Shri Rajesh Kumar vs Airport Authority Of India And ...
2004 Latest Caselaw 1423 Del

JUDGMENT

S. Ravindra Bhat, J.

1. Issue Rule. With consent of parties, the matter has beenn taken up for final hearing.

2. In these proceedings, under Article 226 of the Constitution, the petitioner challenges the cancellation of a tender process initiated by the first respondent, Airports Authority of India (hereafter ''AAI'') as well as its subsequent decision to award the contract for services of recovery cranes to remove vehicles from the ''No Parking Area'' to the second respondent.

3. The AAI had, through an advertisement dated 16th May 2003, called for tenders for the purposes of providing services for recovery cranes for towing of light vehicles parked in the ''No Parking Zone'' of AAI, Indira Gandhi International Airport, New Delh [''the airport'']. Bidders were required to quote rates chargeable by them. This meant that the bidders were to indicate the rates payable on the basis of deployment of certain number of cranes, six shifts each day. It is not in dispute that as per the conditions, the petitioner was eligible to bid, which he did.

4. The technical bids were opened on 25.06.2003. Later, commercial bids of all the four concerns/parties who had tendered, were opened on 16.07.2003. The petitioner was found to be the lowest bidder. He had quoted Rs.2400/- per day for operating six shifts from the AAI. The other bidders had quoted higher rates.

5. The AAI wrote a letter on 20th November 2003, returning the earnest money deposit of the petitioner, to the tune of Rs.45000/-. He, therefore, questioned the non-award of contract and return of his earnest money deposit, in earlier writ proceedings in P No.3718-19/04. In that petition, he had imp leaded the respondent No.2, namely, M/s Mahesh and Sunny Enterprises. That petition was founded upon the alleged illegality of the return of his earnest money deposit and the award of contract to the second respondent. That petition was however rejected on 20th April 2004 on the ground of non-disclosure of relevant details and vague averments. No liberty was sought or granted to file any writ petition on the same cause of action.

6. In the present proceedings, the award of contract to the second respondent, without following the tender process and the cancellation of the bids pursuant to the tender notice dated 16.05.2003, have been questioned as arbitrary.

7. In reply to the notice issued, the AAI has averred that pursuant to the tender process, four parties including the petitioner were supplied with tender documents. The technical bids of all the parties were opened on 25.06.2003; commercial bids were opened on 16.07.2003. The AAI avers that the petitioner was the lowest bidder. It however alleges that the rate quoted by the petitioner was found to be unworkable, in that it was less than cost estimated by it. The petitioner had quoted Rs.2400/- per day for all the six shifts whereas according to the estimation of AAI, the cost of the said shifts itself was Rs.4950/- per day and that the rates quoted by the petitioner were not sufficient to meet the expenses, reasonably necessary for providing the services.

8. In view of the above, the AAI avers that the matter was referred to the headquarters of the Airport Authority for appropriate directions and that as per the decision received, all tenders were cancelled; the earnest money received from various parties were refunded in November 2003.

9. As far as the award of contract to the second respondent is concerned, the AAI avers that on 9th December 2003, it made arrangements with the help of the IGI Airport car parking management licensee, which is the second respondent, for towing away the vehicles parked in the airport premises unauthorizedly/ in the No Parking Zone. It is averred that such an arrangement was made following the pattern existing in the Chennai Airport and that in this arrangement or scheme, the AAI does not have to incur an expenses; instead it leads to augmenting of its revenue. The revenue secured from persons who unauthorizedly park their vehicles or park them at No Parking Area, is now shared between AAI and the second respondent. This arrangement, it is averred, will be co-terminus with the existing license held by the second respondent. The AAI further submits that since the earlier petition was based on the same cause of action and had claimed the same reliefs, the present petition has to be dismissed.

10. Further to our direction, the AAI produced the relevant records. The various nothings on the files, made on 17.07.2003, 20.07.2003 and 05.08.2003 [by the Deputy General Manager (Technical)] indicate that all the quotations received were perceived to be considerably lower than the estimated cost of providing the service and that the AAI was concerned about adoption of unfair methods by the party in the eventuality of such tenders being accepted. After revising the estimated cost, the estimate for each shift was Rs.700/-; thus according to the AAI, the total estimated cost for providing the service itself could not have been less than Rs.4200/- per day, without including the element of profit. As per its thinking, therefore, the award of the contract could have meant that any contractor would have resorted to unfair methods in order to secure additional amounts or profits. Having regard to these factors, the General Manager proposed that the tender called by the AAI for tow away cranes be cancelled and that the contract for tow away service be negotiated with M/s Upper India Automobile Association initially for a period of one year since it was perceived as a reputed and reliable service provider. This proposal was concurred by the Competent Authority on 27.08.2003.

11. The file of AAI further discloses that M/s Upper India Automobile quoted a rate of Rs.5,94,000/- for providing the service of towing away cranes for a period of four months. This quotation was received after the decision of the AAI to cancel the contact. When the offer of M/s Upper India Automobiles was being processed, a letter was received by the Airport Director, IGI Airport of AAI, from the headquarters of AAI advising that the arrangement at Chennai Airport be followed. This meant that the existing licensee, managing the authorized car parking was to be assigned the service of providing cranes to remove vehicles parked at No Parking Areas. This advise appears to have been based on certain representations received about the functioning in the Airport. The representation was made by the second respondent; he highlighted that the lack of any arrangement for removal of unauthorizedly parked vehicles was causing financial loss to it to the tune of Rs. 6 lakhs to Rs. 8 lakhs per month. The noting had proposed to allow the car parking contractor, namely, the second respondent to provide the crane service at his cost. The proposal also contemplated that AAI would levy the fine (for unauthorized parking) which would be shared with the contractor according to an agreed ratio fixed by AAI. Having regard to these factors, letter dated 20th November 2003 was issued by the headquarters of AAI after which the second respondent was issued with the contract of providing cranes for towing away unauthoriedly parked vehicles. In order to satisfy ourselves, we had sought information as to which concern or party is presently operating the service in Chennai; we have been informed by the learned counsel for the AAI that it is not the second respondent; the hennai concern has no interest or connection with the latter.

12. Shri O.P. Saxena, learned counsel appearing for the petitioner submits that the petitioner was entitled to be awarded the contract since admittedly he was the lowest bidder. Learned counsel submits that the action taken by the AAI in cancelling the contract is arbitrary and unreasonable. According to him, the basis for that action is that the cost for providing the crane service would be Rs.4950/- per day. It is submitted that such an assumption is grossly exaggerated and that the petitioner has made realistic and reasonable offer of Rs.2400/- per day which would not only cover his costs but also provide him reasonable return.

13. Learned counsel further submits that there is nothing to warrant the conclusion that if the petitioner were to be awarded the contract at the rate quoted, he would indulge in unfair practice. He submits that such a surmise is unfair and not borne out by any material. Learned counsel also submits that being an instrumentality of the State, AAI is required to act in a fair and non-arbitrary manner; its action in proceeding to award the work of towing away unauthorizedly parked vehicles to the second respondent, without even calling for tenders is opposed to Article 14.

14. Ms.Rachna Joshi, learned counsel for the AAI submits that the cancellation of the bids was preceded by an application of mind to all the relevant factors. According to her, none of the bids bore a reasonable proximity with the cost estimated as necessary for providing the service, i.e. Rs.4950/- per day, as per AAI's calculations. She submits that while considering bids and deciding whether to enter into a contract at all with one or the other tenderers, the nature of the work and the realistic or easonable costs likely to be incurred by the service provider/tenderer are relevant considerations. In the present case, the cranes and manpower to operate the cranes for the six shifts were to be deployed by the contractor; hence the costing in respect of each shift was worked out and as per the AAI calculations, an amount of Rs.4950/- for all the six shifts was the minimum expected expenditure. In such a situation, a quotation for Rs.2400/- which was less than 50% of the estimated cost, could not but be viewed adversely. The AAI was therefore bound to consider whether the tenderer would seek to profit or derive advantage by recourse to other means which were likely to be unfair. Learned counsel submits that the analysis of all tenders received disclosed the same pattern and that consequently the decision was taken in principle to cancel the contracts and negotiate with M/s Upper India Automobiles. When this process was underway, the headquarters of AAI took a decision in line with the prevailing contract at Chennai, the existing license holder in respect of authorized car parking be also asked to provide the additional service of towing away the unauthorizedly parked vehicles, with cranes.

15. Learned counsel for the AAI has submitted that the entire decision making process culminating in the cancellation of tenders and the award of service contract to the second respondent is based upon rational and reasonable considerations; it is the result of a bona fide exercise of power. She further submits that AAI cannot be compelled to enter into a contract with the petitioner and that the decision to award additional work to the existing authorized car parking agency, namely, the second respondent, was pursuant to a change in the policy which resulted in augmenting of resources of the AAI. As per the previous scheme, the AAI was to bear the expenses of towing away vehicles; with the present policy by which the contract has been awarded to the second respondent, the AAI does not have to bear that expenditure and instead, it would share a part of the revenue received by way of fines etc. from the owners of such vehicles, with the second respondent.

16. At the outset, we may notice that the previous writ petition filed by the petitioner sought the same reliefs as in the present proceedings. That writ petition was dismissed, though for the reason that the grounds were vague. Yet, no liberty was sought to move fresh proceedings under Article 226 of the Constitution. This, in our view strikes at the maintainability of the present petition, since no leave was sought, or granted to move afresh on the same cause of action. The dismissal of the writ petiton, in our view stands in the way of any relief being granted in these proceedings. We however, do not wish to rest our decision on this ground, since the parties have made submissions on merits and we propose to deal with it.

17. There is a considerable body of judicial thinking about the duties of Government and public agencies, (and the norms of their acceptable behavior) while entering into contracts, and commercial transactions. These were re-stated in Tata Cellular v. Union of India , and have been followed in a number of later decisions. In the process of contract formation, the governmental or public authority acts in the commercial sphere, and possesses what has been termed as a greater '' elbow room'' han in other administrative matters. Nevertheless, it is bound by principles of non-arbitrariness, reasonableness, in matters of policy formulation, and it has to act in bona fide exercise of power, within the bounds of any law holding the field. Judicial review is confined to an examination of the decision making process, and ensuring that it is not tainted by mala fides, unreasonableness, or arbitrariness.

18. In Monarch Infrastructure (P) Ltd v. Commissioner Ulhasnagar Municipal Corporation ( AIR 2001 SC 2272) the Supreme Court had ruled that the State or public agency has, in the commercial field, sufficient discretion to decide whether to accept the tender of the lowest bidder at all. The court held that as long as the decision not to accept a tender or enter into contract was based upon reasonable considerations, and was not mala fide or illegal, the court would not interdict with such an administrative exercise of power.

19. On an application of the above principles, we are of the view that the decision taken by the AAI to cancel the tendering process, and not accept bids from any tenderer, including the petitioner, cannot be characterized as arbitrary or unreasonable. The AAI, as a public authority, was within its rights to make a fair assessment of the likely and reasonable expenses that could be incurred by every service provider. As per that assessment, the rates offered by the petitioner were considerably lower than its estimate of what could be the reasonable cost for providing the service. Hence, the inference drawn by it that in the event of the contract being awarded, the service provider could use unfair means, cannot be called irrational. Having regard to the very nature of the service, namely towing away unauthorizedly parked vehicles, the quotation of such low rates led to the feeling that tenderers could use unfair means and possibly recover amounts from individuals. This rationale is based upon the assessment of the authority, viz AAI; we cannot value-judge, nor oversee it as an appellate authority. Hence, the decision of AAI, not to enter into contract with any bidder, and to reject the bid of the petitioner (who was the lowest bidder) is neither arbitrary nor unreasonable; it is not violative of Article 14 of the Constitution of India.

20. The second aspect raised in this petition is that whether the second respondent could have been granted the contract to perform the service without recourse to the process of public tenders.

21. The rule in such cases, as we see it, is that wherever a government agency seeks to dispose of property or enter into contracts, it must do so consistent with Article 14, after giving appropriate publicity in that regard. This however, is not an invar able rule; decisions have accepted that there can be departure from such a requirement. It was held that in Natai Bag v. State of West Bengal that the Government can make pragmatic adjustments and frame policies which may be necessitated due to particular circumstances, and that when such a departure is made, it should be justified on rational and non-discriminatory considerations.

22. The facts of this case show that when the process of finalizing a short term contract with Upper India Automobiles was under way, the AAI decided to adopt the pattern or scheme prevalent in Chennai, where the authorized car parking agency was also given the responsibility of towing away vehicles parked in non-parking zones. This was a policy decision. There is nothing to suggest mala fides or arbitrariness in the formulation of that policy. The policy marks a change in the manner of handling unauthorizedly parked vehicles. Firstly the agency for manning authorized parking and removing the other vehicles is the same; secondly, the contract for such an additional service is co-terminus with the license to man the authorized parking; it forms a part of the conditions of that service sought by AAI; thirdly, this scheme envisions revenue sharing between the service provider and the AAI, whereas in the previous policy, the AAI was paying for the service, of course from its revenues, which included fines levied from persons who unauthorizedly parked their vehicles.

23. In the nature of the policy decision, which was to the effect that the existing contractor for the authorized parking had to provide additional service, the issue of entering into contract after issuing advertisement did not arise. We are therefore satisfied that the decision to award the work of providing cranes, to the existing authorized parking management agency, namely the second respondent, was not arbitrary or unreasonable. These findings however, cannot be understood to mean that when the period of contract between the AAI and the service provider (i.e the second respondent) comes to an end, there is no requirement for giving due publicity. That requirement would have to be adhered to since the AAI would then be calling for tenders/ responses or composite services.

24. In view of the foregoing discussion and findings, the petition is bereft of merits, and is accordingly rejected. All interlocutory applications, having been rendered infructuous, are disposed off.

25. No costs.