Delhi High Court
Concor Bats Airport Services vs Airports Authority Of India on 12 December, 2018
$~56
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Decided on: 12th December, 2018
+ W.P.(C) 13430/2018 & CM APPL. 52303-52304/2018
CONCOR BATS AIRPORT SERVICES ..... Petitioner
Through: Mr. Sudhir Nandarajog, Sr. Adv.
with Mr. Rishi K. Awasthi, Adv.
versus
AIRPORTS AUTHORITY OF INDIA ..... Respondent
Through: Mr. Abhinav Vashisht, Sr. Adv.
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE PRATEEK JALAN
PRATEEK JALAN, J (ORAL)
%
1. This writ petition concerns a Global Request for Qualification
[hereinafter referred to as 'RFQ'] dated 01.06.2018, issued by the
respondent inviting proposals for providing ground handling services at
various airports (divided into Group A, B and C airports). The petitioner is
aggrieved by three communications dated 20.11.2018 issued by the
respondent (one for each group of airports), wherein the respondent has
stated that the petitioner does not meet the qualification requirements under
the RFQ.
2. The petitioner is an association of persons ["AOP"] consisting of two
entities, namely Container Corporation of India Ltd. ["CONCOR"] and
Bangalore Airport Terminal Services Pvt. Ltd. ["BATS"]. Under a Joint
Working Agreement dated 12.06.2018 [hereinafter referred to as "JWA"],
CONCOR and BATS agreed to work together on a pan-India basis for
providing various airport related services. The petitioner entity was
constituted as an AOP pursuant to this JWA. For the purposes of the RFQ,
the petitioner entered into a further consortium arrangement with another
entity, viz. National Aviation Services WLL, a company based in Kuwait
["NAS"].
3. The grounds on which the petitioner's consortium has been held to be
disqualified are contained in the aforesaid communications dated
20.11.2018, the contents of which are reproduced below:
"Your submitted tender and clarifications/replies have
been evaluated with reference to RFQ vide Tender ID-
No.AAI_13740_1 and other references given above. After
evaluation of the tender, you were given two times
opportunities for clarifications. However, amongst other, the
following reasons are given below for disqualification of your
application from further participation in the Bidding process:-
A Member of the Consortium is Concor BATS which is
an Association of Person (AOP) and does not meet the
requirement under the RFQ.
a. Security clearance of the lead member or its affiliate
has not been provided.
b. The Member of the Consortium Concor BATS AOP
does not meet the requirement for forming a SPV as
required under the RFQ.
c. As response to email dated 13 November, 2018, the
Applicant has mentioned that the shareholding of
NAS will be 24% in the Consortium. The Applicant
has used technical experience of NAS. However,
technical experience of those entities which hold
26% stake in the Consortium is considered as per the
RFQ.
In view of the above, we regret to inform you that you
have been disqualified under this tender process."
4. Mr.Sudhir Nandrajog, learned Senior Counsel submitted that none of
the reasons mentioned in the said communications are valid grounds for
rejection of the petitioner's consortium at the qualification stage. He
contended that the tender conditions required the parties to form a special
purpose vehicle ["SPV"] only in the event the contract was awarded in their
favour. Consequently, he submits that grounds (b) and (c) enumerated in
the impugned communication are premature. With regard to the
requirement of security clearance, Mr.Nandrajog submitted that the
petitioner had provided the requisite security clearance of BATS, issued by
the Bureau of Civil Aviation Security dated 26.11.2014, and the impugned
communication had incorrectly recorded that security clearance of the lead
member of the consortium or its affiliate had not been provided.
5. Mr.Abhinav Vashisht, learned Senior Counsel for the respondent
defended the impugned decision principally on the ground that the
petitioner's consortium did not provide the security clearance as required.
He submitted that the tender was liable to be rejected on this ground alone,
particularly in view of the fact that the successful tenderer would have
access to airport facilities where security is a paramount consideration.
6. At the outset, we may note that by virtue of Clause 2.2.2(A) of the
RFQ, failure to comply with any of the conditions contained in the
threshold eligibility criteria enumerated in Clause 3.2 rendered a party
liable for disqualification. Clause 3.2 of the RFQ enumerated various
"threshold eligibility criteria" and provided that fulfillment thereof was a
pre-requisite for eligibility. Amongst the conditions stipulated under the
heading "technical capacity", a requirement for security clearance was
included, which was identical for all three categories of airports. It reads as
follows:
"(v) To be eligible to take part in the Bidding Process, the
Applicant must have security clearance/approval from their
operating country for ground handling operations. In case of
a Consortium, security clearance/approval of the Lead
Member only shall be evaluated. Appropriate proof from
BCAS or from appropriate authority for the foreign Applicants
to be provided."
7. As stated above, the applicant in the present case was a consortium of
the petitioner and NAS. The security clearance required was, therefore, of
its "lead member". The definition of "lead member" in the RFQ provides
as follows:
""Lead Member" in respect of an Applicant where the
Applicant is a Consortium, shall mean such entity, which is
named and identified as such in the Application and as
described in 2.2.4(iii). "
The petitioner [namely, the AOP formed by CONCOR and BATS] was the
designated lead member of the consortium in question. The documents
submitted by the petitioner to the respondent including the Joint Bidding
Agreement signed by the petitioner and NAS provided that at least 51% of
the share capital of the proposed SPV would be held by the lead partner.
Consequent thereupon, in correspondence with the respondent, the
petitioner stated that it would hold 74% of the share capital of the SPV.
This was in accordance with Clause 2.2(iii) of the RFQ, which stipulated
that only a member holding more than 50% of the equity of the SPV could
be designated as the lead member:
"(iii) Members of the Consortium shall nominate 1 (one)
Member as the lead member ("Lead Member") who
shall have the highest equity share holding of more than
50% (fifty Percent) of the paid up and subscribed equity
of the SPV at all times during the Concession Term. The
nomination(s) shall be supported by a power of
attorney, as per the format at Appendix 3, signed by all
the other Members of the Consortium. "
8. It is undisputed that the petitioner [as a composite entity of
CONCOR and BATS] did not have the requisite security clearance. The
only entity which did have security clearance was BATS. Mr.Nandrajog,
therefore, contended that BATS was an "affiliate" of the petitioner within
the meaning of RFQ. Although the clause in question required the lead
member to have security clearance, and not its affiliate, Mr.Nandrajog's
submission is based upon the impugned communication of the respondent
wherein the lack of security clearance of an affiliate has also been referred
to. The RFQ defined the term "affiliate" in the following manner:
""Affiliate" shall mean in relation to any Applicant or
Member, a person who controls, is controlled by, or is under
the common control with such Applicant or Member. As used
in this definition, the expression "control" means: (a) with
respect to a company, corporation or LLP the ownership,
directly or indirectly, of more than 50% (fifty per cent) of the
economic or voting rights of such person, b) with respect to a
person which is not a company, corporation or LLP the power
to direct the management and policies of such person by
operation of law; "
9. In view of the fact that the petitioner is an AOP, BATS can be
regarded as its "affiliate" only if it is "a person who controls, is controlled
by or is under the common control with" the petitioner, in the sense that it
has "the power to direct the management and policies of such person by
operation of law". We do not find such a contention to be tenable upon a
reading of the JWA under which the petitioner entity has been constituted.
It is clear therefrom that the CONCOR and BATS are equal stakeholders in
the AOP, in terms of financial as well as managerial control. They have
equal representation on the management committee and steering committee
in which decision making powers are vested. Looking at it from another
angle also, BATS' ultimate stake in the consortium would be about 37%,
being half of the share of the petitioner - AOP in the consortium. BATS,
therefore, on its own also does not meet the minimum shareholding
required for an entity to be a lead member in a consortium, whose security
clearance could be regarded as sufficient. Consequently, we are of the view
that the security clearance furnished by the petitioner was inadequate to
qualify it in terms of the RFQ conditions and its bid was liable to be
rejected on this ground alone. It is, therefore, unnecessary to examine the
correctness of other grounds mentioned in the impugned communications.
10. As held by the Supreme Court inter alia in Jagdish Mandal vs. State
of Orissa (2007) 14 SCC 517, the jurisdiction of the Court to interfere with
a tender evaluation by the procuring entity is limited to situations of mala
fides or arbitrariness of a dimension that eludes any reasonable explanation.
The present case does not meet that high standard.
11. For the reasons aforesaid, the writ petition is dismissed, but without
any orders as to costs.
PRATEEK JALAN, J
S. RAVINDRA BHAT, J
DECEMBER 12, 2018
„hkaur‟
