Kerala High Court
Flemingo Travel Retail Limited vs Kannur International Airport Limited on 20 December, 2019
Author: Shaji P.Chaly
Bench: Shaji P.Chaly
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE SHAJI P.CHALY
FRIDAY, THE 20TH DAY OF DECEMBER 2019 / 29TH AGRAHAYANA, 1941
WP(C).No.30645 OF 2019(E)
PETITIONER/S:
FLEMINGO TRAVEL RETAIL LIMITED,
HAVING REGISTERED OFFICE AT CHHATRAPATI SHIVAJI
INTERNATIONAL AIRPORT, NEW TERMINAL 2, SAHAR ROAD,
ANDHERI (EAST) MUMBAI-400 099, REPRESENTED BY ITS
AUTHORIZED SIGNATORY SHRI. NIXON VARGHESE.
BY ADVS.
SRI. JOSEPH KODIANTHARA (SR.)
SRI.HARIKUMAR G. NAIR(GOPINATHAN NAIR)
SHRI.AKHIL SURESH
RESPONDENT/S:
1 KANNUR INTERNATIONAL AIRPORT LIMITED,
KARA PERAVOOR P.O., MATTANNUR, KANNUR-670 702,
REPRESENTED BY ITS MANAGING DIRECTOR.
2 KPMG ADVISORY SERVICES PVT. LTD.,
BUILDING NO.104, 4TH FLOOR, TOWER C
DLF CYBER CITY-PHASE-11, GURUGRAM-122002, REPRESENTED
BY ITS DIRECTOR.
3 GMR AIRPORTS,
INDIRA GANDHI INTERNATIONAL AIRPORT,
NEW UDAAN BHAWAN OPPOSITE TERMINAL 3,
NEW DELHI-110037, REPRESENTED BY ITS CHIEF EXECUTIVE
OFFICER-BD.
BY ADVS.
R1 - SRI. P. GOPINATH MENON, (SR.)
SRI.M.GOPIKRISHNAN NAMBIAR
SRI.K.JOHN MATHAI
SRI.JOSON MANAVALAN
SRI.KURYAN THOMAS
SRI.PAULOSE C. ABRAHAM
SMT. N. RAMOLA
R2 - SRI.BECHU KURIAN THOMAS (SR.)
SRI.VIJAYENDRA PRATHAP SINGH
SRI.KAMAL SANKAR
SRI.ATUL.N.
W.P.(C)No.30645 of 2019 2
SRI. SAYOBANI BASU
SRI.ENOCH DAVID SIMON JOEL
R3 - SRI.S.RAMESH BABU (SR.)
SRI.S.ANANTHAKRISHNAN
SRI.R.ARUN
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON
06.12.2019, THE COURT ON 20.12.2019 DELIVERED THE FOLLOWING:
W.P.(C)No.30645 of 2019 3
JUDGMENT
This writ petition is filed by the petitioner, a company incorporated under the Companies Act, 1956, engaged in the business of operating duty free shops at various Airports, seeking to quash the letter of award issued by the 1st respondent, i.e., the Kannur International Airport Limited, to the 3rd respondent, i.e., GMR Airports, who is also a business operator of duty free shops at various Airports. The 2nd respondent is the consultant of the 1st respondent. Basic material facts for the disposal of the writ petition are as follows:
2. Respondent No.1, i.e., Kannur International Airport Limited (KIAL), a Public Sector Undertaking operating the Kannur International Airport commissioned on 09.12.2018, and built on Public Private Partnership model, has apparently appointed the 2nd respondent as the consultant for negotiations and allied activities for the improvement of the Kannur International Airport. Kannur International Airport Limited is functioning under the control of the Government of Kerala with the Chief Minister of the State of Kerala as its Chairman and Ministers on its Director Board, evident from Ext.P2. The case put forth by the W.P.(C)No.30645 of 2019 4 petitioner is that, the 1st respondent illegally rejected the proposal of the petitioner for developing, operating and maintaining duty free outlets at the Airport, and has illegally and for ulterior motives awarded it to the 3rd respondent in a non-transparent manner.
3. It is also the case of the petitioner that, as early as in 2016, the Government of Kerala had taken a decision that all works and activities relating to the establishment, development, implementation, integration, operation and maintenance of the Airport and its allied services shall be based solely on the tendering process, strictly on the lines of the Tender Guidelines issued by the Central Vigilance Commission.
Therefore, right from the inception, all contracts pertaining to all works and services in connection with the establishment and operation of the Airport and its allied services was being undertaken after calling tenders from interested participants, and to the best of knowledge of the petitioner, as many as 30 major tenders have been floated by the 1 st respondent till date in relation to major works and services at the Kannur International Airport.
W.P.(C)No.30645 of 2019 5
4. In the month of November, 2017, 1 st respondent floated a Request for Proposal to develop, operate and maintain duty free outlets. According to the petitioner, the said tender was concession based model under the terms of which the successful tenderer would be handed over the entire retail area of duty free shop, and in lieu of this grant of concession, the successful tenderer will pay revenue share to the 1st respondent. Petitioner participated in the first tender and was the sole bidder in the said process. However, the selection process was stalled, and according to the petitioner, the first tender was cancelled by the 1st respondent at the instance of some interested persons who had challenged the conditions of tender before this Court.
5. Thereafter, the 1st respondent floated yet another tender during February, 2018, on similar lines as that of the first tender, however, relaxing certain conditions of eligibility. In the said process, two tenderers participated, i.e., the petitioner and M/s. Plus Max Duty Free Pvt. Ltd. Anyhow, even according to the petitioner, it was decided not to proceed further on the second tender, instead, it was decided to float Request for Proposal (RFP) for selection of Joint W.P.(C)No.30645 of 2019 6 Venture partner for Developing, Operating and Maintaining Duty Free Outlets.
6. Thereupon, in the month of December, 2018, the 1st respondent floated a Request for Proposal (RFP) for selection of Joint Venture partner for Developing, Operating and Maintaining Duty Free Outlets at Kannur International Airport. It is the case of the petitioner that, as per clause 2.3.8 of the said RFP, for the purposes of evaluation of the Financial Proposals, the highest quoted percentage of net sales in terms of revenue share offered to the Airport during concession period shall be the sole parameter for identification of the Highest Bidder, and the relevant portion of the RFP is produced as Ext.P3. Petitioner and M/s. Dufry AG participated in the said tender process.
7. However, the 1st respondent again decided not to proceed with the said tender by opening the bids submitted by the interested parties, instead, 1st respondent decided to resort to negotiations with parties for the purpose of identifying the successful bidder and award of the contract to develop, operate and maintain the duty free outlets. While so, the 1 st respondent invited bids for appointment of a consultant W.P.(C)No.30645 of 2019 7 after removing M/s. KITCO Ltd. for locating investors for development of aeronautical and non-aeronautical activities, and the 2nd respondent was appointed as the consultant, also for negotiating with the bidders for the development of the duty free outlets and its maintenance, evident from Ext.P4 award dated 09.07.2019.
8. Case projected by the petitioner is that, petitioner having no option left, agreed to participate in negotiations with 2nd respondent on the specific condition and understanding that entire negotiation process adopted by the 1st and 2nd respondents shall be fully transparent, and at the same time, ensuring that there is absolute confidentiality in respect of bid submitted by the petitioner. According to the petitioner, the consultant was holding negotiations with both the participants, i.e., the petitioner and M/s. Dufry. In connection with the negotiations as stated above, 1st respondent issued 'heads of terms for duty free contract' giving broad outline of the terms proposed between Kannur International Airport, and the participants were required to furnish requisite inputs/data in furtherance of the negotiating process for finalization of the Concessionaire, which is W.P.(C)No.30645 of 2019 8 produced as Ext.P5.
9. A perusal of clause 5 of Ext.P5 clearly shows that the concession fee for each month has been fixed as the higher of; (i) the amount of Revenue Share; and
(ii) the applicable Minimum Monthly Guarantee for such month. Pursuant to the same, petitioner and M/s. Dufry had submitted their revenue share percentage in both core category and non-core category along with Minimum Guarantee. The 2nd respondent thereafter called both the petitioner and M/s. Dufry to improve their proposals/offers, and thereupon, petitioner had improved its offer. Further negotiations were on between the petitioner and the 2nd respondent between July and October, 2019, evident from Ext.P6 minutes of the meeting dated 13.09.2019. Anyhow, it is stated, as part of the ongoing negotiations, 1st respondent Airport called upon the petitioner to submit its final offer on or before 15.10.2019, evident from Ext.P7 dated 09.10.2019. Accordingly, petitioner submitted its final offer which was the most competitive and better than the quote made by M/s. Dufry, evident from Ext.P8 dated 15.10.2019. However, petitioner was served with a communication by the 1st respondent dated 02.11.2019, evident from Ext.P9, informing that petitioner's W.P.(C)No.30645 of 2019 9 proposal was not successful.
10. According to the petitioner, thereupon, made enquiries, and realized that three employees of the 3 rd respondent, i.e., the GMR Airports, viz., Mr. Tariq Hussain Bhat, Mr. Biju P. and Mr. Rajesh Poduval had left the services of the 3rd respondent and joined the 1st respondent Airport in key managerial positions such as the Chief Operating Officer, Human Resource Head and Senior Manager (Operations), respectively, in the 1st respondent, and therefore, it is further contended that, the said employees, who were at the helm of affairs of the 1st respondent in respect of the subject bid/negotiations, started negotiations with the 3rd respondent for setting up of the duty free shops upon the instructions of the Managing Director of the 1 st respondent.
11. Therefore, the sum and substance of the contention of the petitioner is that, the act of these officials of the 1st respondent involving in direct negotiations with the 3rd respondent bypassing the 2nd respondent appointed as consultant, is tainted with mala fides. So also, it is submitted, the proposal submitted by the petitioner to the 2nd respondent, i.e., the consultant, was intended to be confidential W.P.(C)No.30645 of 2019 10 information to be shared only with the Board of Directors of the 1st respondent. But petitioner learnt that various officials of the 1st respondent including the three officials named above, had access to all such confidential information. Consequently, such information came to be passed on to the 3 rd respondent thereby giving undue benefit to them, and the tender process was finalized in blatant violation of the principles of transparency and confidentiality.
12. Anyhow, the Board of Directors of the 1st respondent in its meeting held on 20.10.2019 decided to award the contract for establishing, operating and maintaining Duty Free Shops to the 3 rd respondent, and the paper publication in that regard is produced as Ext.P10. Thereupon, petitioner submitted Ext.P11 representation, however, no reply was given. It is also pointed out that, the letter of award has been issued in clear violation of the terms and parameters issued by the 1st respondent for selecting the Concessionaire. The entire contract was premised on the fact that the concession fee payable by the party shall be the higher of the two viz., Revenue Share and Minimum Monthly Guarantee (MMG). The mandate of the 1st respondent was that under no circumstances there can be W.P.(C)No.30645 of 2019 11 a deviation or relaxation of the said condition. In other words, even if the monthly sales fall below the minimum guarantee, the party will have to still remit the 1st respondent the MMG as assured. Petitioner had assessed and quoted the MMG on the basis of the passenger forecasts furnished by the 1st and 2nd respondents. However, petitioner understood that the 1st respondent has illegally and unreasonably waived this condition to the advantage of the 3rd respondent.
13. It is also pointed out that, the 1st respondent has altered the terms of negotiations for 3rd respondent alone at total variance with Ext.P5. Therefore, it is contended that, 1st respondent has not extended the same level playing field to all the participants with the intention of giving undue advantage to the 3rd respondent at the expense of consequential financial loss to the 1st respondent and the State of Kerala. These are the basic contentions put forth by the petitioner to secure the reliefs as are sought for in the writ petition.
14. The 1st respondent has filed a detailed counter affidavit, disputing the allegations and claims and demands raised by the petitioner. It is also pointed out that, the 1st respondent is a Public Limited W.P.(C)No.30645 of 2019 12 Company registered under the Companies Act, 1956, where the State Government's equity participation is only 35% of the total paid up capital of the company. Though the Kannur International Airport Limited (KIAL) was originally registered as a Government Company, the status of the company had changed into a public limited company by issue and allotment of shares to non-State Government shareholders, and there are at present 20 Directors on the Board, representing different shareholders appointed in the Annual General Meeting. As per the Articles of Association of the company, the State Government has the right to appoint only 1/3 of the total number of Directors on the Board of the 1 st respondent. Thus, the State Government has no pervasive control over the 1st respondent. The sum and substance of the contention put forth is that, the 1st respondent is neither an instrumentality nor an agency of the Government, and it is also not discharging any statutory or Governmental function, enabling the petitioner to file a writ petition against the 1 st respondent and it is not a 'State' coming under Article 12 of the Constitution of India.
15. It is submitted that, petitioner having participated in the negotiation process and after W.P.(C)No.30645 of 2019 13 having failed to get the award, is not entitled to question the manner in which the selection was conducted, and the allegations made with respect to mala fides are all without any basis and foundation and the attempt of the petitioner is only to make some allegations in order to secure orders from this Court.
16. Even though allegations of mala fides are made against the persons named in the writ petition, they are not made parties in the writ petition, and therefore, petitioner is not entitled to get such mala fide allegations adjudicated through the process of this Court. The tenders were cancelled with a view to get more participation and give opportunity to various prospective tenderers. But, despite floating tenders on three occasions, the 1st respondent failed to secure sufficient valid bids. It was accordingly decided to go for negotiation for selection of an operator. At that juncture, M/s. Plus Max Duty Free Pvt. Ltd. filed W.P.(C) No.16176 of 2019 before this Court, which was dismissed by this Court as per Ext.R1(a) judgment, and according to the 1st respondent, which upheld the right of the 1st respondent to select the duty free shop operator through negotiations.
W.P.(C)No.30645 of 2019 14
17. The negotiations with the petitioner as well as M/s. Dufry were proceeded and during discussion with them, various business models were suggested, which were considered by the Technical Committee of Board of Directors in the meeting held on 09.02.2019, and it was noted that the steps taken by the airport till then through the tender routes were not successful and no agency could be selected. Taking into account the interest shown by the petitioner as well as M/s. Dufry, the committee after discussion, authorized the Managing Director to negotiate with both the parties, evident from Ext.R1(b).
18. While the negotiations were going on, the 2nd respondent was selected as the consultant through a bidding process, evident from Ext.R1(c). One of the specific responsibilities of the consultant was to explore the possibility of generating more non-aero revenue for Kannur Airport. The Board also decided in the same meeting to select the suitable agency for duty free business in consultation with the consultant i.e., between the petitioner and M/s. Dufry, as those were the only proposals available at that stage, evident from Ext.R1(d) minutes dated 25.06.2019. During the discussion with the Airport, the consultant had W.P.(C)No.30645 of 2019 15 suggested two courses of action, with a view to extract maximum value for the airport, passengers and shareholders, namely: (i) Common head of terms must be developed and used as base line to evaluate and negotiate the offers; and (ii) Another round of market sounding must be performed highlighting the business potential that Kannur Airport has for a duty free operator. It was accordingly based on these discussions, the consultant received a proposal from M/s. GMR Airports Ltd., operator of Hyderabad Airport Duty Free and JV partner in Delhi Duty Free.
19. Therefore, the proposal of M/s. GMR Airports was also evaluated by the consultant. The consultant also approached other duty free operators to elicit interest, but no firm proposal was forthcoming. Therefore, after evaluating all the three proposals received from the petitioner, M/s. Dufry and M/s. GMR Airports, consultant recommended the proposal of M/s. GMR Airports as the best proposal, which gives maximum revenue to the airport.
20. It is further submitted that, on 15.10.2019, all the three parties had submitted their best and final proposals for the operation and management of duty free shops. The proposals were evaluated by the W.P.(C)No.30645 of 2019 16 consultant on the basis of commercial terms, and in the evaluation process, the 3rd respondent obtained the highest score based on the score parameters fixed namely, minimum monthly guarantee, security deposit (cash), revenue share (core category), revenue share (non-core category) and Capex. M/s. GMR Airports, i.e., the 3rd respondent obtained the highest score of 49.8 out of 50, while the petitioner secured only 40.7 and M/s. Dufry scored only 20.5. At the meeting held on 20.10.2019, the Board noted that the proposal received from M/s. GMR Airports was more favourable to the company based on the recommendation of the consultant, as the total revenue offered by them was very much higher than that offered by others. Therefore, the Board after discussion, authorized the Managing Director to negotiate further with them and also authorized the Chairman to take a decision in the matter, evident from Ext.R1(f).
21. Further negotiations were held by the consultant and the 1st respondent with M/s. GMR Airports and in line with the decision of the Board of Directors, M/s. GMR had offered Rs.162/- per arriving passenger as the basis for calculating Minimum Monthly Guarantee. In line with the direction of the Board of W.P.(C)No.30645 of 2019 17 Directors, they were asked whether they could revise the proposal as Rs.162/- per arriving/departing passenger whichever is higher. Once they accepted the condition, the proposal was placed before the Chairman of the Board of Directors, who approved the award of Duty Free Concession to M/s. GMR Airports, based on Board's decision and it was accordingly that letter of award dated 26.10.2019 was issued to the 3rd respondent, evident from Ext.R1(g).
22. It is the case of the 1st respondent that, on a perusal of Ext.R1(g), it is clear that, no relaxations whatsoever are provided to the 3rd respondent. Negotiations were undertaken by the 2nd respondent in the same manner as it was with the petitioner, and therefore, allegations of mala fides are completely denied being false. It is also submitted that, the negotiation process and the selection of the 3rd respondent was perfectly lawful and transparent in all respects.
23. It is also pointed out that, Mr. Tariq Hussain Bhat, Mr. Biju P. and Mr. Rajesh Poduval are in the service of Kannur Airport. But, they had no role in the negotiations conducted by the consultant. The negotiations with the parties were carried by the W.P.(C)No.30645 of 2019 18 consultant independently and in a transparent manner, and since the 2nd respondent found that M/s. GMR Airports has submitted the best proposal, they were recommended by the consultant. The other allegations with respect to deviation from conditions and relaxations given to the 3rd respondent are all denied.
24. The 1st respondent has also filed an additional affidavit, explaining the Annexure to Ext.P5 head of terms and Ext.R1(g) head of terms. It is submitted that, the heads of terms were circulated to all the parties on 09.10.2019 and terms and conditions forming part of the Letter of Award are identical, except for Clause 19 regarding the Set up and commencement of the operations of the Duty Free Outlets, and the commencement date as per Ext.P5 is two months from the date of circulation of the terms, i.e., 09.12.2019. The consultant submitted its analysis (Ext.R1(e)), which was placed before the Board of Directors of the 1st respondent and it was accordingly that Letter of Award was decided to issue to M/s. GMR Airports. It is also pointed out that, the Minimum Monthly Guarantee of Rs.162/- per arriving international passenger quoted by the 3rd respondent for the entire concession term, in comparison to Rs.112/- W.P.(C)No.30645 of 2019 19 per departing international passenger for the first year and Rs.125/- per departing international passenger from second year onwards quoted by the petitioner, was better in all respects.
25. A reply and additional reply affidavit is filed by the petitioner to the counter affidavit and additional affidavit of the 1st respondent.
26. The 2nd respondent has filed a detailed counter affidavit, contending that as part of its engagement as a financial consultant, during the introductory meeting, the Managing Director of the 1st respondent instructed to evaluate the proposals received based on the commercials and the terms offered by the two operators. Accordingly, the proposals received from the two operators were subjected to an initial verification and it was found by the consultant that the proposals received had certain concerns like no increment on MMG on a year to year basis, low security deposit, calculation of MMG basis etc. The 1 st respondent then directed the consultant to review the commercial terms of the proposals received in detail.
27. On evaluation by and between the petitioner and M/s. Dufry, it was noted that the Airport can derive significantly more value from the duty free W.P.(C)No.30645 of 2019 20 operations and it was advised that the same may be bettered by increasing competition and asking for more bids from other duty free shop operators, which may result in the highest offers possible. The conclusion was based on the Duty free strategy that was formulated for the Airport using:
(i) Consultant's repository of data on non-
aeronautical revenue and industry trends;
(ii) The traffic potential of Kannur Airport; and
(iii) Specific requirements of the Kannur Airport, such as upfront cash, guaranteed revenue on a monthly basis. Clear outcomes of the strategy document was:
(a) De-risk the airport from the duty free business in form of minimum guarantee payment;
(b) Capturing the revenue upside through a revenue share model;
(c) Steady and constant cash flow and up-front cash generation; and
(d) Creating safeguards from inefficient operations.
28. It also appeared that, owing to certain inconsistencies in the commercial understanding between the entities, there arose the need to prepare a document setting out the commercial heads of terms of W.P.(C)No.30645 of 2019 21 the concession for designing, establishing, operating and maintaining duty free shops at Kannur International Airport. In view of the above, the consultant together with 1st respondent created the commercial heads of terms document which was shared with the two operators viz., petitioner and Dufry, as per e-mail dated 11.09.2019. In view of the above and in consultation with the Airport management, the consultant reached out to other entities engaged in the business of operating and maintaining duty free outlets, and thereupon, reached out to M/s. GMR and other known players in the field.
29. Thereupon, M/s. GMR expressed their interest to participate and also submitted their proposal upon request on 24.09.2019, evident from Ext.R2(a). Since the 3rd respondent expressed their interest, the commercial heads of terms was further finalized and revised after negotiations conducted with all the three operators. It is also pointed out that, the proposal document listing down the commercial parameters along with the commercial heads of terms was shared with all operators with whom consultant had reached out by various e-mails seeking their best and final offers latest by 15.10.2019, and the e-mail communication W.P.(C)No.30645 of 2019 22 dated 09.10.2019 issued to the petitioner, M/s. Dufry and M/s. GMR Airports are produced as Exts.R2(b) to R2(d).
30. It is also submitted that, the consultant had for the purpose of its evaluation made certain assumptions for arriving at the revenue estimates for duty free operations, and accordingly considered the passenger forecasts (low, medium and high) for a period of 10 years, which were interim estimates, for the purpose of arriving at the revenue estimates. The consultant had shared such forecasts with the operators, including the petitioner, in order to enable them to submit their best proposals for acquiring the concession for designing, establishing, operating and maintaining duty free shops. Copy of the e-mail dated 23.08.2019 along with the attachment thereto sent to the petitioner is produced as Ext.R2(e), and according to the consultant, similar communications were sent to all the parties. Petitioner, M/s. Dufry and the 3rd respondent responded to the same, and ultimately, on evaluation, it was found that M/s. GMR Airports has made the best offer. It is also pointed out that no manner of allegations are made against the consultant by the petitioner.
W.P.(C)No.30645 of 2019 23
31. A reply affidavit is filed by the petitioner to the said counter affidavit also.
32. The 3rd respondent has filed a detailed counter affidavit, refuting the allegations and also stating that the petitioner has no case that the 3rd respondent is not eligible for participating in the award of the contract in question, nor can it claim any superiority over the petitioner in the matter of competency. In so far as the aspersions cast in reference to former employees of M/s. GMR Airports, it is stated that, the said persons left the services of the GMR as early as on 15.02.2011, 31.05.2018 and 16.09.2010 respectively, and they were holding the posts of General Manager, Associate General Manager-ER and Airside Monitoring Inspector.
33. The 3rd respondent has also raised the contention that even though mala fides are attributed against the said persons, by interfering with the negotiations held, they are not made parties to the writ petition. The allegations made on account of the same in the writ petition and the reply affidavits are all denied by the 3rd respondent. So also, it has submitted the highest rates that would bring the highest revenue to the Airport, and it is absolute W.P.(C)No.30645 of 2019 24 commercial prudence that the offer which generates the highest revenue over the contract and the concession period strengthened by the credibility, soundness, competency of the prospect is given due recognition for the award of contract.
34. It is also pointed out that, an examination of the whole of the contract and the revenue offered by the petitioner vis-a-vis the 3rd respondent would clearly indicate that there is no waiver as such and the waiver period viz., three months is very insignificant for the revenue. It is further pointed out that, the 3rd respondent had categorically indicated in its proposals, as in every venture relating to commercial operations of duty free shops, that it requires some minimum time to establish the infrastructure to establish the shop and put the shop in full operation, and teething period is required before the commercial operations could start on normal basis. Therefore, in consideration of the same, 1 st respondent has provided the minimum time period of three months despite the commercial venture being a large scale and requiring more time. The disparity highlighted and its total insignificance becomes relevant on a comparison of the rates offered by the 3 rd W.P.(C)No.30645 of 2019 25 respondent and the petitioner. The calculations are made on a reasonable estimate of traffic of 30,000 passengers (in and out) per month. The difference of Rs.50/- per passenger multiplied by 30,000 for three months is hardly a figure when compared to the revenue for 7 years assured by the 3rd respondent, which would stand at about Rs.41 crores.
35. That apart, it is submitted that, the offer made by the petitioner in respect of MMG is not in conformity with the Head of Terms sought by the 1st respondent as per Ext.P5. Therein MMG was sought for per international arriving passenger, whereas the petitioner has submitted its offer on MMG per departing passenger, evident from Ext.P8. That be so, the petitioner's offer ought to have been straight away rejected as not in conformity with the Heads of Terms sought by the 1st respondent. It is further submitted that, petitioner has no case that the alleged period of waiver would put its contract bid on a higher footing even for the MMG, and therefore, no case is made out on the alleged waiver. It is also pointed out that, all the participants in the bid were given a level playing field and it was after negotiations with all the parties, the consultant has made its proposal to the 1st W.P.(C)No.30645 of 2019 26 respondent. Therefore, according to the 3rd respondent, no case is made out by the petitioner justifying interference of this Court, exercising the power of discretion under Article 226 of the Constitution of India.
36. A reply affidavit is filed by the petitioner to the said counter affidavit also. The consultant has filed an additional affidavit, producing additional documents on account of the contentions put forth by the petitioner in the writ petition for production of certain documents in order to identify the manner in which the discussions were executed with the 3rd respondent.
37. I have heard Sri. Joseph Kodianthara, learned Senior Counsel for the petitioner, assisted by Advocate Sri. Harikumar G. Nair, Sri. P. Gopinath Menon, learned Senior Counsel appearing for the 1st respondent, assisted by Advocate Smt. N. Ramola, Sri. Bechu Kurian Thomas, learned Senior Counsel appearing for the 2nd respondent, assisted by Advocate Sri. Enoch David Simon Joel and Sri. S. Ramesh Babu, learned Senior Counsel appearing for the 3rd respondent, assisted by Advocate Sri. S. Ananthakrishnan, and perused the entire pleadings and the documents on record. W.P.(C)No.30645 of 2019 27
38. The thrust of the contention advanced by learned Senior Counsel for the petitioner is that, three employees of M/s. GMR Airports became employees of the Kannur International Airport and the details with respect to the offer made by the petitioner was leaked by the said persons, which enabled the 3rd respondent to quote highest amount per passenger, minimum monthly guarantee etc. etc.
39. However, it is an admitted fact that, Kannur International Airport has appointed the 2nd respondent as the consultant to develop the activities of the Airport and it is also an admitted fact that, the 2 nd respondent has held negotiations with the parties in order to arrive at the conclusion. Petitioner has also participated in the private negotiation held by the consultant for and on behalf of the Airport. According to learned Senior Counsel for the petitioner, the bid details submitted by the 3rd respondent to the consultant was also forwarded to the officials of the Kannur International Airport, and therefore, the contention put forth by the respondents that only the consultant held negotiations with the respective parties is not at all true or correct.
W.P.(C)No.30645 of 2019 28
40. However, fact remains, it is evident from Ext.P8 e-mail that, petitioner has also issued copies of offer made by the petitioner to the officials of the Kannur Airport. Moreover, none of the persons against whom mala fides are alleged are personally made parties in the writ petition. So also, even though petitioner has raised allegations, it is not pleaded as to how the malafide action was resorted to by the said persons named in the writ petition, and how the informations were leaked out. Therefore, I find force in the contention advanced by learned Senior Counsel appearing for the 1st and 3rd respondents that, without the said parties in the array, the said issue raised by the petitioner cannot be considered.
41. Learned Senior Counsel for the 1st respondent in that regard has invited my attention to the judgment of the apex court in 'State of Bihar & another v. Shri P.P. Sharma and Another' [AIR 1991 SC 1260]. Paragraph 55 thereto is relevant to the context, which read thus:
"55. It is a settled law that the person against whom mala fides or bias was imputed should be impleaded eo nomine as a party respondent to the proceedings and given an opportunity to meet those allegations. In his / her absence no enquiry into those allegations would be made. Otherwise it itself is violative of the principles of natural justice as it amounts to condemning a person without an opportunity. Admittedly, both R. K. Singh and G. W.P.(C)No.30645 of 2019 29 N. Sharma were not impleaded. On this ground alone the High Court should have stopped enquiry into the allegation of mala fides or bias alleged against them. Nothing has been alleged, nor brought to our notice that preceding laying the complaint before the police, R. K. Singh, had any personal animosity against the respondents. Nothing has also been brought to our notice, nor alleged either in the High Court or in this Court that after his filing the complaint he had any say in the investigation conducted by the Investigating Officer or exercised any pressure to investigate the case in any particular way to secure the conviction of the respondents. The only allegation relied on by the High Court is that R. K. Singh before laying the First Information Report did not look into certain documents or did not deliver them up for a week to the Investigating Officer. Had he considered things would be favourable to the respondents and that no administrative sanction was obtained. That by itself in our considered view would not lead to any irresistible conclusion that R. K. Singh was actuated with any personal bias or mala fides against Sharma or Dutt. At the most it may be said that he had not properly exercised his discretion before laying the complaint. Equally no personal bias was alleged to the Investigating Officer nor found in this regard by the High Court. The ground on which reliance was placed and found acceptable to the High Court is that when the documents said to be favourable to the respondents were brought to his notice, he did not investigate into those facts on the ground of being "irrelevant". Free from bias is an integral pat, of the principles of natural justice. When bias was imputed to be existed, he ought not to take part in a decision making process. Police Officer has a statutory duty to investigate into the crime suspected to have been committed by the accused, by collecting necessary evidence to connect the accused with the crime. Investigator exercises no judicial or quasi-judicial duty except the statutory function of a ministerial nature to collect the evidence. With his expertise, skill or knowledge he has to find whether the accused committed the offence alleged against. If the accused is aware that the Investigating Officer was personally biased against him, it is his primary duty to bring it to the notice of the higher authorities or the W.P.(C)No.30645 of 2019 30 Court at the earliest of the circumstances or on the grounds on which he believed that the Investigating Officer is actuated with malice and impartial investigation cannot be had. If he allows the Investigating Officer to complete the investigation and the report submitted, it amounts to his waiving the objection and he would not be allowed to impeach the charge-sheet on the ground of the alleged bias or mala fides. Moreover, the Investigating Officer would be available to cross-examination at the trial of the case and it would be open to the accused to elicit from the Investigating Officer necessary circumstances or grounds to throw doubt on the impartiality of the Investigating Officer and must establish its effect on the prosecution evidence adduced at the trial. It is for the Court to consider how far it has affected materially the result of the trial. The evidence collected during investigation would be subject to proof as per Evidence Act and tested by cross- examination. The reasoning of the Courts below that if an authority does not act impartially or in good faith then a reasonable mind can definitely infer the bias for reason best known to the authorities is too wide a statement of law in the context of police / Investigating Officer".
42. The apex court had also occasion to consider the said issue in 'Girias Investment Private Limited and Another v. State of Karnataka and Others' [(2008) 7 SCC 53] and paragraphs 21 to 23 are relevant to the context, which read thus:
"21. The learned counsel for the respondents has also taken pains to point out that in the absence of specified individuals, who are to be made parties in a litigation alleging mala fides, an enquiry into such an allegation was impermissible. The learned counsel has placed reliance on State of Bihar v. P.P. Sharma and All India State Bank Officers' Federation v. Union of India. In P.P. Sharma case, it was observed that: (SCC pp.261-62, para 55) W.P.(C)No.30645 of 2019 31 "55. It is a settled law that the person against whom mala fides or bias was imputated (sic imputed) should be impleaded eo nomine as a party respondent to the proceedings and given an opportunity to meet those allegations. In his/her absence no enquiry into those allegations would be made. Otherwise it itself is violative of the principles of natural justice as it amounts to condemning a person without an opportunity."
22. A similar opinion was expressed in All India State Bank Officers' Federation in the following words: (SCC pp. 165-66, paras 21-22) "21. In view of the aforesaid explanation of the respondent Bank, which we see no reason to disbelieve, it is clear that the petitioners have made baseless and reckless allegations of mala fides. Respondents 4 and 5 obviously had no direct or indirect role to play either in the formulation of the policy or in the memorandum being placed as a table item to be taken up for consideration in the meeting held on 7-3-1999. The modification was approved by the Chairman and all the Directors who were present in the meeting of the Board. For an allegation of mala fides to succeed it must be conclusively shown that Respondents 4 and 5 wielded influence over all the members of the Board, who were present in the said meeting. No such allegation has been made. The decision to modify the promotion policy was taken by a competent authority, namely, the Central Board in a duly constituted meeting held on 7-3-1989 and we are unable to accept that this change in the policy was brought about solely with a view to help Respondents 4 and 5.
22. There is yet another reason why this contention of the petitioners must fail. It is now well-settled law that the person against whom mala fides are alleged must be made a party to the proceeding. The allegation that the policy was amended with a view to benefit Respondents 4 and 5 would amount to the petitioners contending that the Board of Directors of the Bank sought to favour Respondents 4 and 5 and, therefore, agreed to the proposal put before it. Neither the Chairman nor the Directors, who were present in the said meeting, have been impleaded as respondents. This being so the petitioners cannot be allowed to raise the allegations of W.P.(C)No.30645 of 2019 32 mala fides, which allegations, in fact, are without merit."
23. As observed above, the appellants have not identified any person who had been instrumental in harming their cause. We would, therefore, even be precluded from going into the question of mala fides although we have nevertheless examined the matter in extenso".
43. It is clear from the law laid down by the apex court in the afore-quoted judgments that unless there are clear, satisfactory and clinching evidence before this Court with respect to the mala fides alleged and without the parties in the party array, the said issue cannot be considered by the court in its face value. So also, it is quite clear and evident from the offers made by the 3rd respondent, evident from Ext.R1(e) evaluation report of the consultant that the 3rd respondent has quoted an amount of Rs.162/- per international arriving passenger, whereas the petitioner has quoted an amount of Rs.112/- and Rs.125/- per departing passenger towards the first, and the second year onwards, respectively. The 3rd respondent has, later on negotiation, agreed the rate, per international arriving/departing passenger. Petitioner has quoted the minimum guarantee payments monthly and quarterly basis, whereas 3rd respondent has quoted the proposal monthly. Likewise, in respect of W.P.(C)No.30645 of 2019 33 the revenue share in core and non-core areas rate quoted by the 3rd respondent are on higher side, and ultimately the consultant, on evaluation, have given scores of 49.8 and 40.7, to the 3 rd respondent and petitioner respectively.
44. In that view of the matter, if the allegation made by the petitioner with respect to mala fides on the part of the officials of the 1 st respondent is accepted to be correct, there was no necessity for quoting the amounts offered by the 3rd respondent with a huge difference on various counts. Moreover, the negotiations were held by the consultant with the participants, and there is no serious allegation made by the petitioner against the consultant, in negotiating the deal with the parties. Taking into account all these aspects, I do not think the allegation made by the petitioner against the 1st respondent that it colluded with the 3 rd respondent in the matter of making the offer cannot be sustained under law and facts.
45. The next contention advanced by learned Senior Counsel for the petitioner is in respect of the private negotiation held by the 1st respondent in order to identify an operator for the duty free establishment W.P.(C)No.30645 of 2019 34 and maintenance. It is an admitted fact by the petitioner itself that tenders were floated thrice and lucrative offers could not be secured and it was accordingly that decision was taken by the 1st respondent to go for private negotiation and later appointed a consultant to carry out negotiation for the operation of the duty free shops.
46. In this context, the judgment rendered by this court in W.P.(C) No.16176 of 2019, produced as Ext.R1(a) by the 1st respondent is relevant. The said writ petition was filed by AGM Duty Free and Plus Max Duty Free Pvt. Ltd., and another against the 1 st respondent herein in respect of the negotiations conducted in order to identify the successful operator leaving out the said operator. Therein, the main allegation advanced was that no private negotiation can be held. However, this Court disposed of the said writ petition, finding that the said persons were disqualified to participate in any negotiation due to various other aspects, and it was held that, private negotiation can be held, however, with sufficient transparency and efficacy, since 35% shares are held by the State Government, even though the Airport is constructed with Public Private Participation. W.P.(C)No.30645 of 2019 35
47. It is interesting to note that, petitioner was one of the company which was being negotiated by the 1 st respondent at that point of time along with M/s. Dufry. Therefore, in my considered opinion, having participated in the negotiation process, petitioner is not at liberty to turn around and contend that the private negotiation conducted by the 1st respondent through the consultant is illegal and arbitrary. Now, visualise a situation where the 3rd respondent, i.e., M/s. GMR Airports had not come into picture, and on evaluation by the consultant, petitioner found to have made better offer than M/s. Dufry, petitioner would have been selected. There is a reason for saying so, since initially there were only petitioner and M/s. Dufry in the negotiations and it was later on the basis of the efforts made by the consultant that 3 rd respondent had come into picture and all the parties were directed to submit fresh offers on 15.10.2019, which is an admitted fact. It is also clear that, among the two, petitioner's offer was superior, and at one point of time, the consultant recommended the petitioner.
48. It can also be seen that petitioner and other participants in the negotiations were given the W.P.(C)No.30645 of 2019 36 opportunity to make fresh offers along with the new operator identified by the consultant. Therefore, the contention advanced by learned Senior Counsel for the petitioner that the level playing field was violated, since the consultant has made its recommendation to the 1st respondent that among the petitioner and M/s. Dufry, petitioner's offer is more suited, cannot be sustained either factually or legally, and it is also significant to note that, petitioner submitted the fresh offer with new figures. So also, petitioner is not at liberty to turn around and say that petitioner was not granted sufficient opportunity to participate in the negotiation or that the private negotiation held is bad.
49. The apex court had occasion to consider the issue with respect to private negotiation in 'Nagar Nigam, Meerut v. Al Faheem Meat Exports (P) Ltd. and Others' [(2006) 13 SCC 382]. Paragraphs 12 to 17 are relevant to the context, which read thus:
"12. In this case, however, we are concerned with a different question. It is now a well- settled principle of law that having regard to the provisions of Article 14 of the Constitution of India, a State within the meaning of Article 12 thereof cannot distribute its largesse at its own sweet will, vide Ramana Dayaram Shetty v. International Airport Authority of India. The court can ensure that the statutory functions are not carried out at the whims and caprices of the W.P.(C)No.30645 of 2019 37 officers of the Government/local body in an arbitrary manner. But the court cannot itself takeover these functions.
13. This Court time and again has emphasised the need to maintain transparency in grant of public contracts. Ordinarily, maintenance of transparency as also compliance with Article 14 of the Constitution would inter alia be ensured by holding public auction upon issuance of advertisement in the well-known newspapers. That has not been done in this case. Although the Nagar Nigam had advertised the contract, the High Court has directed that it should be given for 10 years to a particular party (Respondent 1). This was clearly illegal.
14. It is well settled that ordinarily the State or its instrumentalities should not give contracts by private negotiation but by open public auction/tender after wide publicity. In this case the contract has not only been given by way of private negotiation, but the negotiation has been carried out by the High Court itself, which is impermissible.
15. We have no doubt that in rare and exceptional cases, having regard to the nature of the trade or largesse or for some other good reason, a contract may have to be granted by private negotiation, but normally that should not be done as it shakes the public confidence.
16. The law is well settled that contracts by the State, its corporations, instrumentalities and agencies must be normally granted through public auction/public tender by inviting tenders from eligible persons and the notification of the public auction or inviting tenders should be advertised in well-known dailies having wide circulation in the locality with all relevant details such as date, time and place of auction, subject-matter of auction, technical specifications, estimated cost, earnest money deposit, etc. The award of government contracts through public auction/public tender is to ensure transparency in the public procurement, to maximise economy and efficiency in government procurement, to promote healthy competition among the tenderers, to provide for fair and equitable W.P.(C)No.30645 of 2019 38 treatment of all tenderers, and to eliminate irregularities, interference and corrupt practices by the authorities concerned. This is required by Article 14 of the Constitution. However, in rare and exceptional cases, for instance during natural calamities and emergencies declared by the Government; where the procurement is possible from a single source only; where the supplier or contractor has exclusive rights in respect of the goods or services and no reasonable alternative or substitute exists; where the auction was held on several dates but there were no bidders or the bids offered were too low, etc., this normal rule may be departed from and such contracts may be awarded through "private negotiations". (See Ram and Shyam Co. v. State of Haryana.)
17. In Sachidanand Pandey v. State of W.B., AIR at p. 1133, O. Chinnappa Reddy, J. after considering almost all the decisions of the Court on the subject summarised the legal propositions in the following terms: (SCC p. 330, para 40) "40. On a consideration of the relevant cases cited at the Bar the following propositions may be taken as well established: State-owned or public-owned property is not to be dealt with at the absolute discretion of the executive. Certain precepts and principles have to be observed. Public interest is the paramount consideration. One of the methods of securing the public interest, when it is considered necessary to dispose of a property, is to sell the property by public auction or by inviting tenders. Though that is the ordinary rule, it is not an invariable rule. There may be situations where there are compelling reasons necessitating departure from the rule but then the reasons for the departure must be rational and should not be suggestive of discrimination. Appearance of public justice is as important as doing justice. Nothing should be done which gives an appearance of bias, jobbery or nepotism."
(emphasis supplied) "14. The public property owned by the State or by any instrumentality of the State should be generally sold by public auction or by inviting tenders. This Court has been insisting upon that W.P.(C)No.30645 of 2019 39 rule, not only to get the highest price for the property but also to ensure fairness in the activities of the State and public authorities. They should undoubtedly act fairly. Their actions should be legitimate. Their dealings should be aboveboard. Their transactions should be without aversion or affection. Nothing should be suggestive of discrimination. Nothing should be done by them which gives an impression of bias, favouritism or nepotism. Ordinarily these factors would be absent if the matter is brought to public auction or sale by tenders. That is why the court repeatedly stated and reiterated that the State-owned properties are required to be disposed of publicly. But that is not the only rule. As O. Chinnappa Reddy, J. observed, 'that though that is the ordinary rule, it is not an invariable rule'. There may be situations necessitating departure from the rule, but then such instances must be justified by compulsions and not by compromise. It must be justified by compelling reasons and not by just convenience."
(emphasis supplied)".
50. In 'Sachidanand Pandey and Another v. State of West Bengal and Others' [(1987) 2 SCC 295], the apex court had considered the said issue and paragraph 37 is relevant to the context, which read thus:
37. In Kasturilal Lakshmi Reddy v. State of Jammu and Kashmir, (AIR 1980 SC 1992) (supra), Bhagwati, J. again, speaking for the Court reiterated what he had said earlier in R. D. Shetty v. International Airport Authority, (AIR 1979 SC 1628) (supra). He proceeded to say :
x x x x x x x x x
x x x x x x x x x
We have referred to these considerations only illustratively, for there may be an infinite variety of considerations which may have to be taken into account by the Government in formulating its policies and it is on a total evaluation of various considerations which have weighed with the Government in taking a particular action, that the Court would have to W.P.(C)No.30645 of 2019 40 decide whether the action of the Government is reasonable and in public interest. But one basic principle which must guide the Court in arriving at its determination on this question is that there is always a presumption that the Governmental action is reasonable and in public interest and it is for the party challenging its validity to show that it is wanting in reasonableness or is not informed with public interest. This burden is a heavy one and it has to be discharged to the satisfaction of the Court by proper and adequate material. The Court cannot lightly assume that the action taken by the Government is unreasonable or without public interest because, as we said above, there are a large number of policy considerations which must necessarily weigh with the Government in taking action and therefore the Court would not strike down Governmental action as invalid on this ground, unless it is clearly satisfied that the action is unreasonable or not in public interest.
But where it is so satisfied, it would be the plainest duty of the Court under the Constitution to invalidate the Governmental action."
x x x x x x x x x
x x x x x x x x x
And again:
"If the State were giving tapping contract simpliciter there can be no doubt that the State would have to auction or invite tenders for securing the highest price, subject, of course, to any other relevant overriding considerations of public weal or interest, but in a case like this where the State is allocating resources such as water, power, raw materials etc. for the purpose of encouraging setting up of industries within the State, we do not think the State is bound to advertise and tell the people that it wants a particular industry to be set up within the State and invite those interested to come up with proposals for the purpose. The State may choose to do so, if it thinks fit and in a given situation, it may even turn to be advantageous for the State to do so, but if any private party comes before the State and offers to set up an industry the State would not be committing breach of any constitutional or legal obligation if it negotiates with such party and agrees to provide resources and other facilities for the purpose of W.P.(C)No.30645 of 2019 41 setting up the industry."
The observations of the Court in the light of the facts therein appear to fully justify the action of the West Bengal Government in the present case not inviting tenders or not holding public auction".
51. Again in 'M.P. Oil Extraction and Another v. State of M.P. and Others' [(1997) 7 SCC 592], the said question was considered and held as follows in paragraph 45:
"45. Although to ensure fair play and transparency in the State action, distribution of largesse by inviting open tenders or by public auction is desirable, it cannot be held that in no case distribution of such largesse by negotiation is permissible. In the instant case, as a policy decision protective measure by entering into agreements with selected industrial units for assured supply of sal seeds at concessional rate has been taken by the Government. The rate of royalty has also been fixed on some accepted principle of pricing formula as will be indicated hereafter. Hence, distribution or allotment of sal seed at the determined royalty to the respondents and other units covered by the agreements cannot be assailed. It is to be appreciated that in this case, distribution by public auction or by open tender may not achieve the purpose of the policy of protective measure by way of supply of sal seeds at concessional rate of royalty to the industrial units covered by the agreements on being selected on valid and objective considerations".
52. In 'Brij Bhushan and Others v. State of Jammu and Kashmir and Others' [(1986) 2 SCC 354] also the said issue was considered. Paragraph 7 is relevant to the context, which read thus:
W.P.(C)No.30645 of 2019 42
"7. Then, it was contended on behalf of the petitioners that the State Government had acted arbitrarily in selecting respondents Nos. 2, 3 and 4 for setting up factories within the State for manufacture of resin and turpentine derivatives without affording any opportunity to the petitioners and others for obtaining such contract and this action of the State Government was not based on any rational or relevant principles and was, therefore violative of Art. 14 of the Constitution. We must reject this ground also without the slightest hesitation. Respondents Nos. 2, 3 and 4 themselves took the initiative and made offers for setting up factories for manufacture of resin and turpentine derivatives provided they were assured definite supply of oleo resin every year and ultimately, as a result of negotiations which took place between them and the State Government, they were given licence for setting up their factories and assured supply of oleo resin was guaranteed to them for the purpose of feeding their factories. There was nothing to prevent the petitioners and others from making similar offers in time. But, in any event, even if the petitioners and others had made offers, it was for the State Government to decide whether their offers should be accepted or not. It is true that no advertisements were issued by the State Government inviting tenders for setting up factories for manufacture of resin and turpentine derivatives or stating that assured supply of oleo resin would be guaranteed to any party who is prepared to put up a factory for manufacture of resin and turpentine derivatives within the State. But, that cannot have any invalidating effect on the decision of the State Government to allow respondents Nos. 2, 3 and 4 to set up factories and to guarantee assured supply of oleo resin to them for feeding their factories. We may point out that a similar argument was advanced on behalf of the petitioners in Kasturi Lal Lakshmi Reddy v. State of Jammu and Kashmir, (AIR 1980 SC 1992) (supra) where a tapping contract was given to respondent No. 2 in that case and what we said in our judgment in that case applies with equal force to the situation in the present case".W.P.(C)No.30645 of 2019 43
53. So also, the said issue was considered in a different context by the apex court in 'Netai Bag and Others v. State of W.B. and Others' [(2000) 8 SCC 262] and held as follows in paragraphs 19 and 20:
"19. Though the State cannot escape its liability to show its actions to be fair, reasonable and in accordance with law, yet wherever challenge is thrown to any of such action, initial burden of showing the prima facie existence of violation of the mandate of the Constitution lies upon the person approaching the Court. We have found in this case, that the appellants have miserably failed to place on record or to point out to any alleged constitutional vice or illegality. Neither the High Court nor this Court would have ventured to make a roving inquiry particularly in a writ petition filed at the instance of the erstwhile owners of the land, whose main object appeared to get the land back by any means as, admittedly, with the passage of time and development of the area, the value of the land had appreciated manifold. It may be noticed that in the year 1961 the erstwhile owners were paid about Rs.5.5 lakhs and the State Government assessed the market value of the property which was paid by respondent No.5 at Rs. 71,59,820/-. The appellants have themselves stated that the value of the land round about the time, when it was leased to respondent No. 5 was about Rs. 11 crores. There cannot be any dispute with the proposition that generally when any State land is intended to be transferred or the State largesse decided to be conferred, resort should be had to public auction or transfer by way of inviting tenders from the people. That would be a sure method of guaranteeing the compliance of mandate of Art. 14 of the Constitution. Non-floating of tenders or not holding of public auction would not in all cases be deemed to be the result of the exercise of the executive power in an arbitrary manner. Making an exception to the general rule could be justified by the State executive, if challenged in appropriate proceedings. The Constitutional Courts cannot be expected to presume the alleged irregularities, W.P.(C)No.30645 of 2019 44 illegalities or unconstitutionality nor the Courts can substitute their opinion for the bona fide opinion of the State executive. The Courts are not concerned with the ultimate decision but only with the fairness of the decision making process.
20. The Government is entitled to make pragmatic adjustments and policy decision which may be necessary or called for under the prevalent peculiar circumstances. The Court cannot strike down a policy decision taken by the Government merely because it feels that another decision would have been fairer or wiser or more scientific or logical. In State of M.P. v. Nandlal Jaiswal (1986) 4 SCC 566 : (AIR 1987 SC
251) it was held that the policy decision can be interfered with by the Court only if such decision is shown to be patently arbitrary, discriminatory or mala fide. In the matter of different modes, under the rule of general application made under the M.P. Excise Act, the Court found that the four different modes, namely, tender, auction, fixed licence fee or such other manner were alternative to one another and any one of them could be resorted to".
54. Having regard to the facts and circumstances and the law laid down by the apex court, I do not think petitioner has made out any case in the matter of private negotiation because petitioner was also a participant and would have been a beneficiary if the offer made by the petitioner was more competitive than the offer made by the 3rd respondent. It is also pertinent to note that, public tenders were floated thrice, however, the 1st respondent could not secure any feasible bid advantageous to it, and it was accordingly that decision was taken to go for negotiation, and W.P.(C)No.30645 of 2019 45 later appointed the consultant to have negotiations with appropriate players in the field. Therefore, it is clear that there were compelling reasons for the 1st respondent Airport to do so.
55. Yet another contention advanced by learned Senior Counsel for the petitioner is in respect of the deviation made by the 1st respondent regarding Ext.P5 Heads of Terms that was negotiated with the petitioner and Ext.R1(g) Head of Terms with the 3rd respondent. It is true, as per Clause 19 of Ext.P5 Head of Terms, under the heading, Set up and commencement, it was stipulated that, the commencement date for operations of the Duty Free Retail Outlets shall be not later than 9th December, 2019. In the event the Concessionaire is unable to complete set up to the satisfaction of Kannur International Airport before the Commencement, the Concessionaire shall be required to pay Kannur International Airport, liquidated damages up to a maximum of 10% of the Security Deposit for each week or part thereof, for delay till the time the set up is completed to the satisfaction of Kannur International Airport.
56. However, in the Heads of Terms provided to the 3rd respondent, evident from Ext.R1(g) produced by the W.P.(C)No.30645 of 2019 46 1st respondent, a deviation is made from the said clause, which stipulates that, the commencement date for operations of the Duty Free Outlets shall be not later than 26th March, 2020 ("Commencement Date"); however, the Concessionaire agrees and undertakes to operate at least one Duty Free Outlet on or before 26 th December, 2019. In the event, the Concessionaire is unable to complete the set up to the satisfaction of Kannur International Airport before the Commencement, the Concessionaire shall be required to pay Kannur Airport, liquidated damages up to a maximum of 10% of the Security Deposit for each week or part thereof, for delay till the time set up is completed to the satisfaction of Kannur Airport.
57. Therefore, according to learned Senior Counsel for the petitioner, the rule of the game has been changed after the process has started and the 3rd respondent was provided with better offers in the matter of set up and commencement of Duty Free Retail Outlets. It is an admitted fact that three months more period was provided to the 3rd respondent. In my considered opinion, the 3rd respondent has made a very lucrative and tempting offer to the 1 st respondent and the consultant after evaluating the parties have W.P.(C)No.30645 of 2019 47 identified that in all respects, the best offer made was that of the 3rd respondent. It is also an admitted fact that, the Kannur Airport has started its operations during December, 2018, and it requires economic viability in order to carry on its operations without making further financial commitments to third persons by expending amounts towards interest and that is the reason why the consultant was appointed by the 1st respondent in order to find out appropriate operators in order to establish and maintain duty free shops.
58. The rough calculation made by the respondents itself makes it clear that the difference by and between the petitioner and the 3rd respondent's quote through the contract period would be more than Rs.41 crores. Therefore, in my considered opinion, when the consultant after evaluating the offers made by the respective parties, have found that the 3rd respondent's offer is the best one, then the issue with respect to negotiation of pricing and other conditions are over there, and when the 3rd respondent made a very lucrative offer beneficial to the 1st respondent, the 1st respondent is definitely at liberty to negotiate, in respect of the other conditions. Anyhow, it is agreed W.P.(C)No.30645 of 2019 48 by the 3rd respondent that at least one duty free outlet will be started on or before 26th December, 2019.
59. Moreover, the Minimum Monthly Guarantee offered and in various other respects, the offer made by the 3rd respondent was substantially superior than the offer made by the petitioner. In that view of the matter, I am of the considered opinion that, the 1st respondent, who is the master of the contract, have sufficient play in the joints to negotiate with the other terms and conditions to arrive at a logical conclusion and it was exercising the said power of discretion, the 1st respondent has provided time to the 3rd respondent to commence the operations fully, up to 26th March, 2020, i.e., an extension of three months than the one offered to the petitioner. It is also pointed out by learned Senior Counsel for the 1st respondent that, in fact, the 3rd respondent has sought time of five months and the 1st respondent has granted only three more months from 26th December, 2019. In this regard, it is also relevant to note that, in Ext.P7 letter dated 09.10.2019 issued by the Airport to the petitioner, requesting to submit fresh offer, it is clearly specified that management of the 1st respondent Airport will have the discretion to hold negotiations W.P.(C)No.30645 of 2019 49 with the selected party on the detailed terms of the concession agreement. Looking from that angle also, petitioner is not at liberty to contend that, the 1 st respondent has treated the petitioner differently to confer the offer in favour of the 3rd respondent.
60. The apex court had occasion to consider the issue with respect to discretion exercised by the master of a contract in 'Reliance Telecom Limited and Another v. Union of India and Another' [(2017) 4 SCC 269] and paragraphs 35, 36, 39, 40, 44 and 45 are relevant to the context, which read thus:
35. In Tata Cellular, a three-Judge Bench, after extensive consideration of the earlier decisions in the matter of judicial review and its scope of applicability to government contracts and tenders, ruled that the modern trend points to judicial restraint in administrative action and the court does not sit as a court of appeal but merely reviews the manner in which the decision was made. It further opined that the court does not have the expertise to correct the administrative decision and 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.
The Court further expressed that the terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract and the Government must be allowed to have a fair play in the joints as it is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. It was also observed that the decision must not only be tested by the application of Wednesbury principle of reasonableness but must also be free from arbitrariness and must not be affected by bias or actuated by mala fides and while quashing W.P.(C)No.30645 of 2019 50 decisions, heavy administrative burden on the administration and increase on expenditure have to be kept in view.
36. In Raunaq International Ltd. v. I.V.R. Construction Ltd., it has been held that (SCC p. 500, para 9) the award of a contract, whether it is by private party or by a public body or the State, is essentially a commercial transaction and prudent principle of commerce do weigh while making a commercial decision.
39. In Union of India v. International Trading Co., this Court held that non-renewal of permit by the Government to a private party on the ground of change in its policy cannot be faulted if such change is founded on reasonableness and is otherwise not arbitrary, irrational and perverse. It was observed that if the State acts within the bounds of reasonableness, it would be legitimate to take into consideration the national priorities and adopt trade policies and the ultimate test is whether, on the touchstone of reasonableness, the policy decision comes out unscathed. It further ruled that reasonableness of restriction is to be determined in an objective manner and from the standpoint of the interests of the general public and not from the standpoint of the interests of the persons upon whom the restrictions have been imposed or upon abstract consideration. A restriction cannot be said to be unreasonable merely because in a given case, it operates harshly. In determining whether there is any unfairness involved, the nature of the right alleged to have been infringed, the underlying purpose of the restriction imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition and the prevailing condition at the relevant time enter into the judicial verdict. The Court further held that the reasonableness of the legitimate expectation has to be determined with respect to the circumstances relating to the trade or business in question and canalisation of a particular business in favour of even a specified individual is reasonable where the interests of the country are concerned or where the business affects the economy of the country. W.P.(C)No.30645 of 2019 51
40. In Directorate of Education v. Educomp Datamatics Ltd., this Court, applying the principles enunciated in Tata Cellular and Monarch Infrastructure (P) Ltd., held that (SCC p. 24, para 12) the terms of the invitation to tender are not open to judicial scrutiny, the same being in the realm of contract; that the Government must have a free hand in setting the terms of the tender; that it must have reasonable play in its joints as a necessary concomitant for an administrative body in an administrative sphere and the courts would interfere with the administrative policy decision only if it is arbitrary, discriminatory, mala fide or actuated by bias and the courts cannot strike down the terms of the tender prescribed by the Government because it feels that some other terms in the tender would have been fair, wiser or logical. The courts can interfere only if the policy decision is arbitrary, discriminatory or mala fide.
44. In Michigan Rubber (India) Ltd. v. State of Karnataka, the Court, after referring to Jagdish Mandal v. State of Orissa and Tejas Constructions & Infrastructure (P) Ltd. v. Municipal Council, Sendhwa, expressed the view that (at SCC p. 229, para 23) the basic requirement of Article 14 is fairness in action by the State, and non- arbitrariness in essence and substance is the heartbeat of fair play and actions are amenable to judicial review only to the extent that the State must act validly for a discernible reason and not whimsically for any ulterior purpose and if the State acts within the bounds of reasonableness, it would be legitimate to take into consideration the national priorities. It further observed that fixation of a value of the tender is entirely within the purview of the executive and the courts hardly have any role to play in this process except for striking down such action of the executive as is proved to be arbitrary or unreasonable. If the Government acts in conformity with certain healthy standards and norms such as awarding of contracts by inviting tenders, in those circumstances, the interference by courts is very limited unless the action of the tendering authority is found to be malicious and a misuse of its statutory powers and greater latitude is required to be conceded to the State authorities in the matter of formulating W.P.(C)No.30645 of 2019 52 conditions of a tender document and awarding a contract. The Court also laid emphasis on public interest and the prudence in applying the principle of restraint where the action is fair and reasonable and does not smack of mala fides. It was also emphasised that the courts cannot interfere with the terms of the tender prescribed by the Government simply because it feels that some other terms in the tender would have been fair, wiser or logical.
45. In Maa Binda Express Carrier v. North-East Frontier Railway, this Court held that the scope of judicial review in matters relating to award of contracts by the State and its instrumentalities is settled by a long line of decisions of this Court which clearly recognise that the power exercised by the Government and its instrumentalities in regard to allotment of contract is subject to judicial review at the instance of an aggrieved party, and the submission of a tender in response to a notice inviting such tenders is no more than making an offer which the State or its agencies are under no obligation to accept and, therefore, the bidders participating in the tender process cannot insist that their tenders should be accepted simply because a given tender is the highest or lowest depending upon whether the contract is for sale of public property or for execution of works on behalf of the Government. It further ruled that all that the participating bidders are entitled to is a fair, equal and non- discriminatory treatment in the matter of evaluation of their tenders and it is well settled that award of a contract is essentially a commercial transaction which must be determined on the basis of considerations that are relevant to such commercial decision and, hence, the terms subject to which tenders are invited are not open to judicial scrutiny unless it is found that the same have been tailor-made to benefit any particular tenderer or class of tenderers. The Court further held that in the matter of award of contracts, the Government and its agencies have to act reasonably and fairly at all points of time and to that extent, the tenderer has an enforceable right in the court which is competent to examine whether the aggrieved party has been treated unfairly or discriminated against to the detriment of public interest".
W.P.(C)No.30645 of 2019 53
61. The said decision was considered in 'Montecarlo Limited v. National Thermal Power Corporation Limited' [(2016) 15 SCC 272], and paragraphs 19, 21 and 24 are relevant, which read thus:
"19. In Sterling Computers Ltd. v. M&N Publications Ltd., the Court has held that under some special circumstances a discretion has to be conceded to the authorities who have to enter into contract giving them liberty to assess the overall situation for purpose of taking a decision as to whom the contract be awarded and at what terms. It has also been observed that by way of judicial review the Court cannot examine the details of the terms of the contract which have been entered into by the public bodies or the State. Courts have inherent limitations on the scope of any such enquiry.
21. In Jagdish Mandal v. State of Orissa, the Court has held that: (SCC p.531, para 22) "22..... A contract is commercial transaction. Evaluating tenders and awarding contracts are essentially commercial functions. Principles of equity and natural justice stay at a distance. If the decision relating to award of contract is bona fide and is in public interest, courts will not, in exercise of power of judicial review, interfere even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out".
24. In Michigan Rubber (India) Ltd., the Court referred to the earlier judgments and opined that before a court interferes in tender or contractual matters, in exercise of power of judicial review, it should pose to itself the question whether the process adopted or decision made by the authority is mala fide or intended to favour someone or whether the process adopted or decision made is so arbitrary and irrational that the judicial conscience cannot countenance. The emphasis was laid on the test, that is, whether award of contract is against public interest." W.P.(C)No.30645 of 2019 54
62. 'CRRC Corporation Limited v. Metro Link Express for Gandhinagar and Ahmedabad (MEGA) Company Limited' [(2017) 8 SCC 282] was also dealing with similar question and paragraph 29 is relevant, which read thus:
"29. It would be advantageous, in view of the striking analogy of the overall perspectives, to recount the relevant observations recorded therein and having a decisive bearing on the issue under scrutiny: (Consortium of Titagarh Firema Adler S.P.A. case, SCC pp. 504-11, paras 27, 29-30, 32 & 35-38) "27. The core issue, as we perceive, pertains to acceptance of the technical bid of Respondent 2 by the first respondent and we are required to address the same solely on the touchstone of eligibility criteria regard being had to the essential conditions. The decision on other technical aspects, as we are advised at present, is best left to the experts. We do not intend to enter into the said domain though a feeble attempt has been made on the said count.
x x x x x x x x x
x x x x x x x x x
The decisions in Master Marine Services (P) Ltd. v. Metcalfe & Hodgkinson (P) Ltd., B.S.N. Joshi & Sons Ltd. v. Nair Coal Services Ltd. and Michigan Rubber (India) Ltd. have been referred to. The Court quoted a passage from Afcons Infrastructure Ltd. wherein the principle that interpretation placed to appreciate the tender requirements and to interpret the documents by owner or employer unless mala fide or perverse in understanding or appreciation is reflected, the constitutional courts should not interfere. It has also been observed in the said case that it is possible that the owner or employer of a project may give an interpretation to the tender documents that is not acceptable to the constitutional courts but that by itself is not a reason for interfering with the interpretation given. After referring to W.P.(C)No.30645 of 2019 55 the said authority, it has been ruled thus:
(Montecarlo Ltd. case, SCC p. 288, para 26) '26. We respectfully concur with the aforesaid statement of law. We have reasons to do so. In the present scenario, tenders are floated and offers are invited for highly complex technical subjects. It requires understanding and appreciation of the nature of work and the purpose it is going to serve. It is common knowledge in the competitive commercial field that technical bids pursuant to the notice inviting tenders are scrutinised by the technical experts and sometimes third-party assistance from those unconnected with the owner's organisation is taken. This ensures objectivity. Bidder's expertise and technical capability and capacity must be assessed by the experts. In the matters of financial assessment, consultants are appointed. It is because to check and ascertain that technical ability and the financial feasibility have sanguinity and are workable and realistic. There is a multi-prong complex approach; highly technical in nature. The tenders where public largesse is put to auction stand on a different compartment. Tender with which we are concerned, is not comparable to any scheme for allotment. This arena which we have referred requires technical expertise. Parameters applied are different. Its aim is to achieve high degree of perfection in execution and adherence to the time schedule. But, that does not mean, these tenders will escape scrutiny of judicial review. Exercise of power of judicial review would be called for if the approach is arbitrary or mala fide or procedure adopted is meant to favour one. The decision-making process should clearly show that the said maladies are kept at bay. But where a decision is taken that is manifestly in consonance with the language of the tender document or subserves the purpose for which the tender is floated, the court should follow the principle of restraint. Technical evaluation or comparison by the court would be impermissible. The principle that is applied to scan and understand an ordinary instrument relatable to contract in other spheres has to be treated differently than interpreting and appreciating tender documents relating to technical works and projects requiring special skills. The owner should be allowed to carry out the purpose and W.P.(C)No.30645 of 2019 56 there has to be allowance of free play in the joints.' * * *
32. In Reliance Telecom Ltd. v. Union of India, the Court referred to the authority in Asia Foundation & Construction Ltd. v. Trafalgar House Construction (I) Ltd.wherein it has been observed that: (Reliance Telecom Ltd. case, SCC p. 317, para 58) '58. ... though the principle of judicial review cannot be denied so far as exercise of contractual powers of government bodies are concerned, but it is intended to prevent arbitrariness or favouritism and it is exercised in the larger public interest or if it is brought to the notice of the Court that in the matter of award of a contract power has been exercised for any collateral purpose.' Thereafter, the Court in Reliance Telecom Ltd.
proceeded to state thus: (SCC p. 317, para 58) '58. ... In the instant case, we are unable to perceive any arbitrariness or favouritism or exercise of power for any collateral purpose in NIA. In the absence of the same, to exercise the power of judicial review is not warranted. In the case at hand, we think, it is a prudent decision once there is increase of revenue and expansion of the range of service.' And again: (SCC p. 317, para 59) '59. It needs to be stressed that in the matters relating to complex auction procedure having enormous financial ramification, interference by the courts based upon any perception which is thought to be wise or assumed to be fair can lead to a situation which is not warrantable and may have unforeseen adverse impact. It may have the effect potentiality of creating a situation of fiscal imbalance. In our view, interference in such auction should be on the ground of stricter scrutiny when the decision-making process commencing from NIA till the end smacks of obnoxious arbitrariness or any extraneous consideration which is perceivable.
x x x x x x x x x
x x x x x x x x x
W.P.(C)No.30645 of 2019 57
In the obtaining fact situation, the
interpretation placed by the first respondent in the absence of any kind of perversity, bias or mala fide should not be interfered with in exercise of power of judicial review. Decision taken by the first respondent, as is perceptible, is keeping in view the commercial wisdom and the expertise and it is no way against the public interest. Therefore, we concur with the view expressed by the High Court." (emphasis supplied).
63. Lastly, in 'Air India Ltd. v. Cochin International Airport Ltd. and Others' [(2000) 2 SCC 617] the said issue was considered and held as follows in paragraph 7:
"7. The law relating to award of a contract by the State, its corporations and bodies acting as instrumentalities and agencies of the Government has been settled by the decision of this Court in R. D. Shetty v. International Airport Authority, (1979) 3 SCC 498 : (AIR 1979 SC 1628); Fertilizer Corporation Kamgar Union v. Union of India, (1981) 1 SCC 568 : (AIR 1981 SC
844); Asstt. Collector, Central Excise v. Dunlop India Ltd., (1985) 1 SCC 260 : (AIR 1985 SC 330);
Tata Cellular v. Union of India, (1994) 6 SCC 651 : (1994 AIR SCW 3344 : AIR 1996 SC 11); Ramniklal N. Bhutta v. State of Maharashtra, (1997) 1 SCC 134 : (1997 AIR SCW 1281 : AIR 1997 SC 1236) and Raunaq International Ltd. v. I.V.R. Construction Ltd., (1999) 1 SCC 492 : (1999 AIR SCW 53 : AIR 1999 SC 393). The award of contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction.
In arriving at a commercial decision considerations which are of paramount are commercial considerations. The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that is not open to judicial scrutiny. It can enter into negotiations before finally deciding to accept one of the offers made to it. Price need not always be the sole criterion for awarding a contract. It is free to grant any relaxation, for bona fide reasons, if the tender W.P.(C)No.30645 of 2019 58 conditions permit such a relaxation. It may not accept the offer even though it happens to be the highest or the lowest. But the State, is corporations, instrumentalities and agencies are bound to adhere to the norms, standards and procedures laid down by them and cannot depart from them arbitrarily. Though that decision is not amenable to judicial review, the Court can examine the decision making process and interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness. The State, is corporations, instrumentalities and agencies have the public duty to be fair to all concerned. Even when some defect is found in the decision making process the Court must exercise its discretionary power under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point. The Court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the Court should intervene".
64. Therefore, taking into account the proposition of law laid down by the apex court, it is clear that the master of the contract has got sufficient discretion and play in the joints, and liberty in order to conclude the contract, after finding out the successful operator taking into account the attendant facts and circumstances.
65. Moreover, the Heads of Terms or letter of intent is only an outer broad-line given by the tenderer which marks as a first step on the path to a full, legal and binding agreement of the contract and a guideline for the roles and responsibilities of the W.P.(C)No.30645 of 2019 59 parties involved in a deal before any binding documents are drawn up. Therefore, it cannot be said that the Heads of Terms provided by the master of the contract is as such binding on the master. The master has got sufficient play in the joints and flexibility to deal with a successful person identified on the negotiation and attain a logical conclusion. The said liberty exercised by the master of the contract cannot be said to be un-consignable, unfair, untenable and irrational on the part of the master, justifying interference of a court of law.
66. Moreover, it is quite clear and evident that the establishment, conduct and maintenance of a duty free shop is a clear commercial venture and the master of the contract always bears in mind the success of the business to the maximum advantageous financial terms, and thereby protect not only the interest of the master, but also the larger public. It is also equally important to note that, the number of players in the field of conduct of duty free shops in international airports in India are limited, and therefore, when the 1st respondent got a very lucrative offer from the 3rd respondent, and taking into account its financial set up and other surrounding circumstances, 1st respondent W.P.(C)No.30645 of 2019 60 thought it best and proper that it has negotiations with the 3rd respondent to arrive at financial terms and conditions, through the consultant.
67. It is also an admitted fact that, the petitioner, 3rd respondent and other operator viz., M/s. Dufry are all seasoned operators in the matter of establishment and maintenance of duty free shops. It is also equally important to note that, fresh offers were received from the parties only on 15.10.2019 and having received a very lucrative offer from the 3rd respondent, the 1st respondent thought that it is better to negotiate and provide more time to the 3rd respondent to commence the operations. Therefore, the Head of Terms was only the basic idea given to the parties to submit the bid and deal with it.
68. It is also equally important to note that, the parties may be bound by the Head of Terms, but that will not saddle the master of the contract to have negotiated terms and to make a flexible shift without compromising the fundamental requirements of the contract. This is more so, when it was found by the 1st respondent that the offer made was very profitable to it, and which may achieve its aims, and objectives. It must have also realized that the offer made was genuine W.P.(C)No.30645 of 2019 61 and the party has sufficient capacity, efficiency, economic flexibility, viability and discipline to complete the contract without fail. That is the fair play principle that was considered by the apex court in the judgments discussed above. It cannot also said to be unreasonable and totally violative of the conditions of the Head of Terms.
69. It is worthwhile to note that, except the shift from 26th December, 2019 to 26th March, 2020, no other variations are made. It is also significant to note that, without such liberty to the master to negotiate the terms, there can be no successful and meaningful contract. Therefore, it is clear that, it was protecting the interest of the 1st respondent, the public interest, and also on realizing that there are no capricious and patent arbitrariness, the 1st respondent has decided to enter into flexible terms with the 3rd respondent, so as to commence the operations fully from 26th March, 2020.
70. In the case on hand, the entire process was done by the 2nd respondent, which is an internationally reputed organization, and the 2nd respondent on detailed evaluation, has found that the terms and conditions of the 3rd respondent is much superior to the offer made by W.P.(C)No.30645 of 2019 62 the petitioner. The evaluation made by providing marks specified above, would also speaks in volumes the superiority of the offer made by the 3rd respondent. It is also relevant to note that, the intention of the 1 st respondent is to produce a given result and merely by granting three months more time to commence the operation, no manner of mala fides can be attributed against the 1st respondent, especially due to the reason that the negotiations were done by an independent consultant against whom petitioner has not made any allegations of mala fides also. That apart, petitioner has no case that the offer of the 3rd respondent is in any way inferior, unqualified or detrimental to the interest of the Kannur International Airport.
71. Yet another contention advanced by learned Senior Counsel for the petitioner is that, no documents are forthcoming from the side of the 1st respondent to know, how the 3rd respondent has come into the picture. In my considered opinion, it is immaterial because the consultant was requested by the 1st respondent to find out the best persons to establish, maintain and run the duty free shops. It was in the said process that the 2nd respondent could identify the 3rd respondent. The documents produced by the 1st respondent as well as the W.P.(C)No.30645 of 2019 63 consultant make it clear that, the transactions were done in a most transparent manner and merely because private negotiation was chosen by the 1st respondent, it cannot be said that there is any mala fides on the part of the respondents.
72. It is also evident from Ext.R1(e) that the evaluation made by the consultant was taking into account the entire inputs provided and the offers made by all parties, and the same is quoted hereunder:
"Table 1: Comparison of Proposals S. Criteria Flemingo Dufry GMR Proposal No. Proposal Proposal 1 Contract 7 years + 7 years + 7 years + Duration 3 years 3 years 3 years 2 Warehouse Rent/ Payable at Payable at Payable at Bonded Store airport rates airport rates airport rates 3 Utility Charges On Actual On Actual On Actual Metered Metered Metered Consumption Consumption Consumption Marketing Marketing Marketing fund of 0.5% fund of 0.5% fund of 0.5% of gross of gross of gross duty-free duty-free duty-free 4 Marketing/Promot sales will be sales will be sales will be ion created, created, created, which will be which will be which will be utilized for utilized for utilized for promotions promotions promotions and campaigns and campaigns and campaigns
5.A. Minimum Monthly INR 112 per INR 125 per INR 162 per Guarantee for international international international year 1 departing arriving arriving passenger. passenger passenger W.P.(C)No.30645 of 2019 64
5.B. Minimum Monthly INR 125 per 85% of INR 162 per Guarantee from international previous international year 2 departing year's spend arriving passenger per pax *VCF passenger
5.C Minimum Monthly with Guarantee quarterly Quarterly Monthly Payments wash
6. Revenue Share
6.A. Core - Alcohol, 36.27%: Y1-Y4 Tobacco, Perfume 37.20% 36.00% 36.72%: Y4-Y7 and Cosmetics 37.17%: Y7- Y10
6.B. Electronics and 9.00% Not proposed 14.58% Watches
6.C. Supermarket 12.00% 12.00% 14.58%
6.D Others-Luggage, Travel Accessories, 15.00% 15.00% 14.58% Destination Products
6.E. Apple Products 3.00% Not proposed Not proposed
6.F. Frequency of Monthly with Monthly Quarterly Revenue Share quarterly wash 7 Security Deposit 10 Crores No cash in cash (INR) deposit; BG 12 crores of INR 15 Crores 8 Committed Capital 7 Crores 7 crores 7.5 crores Expenditure in one year (INR) 9 Additional TBD on committed 5 crores operational 7.5 crores capital demand expenditure (INR) 10 CAM Charges To be borne To be borne To be borne by by by concessionair concessionair concessionair e, at e, at e, at prevalent prevalent prevalent rates rates rates (current (current (current charges are: charges are: charges are:
INR INR INR
385/sq.mtr./ 385/sq.mtr./ 385/sq.mtr./
month) month) month)
W.P.(C)No.30645 of 2019 65
Evaluation Parameters
1. The proposals were evaluated on the basis of commercial terms
2. Therefore, to maintain uniformity in the proposal evaluation, the following commercial parameters were scored:
Table 2: Evaluation Scores Parameter Flemingo Dufry GMR Minimum Monthly Guarantee 7.7 0 10 Security Deposit (Cash) 8.3 0 10 Revenue Share (Core) 10 9.7 9.8 Revenue Share (Non-Core) 6.7 6.2 10 Capex 8 4.6 10 Total Scores 40.7 20.5 49.8 Scoring: 0 - Not Offered/Fixed Fee Not Offered 1-9 Score relative to highest value,10 - Highest.
Basis of the above evaluation, GMR has scored the highest. Other salient features of the GMR proposal are listed below.
a. Minimum guarantee payable every month, with revenue share reconciliation done every quarter.
b. Prepared to share real-time data with the airport.
c. First store to be opened by 9th December, 2019.
d. Open to a JV at 26% stake for KIAL from year 3 onwards.
e. Marketing campaign in upline stations in the catchment area.
f. Deployment of digital technology solutions at Kannur airport to improve customer engagement, support promotional activity and enhance customer experience".
73. That apart, from the additional affidavit filed by the 1st respondent, it is clear that, the 3rd respondent has sought for six months time to W.P.(C)No.30645 of 2019 66 progressively complete the duty free shops, however, only three months time from 26th December, 2019 was granted to the 3rd respondent. It is also equally important to note that the documents produced by the consultant would show that negotiations were done with all the parties, and it was after taking into account the attendant circumstances alone, the offer made by the 3rd respondent was suggested by the consultant.
74. Above all these aspects, it is pertinent to note the reliefs sought for by the petitioner in the writ petition, which are as follows:
"(i) to call for the records leading to issuance of letter of award in favour of 3rd respondent and quash the same as arbitrary, illegal and in violation of Article 14 of the Constitution of India by issuance of a writ of certiorari or any other appropriate writ, direction or order;
(ii) to issue a writ of mandamus or any other appropriate writ, direction or order commanding the 1st respondent to adopt open tendering system by issuing fresh Request for Proposal (RFP) for award of concession for designing, establishing, operating and maintaining duty free shops at Kannur International Airport;
(iii) to issue such other writs, orders or direction which this Hon'ble Court may deem fit and proper to issue in the facts and circumstances of the case."
75. Therefore, petitioner has no case that the offer made by the 3rd respondent has any illegal or adverse consequences, however, petitioner seeks to quash letter of award, and to go for open public W.P.(C)No.30645 of 2019 67 tender, on the basis of the grounds discussed above. As I have pointed out earlier, petitioner is not at liberty to seek for such a relief, since petitioner was a beneficiary of the private negotiation held. Petitioner was also well aware that, in the negotiation, the party who makes the best offer would be selected to establish, maintain and operate the duty free shops. It is also evident that, a clear procedure was adopted in the matter of selection by the consultant, which is not under challenge at all, and seems to be fair and reasonable, ruling out any interference of this Court.
76. Having assimilated the factual and legal situations, I am of the considered opinion that, petitioner has not made out any case of mala fides, arbitrariness, illegality, unfairness or any other legal infirmities, justifying interference of this Court, exercising the power of discretion conferred under Article 226 of the Constitution of India. W.P.(C)No.30645 of 2019 68
Needless to say, writ petition fails, accordingly it is dismissed.
Sd/-
SHAJI P.CHALY JUDGE W.P.(C)No.30645 of 2019 69 APPENDIX PETITIONER'S/S EXHIBITS:
EXHIBIT P1 TRUE COPY OF COMPANY MASTER DATA OF THE 1ST RESPONDENT WITH THE MINISTRY OF CORPORATE AFFAIRS, GOVERNMENT OF INDIA.
EXHIBIT P2 TRUE COPY OF DETAILS OF BOARD OF DIRECTORS AVAILABLE IN WEBSITE OF THE 1ST RESPONDENT.
EXHIBIT P3 TRUE COPY OF REQUEST FOR PROPOSAL (RFP) WITHOUT ANNEXURES DATED NIL DECEMBER 2018 ISSUED BY THE 1ST RESPONDENT.
EXHIBIT P4 TRUE COPY OF LETTER OF AWARD ISSUED BY 1ST RESPONDENT TO 2ND RESPONDENT DATED 09.07.2019.
EXHIBIT P5 TRUE COPY OF HEADS OF TERMS FOR DUTY FREE CONTRACT AT KANNUR INTERNATIONAL AIRPORT ISSUED BY 1ST RESPONDENT DATED NIL.
EXHIBIT P6 TRUE COPY OF THE MINUTES OF MEETING BETWEEN THE PARTIES DATED 13.09.2019.
EXHIBIT P7 TRUE COPY OF THE LETTER DATED 09.10.2019 ISSUED BY THE 1ST RESPONDENT.
EXHIBIT P8 TRUE COPY OF FINAL PROPOSAL SUBMITTED BY THE PETITIONER DATED 15.10.2019.
EXHIBIT P9 TRUE COPY OF THE LETTER DATED 02.11.2019 ISSUED BY THE 1ST RESPONDENT.
EXHIBIT P10 TRUE COPY OF THE NEWS ARTICLE IN MALAYALA MANORAMA DAILY NEWSPAPER DATED 21.10.2019. EXHIBIT P11 TRUE COPY OF LETTER ISSUED BY THE PETITIONER TO THE 1ST RESPONDENT DATED 2.11.2019.
EXHIBIT P12 TRUE COPY OF OFFICE ORDER DATED 5/2/2016 OF THE 1ST RESPONDENT.
RESPONDENT'S/S EXHIBITS:
EXHIBIT R1(A) TRUE COPY OF THE JUDGMENT IN WPC NO.16176/2019 DATED 8/7/2019.
EXHIBIT R1(B) TRUE COPY OF THE EXTRACT OF THE MINUTES OF THE TECHNICAL COMMITTEE MEETING HELD ON 9TH FEBRUARY 2019 W.P.(C)No.30645 of 2019 70 EXHIBIT R1(C) TRUE COPY OF THE EXTRACT OF THE MINUTES OF THE BOARD MEETING HELD ON 25TH JUNE 2019.
EXHIBIT R1(D) TRUE COPY OF THE EXTRACT OF THE MINUTES OF THE BOARD MEETING HELD ON 25 JUNE 2019.
EXHIBIT R1(E) TRUE COPY OF THE ANALYSIS OF DUTY FREE PROPOSALS PREPARED AND SUBMITTED BY THE 2ND RESPONDENT.
EXHIBIT R1(F) TRUE COPY OF THE EXTRACT OF AGENDA AND MINUTES OF THE BOARD MEETING HELD ON 20TH OCTOBER 2019.
EXHIBIT R1(G) TRUE COPY OF THE LETTER OF AWARD DATED 26/10/2019 AWARDED TO THE 3RD RESPONDENT ALONG WITH ENCLOSURE.
EXHIBIT R1(H) TRUE COPY OF THE LETTER NO.995072/D2/2016/TRANS DATED 5TH JANUARY 2018 FROM GOVERNMENT TO THE 1ST RESPONDENT.
EXHIBIT R2(A) TRUE COPY OF THE COMMUNICATION DATED 24.09.2019 RECEIVED FROM RESPONDENT NO.3 TO RESPONDENT NO.2.
EXHIBIT R2(B) TRUE COPY OF THE EMAIL COMMUNICATION DATED 09.10.2019 SENT BY THIS RESPONDENT TO THE PETITIONER, ALONG WITH A COPY OF THE ANNEXED SAID COMMERCIAL HEADS OF TERMS.
EXHIBIT R2(C) TRUE COPY OF THE EMAIL COMMUNICATION DATED 09.10.2019 SENT BY THIS RESPONDENT TO DUFRY.
EXHIBIT R2(D) TRUE COPY OF THE EMAIL COMMUNICATION DATED 09.10.2019 SENT BY THIS RESPONDENT TO THE 3RD RESPONDENT.
EXHIBIT R2(E) TRUE COPY OF THE E-MAIL DATED 23.08.2019 ALONG WITH ATTACHMENT THERETO SENT BY THIS RESPONDENT TO THE PETITIONER.
EXHIBIT R2(F) A TRUE COPY OF THE E-MAIL DATED 09.09.2019 SENT BY THE 2ND RESPONDENT TO THE 1ST RESPONDENT.
EXHIBIT R2(G) A COPY OF THE E-MAIL DATED 10.09.2019 EXHIBIT R2(H) A COPY OF THE REPLY MAIL TO EXT. R2G, DATED 10.09.2019.
W.P.(C)No.30645 of 2019 71EXHIBIT R2(I) A COPY OF THE E-MAIL DATED 11.09.2019 FROM THE CFO, RESPONDENT NO.1 TO RESPONDENT NO.2 EXHIBIT R2(J) THE RELEVANT EXTRACTS OF THE PRELIMINARY PROPOSAL OF THE RESPONDENT NO.3 RECEIVED ON 24.09.2019.
EXHIBIT R2(K) COPY OF THE E-MAIL TRAIL WITH AER RIANTA INTERNATIONAL DATED 11.10.2019.
EXHIBIT R2(L) COPY OF THE E-MAIL DATED 14.10.2019 SENT TO DFS.
EXHIBIT R2(M) A TRUE COPY OF THE MAIL DATED 15.10.2019 ALONG WITH THE EXTRACT OF THE FINAL PROPOSAL ATTACHE TO THE EMAIL AS RECEIVED FROM RESPONDENT NO.3