Bombay HC says can’t second guess denial of security nod, nixes plea on Cidco bids

Mumbai: The Bombay High Court on Saturday said it "cannot second guess" denial of security clearance by the Centre on National Security grounds and dismissed 2 interconnected petitions, one of which was by a company in a JV with an Azerbaijan-based entity that had for CIDCO's road infrastructure project bids worth almost ₹3500 crore in the Navi Mumbai airport influence zone.A Navi Mumbai-based Thakur Infraprojects Private Limited, lead partner of M/s Thakur-EVRASCON JV, filed a petition last year to challenge the requirement of a security clearance after bidding for 2 CIDCO road-infrastructure projects and its "arbitrary" denial by the Centre on geopolitical and national security concerns. The security clearance to EVRASCON, a Baku-based company, was refused by the govt of India, the HC said
The 2 bids were for roads and bridges over 20 metres wide in 5 town planning schemes in Navi Mumbai worth ₹1,568 crore and ₹1,908 crore each.The HC said once a security nod is denied, it "cannot second-guess the judgment of the Union of India that the purpose identified would violate India's national security." "No doubt, the principles of natural justice are sacrosanct; however, national security will take precedence over enjoyment of commercial rights. Prior clearances on ongoing contracts do not create any entitlement to automatic clearance for a subsequent project," said the judgment pronounced by Justices MS Karnik and Sharmila Deshmukh.The govt of India, in refusing the security clearance, considered Azerbaijan's stance on the Kashmir issue and its strategic alliance with Pakistan and Turkey, and said, "hence it may not be prudent from a security point of view to get this strategic project executed through a joint venture that has EVRASCON as a partner," the HC observed. "It is the executive wing and not the judicial wing that has the knowledge of India's geopolitical relationships to assess if an action is in the interest of India's national security," the HC said.Thakur challenged the City and Industrial Development Corporation (CIDCO) condition of the Centre's security clearance for the public projects after its JV company was last May declared the lowest bidder in 2 tenders. The security NOC was "contrary to the Notice Inviting Bids" dated 23 July 2024, argued senior counsel CA Sundaram for Thakur arguing against maintainability of CIDCO's action, which senior counsel Chetan Kapadia justified as being legally mandatory and in the national interest.Last November, the Centre rejected the security clearance after considering the national security aspects and project being in the new airport influence zone, submitted Additional Solicitor General of India Anil Singh.ASG Singh argued that the company invoked constitutional grounds under Article 77—which ensures accountability in govt actions—for the first time, but Sundaram argued it was permissible since security clearance was denied arbitrarily, as the petition pleaded.Justice Karnik, who authored the judgment, said, "In our opinion, the issue of national security is a dynamic concept. It may not be possible to foresee a situation as to what act constitute a threat to the national security. The executive must have the latitude and necessary flexibility to take decisions which are in national interest. We do not intend to put fetters on the decision-making by the executive by going into the dispute as to whether the denial of security clearance was a policy mandating compliance of Article 77 of the Constitution of India in the peculiar facts of this case."The HC said private commercial interest of a foreign entity, a JV partner of the petitioner, against the safety and security of the entire country had to be balanced."Security and threat perceptions are dynamic in nature. The timing of the clearance sought, the nature of project for which the clearance has been sought, the location of the project for which the clearance has been sought are all crucial and paramount factors which would arise for consideration while taking a decision," said the HC, adding, "The security clearance is ‘Mandatory Eligibility Criterion' which the CIDCO rightly insisted the petitioner JV to comply."The HC rejected a plea for a stay of its judgment on Saturday.Get the latest lifestyle updates on Times of India, along with Women's day wishes, messages and quotes !