Chennai Metro Rail says it has no choice but to impose tender conditions in favour of Japan

Chennai Metro Rail Limited receives loan from Japan for metro project, faces legal challenge over tender conditions.

Chennai Metro Rail Limited (CMRL) on Thursday, July 11, 2024 told the Madras High Court that it has received loan to the tune of several thousand crores of rupees at a negligible interest rate of 0.01% from the Government of Japan for phase II of the metro rail project and therefore it is contractually bound to incorporate a tender condition that 75% of the goods and services for installing elevators, escalators and travelators must be of Japanese origin.

Appearing before the first Division Bench of Acting Chief Justice R. Mahadevan and Justice Mohammed Shaffiq, Advocate General P.S. Raman said, there was no point in OTIS Elevator Company (India) Limited having challenged CMRL’s tender notifications instead of challenging the loan agreement entered between the Government of India and Japan International Cooperation Agency (JICA) on December 12, 2018.

He said, the loan agreement itself prescribes the procurement procedures and the eligibility criteria for the tenderers and therefore the CMRL was bound to follow the agreement. “The Japanese government is not here to do charity to CMRL. There has to be some quid pro quo. This is something that has been negotiated and discussed at the highest level in the Government. CMRL is helpless,” the A-G told the court.

The submissions were made during the hearing of two writ appeals preferred by OTIS against the dismissal of its writ petitions by a single judge of the High Court. The company had challenged certain clauses of the tender notifications issued by CMRL in February and March this year for commissioning elevators, escalators and travelators in corridors 3 and 5 in the ongoing construction of phase II of the metro rail project.

The Bench led by the ACJ heard preliminary arguments advanced by senior counsel P.H. Arvindh Pandian for the appellant as well as Mr. Raman and decided to take up the matter for further hearing on July 22. In his submissions, Mr. Pandian had contended that the tender conditions were illegal, arbitrary and unconstitutional since they were intended at benefitting select entities much to the disadvantage of Indian manufacturers.