MIAL is State - Bombay HC Order

7/31/2019 MIAL is State - Bombay HC Order

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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


55/184


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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

MIAL is State - Bombay HC Order

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