AIRPORT AUTHORITY OF INDIA versus CENTRE FOR AVIATION POLICY, SAFETY & RESEARCH (CAPSR) & OTHERS on 30 September 2022

1. Feeling aggrieved and dissatisfied with the impugned judgmentand order dated 14.07.2021 passed by the High Court of Delhi at NewGDelhi in Writ Petition (Civil) No. 5722 of 2020, by which the High Court,in exercise of its powers under Article 226 of the Constitution of India,has allowed the said writ petition and has struck down the decision tocarry out region-wise sub-categorisation of the 49 airports falling underGroup D-1; the stipulation that only previous work experience in respectof providing GHS to scheduled aircrafts shall be considered acceptableH

for the purpose of the impugned tender/RFP and the revised minimumAnnual Turnover criteria of INR 18 crores as discriminatory and arbitrary,the Airport Authority of India (for short, ‘AAI’) has preferred Civil AppealNo. 6615/2022. The subsequent order dated 24.09.2021 rejecting thereview application being Review Petition No. 150/2021 to review andrecall the final judgment and order passed in Writ Petition No. 5722/2020 is also the subject matter of Civil Appeal No. 6616/2022.

2. The facts leading to the present appeals in a nutshell are asunder:

2. The facts leading to the present appeals in a nutshell are asunder:

The appellant herein – AAI floated a Request for Proposal (forshort, ‘RFP’)/tender for concession of ground handling services at Group‘A’, ‘B’ and ‘C’ airports owned by it on 01.05.2018. The appellant herein– AAI also floated a RFP/tender for concession of ground handlingservices at Group ‘D’ airports owned by it on 02.05.2018. That the RFPfor Group ‘D’ airports was modified multiple times and finally republishedas Corrigendum No. 21. However, subsequently, vide letter dated10.06.2019, AAI cancelled the tender earlier floated for Group ‘D’airports. That thereafter, the AAI published a fresh RFP on 28.07.2020for Group ‘D1’ airports. The respective RFPs contained the eligibilitycriteria which include the technical and financial qualifications.

2.1 Respondent No.1 herein – Centre for Aviation Policy, Safety& Research (CAPSR) filed a writ petition before the High Courtchallenging the eligibility criteria and the respective RFPs with respectto Group ‘C’, ‘D1’ and ‘D2’ airports on the ground that the eligibilitycriteria contained in the RFPs are not only a radical departure from thepast, but also stipulate onerous technical and financial qualifications,thereby rendering most of the extant Ground Handling Agencies (forshort, ‘GHAs’) ineligible to participate in the tender process, especiallythose which have been providing Ground Handling Services (for short,‘GHS’) at the smaller airports of the country, that fall under the categoriesof Groups ‘C’, ‘D1’ and ‘D2’ airports, for the last many years. It wasalso the case on behalf of the original writ petitioner that the prescribedtechnical and financial qualifications have no corelation with the GHSthat the service providers are expected to provide at the Groups ‘C’,‘D1’ and ‘D2’ airports and that the same have been arbitrarily andwhimsically tailored with a view to oust the existing GHS providers, whohave been providing these services for years, without any complaint.

AB

C

D

E

F

G

H

A2.2 The writ petition was opposed by the AAI by filing a counteraffidavit. It was the case on behalf of the AAI that the objective of thetenders for Group ‘C’, ‘D1’ and ‘D2’ airports was not to oust smallplayers but sought to exclude GHAs, which lack expertise andinfrastructure and used casual and unskilled labour in workforce whichallowed them to offer better rates as compared to other GHAs. It wasBalso the case on behalf of the AAI that considering the importance ofexperience in GHS for scheduled aircrafts given the nature of workinvolved in scheduled flights are wider than non-scheduled flights. Thus,36 months of experience in past 7 years of handling ground handlingservices for scheduled flights was reasonable. It was also submitted onCbehalf of the AAI that the earnest money deposit, Annual Turnovercriterion and qualifying experience criterion is not arbitrary, irrationaland discriminatory. It was also pointed out that the amount of earnestmoney deposit required in the tender for Group ‘D1’ airports has beenreduced from Rs. 35 Lakhs per region to Rs. 15 Lakhs per region. AAIalso tried to justify the Annual Turnover criterion of Rs. 30 crores forDGroup ‘D1’ airports. At this stage, it is required to be noted that pursuantto the directions of the High Court, the AAI agreed to reduce therequirement of Annual Turnover criterion to Rs. 18 crores for Group‘D1’ airports. The AAI also challenged the locus of respondent No. 1 –original writ petitioner.E

2.3 By the impugned judgment and order, the High Court has setaside the respective RFPs and has set aside the decision to carry outregion-wise sub-categorisation of the 49 airports falling under Group D-1. The High Court has also set aside the stipulation in the RFPs that onlyprevious work experience in respect of providing GHS to scheduledFaircrafts shall be considered acceptable for the purpose of the impugnedtender/RFP and the revised minimum Annual Turnover criteria of INR18 crores observing the same as discriminatory and arbitrary.

2.4 Feeling aggrieved and dissatisfied with the impugned judgmentand order passed by the High Court, as also the order passed in theGreview application, the original respondent – AAI has preferred the presentappeals.

3. Shri K.M. Nataraj, learned Additional Solicitor General of Indiaappearing for AAI has assailed the impugned judgment and order passedby the High Court, inter alia, on the following grounds:

H

AIRPORT AUTHORITY OF INDIA v. CENTRE FOR AVIATION455POLICY, SAFETY & RESEARCH (CAPSR) [M. R. SHAH, J.]i) that the original writ petitioner before the High Court has noAlocus standi to maintain the writ petition;

ii) that the terms and conditions invitation to tender, being in therealm of contract, are not open to judicial scrutiny; and

iii) MSME order of 2012 and MSME order of 2018 are notapplicable in the facts of the present case B

3.1 Elaborating the aforesaid grounds, it is vehemently submittedby Shri K.M. Nataraj, learned ASG that the original writ petitioner claimsto be a non-profit organisation carrying out independent research, advisoryand advocacy in the field of civil aviation. It is submitted that as per thesettled position, NGOs have no locus standi to maintain a writ petitionchallenging the tender conditions especially when the same is not in thenature of a Public Interest Litigation. It is submitted that an NGO has nobusiness to enter into tender disputes as the same falls in the realm ofcontract. It is submitted that the original writ petitioner cannot be said tobe an affected and/or aggrieved party and therefore at the instance ofthe original writ petitioner, a writ petition was not maintainable assailingthe tender process. Reliance is placed upon the decision of this Court inthe case of Anand Sharadchandra Oka v. University of Mumbai,(2008) 5 SCC 217 (para 12).

D

3.2 It is submitted by the learned ASG that the original writpetitioner mainly challenged three terms/conditions of the tender inquestion, namely, E

I.Clustering of 49 Airports into 4 Region-wise sub-categories/Clusters;

II.Criteria for Evaluation – Clause 3.2.1 – 36 Months ExperienceFin past 7 years in providing 3 out of 7 Core GHS; and

III. Financial capacity – Clause 3.2.2 – Annual turnover of 30 Cr.In any one of last 3 Financial Years It is submitted that all the aforesaid criterions have sound rationaleand therefore the same could not have been the subject matter of a writpetition before the High Court under Article 226 of the Constitution ofIndia. It is submitted that so far as the clustering of 49 airports into 4Region-wise sub-categories/clusters is concerned, the clustering wasdone with the aim of promoting regional connectivity and avoiding the G

H

Acumbersome administrative task of inviting and dealing with separatetenders for each of the 49 airports under Group ‘D1’ category.

3.3 It is submitted that so far as the criteria for evaluation - 36months experience in past 7 years in providing 3 out of 7 Core GHS isconcerned, the purpose of stipulating past experience of handlingBscheduled airlines was that such airlines operate larger aircrafts and thenumber of flights, passengers and amount of cargo would increase infuture with the opening up of the aviation sector.

3.4 Now so far as providing and/or insistence of the financialcapacity – Annual Turnover of Rs. 30 crores in any one of last threeCfinancial years is concerned, it is submitted that as such the same wasscaled down to Rs. 18 crores. It is submitted that even otherwise thesaid criterion was set in view of the nature of the tender and theconsequential financial strength which would be required in order tofulfil the obligations.

3.5 It is submitted that the aforesaid conditions have beenDincorporated keeping in mind the commercial considerations andcommercial expediency and the tender making authority is well withinits rights to formulate conditions based on its commercial wisdom.

3.6 It is submitted that as per the settled position of law, setting ofterms and conditions of invitation to tender are within the ambit of theEadministration/policy decision of the tender making authority and as suchare not open to judicial scrutiny unless they are arbitrary, discriminatoryor mala fides. Reliance is placed on the decisions of this Court in thecase of Maa Binda Express Carrier v. North-East Frontier Railway,(2014) 3 SCC 760 (para 8); Directorate of Education v. EducompFDatamatics Limited, (2004) 4 SCC 19 (para 12); MeerutDevelopment Authority v. Assn. of Management Studies, (2009) 6SCC 171 (paras 26 & 27); and Michigan Rubber (India) Limited v.State of Karnataka, (2012) 8 SCC 216 (paras 23 & 35).

3.7 Making the above submissions and relying upon the aforesaidGdecisions, it is vehemently submitted that in the present case, the HighCourt has erred in interfering with the administration/policy decision ofthe tender making authority in exercise of powers under Article 226 ofthe Constitution of India.

3.8 Now so far as the reliance placed upon MSME orders ofH2012 and 2018 by the High Court is concerned, it is submitted that the reliance placed by respondent No.1 on the aforesaid orders is misplacedas the tenders in question have been issued with the purpose of selectingGHS for providing GHS, which service is in fact akin to grant of a licenseto the GHA, as opposed to procurement of any goods and services thatform the crux of the MSME orders.

3.9 It is submitted that even otherwise it is evident from sub-clause (1) of clause 3 of the MSME order of 2012, the minimum thresholdprescribed is the annual goal for overall procurement and cannot bemade applicable to each tender individually. It is further submitted that areading of sub-clause (4) of clause 3 of MSME order of 2012 wouldshow that the mandate of the order is not absolute. It provides that in theeven of any Ministry, Department or PSU failing to meet the objective,they shall substantiate the same with reasons, which means that thedeparture from the requirement under the order has been envisaged aslong as the same is substantiated with reasons.

3.10 Making the above submissions and relying upon the aforesaiddecisions, it is prayed to allow the present appeals and quash and setaside the impugned judgment and order passed by the High Court.

4. The present appeal is vehemently opposed by Shri UmakantMishra, learned counsel appearing on behalf of respondent No.1 – originalwrit petitioner.

4.1 It is vehemently submitted by the learned counsel appearingon behalf of respondent No.1 that all the members of respondent No.1are GHAs and were to participate in the tender. It is submitted that afterthe authorities did not respond to the representations of the individualGHA members of respondent No.1, only thereafter a writ petition waspreferred before the High Court challenging the illegal policy changesmade in the tender. It is submitted that therefore it cannot be said thatrespondent No.1 – original writ petitioner had no locus standi to file thewrit petition challenging the most arbitrary and illegal tender conditions.

4.2 It is then submitted that since the tender conditions No. 2.2.1(a)allowed three entities to form a consortium to bid, the respondent couldhave been a potential bidder as part of a consortium with two of itsmember GHAs who as MSME could have a maximum turnover of Rs.5 crore each. It is submitted that however since the turnover criteria tobe eligible to bid was arbitrarily fixed as Rs. 30 crores, even as aconsortium with two of its member GHAs, the said eligibility has impaired A

B

C

D

E

F

G

H

Athe fundamental rights of the respondent and its members who areMSMEs. It is submitted that there also respondent No.1 has locus tofile the writ petition.

4.3 It is then submitted that in the present case the AAI earlierhad disregarded the provisions of Section 12(5) of the AAI Act, 1994Br/w the provisions of the MSME Act and MSME Order of 2012 and thestatutory Public Procurement Policy of the Government wherein it ismandated that the AAI must procure 25% of services from MSMEsector along with giving other benefits such as free of cost tender andexemptions to be granted from payment of Earnest Money Deposit(EMD) to register small and medium enterprises. It is submitted that inCthe present case the AAI artificially introduced differentiation in technicaleligibility criteria, specifying experience in providing GHS to scheduledairlines flights only even there is no differentiation between GHS providedto non-scheduled or scheduled airlines in the AAI (GHS) Regulations,2018.D4.4 It is further submitted that as rightly observed and held by theHigh Court the terms and conditions set forth in the tenders arediscriminatory, restrictive, and exclusionary. It is submitted that clusteringof small airports of different sizes, different capacity to handle aircrafts,different financial viabilities, different locations into regions etc. is notEbased on intelligible differentia nor does it have any rational nexus tothe avowed objective of the respondent of security. It is submitted thatas the relevant eligibility criteria and the conditions mentioned in therespective tenders were found to be discriminatory and arbitrary and nonexus with the object of providing such eligibility criteria, the High Courthas not committed any error in striking down the decision to carry outFregion-wise sub-categorisation of the 49 airports falling under Group D-1; the stipulation that only previous work experience in respect of providingGHS to scheduled aircrafts shall be considered acceptable for the purposeof the impugned tender/RFP and the revised minimum Annual Turnovercriteria of INR 18 crores as discriminatory and arbitrary.G4.5 Making the above submissions, it is prayed to dismiss thepresent appeals.

5. We have heard learned counsel for the respective parties atlength.

H

At the outset, it is required to be noted that respondent No.1claiming to be a non-profit organisation carrying out research, advisoryand advocacy in the field of civil aviation had filed a writ petitionchallenging the tender conditions in the respective RFPs. It is requiredto be noted that none of the GHAs who participated in the tender processand/or could have participated in the tender process have challenged thetender conditions. It is required to be noted that the writ petition beforethe High Court was not in the nature of Public Interest Litigation. In thatview of the matter, it is not appreciable how respondent No.1 – originalwrit petitioner being an NGO would have any locus standi to maintainthe writ petition challenging the tender conditions in the respective RFPs.Respondent No.1 cannot be said to be an” aggrieved party”. Therefore,in the present case, the High Court has erred in entertaining the writpetition at the instance of respondent No.1, challenging the eligibilitycriteria/tender conditions mentioned in the respective RFPs. The HighCourt ought to have dismissed the writ petition on the ground of locusstandi of respondent No.1 – original writ petitioner to maintain the writpetition.

6. Even otherwise, even on merits also, the High Court has erredin quashing and setting aside the eligibility criteria/tender conditionsmentioned in the respective RFPs, while exercising the powers underArticle 226 of the Constitution of India. As per the settled position oflaw, the terms and conditions of the Invitation to Tender are within thedomain of the tenderer/tender making authority and are not open to judicialscrutiny, unless they are arbitrary, discriminatory or mala fide. Asper the settled position of law, the terms of the Invitation to Tender arenot open to judicial scrutiny, the same being in the realm of contract. TheGovernment/tenderer/tender making authority must have a free hand insetting the terms of the tender.

7. While considering the scope and ambit of the High Court underArticle 226 of the Constitution of India with respect to judicial scrutinyof the eligibility criteria/tender conditions, few decisions of this Courtare required to be referred to, which are as under:

In the case of Maa Binda Express Carrier (supra), in paragraph 8, this Court observed and held as under:

“8. The scope of judicial review in matters relating to award ofcontracts by the State and its instrumentalities is settled by a long AB

C

D

E

F

G

H

Aline of decisions of this Court. While these decisions clearlyrecognise that power exercised by the Government and itsinstrumentalities in regard to allotment of contract is subject tojudicial review at the instance of an aggrieved party, submissionof a tender in response to a notice inviting such tenders is no morethan making an offer which the State or its agencies are under noBobligation to accept. The bidders participating in the tender processcannot, therefore, insist that their tenders should be accepted simplybecause a given tender is the highest or lowest depending uponwhether the contract is for sale of public property or for executionof works on behalf of the Government. All that participating biddersCare entitled to is a fair, equal and non-discriminatory treatment inthe matter of evaluation of their tenders. It is also fairly well settledthat award of a contract is essentially a commercial transactionwhich must be determined on the basis of consideration that arerelevant to such commercial decision. This implies that termssubject to which tenders are invited are not open to the judicialDscrutiny unless it is found that the same have been tailor-made tobenefit any particular tenderer or class of tenderers. So also, theauthority inviting tenders can enter into negotiations or grantrelaxation for bona fide and cogent reasons provided suchrelaxation is permissible under the terms governing the tenderEprocess.”

In the case of Michigan Rubber (India) Ltd. (supra), afterconsidering the law on the judicial scrutiny with respect to tenderconditions, ultimately it is concluded in paragraph 23 as under:

“23. From the above decisions, the following principles emerge:F

(a) The basic requirement of Article 14 is fairness in action by theState, and non-arbitrariness in essence and substance is theheartbeat of fair play. These actions are amenable to the judicialreview only to the extent that the State must act validly for adiscernible reason and not whimsically for any ulterior purpose. IfGthe State acts within the bounds of reasonableness, it would belegitimate to take into consideration the national priorities; (b) Fixation of a value of the tender is entirely within the purviewof the executive and the courts hardly have any role to play in thisprocess except for striking down such action of the executive as H

AIRPORT AUTHORITY OF INDIA v. CENTRE FOR AVIATIONPOLICY, SAFETY & RESEARCH (CAPSR) [M. R. SHAH, J.]

is proved to be arbitrary or unreasonable. If the Government actsin conformity with certain healthy standards and norms such asawarding of contracts by inviting tenders, in those circumstances,the interference by courts is very limited;

(c) In the matter of formulating conditions of a tender documentand awarding a contract, greater latitude is required to be concededto the State authorities unless the action of the tendering authorityis found to be malicious and a misuse of its statutory powers,interference by courts is not warranted; (d) Certain preconditions or qualifications for tenders have to belaid down to ensure that the contractor has the capacity and theresources to successfully execute the work; and (e) If the State or its instrumentalities act reasonably, fairly and inpublic interest in awarding contract, here again, interference bycourt is very restrictive since no person can claim a fundamentalright to carry on business with the Government.”

In the aforesaid decision, it is further observed that the Governmentand their undertakings must have a free hand in setting terms of thetender and only if it is arbitrary, discriminatory, mala fide or actuated bybias, the courts would interfere. It is further observed that the courtscannot interfere with the terms of the tender prescribed by theGovernment because it feels that some other terms in the tender wouldhave been fair, wiser or logical.

Similar views have been expressed in the case of EducompDatamatics Ltd. (supra) and Meerut Development Authority (supra).

8. In the present case, the AAI explained before the High Courtthe rationale behind the respective conditions, namely, clustering of 49airports into 4 region-wise sub-categories/clusters; criteria for evaluation- 36 months experience in past 7 years in providing 3 out of 7 Core GHSand the financial capacity – Annual Turnover of Rs. 30 crores (modifiedas Rs. 18 crores) in any one of last three financial years.

9. Having gone through the respective clauses/conditions whichare held to be arbitrary and illegal by the High Court, we are of theopinion that the same cannot be said to be arbitrary and/or mala fideand/or actuated by bias. It was for the AAI to decide its own terms andfix the eligibility criteria.

A

B

C

D

E

F

G

H

A10. Applying the law laid down by this Court in the aforesaiddecisions, we are of the opinion that the High Court has committed aserious error in first of all entertaining the writ petition at the instance ofrespondent No.1 – original writ petitioner, an NGO and also holding therelevant eligibility criteria/conditions mentioned in the tender documentsas illegal.B

A

11. Now so far as the submission on behalf of the original writpetitioner on MSME orders of 2012 and 2018 is concerned, the samecan always be subject to the fulfilment of other conditions of the tenderdocuments. Even otherwise, selecting GHS for providing GHS cannotbe equated with the procurement of any goods and services that formCthe crux of the MSME orders. In any case, as observed hereinabove, atthe instance of respondent No.1, the High Court ought not to haveentertained the writ petition challenging the terms and conditions of thetender documents and as observed hereinabove, none of the tenderconditions/eligibility criteria can be said to be arbitrary and/or mala fideDand/or actuated by bias.

12. In view of the above and for the reasons stated above, theimpugned judgment and order(s) passed by the High Court areunsustainable and the same deserve to be quashed and set aside and areaccordingly hereby quashed and set aside. Consequently, the writ petitionEfiled before the High Court at the instance of respondent No.1 – originalwrit petitioner stands dismissed.

13. The instant appeals are accordingly allowed. However, in thefacts and circumstances of the case, there shall be no order as to costs.

F

Divya Pandey

Appeals allowed.

G

H