Terms Of Invitation To Tender Not Open To Judicial Scrutiny Unless They Are Malafide- SC Reiterates
A Supreme Court Bench of Justice MR Shah and Justice Krishna Murari heard an appeal against a judgment passed by the Delhi High Court that set aside some tenders floated by the Airport Authority of India (AAI) in the exercise of powers under Article 226 of the Constitution of India.
Setting aside the order, the Supreme Court held that "the High Court has erred in quashing and setting aside the eligibility criteria/tender conditions mentioned in the respective RFPs, while exercising the powers under Article 226 of the Constitution of India. As per the settled position of law, the terms and conditions of the Invitation to Tender are within the domain of the tenderer/tender making authority and are not open to judicial scrutiny, unless they are arbitrary, discriminatory or mala fide. As per the settled position of law, the terms of the Invitation to Tender are not open to judicial scrutiny, the same being in the realm of contract. The Government/tenderer/tender making authority must have a free hand in setting the terms of the tender."
ASG KM Nataraj appeared for the AAI while Counsel Umakant Mishra appeared for the Centre for Aviation Policy, Safety & Research (CAPSR) before the Court.
In this case, the AAI floated a Request for Proposal (RFP) for concession of ground handling services at Group A, B, C & D airports owned by it. However, AAI cancelled the tender floated for Group D airports, and published a fresh RFP for Group D1 airports. The respective RFPs contained the eligibility criteria which included the technical and financial qualifications.
The CAPSR filed a writ petition before the High Court, challenging the eligibility criteria and the respective RPFs with respect to Group C and D1 and D2 airports, on the ground that eligibility criteria contained in the RFPs were not only a radical departure from the past, but also stipulate onerous technical and financial qualifications, thereby rendering most of the extant Ground Handling Agencies (GHAs) ineligible to participate in the tender process, especially those which have been providing Ground Handling Services (GHS) at the smaller airports of the country, that fall under the categories of said Groups of airports for the last many years.
The AAI opposed the writ petition by filing a counter affidavit which stated that the objective of the tenders for Group C, D1 and D2 airports was not to oust small players but sought to exclude GHAs, which lack expertise and infrastructure and used casual and unskilled labour in workforce which allowed them to offer better rates as compared to other GHAs.
The High Court set aside the respective RFPs and also set aside the decision to carry out region-wise sub-categorisation of the 49 airports falling under Group D-1. The High Court also set aside the stipulation in the RFPs that only previous work experience in respect of providing GHS to scheduled aircrafts shall be considered acceptable for the purpose of the tender/RFP. The Court also held the revised minimum Annual Turnover criteria of INR 18 crores to be discriminatory and arbitrary.
Consequently, the AAI approached the Supreme Court.
The Supreme Court held that it was not appreciable how CAPSR being an NGO would have any locus standi to maintain the writ petition, as it could not be said to be an "aggrieved party". In that context, the Supreme Court held that the High Court had erred in entertaining the writ petition, and it ought to have dismissed the petition on the ground of the locus standi of CAPSR.
Further, the Supreme Court opined that even on the basis of merits, the High Court had erred since the terms of the Invitation to Tender are not open to judicial scrutiny, and further opined that "Having gone through the respective clauses/conditions which are held to be arbitrary and illegal by the High Court, we are of the opinion that the same cannot be said to be arbitrary and/or mala fide and/or actuated by bias. It was for the AAI to decide its own terms and fix the eligibility criteria."
Therefore, the Supreme Court quashed the orders and judgments passed by the High Court, and dismissed the writ petition filed before the High Court. There were no orders passed as to costs.
Cause Title - Airport Authority of India v. Centre for Aviation Policy, Safety & Research