UK Government lawyers are examining details of the last-gasp legal challenge by Virgin Trains to see if it would prevent the signing over of the £5.5 billion contract for the West Coast Mainline to FirstGroup.
Britain's most lucrative rail deal for the Scotland to London route was just hours from being sealed when Virgin boss Sir Richard Branson sought a judicial review.
Virgin Trains, which has run the franchise since 1997, said: "We are left with no choice but to commence court proceedings as we believe the procurement process has ignored the risks to taxpayers and customers of delivering FirstGroup's bid over the course of the franchise."
Aberdeen-based FirstGroup insisted it won the franchise "fair and square" and has promised to introduce more services, faster trains, additional seats, refurbished stations and lower fares.
It said: "We have every confidence in the Department for Transport's process which is rigorous, detailed and fair and in which bids are thoroughly tested. There has been no complaint about the process, which was described in advance, until Virgin Rail Group lost commercially."
Earlier, No 10 insisted there had been a "fair and robust process and the right decision has been made".
Justine Greening, the Transport Secretary, said: "We do plan to push on with signing the contract with FirstGroup and I do suspect that, although I have a huge amount of respect for Virgin and the work they have done on the line, had they won the bid, they would have been perfectly happy with the process."
On Monday, Sir Richard urged the Prime Minister to "intervene to try to get some sense into the Department for Transport".
A DfT spokesman said: "We are confident our process is robust and that the decision was absolutely the right one for taxpayers and passengers."
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