Tdi International India Ltd. vs Airports Authority Of India And ...
2004 Latest Caselaw 1203 Del

JUDGMENT

D.K. Jain, J.

1. RULE D.B.

2. With the consent of learned counsel for the parties, the matter is taken up for final disposal.

3. In this writ petition under Article 226 of the Constitution of India, the petitioner questions the legality and validity of order dated 5 May 2004 passed by the Airports Authority of India (AAI for short), Respondent No. 1 herein, to cancel the second Notice Inviting Tender (NIT for short), issued on 30 January 2004, for award of contract for licensing indoor and outdoor advertisement sites at the international and domestic airports in the country.

4. To appreciate the controversy involved in the case, a brief reference to the background facts would be necessary. These are as follows:

On 27/28 November 2003, the AAI invited tenders for licensing advertisement rights at international and domestic airports. A corrigendum dated 11 December 2003 was issued by the Executive Director (Commercial), AAI, the second respondent herein, notifying that the tender document scheduled for selling from 8 December 2003 stood postponed. Vide their letter dated 24 December 2003, the Ministry of Civil Aviation advised AAI to cancel the NIT and carry out necessary amendments in the Commercial Manual for: changing the gross turnover criteria; clubbing of airports and widening the scope of experience to include advertisements in the fields other than the transport sector.

4.2. Thereafter, a fresh NIT was published on 30 January 2004 Last date for submission and opening of the technical bid was 10 March 2004 Pursuant thereto, the petitioner, who claims to be the forerunner and leader as concessionaire of AAI for advertising rights, submitted its technical and financial bids and deposited the requisite earnest money. Tender documents were issued to seven other parties. Besides, one M/s.Chhabi Advertising (hereinafter referred to as 'Chhabi') downloaded the tender docuents from the web site of AAI. However, out of the eight parties, only two parties, namely the petitioner and Chhabi submitted their bids. On opening of both the tenders, the tender opening committee found only the technical bid of the petitioner to be complete in all respects. Technical bid of Chhabi was found to be not responsive and as such they could not participate in further bidding process in respect of any group of airports. It appears that the evaluation report was put up to the Chairman AAI, who desired that legal opinion regarding eligibility of Chhabi be obtained. Legal opinion went against Chhabi. On the orders of the Chairman, the opinion was placed before Commercial Advisory Board (CAB).

4.3. The issue whether the financial bid of the petitioner, the sole technically qualified bidder, should be opened was deliberated upon in the meeting of CAB held on 6 April 2004, when the tender documents submitted by Chhabi were also scrutinized. CAB suggested the following options for consideration of the AAI's Board:

"i. Opening the offer of M/s. TDI, the only technically qualified bidder and for consideration for award of the same, subject to the offer being more than the MRLF, in accordance with the Clause 3.3.1 of the Commercial Manual.

ii. To go for re-tendering in order to have better response to the tenders, if required, by even encouraging joint venture bids etc., after amending the provisions in the Commercial Manual with the approval of AAI Board. If this opinions proposed to be adopted, it would be necessary to define the maximum number of Members in joint venture the pre-qualification criteria to be fulfillled by each member of joint venture and designating of a tender and the pre-qualification criteria to be rescribed for the tender etc. These criteria should also be formulated and got approved by the Board and incorporated to the Commercial Manual."

4.4. Meeting of the Board of AAI took place on 19 April 2004, wherein the following decision was taken:

"LICENSING INDOOR AND OUTDOOR ADVERTISEMENT SITES AT INTERNATIONAL AND DOMESTIC AIRPORTS.ED (Commercial) explained the proposal for licensing indoor and outdoor advertisement sites at international and domestic airports. The Board thereafter discussed the proposal in detail and also the legal opinion submitted by M/s. M.V.Kini and Co., placed at Annexure-II to the Board Memorandum. Taking into consideration all aspects of the case, sensitivity of such commercial contracts and also to have better response/competition, the Board decided to go in for re-tendering of the proposal with the following conditions:

i) that the airports will be suitably re-grouped with special conditions attached to tendering the facility at Delhi and Mumbai airports regarding assignability clause and termination clause due to the impending restructuring of these two international airports;

ii) that the period of contract for these two airports, namely, Delhi and Mumbai, would be restricted to three years only and that there will be no other changes in the other criteria contained in the earlier tender document.

In view of the decision to go for re-tendering, the Board also decided to approve three months extension of the existing contract from 7.4.2004 to 6.7.2004 as indicated in the Board Memorandum.''

4.5. By the impugned letter, the petitioner was informed about the decision of the AAI Board to re-invite tenders and extension of their existing contract for a period of three months on the existing terms and conditions. Hence the present petition.

5. The petition is contested by the respondents. In the affidavit filed in opposition it is stated that since there was only one qualified tenderer, the Board in its meeting held on 19 April 2004, upon taking into consideration the sensitivity of such commercial contracts, decided to go in for re-tendering. It is averred that re-tendering was resorted to due to impending restructuring of Delhi and Mumbai airports; to have better response/competition and re-grouping of the airports. The allegation in the writ petition to the effect that cancellation of NIT was with a view to provide another opportunity to Chhabi to participate in a fresh tender or to oust the petitioner has been denied. In nut shell, the reasons for cancellation of NIT issued on 30 January 2004 are stated to be: (i) re-grouping with special conditions regarding assignability and termination clause due to impending re-structuring of the two international airports at Delhi and Mumbai and (ii) restricting the period of contract for the e two airports to three years instead of normal period of five years.

6. We have heard Dr.A.M.Singhvi, learned senior counsel for the petitioner and Mr.V.P. Singh, learned senior counsel for the respondents, at some length.

7. Referring to us various clauses of the Unified Commercial Manual, formulated by AAI for having a uniform policy for handling commercial matters, Dr.Singhvi has strenuously urged that it is a sacrosanct document and all bids have to be processed and evaluated strictly in accordance with the terms stipulated therein or else, the credibility of the entire tendering process would be lost. Learned counsel submits that as per clause 3.3.1 of the said Manual even a single tender has to be considered for award of contract, provided the offer is not less than the Minimum Reserve License Fee (MRLF), which is not the case here. It is also pointed out that as per Clause 9.7 appearing in Chapter-9 of the said Manual, which lays down the procedure for opening f tenders, a single tender is also to be opened and technical bid evaluated, which was correctly done in the instant case. Learned counsel contends that having done so and finding petitioner's bid to be responsive, as per Clause 10.2 of the Manual, it was incumbent upon AAI to open the financial bid of the petitioner within thirty days of the opening of the technical bid but mercifully it was not done. Furthermore, the Chairman, instead of according his approval to open the financial bid of the pettioner, deliberately, without any cause, sought legal opinion as to whether the technical bid of Chhabi could be considered. Learned counsel asserts that the procedure adopted by the respondents in dumping the bid of the petitioner is not countenanced b the rule of law and the entire exercise was a calculated move to somehow accommodate Chhabi. To buttress the allegation, learned counsel has invited our attention to certain documents, in particular the deliberations of the CAB, who, despite the legal pinion against Chhabi, still chose to deliberate on their aspirations to form a joint venture, for which there was no provision in the Commercial Manual. It is also contended that even the CAB, while recommending the aforenoted two options to the Board of AAI did not ascribe any cogent reason for ignoring the bid of the petitioner. Learned counsel would also submit that being the sole tenderer, whose technical bid had been declared responsive, the petitioner had a legitimate expectation of their financial bid being considered and awarded the contract and, therefore, AAI's failure to consider the same renders its decision as arbitrary. It is, thus, vehemently pleaded that the decision of the respondents to cancel NIT dated 30 January 2004 for the staed reasons and to re-invite tenders is wholly arbitrary, discriminatory, mala fide and, per se, illegal. In support of the proposition that under these circumstances the Court in judicial review is competent to set aside an administrative action, learne counsel has placed reliance on the decisions of the Supreme Court in Union of India and Others V. Dinesh Engineering Corporation and Another and ABL International Ltd. and Anr V. Export Credit Guarantee Corporation of India Limited and Ors. T 2003 (10) SC 300. Reliance is also placed on another decision of the Apex Court in Food Corporation of India V. M/s. Kamdhenu Cattle Feed Industries to contend that the petitioner having successfully complied with all the tender conditions and the respondents being bound to open and consider the sole tender of the petitioner in terms of Clause 3.3.1, the petitioner had not only a legitimate expectation of getting the contract, in fact a vested right had accrued in their favor to ge the same.

8. Per contra, Mr.V.P.Singh, learned senior counsel for the respondents, while supporting the decision of the respondents to re-invite the tender has submitted that the Commercial Manual, on which a strong reliance has been placed on behalf of the petitioner, is nothing more than a compilation of the internal instructions for AAI and it has no legal sanctity as such. It is urged that the Manual is in the nature of guidelines for the office use and, therefore, its non- compliance will not per se be in icative of the fact that the decision to cancel the NIT and invite fresh tenders is arbitrary or discriminatory. It is asserted that the impugned decision having been taken after due deliberations by the CAB and the AAI Board, which is the final authority to award a tender, no mala fides, factual or legal, can be attributed to the respondents, warranting interference by this Court in exercise of power of judicial review under Article 226 of the Constitution.

9. Before adverting to the issue involved, it will be useful to recapitulate the broad parameters, which have to be kept in view while testing an administrative decision in judicial review. Article 226 of the Constitution confers on the High Courts a very wide power of judicial review to examine whether the administrative action is valid or not. The power of judicial review being an inherent part of the basic structure of the Constitution cannot be abrogated in any manner. At the same time there are certain self imposed limitations and restraints even in the exercise of such a power. Ordinarily, the Courts are slow to interfere in matters relating to administrative decisions, particularly in contractual matters, unless the Court is convinced that he action or the decision of the State or its instrumentality is irrational, arbitrary, discriminatory or actuated by mala fides or bias. It is well settled that while exercising the option of judicial review, the Court is more concerned with the decision making process rather than the merits of the decision itself. At the same time for scrutinizing the decision making process it becomes inevitable to appreciate the facts in a given case as otherwise the decision cannot be tested on the ground of aritrariness, irrationality or mala fides.

10. The scope of judicial review of administrative decision and exercise of contractual powers of the Government bodies was examined in depth by the Supreme Court in Tata Cellulor Vs. Union of India, and on an exhaustive consideration of long line of earlier decisions on the point, the following broad principles were culled out:

(1) The modern trend points to judicial restraint in administrative action.

(2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made.

(3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible.

(4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts.

(5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principles of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides.

(6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and un-budgeted expenditure."

11. The same principles have been reiterated by the Apex court in Directorate of Education and Others Vs. Educomp Datamatics Ltd. and Others, . While observing that in exercise of their power of judicial review it is open to the Courts to scrutinize the award of contracts by the government or its agencies to prevent arbitrariness or favoritism, their Lordships have said that the Courts would interfere with the administrative policy decision only if it is arbitrary, discriminatory, mala fide or actuated by bias.

12. Adverting to the facts in hand, we find some substance in the submission of learned senior counsel for the petitioner that the respondents were bound to scrupulously adhere to the conditions stipulated in the NIT and in terms of Clause 3.3.1 thereof; petitioner's financial bid ought to have been opened and considered despite the fact that they were the only bidder whose technical bid was found to be responsive. We are, therefore, unable to accept the stand of the respondents that they are not bound to scrupulously comply with the conditions contained in the Commercial Manual as the same is meant for departmental guidance only. Such a stand would not only impair the sanctity and integrity of the process of tender, which is so essential to be maintaned, non-adherence to the tender conditions would encourage and provide scope for discrimination, arbitrariness and favoritism, which are totally opposed to rule of law and our Constitutional values. Deviation from any essential conditions of the NIT would provide room for manipulation to suit the whims of the State agencies in picking and choosing a bidder for awarding contracts. Such an approach cannot be permitted. Nevertheless, these observations in favor of the petitioner do not conclude the is se at hand. The real question for determination is whether the decision of the respondents to bury the NIT dated 30 January 2004 and re-invite tenders can be said to be arbitrary, discriminatory or actuated by mala fides or a deliberate act to favor Chabi and, therefore, liable to set aside when tested on the touchstone of the principles enunciated in Tata Cellular (supra) and subsequent pronouncements ?

13. Having carefully perused the original record produced before us by the respondents, we are of the view that there is no material on record which compels us to come to the conclusion that the impugned decision of the respondents is arbitrary, discri minatory or mala fide. nothings on the files produced and the final decisions taken thereon by the CAB and the AAI's Board, extracted above, show that the said exercise was undertaken keeping in view certain situations, anticipated in future and not with view to favor Chhabi, as is sought to be pleaded by learned counsel for the petitioner. No doubt the bid documents submitted by Chhabi were considered by the CAB and even proposal for encouraging joint venture bids was made but it was of no consequence inasmuch as in the final decision by AAI's Board, Chhabi's proposal for permitting bid by joint ventures does not find mention and only two aforenoted new terms were recommended in the NIT. Neither the petitioner seems to have any objection to the new terms nor it is within the domain of this Court in judicial review to consider whether the said stipulations are fair and reasonable or not.

14. As regards the plea of reasonable or legitimate expectation of the petitioner of acceptance of its bid in question in terms of Clause 3.3.1 of NIT, on account of the fact that they were the only one left in the fray, it is true that every legitimate expectation is a relevant factor requiring due consideration in a fair decision making process. But, as observed by the Supreme Court in Kamdhenu Cattle Feed Industries' case (supra), a mere reasonable or legitimate expectation of a citizen may not by it elf be a distinct enforceable right but failure to consider and give due weight to it may render the decision arbitrary and this is how the requirement of due consideration of a legitimate expectation forms part of the principle of non-arbitrariness, a necessary concomitant of the rule of law. Drawing support from two decisions of the House of Lords, in Council of Civil Service Unions Vs. Minister for the Civil Service (1984) All ER 935 (HL) and Preston, in re. (1985) 2 All ER 327 on the significance f the doctrine of legitimate expectation, their Lordships held thus:

"Whether the expectation of the claimant is reasonable or legitimate in the context is a question of fact in each case. Whenever the question arises, it is to be determined not according to the claimant's perception but in larger public interest wherein other more important considerations may outweigh what would otherwise have been the legitimate expectation of the claimant. A bona fide decision of the public authority reached in this manner would satisfy the requirement of non-arbitrariness and withstand judicial scrutiny. The doctrine of legitimate expectation gets assimilated in the rule of law and operates in our legal system in this manner and to this extent.

15. Applying the above quoted principle on the facts of that case, the Court held that though the writ petitioner's bid was the highest, still it had no right to have it accepted because the Corporation reasonably felt that the amount offered by the petitioner was inadequate as per the factors operating in the commercial field. It was observed that the procedure of negotiation itself involved giving due weight to the legitimate expectation of the highest bidder and this was sufficient. Therefore, the on-acceptance of bid could not be faulted.

16. The doctrine of ''legitimate expectation'' was elaborately considered by the Supreme Court in Union of India V. Hindustan Development Corporation . Inter alia, observing that legitimate expectation is neither the same thing as anticipation; nor is it different from a mere wish to desire or hope; nor is it a claim or demand based on a right and a mere disappointment would not give rise to a legal consequence, their Lordships said that the principle of legitimate expectation did not involve any crystallized right. The protection of such legitimate expectation did not require the fulfilllment of the expectation where an overriding public interest required otherwise. Finally, it was held that the Court would interfere only if the decision taken by the authority was arbitrary, unreasonable or not taken in public interest. The Court must follow an objective method by which the decision making authority is given the full range of choice which the legislature is presumed to have intended. f the decision is reached fairly and objectively, it cannot be interfered with on the ground of procedural fairness.

17. We are of the considered view that on the facts of the instant case, delineated above, the doctrine of legitimate expectation has no application. True that the petitioner was the sole tenderer who had qualified for opening of its financial bid but that by itself did not give rise to a vested or crystallized right to have the bid accepted. At best it was a fond hope that if the bid was considered, the tender may be awarded. But before that could happen, some factors intervened. Therefore, the quetion for consideration is whether these intervening factors or considerations outweigh what otherwise would have been the legitimate expectation of the petitioner. In other words, whether the decision by the respondents to call for fresh tenders was ased on cogent reasons and not on their mere ipse dixit to cancel the NIT. The latter situation would clearly be an act of arbitrariness and unfair play, opposed to the mandate of Article 14 of the Constitution, but not the former situation. From the material placed on record, including the advice of the Ministry of Civil Aviation, regarding regrouping etc., restriction of the period of contracts in Delhi and Mumbai airports, it is clear that the impugned decision is based on cogent grounds and cannote said to be arbitrary or unreasonable, warranting interference. Consequently, we reject the contention.

18. Before parting with the case, we may also deal with yet another plea urged by learned counsel for the petitioner, namely, that the impugned decision of the respondents having been taken to somehow frustrate the right of the petitioner to get the tender, amounts to ''malice in law'' and therefore, deserves to be reversed. In support of the proposition, reliance is placed on the decision of the Supreme Court in Smt. S.R.Venkataraman Vs. Union of India and Anr., .

19. This submission of the learned counsel also does not commend to us. In Venkataraman's case (supra) the Supreme Court had observed that malice in its legal sense means malice such as may be assumed from the doing of a wrongful act intentionally but without just cause or excuse, or for want of reasonable or probable cause. Recently in State of A.P. and Ors. Vs. Goverdhan Lal Pitti, , dealing with a similar allegation of malice, their Lordships of the Supreme Court have observed that were malice is attributed to the State, it can never be a case of personal ill-will or spite on the part of the State. If at all it is malice in legal sense, it can be described as an act which is taken with an oblique or indirect object. Legal malice, herefore, on the part of State, as attributed to it, should be understood to mean that the action of the State is not bona fide. In the instant case, in view of our finding that the decision to invite fresh tenders was based on cogent reasons, it is inded difficult for us to condemn the impugned action as a colourable or mala fide exercise of power by the respondents. Thus, the decision of the Apex Court in Venkatraman's case (supra) is of no avail to the petitioner.

20. For the foregoing reasons, we are of the opinion that though failure of the respondents to open the financial bid of the petitioner may fall within the purview of judicial review, yet their decision to invite fresh tenders on the stated grounds goes beyond the scope of judicial review, as elucidated by the Apex Court in Tata Cellular (supra). Therefore, in the final analysis, we do not find any merit in the writ petition and the same is dismissed accordingly. Rule is discharged and interim order dated 26 May 2004 stands vacated. However, on the facts and in the circumstances of the case, we leave the parties to bear their own costs.