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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO.617 OF 2007
1.Flemingo Duty-Free Shop Pvt.Ltd.2.Mr.Vivek S.Bhatt. ...Petitioners
vs.
1.Union of India
2.Airports Authority of India3.Mumbai International Airports Pvt.Ltd4.ITDC Aldeasa India Pvt.Ltd.5.DFS Venture Singapore(Pte) Ltd.6.DFS India Pvt.Ltd. ...Respondents.
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Mr.R.A.Nariman, Sr.Advocate with V.A.Bobade,Sr.Advocate, @ V.R.Dhond, A.Choudhary & ShaileshMerdon i/b. M/s.Crawford Baylay & Co., forPetitioners.
Mr.G.E.Vahanvati, Solicitor General, for Respondentno.1.
Mr.G.E.Vahanvati, S.G. With F.Divitre i/b. RekhaRajgopal, for Respondent no.2.
Mr.Dushant Dave, Sr.Advocate with P.K.Samdhani,Sr.Advocate , Farid Karachiwala, S.Jagtap i/b.M/s.Wadia Gandhy & Co., for Respondent no.3.
Mr.Janak Dwarkadas, Sr.Advocate with N.H.Seervai,Sr.Advocate, Direndra Negi, Z.Doctor,Ms.A.Chandrachud i/b. J.Sagar & Associates, forRespondent nos.5 & 6.
Ms.Vandana S. Mishra i/b. M/s.Little & Co., forRespondent no.4.
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CORAM: D.K.DESHMUKH &N.D.DESHPANDE, JJ.
DATE : 5 th June,2008.
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ORAL JUDGMENT:(PER D.K.Deshmukh, J.)
1. By this petition the Petitioner
challenges the process adopted by the Respondent
No.3 beginning with the Expression of Interest
and followed by issuance of Request for Proposal
and culminating in the award of contract
initially to Respondent No.4 and then to the
Respondent No.5.
2. The facts that are material and relevant
for deciding this petition are that the
Petitioner No.1 is a company incorporated under
the Companies Act and having its registered
office in New Mumbai. According to the Petitioner
No.1, it is engaged in the business of operating
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and running duty Free Retail Outlets in
International Airports in India. The Respondent
No.1 is the union of India and the Respondent
No.2 is Airports Authority of India constituted
under Section 3 of the Airports Authority of
India Act, 1994. According to the Petitioners,
the Respondent No.2 is owned and controlled by
the Respondent No.1. The International Airport at
Mumbai i.e. Chhatrapati Shivaji International
Airport was exclusively controlled and managed
and operated by the Respondent No.2. The
Respondent no.3 is a company registered under the
Companies Act 1956 and is a Joint Venture
Company. Respondent No.3 is a consortium of GVK
Airport Holdings Pvt.Ltd.; ACSA Global Limited;
Bid Services Division (Mauritius) Ltd., and the
Respondent No.2. Respondent No.4 is a consortium
between ALDEASA S.A. a company established and
existing under the laws of Spain and Indian
Tourism Development Corporation (ITDC)
incorporated under the laws of India. Respondent
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No.5 is a company established and existing under
the laws of Singapore. Respondent No.6 is a
wholly owned subsidiary of Respondent No.5.
According to averments in the petition, the
Respondent No.3 has been created with the
objective of operating, maintaining,
developing, designing, constructing, upgrading,
modernizing, financing and managing Airports. The
Respondent No.2 holds 26% in the equity of the
Respondent No.3. According to the petitioners,
Respondent No.3 operates under the pervasive
control of Respondent No.1 & Respondent No.2.
According to the petitioners, after the Airports
Authority of India Act was amended by the
amendment Act of 2003, pursuant to the provisions
of section 12A of the Act on 4-4-2006 an
agreement was executed between the Respondent
No.2 and the Respondent No.3 called the
Operation, Management and Development Agreement
(herein after referred to as OMDA) whereby and
where under the Respondent No.2 leased out the
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Chhatrapati Shivaji International Airport to
Respondent No.3 for a period of 30 years. The
lease is renewable for further period of 30
years. The Petitioners in the petition refer to
the provisions of OMDA in detail. According to
the Petitioners, on 9-10-2006 the Respondent No.3
made a public announcement in the newspapers
calling for Expression of Interest for setting up
Duty free Shops at Chhatrapati Shivaji
International Airport, Mumbai. The Petitioner
No.1 entered into a consortium arrangement with
Aer Rianta International (herein after referred
to as ARI) which is a company incorporated under
the laws of Ireland for the purpose of submitting
the tenders pursuant to the public announcement
dated 9-10-2006. According to the Petitioner, its
partner ARI is a dedicated international division
of the Dublin Airport authority and was the first
to start duty-free business in the world. It
founded first duty-free shop at Shannon Airport
at Ireland in 1947. According to the Petitioner,
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AIR has 60 years of experience in duty-free
retailing. Its managed retail business turn over
for 2006 is in excess of 900 million US$. The
Petitioner and the said ARI intended to jointly
bid for the tender. According to averments in
the petition, this agreement and arrangement
reached between the Petitioner and the ARI is
still subsisting. According to the Petitioner,
pursuant to the public announcement referred to
above, the petitioner submitted its Expression of
Interest along with Joint Venture Partner ARI on
11-10-2006 to the Respondent No.3, which was duly
accepted. It was submitted within time and it was
also accompanied by the prescribed fee. Pursuant
to the Expression of Interest submitted by the
Petitioner along with ARI, the petitioner was
invited to make a presentation by the Respondent
No.3 on 9-11-2006 at ITC Grand Maratha Sheraton,
Mumbai, Mumbai. According to the petitioner on 9-
11-2006 the Petitioner satisfactorily made its
presentation to the representative of the
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Respondent No.3. According to the Petitioner,
thereafter on 12-1-2007, Senior Vice President of
the Respondent No.3 addressed an e-mail to the
petitioner-company asking for details like sales
turnover at Shops operation, international
traffic etc. It was replied to by the Petitioner.
According to the Petitioner, this was the last
correspondence addressed to the Petitioner by the
Respondent No.3. Thereafter, there was, according
to the Petitioner, no communication from the
Respondent No.3. According to the Petitioner,
though the Petitioner thereafter sent number of
reminders to the Respondent No.3, they evoked no
response. According to the Petitioner, it has not
been informed either orally or in writing the
decision of the Respondent No.3 in short-listing
the persons to whom the tender documents would be
issued. The Petitioner, thus, stated in the
petition that, therefore, the Petitioner was
stunned to learn that a Request for Proposal
document has been issued to the participants.
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According to averments in the petition, the
Petitioner has learnt that the persons to whom
RFP was issued are required to submit their
bids/proposals by 23-2-2007. The Petitioner
submitted that the Petitioner has not been asked
to submit the RFP. The Petitioner feeling
aggrieved by the non-issuance of RPF document to
the Petitioner, filed this petition on 20-2-2007
challenging basically the action of the
Respondent No.3 of non-issuance of RFP to the
Petitioner for operating and setting up the duty-
free shop at Chhatrapati Shivaji International
Airports, Mumbai. It appears that the Petition
was mentioned before the Division Bench on 22-2-
2007. The Division Bench after hearing the
counsel appearing for the Petitioner, the
Counsels appearing for the Respondents Nos. 1 & 2
by order dated 22-2-2007 dismissed the petition
on the ground that the Petitioner is guilty of
latches in approaching the Court. That order was
challenged before the Supreme Court by the
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Petitioner. The order of the Division Bench has
been set aside by the Supreme Court by order
dated 22-2-2008 and the Supreme Court has
directed this Court to hear the petition on
merits.
3. It appears that after the Writ Petition
was dismissed by the Division Bench, the
Respondent No.3 awarded the contract to
Respondent No.4/ITDC Aldeasa India Pvt. On 26-2-
2007. The contract awarded in favour of the
Respondent No.4 was cancelled by the Respondent
No.3 on 23-11-2007 and thereafter the contract
has been awarded to the Respondent No.5. The
contract has been awarded to Respondent No.5,
because according to Respondent No.3 the
Respondent No.5 was the second highest bidder.
The Petitioner because of these developments
taking place after rejection of the petition by
the Division Bench and during the pendency of
Special Leave Petition in the Supreme Court
amended the petition and has challenged the
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awarding of contract by Respondent No.3 to
Respondent No.5.
4. The Respondents have filed their
affidavits-in-reply. The Petitioner has also
filed rejoinder. In short the defence put up by
the Respondents is that the R.P.F. documents were
not issued to the petitioner because the
Respondent no.3 found that the petitioner is not
entitled to be short listed. It is also
contended that because the respondent no.3 is not
State it is not bound by the Part III of the
Constitution and is not so amenable to the
jurisdiction of the Court under Article 226 of
the Constitution of India.
5. We have heard the learned Counsel
appearing for the Petitioner as also the learned
Counsels appearing for the Respondents in detail.
The parties have also filed their written
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submissions.
6. Shri R.F. Nariman, the learned Senior
Counsel appearing for the Petitioner No.1
submitted that the issues which arise for
consideration in the present Writ Petition are:
(i) Whether the Respondent No 3 Company, MIAL, isState within the meaning of Article 12?
(ii) Whether, even if it is not State, is it
amenable to the writ-jurisdiction under
Article 226 of the Constitution?
(iii) Whether the Invitation for Expression of
Interest is so designed as to introduce
inherent and complete arbitrariness and
unreasonableness in the whole tender process
in that inter-alia , (a) it does not set out
any criteria, much less definite, clear and
objective criteria, for evaluation of
Expressions of Interest; (b) it does not
specify the absolute or relative importance,
if any, of experience, turnover or the
financial offer ;(c) it expressly states that
the final criteria used for short-listing
would be determined by MIAL in its sole
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discretion; (d) it provides for short-listing
(without even specifying the number to be
short-listed) thereby denying opportunity to
all persons interested to submit their bids
and thereby provide a level-playing field;
(e) it provides for MIALs right to accept or
reject any or all offers at any stage of the
process and/or modify the process at its sole
discretion, without assigning any reasonwhatsoever?
(iv) Whether the impugned process beginning
with the Invitation, Expression of Interest,
the exclusion of the Petitioners consortium
from the bidding process, the issuance of theRFP to four parties, culminating in the
award of the contract to a fifth party, the
Respondent No. 4 and thereafter to the
Respondent No. 5 is vitiated by lack of
transparency which is the sine-qua-non of the
tender process in the realm of public law for
public utility services functioning in the
public interest?
(v) Whether MIAL acted most arbitrarily in short-
listing only four parties and then issuing
the bid-document to a fifth party
(ITDC/ALDAESA) well after the last date for
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issuance thereof, hurriedly awarding the
contract to it on 26 th February 2007, the
very date on which the Special Leave Petition
was filed in the Supreme Court even though
the scheduled date for awarding contract was
7 th March 2007, and then cancelling the
contract on 24.11.2007 , and lastly, awarding
the contract to DFS (Respondent No. 5) on
29.11.2007,without calling for fresh tendersand considering afresh the claims of all
others, including the Petitioner?
(vi) Whether the grant in favour of the Respondent
Nos. 5 & 6 which is contrary to the express
terms of the RFP (tender document) issustainable, legal and valid?
(vii) Whether the decision to deny eventhe opportunity to the Petitionersconsortium to bid for the contract for duty-free retail shop, particularly when the offeri.e. Expression of Interest, is not expressly
rejected for stated reasons is whollyarbitrary, unreasonable and unjust?
7. The learned Counsel further submitted
that the Respondent No . 3 is a Joint Venture
Company in which 26% shareholding is held by the
Airports Authority of India(AAI) and this gives
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control to the AAI over vital matters which
require 3/4 th majority. Respondent No. 3 has been
specially incorporated inter alia with the
objectives of operating, maintaining, developing,
designing, constructing, upgrading, modernizing,
financing and managing the Airport . Airport is
defined in Clause 1.1. of OMDA to mean the
Chhatrapati Shivaji International Airport. The
learned Counsel submitted that the Respondent No.
3 is the lessee of the AAI under Section 12-A of
the Airports Authority of India Act, 1994, as
amended in 2003, which provides that some of the
functions of the AAI may be transferred to the
Respondent No. 3 and that the said Respondent No.
3 shall have all the powers of the AAI in the
performance of any such functions in terms of the
lease. MIAL was granted lease on 26.4.2006 vide
Lease Deed. The operation, maintenance and
development of the airport is governed by OMDA
executed between the AAI and MIAL. The
relationship between the shareholders is governed
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by the Shareholders Agreement dated 4-4-2006
entered into between the shareholders of MIAL
including AAI. The governmental services to be
provided to MIAL is governed by the State Support
Agreement dated 26-4-2006 entered into between
MIAL and the Government of India. It is further
submitted by the learned Counsel that Respondent
No. 3 is a Joint Venture Company. In a joint
venture Company where the government holds
shares, 50% and over makes the company a
Government Company and therefore State, under
Article 12. Mere reduction of the shareholding
below 50% does not make it a purely private
company outside Article 12. In support of this
proposition he relied on the judgment of the
Supreme Court in the case of Amar Alcohol Ltd.
V/s. SIICOM Ltd. 2006 (10 SCC 199). Clearly
therefore, he submits MIAL is a special purpose
joint venture Company formed only because of
Section 12 A and is not a purely private
Company. There is public- private participation
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right from the inception of the Company.
8. The learned Counsel took us through the
relevant provisions of OMDA as also the State
support agreement and the provisions of the Act.
Then the learned Counsel submits that Section 12
of the Act delineates the functions of the
Authority and under Section 12 (3) thereof, the
specific functions of AAI have been mentioned.
Section 12-A (1), introduced by Act 43 of 2003 ,
begins with a non-obstante clause and empowers
the AAI in the public interest or in the
interest of better management of airports to
make a lease to carry out some of its functions
under Section 12. This lease requires the
previous approval of the Central Government under
sub-section (2). Under sub-section (4) the
lessee , who has been assigned any function of the
Authority under sub-section (1) shall have all
the powers of the Authority necessary for the
performance of such functions in terms of the
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lease . Therefore, the Respondent No. 3 carries
out and performs the functions of the Airports
Authority of India imposed upon the Authority by
the Parliamentary enactment. A lease has been
executed between the Airport Authority of India
and MIAL dated 26.4.2006 whereby Chhatrapati
Shivaji International Airport has been leased to
the Respondent No.3 for a period of 30 years from
the effective date and for a further period of
thirty years . It is this Lease dated 26.4.2006
which makes Section 12A operational. It is under
this provision that MIAL has been assigned
functions by the OMDA and granted a lease.
9. It is submitted that the scheme of the
Act discloses that, in essence and truth, the
lessee under Section 12A of an existing airport
carries out the functions of the Authority and
enjoys the powers necessary to carry out such
functions. Such an entity exercising such
public/governmental functions is clearly an
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instrumentality or agency of the State and is
covered by Article 12. It is submitted that
Section 22-A empowers the Authority to levy on
and collect from embarking passengers,
development fees for the purpose of clauses (b)
and (c) viz. establishment or development of a
new airport in lieu of the airport referred to in
clause (a) and for investment in the equity in
the shares to be subscribed by the Authority in
Companies engaged in establishing, owning,
developing, operating or maintaining a private
airport Thus money is collected from the air-
traveling public under law for the funding of the
new airport and for the Authority to acquire
shares in the company setting up the same or for
developing or maintaining an existing airport
leased under Section 12 A. Fee under Section 22A
can be appropriated by MIAL because it functions
in place of the Airport Authority of India. He
further submited that Chapter VA (comprising of
Section 28 A to Section 28 R) provides the
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procedure for eviction of unauthorised occupants
of airports. The provisions are on the lines of
the Public Premises (Eviction) Act. Thus the
property of the airport is public property even
when given on lease and the lessee can resort to
the provisions for eviction, without having to
file a regular Civil suit. This section is a
strong and powerful indicator that airports are
public premises and the company running them is
State because if it were not so, the Company
would never have been allowed to avail of the
summary power of eviction and would instead have
been relegated to the ordinary civil law for
eviction of unauthorised occupants or
trespassers. Section 37 authorises the issuance
of directions by AAI to person or persons
engaged in aircraft operations or using any
airport, heliport, airstrip or civil enclave
under specified clauses of Section 5(2) of the
Aircraft Act, 1934, under which Rules have been
framed in the Aircraft Rules,1937.
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10. The learned Counsel relied on the
judgment of the Supreme Court in the case of
Ashoka Marketing Ltd. V.s,. Punjab National Bank
(1990) 4 SCC 406 and submitted that the Honble
Supreme Court of India in its judgment in the
case Ashoka Marketing Ltd . referred to above
has while considering the provisions of the
Public Premises (Eviction of Unauthorised
Occupants) Act, 1971 referred to its judgment in
the case of Dwarkadas Marfatia and Sons Vs. Board
of Trustees of the Port of Bombay. The learned
Counsel submits that the observations in that
judgment were made in the context of the
provisions of the Bombay Rents, Hotel and Lodging
Houses Rates (Control) Act, 1947 whereby
exemption from the provisions of the Act has been
granted to premises belonging to the Bombay Port
Trust. The consequence of giving overriding
effect to the provisions of the Public Premises
Act is that premises belonging to companies and
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statutory bodies referred to in clauses (2) and
(3) of Section 2( e ) of the Public Premises Act
would be exempted from the provisions of the Rent
Control Act. The actions of the companies and
statutory bodies mentioned in clauses (2) and (3)
of Section 2( e ) of the Public Premises Act while
dealing with their properties under the Public
Premises Act will, therefore, have to be judged
by the same standard.
11. The learned Counsel submitted that the
Petitioner has the largest experience of running
duty-free retail shops at international airports
in India and its partner Aer Rianta, which,
according to the Petitioner, opened the worlds
first ever duty-free retail shop at Shannon
Airport in Ireland in 1947, has the largest
international experience in this field. At
present the Petitioner is operating at 13
international airports and running 37 duty-free
retail shops. Inspite of this, MIAL has excluded
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the Petitioners consortium at the threshold and
prevented it even from bidding for the contract,
without even rejecting their offer. It is
submitted that, ex-facie , the action of the MIAL
is arbitrary and illegal.
12. No reason has been assigned by the
Respondent No.3 to the Petitioner herein and none
of its letters were replied or responded to by
the said Respondent No.3. There is complete lack
of transparency in the Tender process and the
absence of criteria in the EOI has given MIAL
unbridled and arbitrary powers to act according
to its whims and fancies.
13. The learned Counsel submits that the
Respondent No.3 is an instrumentality of the
State within the meaning of Article 12 of the
Constitution of India. He submits that the
definition of the State in Article 12 is an
inclusive one. The Article says includes, not
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means or means and includes. What is included
is allother authorities within the territory of
India or under the control of the Government of
India. The learned counsel referred to the
observations of the Supreme Court in the case of
Rajasthan State Electricity Board v/s. Mohan
Lal, AIR 1967 SC 1857 ; and the judgment of the
Supreme Court in the case of Pradeep Kumar Biswas
v/s. IICB, (2002) 5 SCC 111. The learned Counsel
then took us through the judgment of the Supreme
Court in the case of Sukhdev Singh v/s.
Bhagatram, (1975) 1 SCC 421, specially the
judgment of Justice Mathew. The learned Counsel
pointed out that on the same day on which the
Supreme Court decided Sukhdev's case, the same
Constitution Bench held in Sabhajit Tewary v/s.
Union of India (1975) 1 SCC 485 that the Council
of Scientific and Industrial Research was not
'State'. It was pointed out that the view taken
in the Sabhajit's case was later over-ruled by a
Seven Judges Bench in Pradeep Kumar Biswas's
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the judgment of US Supreme Court in the case of
Burton v/s. Wilmington Parking Authority, (1961)
6 L.Ed. 2D 45 and in the case of Evans v/s.
Newton, (1966) 15 L.Ed.2d. 373, and in the case
of Jackson v/s. Metropolitan Edison Co. (1974)
49 L.Ed.2d 477 and submitted that where the
State and AAI are obliged to provide and
maintain airports adequately equipped for for
international air travel which necessarily
involves providing for a superlative duty free-
shop and this function is delegated to Respondent
No.3 under Section 12A and the Respondent No.3
assumes it voluntarily than the Respondent No.3's
actions are State actions. The learned Counsel,
then, submitted that the following factors in the
present case show that the Respondent Nos. 1, 2
and 3 are joint actors and therefore the
Respondent No.3s actions are amenable to the
writ jurisdiction including application of
Article 14:
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1. Even though Respondent No.3 is a company
registered under the companies Act, its
functions in operating, managing and
developing the Mumbai International
Airport cannot be characterized Purely
Private. Indeed, OMDA read with the
Shareholders Agreement and the lease deed
specifically speak of Respondent No.3
being a Joint Venture between Airport
Authority of India and its private
partners. In addition, there is an
agreement directly entered into between
the Union of India and Respondent No.3,
which is called State Support Agreement.
The documents produced on record therefore
clearly show that Respondent No. 3 is a
Joint Venture company supported by the
Union of India in operating, managing and
developing the Mumbai International
Airport on property that is owned by the
Airports Authority of India i.e. Public
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property.
2. Respondent No.3 in fact performs statutory
functions and exercises statutory powers
under the Airport Authority of India Act,
1994; it performs the Airport Authority of
Indias statutory functions of operating,
managing and developing Mumbai
International Airport and exercises the
powers of the Airport Authority for
performing the functions assigned or
delegated to it. Under Section 12A of the
said Act, it is not a simple lessee of
public property. The lease with
Respondent No.3 has to be made with the
previous approval of the Central
Government. All moneys payable by the
lessee in terms of the lease made under
Section 12A is to form part of the fund of
the Authority and is to be credited
thereto as if such money is the receipt of
the Authority for all purposes of Section
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24. Thus, the moneys payable by the lessee
to the Authority are public money and
public funds. Further, the lessee
statutorily is given all powers of the
Authority necessary for the performance of
its functions in terms of the lease. Thus,
Respondent No.3 is a lessee under a
statutory lease exercising Governmental or
public functions.
3. It is because Respondent No.3 performs
Governmental functions that Chapter VA of
the said Act applies to it and it can just
like Government use summary procedure to
evict unauthorized occupants on the area
leased to it without following the rigor
of the Rent Act. This shows unmistakably
that Respondent No. 3 is State for the
purpose of Article 12.
4. The Government has a large financial stake
not only does the Airport Authority of
India own 26% of the paid up share capital
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of Respondent No.3 (which can never be
reduced but can only be increased) the
Respondent No.3 has to give 38.7% of its
gross revenue quite apart from the down
payment made by way of consideration for
the grant of the lease to Airport
Authority of India.
5. OMDA clearly shows that for the purpose of
operating, managing and developing Mumbai
International Airport Respondent No.3 has
been conferred a monopoly status it
alone may exclusively perform all these
functions and indeed cannot perform any
other function.
6. That Government exercises control in
various ways is clear 26% of the share
capital of Respondent No.3 is held by the
Airport Authority of India, which can
therefore block any Special Resolution
that is to be passed under the Companies
Act. Further, no change in the Memorandum
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of agency but by way of what has been
submitted above.
7. It is obvious that the Government and
Respondent No.3 are jointly interested
Joint Coordination Committees have to be
set up both for Government services as
well as Airports services and it is here
that it is again clear that Respondents
No.1 to 3 have necessarily to function
together in running the Airport
8. OMDA itself specifically states that in
the granting of sub-contracts Respondent
No. 3 has to do so fairly, objectively and
without discrimination in short the
State as traditionally defined insists
that Respondent No. 3 be subject to the
same constitutional obligations under
Article 14 as the State is itself subject
to.
9. Under the State Support Agreement, fees
that are statutorily levied and collected
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under Section 22A of the 1994 Act are to
be paid to Respondent No. 3 in fact, 35%
of the fees so collected by the collecting
agency that is the airlines have to be
paid directly to Respondent No. 3. This
again makes it clear that the sovereign
authority of the State in levying and
collecting fees is utilized in order to
distribute a large part of it to
Respondent No.3.
10. OMDA says that whenever contracts are
entered into by the Respondent No. 3, such
contracts must contain a clause stating
that all contractual rights are to stand
transferred automatically to the Airport
Authority of India under certain specified
circumstances.
11. Even going by the six criteria laid down
in the International Airport Authority
case the Respondent No.3 would be State
under Article 12.
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functions such as customs,
immigration, etc. which are
intertwined with functions of public
importance.
vi) Specifically, the powers and the
functions of the Airport Authority of
India, which is a Statutory
Corporation and a department of
Government in the wider sense is
transferred by and under the Airport
Authority of India Act 1994 to the
Respondent No.3.
12. That these six criteria are not exhaustive
but merely illustrative is clear and in
the present case the additional criteria
pointed out above, viz., the application
of Chapter VA that is the summary
procedure of evicting unauthorized
occupants; the joint action taken by Joint
Coordination Committees; the express
provision in OMDA that Respondent No.3
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cannot behave discriminatorily in awarding
sub-contracts; the fact that 35% of
passenger service fee is paid directly to
Respondent No.3; the fact that all
contracts entered into by Respondent No.3
must compulsorily have clauses
transferring contractual rights to the
Airport Authority of India in certain
circumstances would all go to show that
State action is writ large in the present
case.
14. The learned Counsel submits that the
very purpose of calling for bids is to ensure
that as many bidders as possible submit their
bids so that the best among them may be selected.
The final criteria for short-listing were to be
decided in MIAL sole discretion. No preliminary
criteria are mentioned anywhere; in fact no
criteria or norms are at all mentioned and the
information in the EOI are not clear, certain and
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objective. The manner of evaluation has not been
stated at all as to what would be the
determinative factors which will be considered
for deciding who will be shortlisted or who will
be awarded the contract eg. a certain minimum
turnover, a certain minimum experience, and that
the maximum experience or turnover will be the
basis. Nothing is stated about the absolute,
relative or decisive importance of any factors-
experience or turnover for short-listing or
awarding the contract. There is total uncertainty
about the norms and decisive factors. And this is
compounded by the arbitrary power claimed by MIAL
to decide the final criteria in their sole
discretion and to change or modify the process at
any time. Power is also claimed to reject any
offer or bid without assigning any reasons. The
EOI is thus designed and calculated to make the
competitive bidding process completely and
inherently irrational and destructive of fair-
play, rule of law and the public interest. The
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EOI is framed in such a fashion as to allow MIAL
to act arbitrarily, whimisically and unreasonably
and also it is actively designed to prevent
fairness and objectivity in the selection process
and to cast an opaque shroud over the arbitrary
procedure and acts of MIAL . The EOI specified 3
criteria for evaluation viz. (i) prior
international experience in the relevant area,
(ii) financial and commercial capability and
(iii) past experience in increasing revenue in
similar situations . In the counter affidavit
dated 6.12.2007 filed before the Honble Supreme
Court, the Respondent No. 3 mentioned 10
criterions taken as a whole which allegedly
formed the basis of evaluation and short listing
namely :
The total turnover of the
bidder for the least 3 years.
The total space managed.
The total airport duty free
sales.
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Total airport duty free sales
under concessionaire type
agreements.
Total airport duty free sales
under management contract/non-
concessionaire type agreement.
Asian airport presence and
experience.
Asian duty free sales.
Type of merchandise sold.
Number of international Indian
passengers.
Customs inquiry resulting in
adverse findings or payment of
penalty.
In the Additional Affidavit dated
20.2.2008 filed before the Honble Supreme
Court, the Respondent No. 3 averred that
three critical elements were identified
as concession turn over, experience of
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space managed and total turn over which
formed the basis for short listing which
three critical elements have been
reiterated in the Affidavit in Reply dated
31.3.2008 filed before this Court. The
Respondent No. 3 further claims that it
had the power under the EOI to determine
the final criteria for short listing at
its sole discretion. It is submitted that
it is not permissible to change the rules
or the criteria of selection either during
the selection process or after the
selection process or to add an additional
requirement or criteria. The learned
Counsel relied on a judgment of the
Supreme Court in the case of Hemani
Malhotra Vs. High Court of Delhi 2008(4)
SCALE 645 . He further submits that the
non-issuance of the tender document to the
Petitioners consortium tantamounts to
total denial of a fair opportunity to the
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consortium to participate in the bidding
process. The Petitioners consortium has
simply been excluded from the bidding
process without even rejecting its offer.
No reasons whatsoever were ever
communicated; in fact, there was not even
a communication of rejection of the offer.
The process adopted was extremely high-
handed and whimsical. MIAL did not adhere
to its own time-schedule in that four
parties were reportedly short-listed and
the last date for issuing the RFP (tender
document) was 19.1.2007 MIAL issued the
RFP to ITDC/ALDAESA ( Respondent No. 4
which was not among the four short-listed)
on 29.1.2007. It is submitted that one of
the four Dufry- did not submit its bid.
Immediately after the dismissal of the
petition by this Court, MIAL hurriedly
awarded the contract to ITDC/ALDAESA on
26-2-2007 on the very day that the Special
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Leave Petition under Article 136 was filed
so as to make out a case against grant of
interim orders by the Honble Supreme
Court. This was done even though the last
date for award of contracts was 7 th March
2007. That contract was later cancelled on
24.11.2007 because of alleged labour
problems of ITDC and that ITDC could not
fulfill its commitment. MIAL then simply
awarded the contract to the Respondent
No.5 without calling for fresh tenders and
the grant in favour of the Respondent No.
5 is contrary to the terms of the RFP.
Clause 3.1 of the RFP has not been
triggered. Assuming arguendo that Clause
3.1 has been triggered, even then there is
no power or provision to give the contract
to the second highest bidder but the
Respondent No. 3 is obliged to follow
Section III. The Petitioner states and
reiterates that the Expression of Interest
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applied in making the decision of short
listing and awarding contract, renders the
entire process opaque i.e lacking in
transparency and allows MIAL to pick and
choose any party it wishes for unknown and
wrong reasons and exclude others from
competition for extraneous and irrelevant
considerations. This not only permits but
also encourages (and has encouraged and
resulted in) complete arbitrariness in the
decision making process. There was no
justification to restrict the issuance of
the Tender documents or not to issue
Tender documents (RFP) to all the 9
bidders who had submitted their EOIs.
There is no rational basis or
justification to resort to shortlisting as
shortlisting is resorted to in cases where
the number of applicants or participants
are so large in number as the procedure
of shortlisting is only a practical via
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media in cases where the number of
applicants is large and would impose
difficulties for the selecting and
appointing authorities. 9 participants
for a duty free tender cannot be by any
stretch of imagination be held to be large
so as to require shortlisting. It is
submitted that this process has been
adopted and applied so as to exclude the
Petitioners consortium from the fray,
knowing fully well that were it allowed to
bid, it would have had the best chance of
bagging the contract by offering the best
proposal. This apprehension of MIAL stems
from the Petitioner's track record which
undeniably is the best in India and, along
with its partner who has the largest
experience internationally, and hence, the
bid would have been hard to reject and the
rejection would have been hard to defend.
The procedure adopted by the MIAL is
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against the prescribed and well
established principles of awarding of
tenders/ contracts in public law. The
impugned action is not only prejudicial to
the Petitioners consortium but would also
adversely affect the larger public
interest since fair competition has been
sought to be excluded at the very
threshold. The learned Counsel also
relied on the observations of the Supreme
Court in its judgment in the case of
Reliance Energy Ltd. Vs. Maharashtra State
Road Development Corporation , (2007) 8
SCC 1 and the observations of the Supreme
court in its judgment in the case of
B.Ramakichenn Alias Balgandhi V. Union of
India & ors., 2008 (1) SCC 362. The
learned Counsel took us through the
affidavits and counter affidavits and
submitted that there are glaring
contradictions in the affidavits filed by
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the Respondent No.3. The learned Counsel
also submitted that awarding of contract
to Respondent No.5 without inviting fresh
bids is contrary to the terms of RFP.
15. Shri Vinod Bobde, the learned Senior
Counsel also appearing for the Petitioner
submitted that in the alternative even if it is
assumed that the Respondent No.3 is not an
instrumentality of the State, still its action
can be subjected to judicial review under Article
226 of Constitution of India. He submits the
answer to the question whether an entity is
amenable to the writ jurisdiction of this Court
under Article 226 of Constitution of India
depends on two things: (a) the wide language in
which Article 226 is couched, and (b) the nature
of the functions or duties performed by the
entity i.e. whether they are public functions or
purely private. He then submitted that Article
226 empowers the High Court to issue the
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specified writs or even orders or directions in
the nature of those writs to any person or
authority, including , in appropriate cases any
Government for the enforcement of fundamental
rights or for any other purpose . There is no
mention of the word State. The words any
Government were added apparently to remove any
doubt because during the 19 th century and early
20 th century, the prevailing view in England was
that the writ of mandamus could not issue
against the Crown. Furthermore, the word person
is deliberately used. A person may be a natural
person or a juristic entity such as a company or
a society. Whenever, therefore, a person is
performing public duties or functions or is
acting in the public interest, the actions
of such a person were always intended to be
amenable to judicial review by the High Court
under Article 226. Article 226 is available not
just for enforcement of fundamental rights but
for any other purpose so that any legal right
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can be enforced thereunder or the due discharge
of a public duty commanded unless the High Court,
in its discretion, considers that disputed
questions of fact are involved and the matter is
best relegated to a civil suit, or it considers
that there is an equally speedy and efficacious
remedy. Wherever there is a right in some person
or entity, there is a corresponding duty or
obligation of another person or entity. For
example, in private law, the duty to take care
and not to be negligent existed in the law of
torts. The right to prevent trespass on property
similarly existed. In the realm of public law,
persons and bodies performing public functions
are under a duty not to infringe the rights of
people. The legal rights and duties enforceable
under Article 226 are not merely those which are
statutory. There are also rights under common law
or judge-made law, customary law or any other
form of law. For example, rules of natural
justice have been judicially evolved as law and
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have their origin in Roman law. Another such
legal right is the human right to be protected
from arbitrary, unreasonable and unjust action.
It is submitted that every person has the legal
right to be treated equally, not discriminated
against, and be dealt with justly, fairly and
reasonably. The basic principle underlying the
equality clause was called by Vivian Bose J. a
way of life. It is submitted that a way of
life does not spring from a Constitution or law.
The right to be treated equally is so basic to
human life that it is a right which is always
justiciable, whether in a civil court, or High
Court under Article 226. What Article 14 does is
to guarantee that right by an injunction to the
State not to deny equality before the law or the
equal protection of the laws. The right to
equality inheres in the right to justice, being a
human right, is itself a basic right and
comprehends almost all rights. The writ of
mandamus is designed to reach injustice wherever
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it is found . The learned Counsel in support of
his submissions relied on following judgments of
the Supreme Court.
i.Dwarkanath v/s. I.T.O. AIR 1966 SC 81;
ii.Rohtas industries v/s. Rohtas Industriest
Staff , 1976 (2) SCC 82;
iii.Anandi Mukta sadguru v/s. V.R.Rudani (1989)
2 SCC 691;
iv.Unnikrishnan v/s. State of A.P. (1993) 1 SCC
645;
The learned Counsel heavily relied on the
observations of the Supreme Court in its judgment
in the case Zee Telefilms Ltd. v/s. Union of
India, (2005) 4 SCC 649 and in the case of Binny
Ltd. v/s. Sadasivan (2005) 6 SCC 657. He
submitted that the above decisions demonstrate
that public function is performed when the
result is some collective benefit for the public
or a section of the public so that a private body
intervening or participating in economic or
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social affairs in the public interest are
amenable to the writ jurisdiction under Article
226. It is clear that the establishment,
operation and maintenance of airports is a public
and governmental function performed for the
benefit of the public, and has always been so,
historically and traditionally. That it is an
important public function is recognized by the
Essential Services Maintenance Act, 1981. The Act
of 1994, even as amended in 2003, particularly,
Sections 12, 12-A, 22-A and Chapter V-A leave no
manner of doubt that MIAL performs the public
functions and duties of the AAI and exercises the
powers of AAI for that purpose. Participation in
economic affairs in the public interest may,
and often does, involves commercial or business
activity in the public interest. A public
function may be performed on a non-profit basis
or by operating on commercial lines for profit.
MIAL performs a public function in the public
interest in providing for Duty Free Shops and
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other amenities and facilities and the airport.
In the discharge of its public function, MIAL is
obliged to act fairly, reasonably and justly so
that when it chooses to give a contract for any
particular activity at the airport which is for
the benefit of the public, it must choose the
person by open competition, according to
objective and clear norms, and its actions should
be transparent. MIALs actions are amenable to
judicial review under Article 226.
16. The learned Counsel submits that the judicial
review is available not merely when fundamental
rights are infringed but also when a body or
entity having public duties and functions acts
unreasonably, unjustly, irrationally, mala-fide,
arbitrarily or in violation of natural justice or
otherwise illegally in innumerable ways. He also
relies on the observations of the Supreme Court
in its judgment in the case of Comptroller &
Auditor General of India v/s K.S.Jagannadhan
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(1986) 2 SCC 679. He submits that a challenge to
arbitrary and irrational or mala-fide action can
be laid in a writ petition under Article 226
without invoking Article 14. He relies on the
observations of the Supreme Court in its judgment
in A.S.Ahluwalia v/s. State of Punjab, (1975) 3
SCC 503 as also in the case of R.D.Shetty
referred to above. He submitted that the same
view that has been reiterated by the Supreme
Court in the case of B.Ramakichenin v/s. Union of
India, (2008) 1 SCC 362.
17. The learned Counsel submits that
importance of giving reasons for a decision, even
an administrative one in the exercise of
discretion, is that the obligation to give
reasons acts as a check on arbitrary exercise of
power. The total absence of reasons in any formal
document of evaluation, the admitted non-
communication of any reasons to the Petitioners
consortium, and the ever-shifting, contradictory
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taking nine months of inactivity by Respondent
No.4 and not cancelling their contract earlier,
and, secondly, quietly handing over the contract
to Respondent No. 5 on a substantially low bid
affects the public exchequer and therefore the
public interest. Reasons for excluding from the
bidding process mean reasons which state why and
how the Petitioners consortium was found wholly
unworthy of being short-listed i.e. what is it
that the Petitioners consortium lacked in terms
of the criteria set out, what were its demerits,
how it was disqualified. In other words, reasons
for a decision, in law, involve the indication of
consideration of the relevant and objective
factors which lead to the result. Admittedly,
there is no clear statement by MIAL as to what
were the final criterea for short-listing. Thus
it is impossible to say that there were any
objective criteria at all which were objectively
evaluated. There is not a single document either
recording the process of evaluation either by the
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Respondent No.3 Company or by a Committee which
was formed to evaluate the Expressions of
Interest received, or indicating in any manner
the reasons for the decision to eliminate the
Petitioner from the bidding process. Lawful
reasons have to be clear, cogent and certain;
they cannot be vague, unclear and such as to
require inference from loose language in an
affidavit. It is only conjectural to infer that
because four out of nine were shortlisted, the
four were found better than the two left out; but
nothing is clear as to the grounds on which this
was done. The legal meaning of reasons is
disclosing the grounds for preferring the four
and disclosing what was the demerit or lack of
capacity or disqualification which the ousted
person suffered from.
18. The learned Counsel further submits that
the Respondent No.3/ MIALs principal submissions
may be summarized as follows:
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(a) As soon as the functions of the AAI are
transferred to MIAL under Section 12-A, they
cease to be public functions and become
private functions.
(b) MIAL is not acting for the public benefit
or in the public interest but is acting for
its own benefit and interest as a commercial
organization out to make profits.
(c) Under Article 226, only statutory duties
can be required to be performed, not public
duties. No writ lies against a company.
(d) Contractual rights cannot be enforced
under Article 226.
(e) Delay, waiver, acquiescence and the
equities arising in favour of Respondent
No. 5 are enough to dismiss the petition.
(f) Non-disclosure of the petition filed
against Bangalore International Airport Pvt.
Ltd.
He submits that none of the above submissions (a)
to (f) merit acceptance. As regards (a) it
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requires little argument to show that the
assignment/transfer/delegation of statutory
functions of the AAI to MIAL cannot possibly
change the nature of the functions. The functions
continue to remain public functions now being
performed by the Joint Venture Company as a
public- private partnership. The functions are
from amongst those enumerated in Section 12 and
their character as public functions, in law,
remain the same. As regards (b), there is
nothing antithetical between doing business for
profit-making and performing public functions. It
is clear from Sections 11 and 25(2) of the Act of
1994 that AAI is under a statutory obligation to
function on business principles and to have its
own Fund and to give the profits made to the
Central Government. Plainly, this does not
detract from the fact the AAI performs public and
statutory functions and it is some of these
functions that are assigned to MIAL. As regards
(c), as already submitted, historically, mandamus
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was issued in England for the proper performance
of public duties, not just statutory duties, and
this is settled law in India for the purposes of
Article 226. The law was initially enacted in
Section 45 of the Specific Relief Act, 1877.
Article 226 is much wider than the English law of
writs and reaches any person or entity that is
performing public duties. Zee Telefilms is a
Constitution Bench authority for the proposition
that if the duties of a private body are public
duties, Article 226 is available against the
actions of that body. Moreover, it is submitted
that the functions and duties of the AAI are
statutory and it is those statutory functions and
duties, along with powers to perform them, that
have been assigned or delegated to MIAL. It can
therefore be said that MIAL is performing
statutory duties and functions which are also
public functions and duties.
Several decisions were cited to indicate that
only statutory duties are enforceable by
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mandamus. In the first place this was an
erroneous view taken in ignorance of the existing
law on enforcement of public duties. In the
second place, all these cases are swept aside by
the later decisions particularly Anadi,
Unnikrishnan, Binny and the Constitution Bench in
Zee Telefilms. Reliance was placed on Praga
Tools (Two Judges Bench) to contend that no writ
lies against a company. This decision has been
held to be no longer good law in Air India
Statutory Corporation, (1997)9 SCC 377 (Three
Judges Bench). As regards (d), this is not a
case where contractual rights arising from a
concluded contract are being sought to be
enforced; it is a case where the public tender
process adopted by a body performing public
functions is being questioned as arbitrary.
Several decisions were cited but they dealt with
rights arising from a contract and are therefore
irrelevant. The situation here is wholly similar
to that which obtained in the International
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Airports Authority of India case which dealt with
award of contracts by the Authority by inviting
tenders. The only distinguishing factors- which
make no difference in law at all are that the
award of contract was for a restaurant and snack
bars and here it is for a duty-free shop and the
award is made by an assignee of the Airports
Authority, instead of the Authority itself.
There cannot be waiver of fundamental rights. See
Olga Tellis (1985)3 SCC 545. As far as the
legal right of the Petitioners consortium and
the public duties and functions of MIAL are
concerned, there has been no waiver. Nothing has
been shown as to how the Petitioner waived its
rights or waived the performance of public duties
by MIAL. It was urged that having participated in
the process by submitting an Expression of
Interest and then giving a presentation and
furnishing all required information, without any
complaint against the terms of the Invitation,
the Petitioners consortium is estopped from
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challenging the same. What is invoked is really
the Scottish doctrine of approbate and
reprobate which is equivalent to the English
doctrine of election. The answer is that no
equitable doctrine can impede a constitutional
remedy. Reliance was placed on the Judgment in
the case of P.R.Deshpande Vs. Maruti, (1998)6
SCC 507. Furthermore no so-called equities
can be pleaded by MIAL or the Respondent No. 5.
since the contract was awarded as late as 24-11-
2007 when the matter was sub-judice in the
Supreme Court. These Respondents have
consciously taken the risk with full knowledge of
the proceedings. In fact, they deliberately tried
to hastily put up the duty-free shop while
attempting to delay the hearing of this petition
only to create the so-called equities. They
went to the extent of urging before this Honble
Court that the petition has become infructuous
which plea was turned down by order dated 10-3-
2008. In any event, every impugned action done
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before and during the pendency of the petition,
is the subject matter of challenge and is
plainly subject to the result of the petition. In
International Airports Authority of India ( at
p.524 of SCC) the Supreme Court noted that the
writ petition had been filed five months after
the acceptance of the tender of respondent no. 4
therein and that he had incurred expenditure and
started running the same. On those facts the
Court found thus:
It would now be most iniquitous to set aside
the contracts of respondents 4 at the
instance of the appellant. The position would
have been different if the appellant had
filed the petition immediately after the
acceptance of the tender of respondents 4.
But the appellant allowed a period of five
months to elapse during which the respondents
altered their position.
The present petition was filed on 20-2-2007 and
dismissed on 22-2-2007. Respondent No. 4 was
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awarded the contract on 26-2-2007 , the very day
on which Special Leave Petition was filed. In the
said S.L.P. Respondent No.4 was impleaded. When
the Petitioner learnt that after cancelling that
contract the same has been awarded to Respondent
No.5, this Respondent was also impleaded in the
S.L.P. All parties were heard by the Supreme
Court before passing the remand order dated 21-2-
2008. Thereafter the Writ Petition was suitably
amended and Respondents Nos. 4 and 5 were
impleaded. All parties have been heard by this
Honble Court at length. There is no scope
whatever for claiming any equities.
As regards (f) there are three answers:
(1) The litigation against BIAL in the
Karnataka High Court was not against an airport
operator. BIAL was in the process of setting up
a new Greenfield airport at Devanahalli which was
scheduled to become operational in April ( now
postponed to end of May, 2008). Hence BIAL was
not operating an airport but establishing it.
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Operations start only when the airport is
established and fully ready to commence
operations. The object of the disclosure was to
see if an operator of a duty-free shop litigates
with its airport operator. Neither was the
Petitioners consortium an operator of any duty
free shop at Devanahalli nor was BIAL an airport
operator.
(2) The litigation was disclosed in any case
during the presentation on 9-11-2006 and this
averment was made in the Petitioners Rejoinder
dated 24-1-2008 but was not controverted in the
Additional Affidavit filed by MIAL on 20-2-2008.
For the first time, a denial is made in the Sur-
Rejoinder filed in this Honble Court during the
hearing on 30-4-2008. If in earlier affidavits
there is no denial, the denial made during the
course of the hearing is obviously an
afterthought.
(3) MIAL has nowhere averred when it came to
know of the litigation in Bangalore. Since it
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has now denied that disclosure was not made
during the presentation, it was incumbent on it
to aver precisely the date on which it became
aware. There is no averment that it became aware
before 30-1-2008 when the short-listing of four
parties had taken place. Thus it is clear that
that the so-called non-disclosure was not the
reason for refusing to shortlist the Petitioners
consortium. It must be noted that in the Sur-
Rejoinder dated 30-4-2008, MIAL gives as one of
the reasons for not wanting the Petitioners
consortium : Habitual litigant; filed cases
against various airport operators. This shows,
firstly, MIAL does not respect legal and
constitutional obligations and finds inconvenient
and undesirable those persons who go to Courts of
law to vindicate their rights. Secondly, the
litigations filed have been occasioned by the
arbitrary conduct of companies like the MIAL
which underscores the need to lay down the law
that they are subject to judicial review.
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19. On behalf of the Respondent No.3
Mr.Dave, the learned Senior counsel submitted
that the petition at the instance of the
Petitioner is not maintainable. He submitted that
the EOI was submitted by the Petitioner and ARI
together on the basis of the combined strength of
two entities. The Petitioner has not produced any
collaboration agreement entered into between the
petitioner and the ARI. ARI is not one of the
Petitioners before this court. No affidavit on
behalf of the ARI supporting the Petitioner has
been produced. Therefore, according to the
learned Counsel this petition at the instance of
the Petitioner alone is not maintainable. He
relies on the observations of the Supreme court
in the judgment in the case of Jahar Roy and Anr.
v/s. Premji Bhimji Mansata & Anr. AIR 1977 SC
2439. He also relied on the observations in the
case of Monghibai vs. Cooverji Umersey, AIR 1939
PC 170, and two other judgments, one in the case
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of Vyankatesh Oil Mill co. v/s. N.V.Velmohamed,
AIR 1928 Bom, 191; and the judgment in the case
of Sarju Prasad v/s. Badri Prasad, AIR 1939
Nagpur, 242. It was contended that the Respondent
No.3 cannot be termed either as a State or a
instrumentality of the State or other authorities
within the meaning of Article 12 of the
Constitution of India. It is submitted that the
Respondent No.3 is purely Private Limited Company
incorporated under the Companies Act, in which
74% shares are held by private promoters and 26%
are held by Airports Authority of India. It was
submitted that the Respondent No.3 is
financially, functionally and administratively
independent, managed and controlled by its Board
of Directors under its Articles of Association,
in which the Chairman and Managing Directors are
nominated by the private promoters and further 8
out of 11 directors are nominees of private
promoters. It was submitted, therefore, that the
ultimate tests propounded by the seven judge
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constitution bench of the Supreme Court in the
case of Pradeep Kumar Biswas, referred to above,
are not satisfied in the facts of the present
case, so as to make Respondent No.3 State
within the meaning of Article 12. The learned
counsel took us through the various clauses of
the Sharesholders Agreement, the OMDA, and
contended that it is clear that the Respondent
No.3 was functionally, financially and
administratively independent of Airports
Authority of India. It was submitted by referring
to various clauses in State Support agreement
that far from deep and pervasive control, there
was no control by AAI over Respondent No.3. In so
far as the submissions on behalf of the
Petitioner that in view of clause 3.1A of the
State Support Agreement dealing with Passenger
Service Fee, the Respondent No.3 should be
construed to be a State. It was submitted that
the Passenger Service Fee is not imposed by
Respondent No.3. It is imposed by the Central
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Government under Rule 88 of the Aircraft Rules
1937 and collected by the airlines. The security
component goes to AAI for meeting the security
expenses and the facilitation component is paid
to the airport operator to offset the expenses
incurred by it for operating and modernising the
airport.
20. It was further submitted that earlier
decisions of the Supreme Court in the cases of
Rajasthan State Electricity Board, Sukhdev Singh
and Ramana Dayaram Shetty, referred to above are
clearly distinguishable both on principle and on
facts. Same is true according to the learned
counsel in relation to Ajay Hasia's case (supra).
The learned Counsel submits that the law laid
down by the Supreme Court applicable in the
present case is the one which is laid down in the
Pradeep Kumar Biswas's case, referred to above,
General Manager, Kisan Sahkari, Chini Mills Ltd,
Sultanpur, U.P. v/s Satrughan Nishad and Others
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(2003) 8 SCC 639; Zee Telefilms Ltd, referred to
above; S.S. Rana v/s Registrar Co-operative
Societies and Anr (2006) 11 SCC 634; and the
judgment of the Supreme Court in the case of
Federal Bank Ltd. v/s Sagar Thomas AIR 2003 SC
4325. It was contended that the Respondent No.3
does not have monopoly status merely because some
of the functions of the AAI have been conferred
on the Respondent No 3 under the OMDA. It is
submitted that even the State Support Agreement
contemplates the setting up of a second airport
within 150 km radius of the existing airport,
through a competitive bidding process. In so far
as the submission made by the learned Counsel
appearing for the Petitioner in relation to the
provisions of Chapter VA of the Act are
concerned, it was submitted that the Respondent
No. 3 is entitled to take the benefits of the
provisions of the said Chapter VA is not enough
to construe that the Respondent No 3 is a
State. It is submitted that the benefits of
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provisions of the Chapter VA can be taken also by
a person operating a private airport. It was
submitted that the provisions in the OMDA and
State Support Agreement provides the formation of
the Joint Co-ordination Committee, Airport Co-
ordination Committee and OMDA Implementation
Oversight Committee does not in any manner
indicate that there is any deep, pervasive or any
control over the Respondent No 3 either by the
AAI or the Central Government. It was submitted
that the aforesaid Committees are formed only for
coordination purposes and for ensuring the smooth
and efficient rendering of the services to be
provided by the Central Government without any of
the aforesaid committees making any dictate/order
upon the Respondent No 3 or in any manner
interfering with the operation and management of
the Airport by the Respondent No 3. It was
submitted that the Respondent No.3 is exercising
commercial functions and not public functions and
is thus not amenable to the jurisdiction of this
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(iii) C.K. Achutan v/s State of Kerala AIR
1959 SC 490;
(iv) V.R. Misra v/s Managing Committee Shree
Jai Narain College (1972) 1 SCC 623;
(v) Umakant Saran v/s State of Bihar (1973)
1 SCC 485;
(vi) Har Shankar v/s Deputy Excise and
Taxation Commissioner AIR 1975 SC 1121;
(vii) Bihar Eastern Gangetic Fishermen Co-op
Society v/s Sipahi Singh and Ors (1977) 4 SCC
145;
(viii) Gujarat State Financial Corporation v/s
Lotus Hotels Pvt. Ltd (1983) 3 SCC 379;
(ix) Kerala State Electricity Board and Anr
v/s Kurien E Kalathil and Ors (2000) 6 SCC 293;
(x) Binny Ltd and Anr v/s V. Sadasivan and
Ors (2005) 6 SCC 657;
21. It was submitted that no relief can be
granted against the Respondent No.3, which was
discharging private and commercial functions and
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its impugned decision was purely a business
decision in view of the policy of privatisation
initiated by Govt. of India resulting in the
amendment to the Airports Authority of India Act
in 2003. It was submitted that these documents
need to be construed in a business like manner
and to effectuate the purpose, namely, the state
distancing itself from commercial activities. Our
attention was invited to the statement of objects
and reasons of the Airports Authority of India
Amending Act 2003 and the observations of the
Supreme Court in its judgment in the case of Zee
Telefilms (supra). The learned Counsel took us
through paragraphs 58, 62, 64, 67 of the judgment
in the Reliance Airport Developers's case. It
was submitted that in so far as the facts of the
present case in the light of the above law it is
clear that
(i)the advertisement for inviting EOIs was
clear in terms and was not vague;
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(ii) The process of consideration of EOIs was
divided into two stages, the first stage of
evaluation and short listing of offers and
the second stage of submission of tender
document to short listed persons/ consortia
and the consideration of bids submitted by
them;
(iii) Advertisement gave detailed criteria for
evaluation of offers and also indicated the
broad basis of evaluation; The advertisement
expressly stated the final criteria used for
short listing would be determined by MIAL in
its sole discretion and further provided
that the tender will be issued only to those
persons / consortia shortlisted by MIAL.
(iv) Further express right was reserved in
following terms: MIAL reserves the right to
decide on the modalities of the EOI / tender,
accept or reject any or all offers at any
stage of the process and / or modify the
process, at its sole discretion, without
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assigning any reason whatsoever. No
obligation or liability whatsoever shall
accrue to MIAL in such event.Undisputably,
the offer was made on behalf of ARI /
Flemingo in terms of the said advertisement
stating Requirements of Individual EOI. No
challenge was raised by ARI/Flamingo at any
stage to the advertisement, the criteria
provided therein, the process of evaluation
set out thereunder, the terms of short
listing, the right to issue tender to only
those short listed, etc. Even when called
upon to make a presentation in person on 9th
November 2006 and to submit information on
12th January 2007, no clarification much less
challenge to the advertisement was raised.
ARI / Flemingo participated in the 1st stage
of the process by submitting their EOI in
terms of the advertisement. While Petitioner
No 1/ ARI were offered the fullest
opportunity to represent their case in person
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and otherwise, they could not be short
listed on merits. Even when ARI/Flemigo
realised by 24th January 2007 that others had
been short listed while they were not, it did
not seek to challenge its exclusion until the
filing of the Writ Petition, which was only
on 20th February 2007. The Writ petition most
pertinently does not challenge the
advertisement inviting EOI. Therefore, the
arguments on behalf of the Petitioners as to
the alleged vagueness in the criteria
prescribed for evaluation or absence thereof
cannot and ought not to be entertained,
particularly they having participated in the
process and having failed. That in any
case Respondent No.3 have evaluated the EOI
of ARI/Flemingo bonafide with the assistance
of their team comprising qualified internal
and external experts. Clearly Respondent
No. 3 had fully complied with even the
contractual stipulation as set out under
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22. It was submitted that neither in the
Writ Petition nor in the course of argument has
it been alleged that the award of the contract by
the Respondent No 3 either in favour of the ITDC,
Aldeasa consortium or subsequently to the
Respondent No 5 involves any collateral purpose
or there has been a malicious misuse of powers by
the Respondent No 3 nor is any malafides alleged
against the Respondent No 3. It is submitted that
in the absence of proof of malafides, the tender
conditions are unassailable and are not open to
judicial review. The following decisions were
submitted for our consideration:-
(i) Asia Foundation & Consultation Ltd v/s
Trafalgar House Construction (India) Pvt. Ltd and
Ors (1997) 1 SCC 738;
(ii) Raunaq International Ltd v/s I.V.R
Construction Ltd and Ors (1999) 1 SCC 492;
(iii) Association of Registration Plates v/s
Union of India and Ors (2005) 1 SCC 679;
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(iv) Reliance Airport Developers Pvt. Ltd v/s
Airports Authority of India and Ors (2006) 10 SCC
1.
23. The learned Counsel further submitted
that most of all, on merits ARI/Flemingo was
found to be less meritorious than the five short
listed bidders as disclosed in the Affidavit in
Reply and more particularly as even admitted by
ARI in its email dated 26th February 2008.
Therefore, it was submitted that in the light of
the law declared by the Honble Supreme Court in
Reliance Airport Developers case and Tata
Cellular case besides other decisions cited
above, the decision making process did not suffer
from illegality, irrationality and
procedural impropriety. The decision in the
case of Reliance Energy Ltd and Anr v/s
Maharashtra State Road Development Corporation
and Ors (2007) 8 SCC 1 was clearly inapplicable
because therein the Honble Supreme Court had
clearly held that the doctrine of level playing
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losses, apart from rendering many employees
jobless. Passengers would be deprived of the
opportunity of duty free shopping and it is in
public interest that the same be allowed to
continue especially when equities have been
created. It was submitted that even otherwise the
Respondent No. 3 did not issue the RFP to the
Petitioner No 1 and its partner ARI in view of,
inter alia, the fact that the Petitioner No 1 did
not fit into or fulfill the criteria for
selection for the purpose of the said tender. It
is submitted that the Petitioner No 1
deliberately failed to make material disclosures
as was required under the EOI such as litigation
initiated by them against Bangalore International
Airport Pvt Ltd which was filed by the Petitioner
No.1 as early as on 9th October, 2006. It is
further submitted that this condition on
litigation disclosure was incorporated in the EOI
so that the Respondent No 3 would become aware of
the nature of relationship and the conduct of the
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duty free operator vis a vis other airport
operators and this deliberate attempt to conceal
the litigation spoke volumes of the conduct of
the Petitioner No. 1. It is further submitted
that even at the time of the presentation made by
the Petitioner No 1 before the Respondent No 3 on
9th November, 2006, the Petitioner No 1 failed to
disclose the litigation that it had filed against
Bangalore International Airport Pvt. Ltd. It is
further submitted that the process of evaluation
of the EOIs was transparent and full opportunity
was afforded to all nine persons including ARI
and the Petitioner No. 1, who submitted the EOIs.
It is further submitted that after receipt of the
EOI submitted on 18th October, 2006, ARI and the
Petitioner No. 1 were invited to make a
presentation on 9th November, 2006. It is
further submitted that the presentation indeed
took place and lasted for a couple of hours
during which a team of senior, experienced and
qualified personnel of Respondent No. 3 assisted
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by experts present or otherwise had a very frank,
open and fruitful discussion with the
representatives of ARI/ the Petitioner No. 1, who
were also qualified and experienced executives.
It is further submitted that during this meeting,
the entire process was discussed threadbare and
details of clarifications if any were duly
provided. It is further submitted that therefore
fair opportunity was afforded to ARI/ the
Petitioner No. 1. It is further submitted that
the process of application of mind in decision
making process on the part of Respondent No. 3
even continued thereafter as is clear from the
communications exchanged between the Petitioner,
Respondent No. 3 and ARI. It is further submitted
that these exchanges clearly show that Respondent
No. 3 not only considered the EOI filed by the
Petitioner No 1 and ARI on 18th October, 2006
seriously, but afforded every opportunity to ARI/
the Petitioner No 1 in support thereof. It is
further submitted that the process was clearly
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fair and reasonable given the nature of the
proposed transaction. It is further submitted
that at no stage any grievance was made on the
part of ARI/ the Petitioner No. 1 as to the
procedure/ process not being fair, reasonable or
lacking in any objective criteria. It is further
submitted that for the purpose of evaluation of
the EOIs, the Respondent No 3 appointed Trammell
Crow Meghraj and Crossbar Associates both of who
are considered experts in the field of duty free
retail as set out in the Affidavit in Sur
Rejoinder filed by the Respondent No 3. It is
further submitted that during this period of
evaluation there was a free exchange of views and
opinions and ideas and close interaction even
with those nine companies who had submitted the
EOIs. There was no bias whatsoever against any
one nor was there any preference in favour of any
one. It is further submitted that the whole
process was designed and implemented to find the
most suitable person to be shortlisted on merits.
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It is further submitted that the Respondent No. 3
is a commercial entity and the entire decision
making process was taken in the best interest of
the Company keeping in mind the requirements of
OMDA and interest of passengers needing world
class retail facilities. It is further submitted
that throughout this process, Respondent No. 3
also had the benefit of advice and guidance from
its then Chief Operating Officer Mr. Rudy
Vercelli, who had impeccable credentials and vast
experience in establishing and operating
international airports. It is further submitted
that after receiving the EOIs from the said nine
companies the same were subject to the scrutiny
of the aforesaid experts and the evaluation of
EOIs were done on a daily basis. It is further
submitted that the aforesaid experts periodically
met the senior management of the Respondent No 3
and advised the senior management of the
Respondent No 3. It is further submitted that the
said experts also prepared a detailed chart which
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laid down various categories/criteria and
categorized as to which consortium fulfilled
which condition/criteria and to what extent in
order to short list the entities. It is
further submitted that it was decided to confine
the issue of RFP to four or five of the best
potential bidders. It is further submitted that
the criti