merits & demerits of the two options, namely, the laying of Roads with Bitumen or Cement Concrete, nor can we say that in accepting the ADB's option for Option A, the Nhai has acted contrary, so far as may be, to business principles.
(38) For the aforesaid reasons, the appeal is dismissed.