Bombay High Court
Flemingo Duty-Free Shop Pvt. Ltd. And ... vs Union Of India (Uoi) And Ors. on 5 June, 2008
Author: D.K. Deshmukh
Bench: D.K. Deshmukh
JUDGMENT D.K. Deshmukh, J.
1. By this petition the Petitioner challenges the process adopted by the Respondent No. 3 beginning with the Expression of Interest and followed by issuance of Request for Proposal and culminating in the award of contract initially to Respondent No. 4 and then to the Respondent No. 5.
2. The facts that are material and relevant for deciding this petition are that the Petitioner No. 1 is a company incorporated under the Companies Act and having its registered office in New Mumbai. According to the Petitioner No. 1, it is engaged in the business of operating and running duty Free Retail Outlets in International Airports in India. The Respondent No. 1 is the union of India and the Respondent No. 2 is Airports Authority of India constituted under Section 3 of the Airports Authority of India Act, 1994. According to the Petitioners, the Respondent No. 2 is owned and controlled by the Respondent No. 1. The International Airport at Mumbai i.e. Chhatrapati Shivaji International Airport was exclusively controlled and managed and operated by the Respondent No. 2. The Respondent no.3 is a company registered under the Companies Act 1956 and is a Joint Venture Company. Respondent No. 3 is a consortium of GVK Airport Holdings Pvt.Ltd.; ACSA Global Limited; Bid Services Division (Mauritius) Ltd., and the Respondent No. 2. Respondent No. 4 is a consortium between ALDEASA S.A. a company established and existing under the laws of Spain and Indian Tourism Development Corporation (ITDC) incorporated under the laws of India. Respondent No. 5 is a company established and existing under the laws of Singapore. Respondent No. 6 is a wholly owned subsidiary of Respondent No. 5. According to averments in the petition, the Respondent No. 3 has been created with the objective of operating, maintaining, developing, designing, constructing, upgrading, modernizing, financing and managing Airports. The Respondent No. 2 holds 26% in the equity of the Respondent No. 3. According to the petitioners, Respondent No. 3 operates under the pervasive control of Respondent No. 1 & Respondent No. 2. According to the petitioners, after the Airports Authority of India Act was amended by the amendment Act of 2003, pursuant to the provisions of Section 12A of the Act on 4-4-2006 an agreement was executed between the Respondent No. 2 and the Respondent No. 3 called the Operation, Management and Development Agreement (herein after referred to as OMDA) whereby and where under the Respondent No. 2 leased out the Chhatrapati Shivaji International Airport to Respondent No. 3 for a period of 30 years. The lease is renewable for further period of 30 years. The Petitioners in the petition refer to the provisions of OMDA in detail. According to the Petitioners, on 9-10-2006 the Respondent No. 3 made a public announcement in the newspapers calling for Expression of Interest for setting up Duty free Shops at Chhatrapati Shivaji International Airport, Mumbai. The Petitioner No. 1 entered into a consortium arrangement with Aer Rianta International (herein after referred to as ARI) which is a company incorporated under the laws of Ireland for the purpose of submitting the tenders pursuant to the public announcement dated 9-10-2006. According to the Petitioner, its partner ARI is a dedicated international division of the Dublin Airport authority and was the first to start duty-free business in the world. It founded first duty-free shop at Shannon Airport at Ireland in 1947. According to the Petitioner, AIR has 60 years of experience in duty-free retailing. Its managed retail business turn over for 2006 is in excess of 900 million US$. The Petitioner and the said ARI intended to jointly bid for the tender. According to averments in the petition, this agreement and arrangement reached between the Petitioner and the ARI is still subsisting. According to the Petitioner, pursuant to the public announcement referred to above, the petitioner submitted its Expression of Interest along with Joint Venture Partner ARI on 11-10-2006 to the Respondent No. 3, which was duly accepted. It was submitted within time and it was also accompanied by the prescribed fee. Pursuant to the Expression of Interest submitted by the Petitioner along with ARI, the petitioner was invited to make a presentation by the Respondent No. 3 on 9-11-2006 at ITC Grand Maratha Sheraton, Mumbai, Mumbai. According to the petitioner on 9- 11-2006 the Petitioner satisfactorily made its presentation to the representative of the Respondent No. 3. According to the Petitioner, thereafter on 12-1-2007, Senior Vice President of the Respondent No. 3 addressed an e-mail to the petitioner-company asking for details like sales turnover at Shops operation, international traffic etc. It was replied to by the Petitioner. According to the Petitioner, this was the last correspondence addressed to the Petitioner by the Respondent No. 3. Thereafter, there was, according to the Petitioner, no communication from the Respondent No. 3. According to the Petitioner, though the Petitioner thereafter sent number of reminders to the Respondent No. 3, they evoked no response. According to the Petitioner, it has not been informed either orally or in writing the decision of the Respondent No. 3 in short-listing the persons to whom the tender documents would be issued. The Petitioner, thus, stated in the petition that, therefore, the Petitioner was stunned to learn that a Request for Proposal document has been issued to the participants. According to averments in the petition, the Petitioner has learnt that the persons to whom RFP was issued are required to submit their bids/proposals by 23-2-2007. The Petitioner submitted that the Petitioner has not been asked to submit the RFP. The Petitioner feeling aggrieved by the non-issuance of RPF document to the Petitioner, filed this petition on 20-2-2007 challenging basically the action of the Respondent No. 3 of non-issuance of RFP to the Petitioner for operating and setting up the duty- free shop at Chhatrapati Shivaji International Airports, Mumbai. It appears that the Petition was mentioned before the Division Bench on 22-2- 2007. The Division Bench after hearing the counsel appearing for the Petitioner, the Counsels appearing for the Respondents Nos. 1 & 2 by order dated 22-2-2007 dismissed the petition on the ground that the Petitioner is guilty of latches in approaching the Court. That order was challenged before the Supreme Court by the Petitioner. The order of the Division Bench has been set aside by the Supreme Court by order dated 22-2-2008 and the Supreme Court has directed this Court to hear the petition on merits.
3. It appears that after the Writ Petition was dismissed by the Division Bench, the Respondent No. 3 awarded the contract to Respondent No. 4/ITDC Aldeasa India Pvt. On 26-2- 2007. The contract awarded in favour of the Respondent No. 4 was cancelled by the Respondent No. 3 on 23-11-2007 and thereafter the contract has been awarded to the Respondent No. 5. The contract has been awarded to Respondent No. 5, because according to Respondent No. 3 the Respondent No. 5 was the second highest bidder. The Petitioner because of these developments taking place after rejection of the petition by the Division Bench and during the pendency of Special Leave Petition in the Supreme Court amended the petition and has challenged the awarding of contract by Respondent No. 3 to Respondent No. 5.
4. The Respondents have filed their affidavits-in-reply. The Petitioner has also filed rejoinder. In short the defence put up by the Respondents is that the R.P.F. documents were not issued to the petitioner because the Respondent no.3 found that the petitioner is not entitled to be short listed. It is also contended that because the respondent no.3 is not State it is not bound by the Part III of the Constitution and is not so amenable to the jurisdiction of the Court under Article 226 of the Constitution of India.
5. We have heard the learned Counsel appearing for the Petitioner as also the learned Counsels appearing for the Respondents in detail. The parties have also filed their written submissions.
6. Shri R.F. Nariman, the learned Senior Counsel appearing for the Petitioner No. 1 submitted that the issues which arise for consideration in the present Writ Petition are:
(i) Whether the Respondent No 3 Company, MIAL, is 'State' within the meaning of Article 12?
(ii) Whether, even if it is not 'State', is it amenable to the writ-jurisdiction under Article 226 of the Constitution?
(iii) Whether the Invitation for Expression of Interest is so designed as to introduce inherent and complete arbitrariness and unreasonableness in the whole tender process in that inter-alia, (a) it does not set out any criteria, much less definite, clear and objective criteria, for evaluation of Expressions of Interest; (b) it does not specify the absolute or relative importance, if any, of experience, turnover or the financial offer ;(c) it expressly states that the final criteria used for short-listing would be determined by MIAL in its sole discretion; (d) it provides for short-listing (without even specifying the number to be short-listed) thereby denying opportunity to all persons interested to submit their bids and thereby provide a level-playing field; (e) it provides for MIAL's right to accept or reject any or all offers 'at any stage of the process and/or modify the process at its sole discretion, without assigning any reason whatsoever'?
(iv) Whether the impugned process beginning with the Invitation, Expression of Interest, the exclusion of the Petitioner's consortium from the bidding process, the issuance of the RFP to four parties, culminating in the award of the contract to a fifth party, the Respondent No. 4 and thereafter to the Respondent No. 5 is vitiated by lack of transparency which is the sine-qua-non of the tender process in the realm of public law for public utility services functioning in the public interest?
(v) Whether MIAL acted most arbitrarily in short- listing only four parties and then issuing the bid-document to a fifth party (ITDC/ALDAESA) well after the last date for issuance thereof, hurriedly awarding the contract to it on 26th February 2007, the very date on which the Special Leave Petition was filed in the Supreme Court even though the scheduled date for awarding contract was 7th March 2007, and then cancelling the contract on 24.11.2007 , and lastly, awarding the contract to DFS (Respondent No. 5) on 29.11.2007,without calling for fresh tenders and considering afresh the claims of all others, including the Petitioner?
(vi) Whether the grant in favour of the Respondent Nos. 5 & 6 which is contrary to the express terms of the RFP (tender document) is sustainable, legal and valid?
(vii) Whether the decision to deny even the opportunity to the Petitioner's consortium to bid for the contract for duty-free retail shop, particularly when the offer i.e. Expression of Interest, is not expressly rejected for stated reasons is wholly arbitrary, unreasonable and unjust?
7. The learned Counsel further submitted that the Respondent No. 3 is a Joint Venture Company in which 26% shareholding is held by the Airports Authority of India(AAI) and this gives control to the AAI over vital matters which require 3/4th majority. Respondent No. 3 has been specially incorporated "inter alia with the objectives of operating, maintaining, developing, designing, constructing, upgrading, modernizing, financing and managing the Airport". Airport is defined in Clause 1.1. of OMDA to mean "the Chhatrapati Shivaji International Airport". The learned Counsel submitted that the Respondent No. 3 is the lessee of the AAI under Section 12-A of the Airports Authority of India Act, 1994, as amended in 2003, which provides that some of the functions of the AAI may be transferred to the Respondent No. 3 and that the said Respondent No. 3 shall have all the powers of the AAI in the performance of any such functions in terms of the lease. MIAL was granted lease on 26.4.2006 vide Lease Deed. The operation, maintenance and development of the airport is governed by OMDA executed between the AAI and MIAL. The relationship between the shareholders is governed by the Shareholders Agreement dated 4-4-2006 entered into between the shareholders of MIAL including AAI. The governmental services to be provided to MIAL is governed by the State Support Agreement dated 26-4-2006 entered into between MIAL and the Government of India. It is further submitted by the learned Counsel that Respondent No. 3 is a Joint Venture Company. In a joint venture Company where the government holds shares, 50% and over makes the company a Government Company and therefore "State", under Article 12. Mere reduction of the shareholding below 50% does not make it a "purely private" company outside Article 12. In support of this proposition he relied on the judgment of the Supreme Court in the case of Amar Alcohol Ltd. v. SIICOM Ltd. 2006 (10 SCC 199. Clearly therefore, he submits MIAL is a special purpose joint venture Company formed only because of Section 12 A and is not a purely private Company. There is public- private participation right from the inception of the Company.
8. The learned Counsel took us through the relevant provisions of OMDA as also the State support agreement and the provisions of the Act. Then the learned Counsel submits that Section 12 of the Act delineates the functions of the Authority and under Section 12 (3) thereof, the specific functions of AAI have been mentioned. Section 12-A (1), introduced by Act 43 of 2003 , begins with a non-obstante clause and empowers the AAI " in the public interest or in the interest of better management of airports" to make a lease " to carry out some of its functions under Section 12." This lease requires the previous approval of the Central Government under Sub-section (2). Under Sub-section (4) "the lessee, who has been assigned any function of the Authority under Sub-section (1) shall have all the powers of the Authority necessary for the performance of such functions in terms of the lease." Therefore, the Respondent No. 3 carries out and performs the functions of the Airports Authority of India imposed upon the Authority by the Parliamentary enactment. A lease has been executed between the Airport Authority of India and MIAL dated 26.4.2006 whereby Chhatrapati Shivaji International Airport has been leased to the Respondent No. 3 for a period of 30 years from the effective date and for a further period of thirty years. It is this Lease dated 26.4.2006 which makes Section 12A operational. It is under this provision that MIAL has been assigned functions by the OMDA and granted a lease.
9. It is submitted that the scheme of the Act discloses that, in essence and truth, the lessee under Section 12A of an existing airport carries out the functions of the Authority and enjoys the powers necessary to carry out such functions. Such an entity exercising such public/governmental functions is clearly an instrumentality or agency of the State and is covered by Article 12. It is submitted that Section 22-A empowers the Authority to levy on and collect from embarking passengers, 'development fees' for the purpose of Clauses (b) and (c) viz. 'establishment or development of a new airport in lieu of the airport referred to in Clause (a)' and for 'investment in the equity in the shares to be subscribed by the Authority in Companies engaged in establishing, owning, developing, operating or maintaining a private airport....' Thus money is collected from the air- traveling public under law for the funding of the new airport and for the Authority to acquire shares in the company setting up the same or for developing or maintaining an existing airport leased under Section 12 A. Fee under Section 22A can be appropriated by MIAL because it functions in place of the Airport Authority of India. He further submited that Chapter VA (comprising of Section 28 A to Section 28 R) provides the procedure for eviction of unauthorised occupants of airports. The provisions are on the lines of the Public Premises (Eviction) Act. Thus the property of the airport is public property even when given on lease and the lessee can resort to the provisions for eviction, without having to file a regular Civil suit. This section is a strong and powerful indicator that airports are public premises and the company running them is 'State' because if it were not so, the Company would never have been allowed to avail of the summary power of eviction and would instead have been relegated to the ordinary civil law for eviction of unauthorised occupants or trespassers. Section 37 authorises the issuance of directions by AAI to 'person or persons engaged in aircraft operations or using any airport, heliport, airstrip or civil enclave' under specified clauses of Section 5 (2) of the Aircraft Act, 1934, under which Rules have been framed in the Aircraft Rules, 1937.
10. The learned Counsel relied on the judgment of the Supreme Court in the case of Ashoka Marketing Ltd. v. Punjab National Bank and submitted that the Hon'ble Supreme Court of India in its judgment in the case "Ashoka Marketing Ltd." referred to above has while considering the provisions of the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 referred to its judgment in the case of Dwarkadas Marfatia and Sons v. Board of Trustees of the Port of Bombay. The learned Counsel submits that the observations in that judgment were made in the context of the provisions of the Bombay Rents, Hotel and Lodging Houses Rates (Control) Act, 1947 whereby exemption from the provisions of the Act has been granted to premises belonging to the Bombay Port Trust. The consequence of giving overriding effect to the provisions of the Public Premises Act is that premises belonging to companies and statutory bodies referred to in Clauses (2) and (3) of Section 2 (e) of the Public Premises Act would be exempted from the provisions of the Rent Control Act. The actions of the companies and statutory bodies mentioned in Clauses (2) and (3) of Section 2(e) of the Public Premises Act while dealing with their properties under the Public Premises Act will, therefore, have to be judged by the same standard".
11. The learned Counsel submitted that the Petitioner has the largest experience of running duty-free retail shops at international airports in India and its partner Aer Rianta, which, according to the Petitioner, opened the world's first ever duty-free retail shop at Shannon Airport in Ireland in 1947, has the largest international experience in this field. At present the Petitioner is operating at 13 international airports and running 37 duty-free retail shops. Inspite of this, MIAL has excluded the Petitioner's consortium at the threshold and prevented it even from bidding for the contract, without even rejecting their offer. It is submitted that, ex-facie, the action of the MIAL is arbitrary and illegal.
12. No reason has been assigned by the Respondent No. 3 to the Petitioner herein and none of its letters were replied or responded to by the said Respondent No. 3. There is complete lack of transparency in the Tender process and the absence of criteria in the EOI has given MIAL unbridled and arbitrary powers to act according to its whims and fancies.
13. The learned Counsel submits that the Respondent No. 3 is an instrumentality of the State within the meaning of Article 12 of the Constitution of India. He submits that the definition of the State in Article 12 is an inclusive one. The Article says " includes", not "means" or "means and includes". What is included is "all...other authorities within the territory of India or under the control of the Government of India." The learned Counsel referred to the observations of the Supreme Court in the case of Rajasthan State Electricity Board v. Mohan Lal ; and the judgment of the Supreme Court in the case of Pradeep Kumar Biswas v. IICB . The learned Counsel then took us through the judgment of the Supreme Court in the case of Sukhdev Singh v. Bhagatram , specially the judgment of Justice Mathew. The learned Counsel pointed out that on the same day on which the Supreme Court decided Sukhdev's case, the same Constitution Bench held in Sabhajit Tewary v. Union of India that the Council of Scientific and Industrial Research was not 'State'. It was pointed out that the view taken in the Sabhajit's case was later over-ruled by a Seven Judges Bench in Pradeep Kumar Biswas's case. The learned Counsel also took us through the judgments of the Supreme Court in the case of Ramana Dayaram Shetty v. International Airport Authority of india and Ors. and the judgment in the case of Ajay hasia v. Khalid Mujib . The learned Counsel relying on the observations of the Supreme Court in all the above referred judgments submitted that the Respondent No. 3 is the instrumentality of the State. The learned Counsel also took us through the judgment of the Supreme Court in the case of Zee Telefilms ltd. v. Union of India . The learned Counsel submitted that because Respondent No. 3 is an instrumentality of the State, it is bound by Article 14 of the Constitution, and therefore, its conduct of not issuance of RPF to the Petitioner and awarding contract to the Respondent No. 5 is liable to be set aside being violative of Article 14 of Constitution. The learned Counsel also relied on the judgment of US Supreme Court in the case of Burton v. Wilmington Parking Authority (1961) 6 L.Ed. 2D 45 and in the case of Evans v. Newton (1966) 15 L.Ed.2d. 373, and in the case of Jackson v. Metropolitan Edison Co. (1974) 49 L.Ed.2d 477 and submitted that where the State and AAI are obliged to provide and maintain airports adequately equipped for for international air travel which necessarily involves providing for a superlative duty free- shop and this function is delegated to Respondent No. 3 under Section 12A and the Respondent No. 3 assumes it voluntarily than the Respondent No. 3's actions are State actions. The learned Counsel, then, submitted that the following factors in the present case show that the Respondent Nos. 1, 2 and 3 are joint actors and therefore the Respondent No. 3's actions are amenable to the writ jurisdiction including application of Article 14:
1. Even though Respondent No. 3 is a company registered under the companies Act, its functions in operating, managing and developing the Mumbai International Airport cannot be characterized "Purely Private". Indeed, OMDA read with the Shareholders Agreement and the lease deed specifically speak of Respondent No. 3 being a "Joint Venture" between Airport Authority of India and its private partners. In addition, there is an agreement directly entered into between the Union of India and Respondent No. 3, which is called "State Support Agreement". The documents produced on record therefore clearly show that Respondent No. 3 is a Joint Venture company supported by the Union of India in operating, managing and developing the Mumbai International Airport on property that is owned by the Airports Authority of India - i.e. Public property.
2. Respondent No. 3 in fact performs statutory functions and exercises statutory powers - under the Airport Authority of India Act, 1994; it performs the Airport Authority of India's statutory functions of operating, managing and developing Mumbai International Airport and exercises the powers of the Airport Authority for performing the functions assigned or delegated to it. Under Section 12A of the said Act, it is not a simple lessee of public property. The lease with Respondent No. 3 has to be made with the previous approval of the Central Government. All moneys payable by the lessee in terms of the lease made under Section 12A is to form part of the fund of the Authority and is to be credited thereto as if such money is the receipt of the Authority for all purposes of Section 24. Thus, the moneys payable by the lessee to the Authority are public money and public funds. Further, the lessee statutorily is given all powers of the Authority necessary for the performance of its functions in terms of the lease. Thus, Respondent No. 3 is a lessee under a statutory lease exercising Governmental or public functions.
3. It is because Respondent No. 3 performs Governmental functions that Chapter VA of the said Act applies to it and it can just like Government use summary procedure to evict unauthorized occupants on the area leased to it without following the rigor of the Rent Act. This shows unmistakably that Respondent No. 3 is "State" for the purpose of Article 12.
4. The Government has a large financial stake - not only does the Airport Authority of India own 26% of the paid up share capital of Respondent No. 3 (which can never be reduced but can only be increased) the Respondent No. 3 has to give 38.7% of its gross revenue quite apart from the down payment made by way of consideration for the grant of the lease to Airport Authority of India.
5. OMDA clearly shows that for the purpose of operating, managing and developing Mumbai International Airport Respondent No. 3 has been conferred a monopoly status - it alone may "exclusively" perform all these functions and indeed cannot perform any other function.
6. That Government exercises control in various ways is clear - 26% of the share capital of Respondent No. 3 is held by the Airport Authority of India, which can therefore block any Special Resolution that is to be passed under the Companies Act. Further, no change in the Memorandum of Association or Articles of Association of the company can be made unless Airport Authority of India gives its consent, since it can block a special resolution. Both under the State Support Agreement and under OMDA, a Master Plan has to be formulated by Respondent No. 3 in accordance with the criteria set out. After the Master Plan is so formulated a final Master Plan can only come into existence after the Government makes comments and suggests changes, which comments and changes are binding on Respondent No. 3. Further, monthly and other reports of the day-to-day functioning of Respondent No. 3 have to be submitted by Respondent 3 to the Airport Authority of India. The fact that the OMDA and the Shareholders Agreement say that no agency is created is neither here nor there. Control is not exercised by way of agency but by way of what has been submitted above.
7. It is obvious that the Government and Respondent No. 3 are jointly interested - Joint Coordination Committees have to be set up both for Government services as well as Airports services and it is here that it is again clear that Respondents No. 1 to 3 have necessarily to function together in running the Airport
8. OMDA itself specifically states that in the granting of sub-contracts Respondent No. 3 has to do so fairly, objectively and without discrimination - in short the State as traditionally defined insists that Respondent No. 3 be subject to the same constitutional obligations under Article 14 as the State is itself subject to.
9. Under the State Support Agreement, fees that are statutorily levied and collected under Section 22A of the 1994 Act are to be paid to Respondent No. 3 - in fact, 35% of the fees so collected by the collecting agency - that is the airlines - have to be paid directly to Respondent No. 3. This again makes it clear that the sovereign authority of the State in levying and collecting fees is utilized in order to distribute a large part of it to Respondent No. 3.
10. OMDA says that whenever contracts are entered into by the Respondent No. 3, such contracts must contain a clause stating that all contractual rights are to stand transferred automatically to the Airport Authority of India under certain specified circumstances.
11. Even going by the six criteria laid down in the International Airport Authority case the Respondent No. 3 would be "State" under Article 12.
i) 26% of the share capital of the company is held by the Airport Authority of India - i.e. Government.
ii) Financial involvement is great - even though financial assistance may not be given in the facts of the present case, 38.7% of the gross revenue of Respondent No. 3 is to be given to the Airport Authority of India which in turn is to put the money in the fund created under the 1994 Act.
iii) Respondent No. 3 enjoys monopoly status, which is statutorily conferred and State protected.
iv) Existence of deep and pervasive State control is clear from the fact that Master Plan and Major Development Plan can only be in accordance with what the State wants - in short, operation, maintenance and development of Mumbai International Airport is only to be along Central Government lines. Further, the Airport Authority of India is entitled to get monthly and other reports of the day to day functioning of Respondent No. 3.
v) The functions of Respondent No. 3 are certainly of public importance - they are vital to the tourist trade of the country. Section 2(i)(iii) of the Essential Services Maintenance Act, of 1981 makes it clear that any service connected with the operation or maintenance of aerodrome is an essential service which has vital bearing on the life of the community. Further, the function of Respondent No. 3 in operating, managing and developing Mumbai International Airport is also closely related to Governmental functions as the airport is a conglomerate of various sovereign functions such as customs, immigration, etc. which are intertwined with functions of public importance.
vi) Specifically, the powers and the functions of the Airport Authority of India, which is a Statutory Corporation and a department of Government in the wider sense is transferred by and under the Airport Authority of India Act 1994 to the Respondent No. 3.
12. That these six criteria are not exhaustive but merely illustrative is clear and in the present case the additional criteria pointed out above, viz., the application of Chapter VA that is the summary procedure of evicting unauthorized occupants; the joint action taken by Joint Coordination Committees; the express provision in OMDA that Respondent No. 3 cannot behave discriminatorily in awarding sub-contracts; the fact that 35% of passenger service fee is paid directly to Respondent No. 3; the fact that all contracts entered into by Respondent No. 3 must compulsorily have clauses transferring contractual rights to the Airport Authority of India in certain circumstances would all go to show that State action is writ large in the present case.
14. The learned Counsel submits that the very purpose of calling for bids is to ensure that as many bidders as possible submit their bids so that the best among them may be selected. The 'final' criteria for short-listing were to be decided in MIAL sole discretion. No 'preliminary' criteria are mentioned anywhere; in fact no criteria or norms are at all mentioned and the information in the EOI are not clear, certain and objective. The manner of evaluation has not been stated at all as to what would be the determinative factors which will be considered for deciding who will be shortlisted or who will be awarded the contract eg. a certain minimum turnover, a certain minimum experience, and that the maximum experience or turnover will be the basis. Nothing is stated about the absolute, relative or decisive importance of any factors- experience or turnover for short-listing or awarding the contract. There is total uncertainty about the norms and decisive factors. And this is compounded by the arbitrary power claimed by MIAL to decide the final criteria in their sole discretion and to change or modify the process at any time. Power is also claimed to reject any offer or bid without assigning any reasons. The EOI is thus designed and calculated to make the competitive bidding process completely and inherently irrational and destructive of fair- play, rule of law and the public interest. The EOI is framed in such a fashion as to allow MIAL to act arbitrarily, whimisically and unreasonably and also it is actively designed to prevent fairness and objectivity in the selection process and to cast an opaque shroud over the arbitrary procedure and acts of MIAL. The EOI specified 3 criteria for evaluation viz. (i) prior international experience in the relevant area, (ii) financial and commercial capability and (iii) past experience in increasing revenue in similar situations. In the counter affidavit dated 6.12.2007 filed before the Hon'ble Supreme Court, the Respondent No. 3 mentioned 10 criterions 'taken as a whole' which allegedly formed the basis of evaluation and short listing namely :
The total turnover of the bidder for the least 3 years.
The total space managed.
The total airport duty free sales.
Total airport duty free sales under concessionaire type agreements.
Total airport duty free sales under management contract/nonconcessionaire type agreement. Asian airport presence and experience.
Asian duty free sales. Type of merchandise sold. Number of international Indian passengers. Customs inquiry resulting in adverse findings or payment of penalty.
In the Additional Affidavit dated 20.2.2008 filed before the Hon'ble Supreme Court, the Respondent No. 3 averred that three critical elements were identified as concession turn over, experience of space managed and total turn over which formed the basis for short listing which three critical elements have been reiterated in the Affidavit in Reply dated 31.3.2008 filed before this Court. The Respondent No. 3 further claims that it had the power under the EOI to determine the final criteria for short listing at its sole discretion. It is submitted that "it is not permissible to change the rules or the criteria of selection either during the selection process or after the selection process or to add an additional requirement or criteria". The learned Counsel relied on a judgment of the Supreme Court in the case of Hemani Malhotra v. High Court of Delhi . He further submits that the non-issuance of the tender document to the Petitioner's consortium tantamounts to total denial of a fair opportunity to the consortium to participate in the bidding process. The Petitioner's consortium has simply been excluded from the bidding process without even rejecting its offer. No reasons whatsoever were ever communicated; in fact, there was not even a communication of rejection of the offer. The process adopted was extremely high- handed and whimsical. MIAL did not adhere to its own time-schedule in that four parties were reportedly short-listed and the last date for issuing the RFP (tender document) was 19.1.2007 MIAL issued the RFP to ITDC/ALDAESA ( Respondent No. 4 which was not among the four short-listed) on 29.1.2007. It is submitted that one of the four - Dufry- did not submit its bid. Immediately after the dismissal of the petition by this Court, MIAL hurriedly awarded the contract to ITDC/ALDAESA on 26-2-2007 on the very day that the Special Leave Petition under Article 136 was filed so as to make out a case against grant of interim orders by the Hon'ble Supreme Court. This was done even though the last date for award of contracts was 7th March 2007. That contract was later cancelled on 24.11.2007 because of alleged labour problems of ITDC and that ITDC could not fulfill its commitment. MIAL then simply awarded the contract to the Respondent No. 5 without calling for fresh tenders and the grant in favour of the Respondent No. 5 is contrary to the terms of the RFP. Clause 3.1 of the RFP has not been triggered. Assuming arguendo that Clause 3.1 has been triggered, even then there is no power or provision to give the contract to the second highest bidder but the Respondent No. 3 is obliged to follow Section III. The Petitioner states and reiterates that the Expression of Interest submitted by the Petitioner, and its joint venture partner Aer Rianta International, fully met the criteria laid down. The Petitioner and its joint venture partner together have vast domestic and international experience in airport retailing, strong relation and access to international as well as domestic brands and proven track record and providing quality services in duty-free retailing sector particularly in India. The Petitioner has the highest experience in India and has full understanding of Indian consumer. The facts clearly demonstrate that the entire bidding process is completely arbitrary and anything but transparent. Everything has been done in a secretive manner that is highly suspicious. The absence of any criteria at all, when 'legal certainty' was required in the criteria which can be objectively applied in making the decision of short listing and awarding contract, renders the entire process opaque i.e lacking in transparency and allows MIAL to pick and choose any party it wishes for unknown and wrong reasons and exclude others from competition for extraneous and irrelevant considerations. This not only permits but also encourages (and has encouraged and resulted in) complete arbitrariness in the decision making process. There was no justification to restrict the issuance of the Tender documents or not to issue Tender documents (RFP) to all the 9 bidders who had submitted their EOIs. There is no rational basis or justification to resort to shortlisting as shortlisting is resorted to in cases where the number of applicants or participants are so large in number "as the procedure of shortlisting is only a practical via media" in cases where the number of applicants is large and would impose difficulties for the selecting and appointing authorities. 9 participants for a duty free tender cannot be by any stretch of imagination be held to be large so as to require shortlisting. It is submitted that this process has been adopted and applied so as to exclude the Petitioner's consortium from the fray, knowing fully well that were it allowed to bid, it would have had the best chance of bagging the contract by offering the best proposal. This apprehension of MIAL stems from the Petitioner's track record which undeniably is the best in India and, along with its partner who has the largest experience internationally, and hence, the bid would have been hard to reject and the rejection would have been hard to defend. The procedure adopted by the MIAL is against the prescribed and well established principles of awarding of tenders/ contracts in public law. The impugned action is not only prejudicial to the Petitioner's consortium but would also adversely affect the larger public interest since fair competition has been sought to be excluded at the very threshold. The learned Counsel also relied on the observations of the Supreme Court in its judgment in the case of Reliance Energy Ltd. v. Maharashtra State Road Development Corporation and the observations of the Supreme court in its judgment in the case of B. Ramakichenn Alias Balgandhi v. Union of India and Ors. . The learned Counsel took us through the affidavits and counter affidavits and submitted that there are glaring contradictions in the affidavits filed by the Respondent No. 3. The learned Counsel also submitted that awarding of contract to Respondent No. 5 without inviting fresh bids is contrary to the terms of RFP.
15. Shri Vinod Bobde, the learned Senior Counsel also appearing for the Petitioner submitted that in the alternative even if it is assumed that the Respondent No. 3 is not an instrumentality of the State, still its action can be subjected to judicial review under Article 226 of Constitution of India. He submits the answer to the question whether an entity is amenable to the writ jurisdiction of this Court under Article 226 of Constitution of India depends on two things: (a) the wide language in which Article 226 is couched, and (b) the nature of the functions or duties performed by the entity i.e. whether they are public functions or purely private. He then submitted that Article 226 empowers the High Court to issue the specified writs or even orders or directions in the nature of those writs "to any person or authority, including, in appropriate cases any Government...for the enforcement of fundamental rights or for any other purpose". There is no mention of the word 'State'. The words 'any Government' were added apparently to remove any doubt because during the 19th century and early 20th century, the prevailing view in England was that the writ of mandamus could not issue against the Crown. Furthermore, the word 'person' is deliberately used. A person may be a natural person or a juristic entity such as a company or a society. Whenever, therefore, a person is performing public duties or functions or is acting in the public interest, the actions of such a person were always intended to be amenable to judicial review by the High Court under Article 226. Article 226 is available not just for enforcement of fundamental rights but for 'any other purpose' so that any legal right can be enforced thereunder or the due discharge of a public duty commanded unless the High Court, in its discretion, considers that disputed questions of fact are involved and the matter is best relegated to a civil suit, or it considers that there is an equally speedy and efficacious remedy. Wherever there is a right in some person or entity, there is a corresponding duty or obligation of another person or entity. For example, in private law, the duty to take care and not to be negligent existed in the law of torts. The right to prevent trespass on property similarly existed. In the realm of public law, persons and bodies performing public functions are under a duty not to infringe the rights of people. The legal rights and duties enforceable under Article 226 are not merely those which are statutory. There are also rights under common law or judge-made law, customary law or any other form of law. For example, rules of natural justice have been judicially evolved as law and have their origin in Roman law. Another such legal right is the human right to be protected from arbitrary, unreasonable and unjust action. It is submitted that every person has the legal right to be treated equally, not discriminated against, and be dealt with justly, fairly and reasonably. The basic principle underlying the equality clause was called by Vivian Bose J. 'a way of life'. It is submitted that a 'way of life' does not spring from a Constitution or law. The right to be treated equally is so basic to human life that it is a right which is always justiciable, whether in a civil court, or High Court under Article 226. What Article 14 does is to guarantee that right by an injunction to the State not to deny equality before the law or the equal protection of the laws. The right to equality inheres in the right to justice, being a human right, is itself a basic right and comprehends almost all rights. The writ of mandamus is designed to 'reach injustice wherever it is found'. The learned Counsel in support of his submissions relied on following judgments of the Supreme Court.
i. Dwarkanath v. I.T.O. ;
ii. Rohtas industries v. Rohtas Industriest Staff ;
iii. Anandi Mukta sadguru v. V.R.Rudani ;
iv. Unnikrishnan v. State of A.P. ;
The learned Counsel heavily relied on the observations of the Supreme Court in its judgment in the case Zee Telefilms Ltd. v. Union of India and in the case of Binny Ltd. v. Sadasivan . He submitted that the above decisions demonstrate that 'public function' is performed when the result is some collective benefit for the public or a section of the public so that a private body intervening or participating in economic or social affairs in the public interest are amenable to the writ jurisdiction under Article 226. It is clear that the establishment, operation and maintenance of airports is a public and governmental function performed for the benefit of the public, and has always been so, historically and traditionally. That it is an important public function is recognized by the Essential Services Maintenance Act, 1981. The Act of 1994, even as amended in 2003, particularly, Sections 12, 12-A, 22-A and Chapter V-A leave no manner of doubt that MIAL performs the public functions and duties of the AAI and exercises the powers of AAI for that purpose. Participation in 'economic affairs in the public interest' may, and often does, involves commercial or business activity in the public interest. A public function may be performed on a non-profit basis or by operating on commercial lines for profit. MIAL performs a public function in the public interest in providing for Duty Free Shops and other amenities and facilities and the airport. In the discharge of its public function, MIAL is obliged to act fairly, reasonably and justly so that when it chooses to give a contract for any particular activity at the airport which is for the benefit of the public, it must choose the person by open competition, according to objective and clear norms, and its actions should be transparent. MIAL's actions are amenable to judicial review under Article 226.
16. The learned Counsel submits that the judicial review is available not merely when fundamental rights are infringed but also when a body or entity having public duties and functions acts unreasonably, unjustly, irrationally, mala-fide, arbitrarily or in violation of natural justice or otherwise illegally in innumerable ways. He also relies on the observations of the Supreme Court in its judgment in the case of Comptroller & Auditor General of India v. K.S. Jagannadhan . He submits that a challenge to arbitrary and irrational or mala-fide action can be laid in a writ petition under Article 226 without invoking Article 14. He relies on the observations of the Supreme Court in its judgment in A.S. Ahluwalia v. State of Punjab as also in the case of R.D.Shetty referred to above. He submitted that the same view that has been reiterated by the Supreme Court in the case of B. Ramakichenin v. Union of India .
17. The learned Counsel submits that importance of giving reasons for a decision, even an administrative one in the exercise of discretion, is that the obligation to give reasons acts as a check on arbitrary exercise of power. The total absence of reasons in any formal document of evaluation, the admitted non- communication of any reasons to the Petitioner's consortium, and the ever-shifting, contradictory and untenable stands taken in the five affidavits of MIAL, clearly point to the fact that MIAL has acted in a grossly arbitrary manner from start to finish of the whole process beginning from the Invitation for Expression of Interest to the ultimate award of contract to Respondent No. 5. Apart from being arbitrary, it is contrary to the public interest since for months, MIAL tolerated the consortium of ITDC/ALDAESA from 26-2-2007 to 24-11-2007 which did not put up a duty-free shop resulting in a tremendous loss of revenue to MIAL and therefore the AAI and Central Government. MIAL sat back while the consortium kept reducing its financial offer to Rs. 348 crores spread over four years. It is only on 29-11-2007 that MIAL gave the contract to Respondent No. 5 on a much reduced financial bid of Rs. 388 crores spread over four years instead of Rs. 488 crores over three years. MIAL has not answered why such a course was followed. Failure to start a fresh tender process expeditiously instead of, firstly, taking nine months of inactivity by Respondent No. 4 and not cancelling their contract earlier, and, secondly, quietly handing over the contract to Respondent No. 5 on a substantially low bid affects the public exchequer and therefore the public interest. Reasons' for excluding from the bidding process mean reasons which state why and how the Petitioner's consortium was found wholly unworthy of being short-listed i.e. what is it that the Petitioner's consortium lacked in terms of the criteria set out, what were its demerits, how it was disqualified. In other words, reasons for a decision, in law, involve the indication of consideration of the relevant and objective factors which lead to the result. Admittedly, there is no clear statement by MIAL as to what were the final criterea for short-listing. Thus it is impossible to say that there were any objective criteria at all which were objectively evaluated. There is not a single document either recording the process of evaluation either by the Respondent No. 3 Company or by a Committee which was formed to evaluate the Expressions of Interest received, or indicating in any manner the 'reasons' for the decision to eliminate the Petitioner from the bidding process. Lawful 'reasons' have to be clear, cogent and certain; they cannot be vague, unclear and such as to require inference from loose language in an affidavit. It is only conjectural to infer that because four out of nine were shortlisted, the four were found better than the two left out; but nothing is clear as to the grounds on which this was done. The legal meaning of 'reasons' is disclosing the grounds for preferring the four and disclosing what was the demerit or lack of capacity or disqualification which the ousted person suffered from.
18. The learned Counsel further submits that the Respondent No. 3/ MIAL's principal submissions may be summarized as follows:
(a) As soon as the functions of the AAI are transferred to MIAL under Section 12-A, they cease to be public functions and become private functions.
(b) MIAL is not acting for the public benefit or in the public interest but is acting for its own benefit and interest as a commercial organization out to make profits.
(c) Under Article 226, only statutory duties can be required to be performed, not public duties. No writ lies against a company.
(d) Contractual rights cannot be enforced under Article 226.
(e) Delay, waiver, acquiescence and the 'equities' arising in favour of Respondent No. 5 are enough to dismiss the petition.
(f) Non-disclosure of the petition filed against Bangalore International Airport Pvt. Ltd.
He submits that none of the above submissions (a) to (f) merit acceptance. As regards (a) it requires little argument to show that the assignment/transfer/delegation of statutory functions of the AAI to MIAL cannot possibly change the nature of the functions. The functions continue to remain public functions now being performed by the Joint Venture Company as a 'public- private partnership'. The functions are from amongst those enumerated in Section 12 and their character as public functions, in law, remain the same. As regards (b), there is nothing antithetical between doing business for profit-making and performing public functions. It is clear from Sections 11 and 25(2) of the Act of 1994 that AAI is under a statutory obligation to function on business principles and to have its own Fund and to give the profits made to the Central Government. Plainly, this does not detract from the fact the AAI performs public and statutory functions and it is some of these functions that are assigned to MIAL. As regards (c), as already submitted, historically, mandamus was issued in England for the proper performance of public duties, not just statutory duties, and this is settled law in India for the purposes of Article 226. The law was initially enacted in Section 45 of the Specific Relief Act, 1877. Article 226 is much wider than the English law of writs and reaches any person or entity that is performing public duties. Zee Telefilms is a Constitution Bench authority for the proposition that if the duties of a private body are public duties, Article 226 is available against the actions of that body. Moreover, it is submitted that the functions and duties of the AAI are statutory and it is those statutory functions and duties, along with powers to perform them, that have been assigned or delegated to MIAL. It can therefore be said that MIAL is performing statutory duties and functions which are also public functions and duties. Several decisions were cited to indicate that only statutory duties are enforceable by mandamus. In the first place this was an erroneous view taken in ignorance of the existing law on enforcement of public duties. In the second place, all these cases are swept aside by the later decisions particularly Anadi, Unnikrishnan, Binny and the Constitution Bench in Zee Telefilms. Reliance was placed on "Praga Tools (Two Judges Bench) to contend that no writ lies against a company. This decision has been held to be no longer good law in Air India Statutory Corporation (Three Judges Bench). As regards (d), this is not a case where contractual rights arising from a concluded contract are being sought to be enforced; it is a case where the public tender process adopted by a body performing public functions is being questioned as arbitrary. Several decisions were cited but they dealt with rights arising from a contract and are therefore irrelevant. The situation here is wholly similar to that which obtained in the International Airports Authority of India case which dealt with award of contracts by the Authority by inviting tenders. The only distinguishing factors- which make no difference in law at all- are that the award of contract was for a restaurant and snack bars and here it is for a duty-free shop and the award is made by an assignee of the Airports Authority, instead of the Authority itself. There cannot be waiver of fundamental rights. See "Olga Tellis ". As far as the legal right of the Petitioner's consortium and the public duties and functions of MIAL are concerned, there has been no waiver. Nothing has been shown as to how the Petitioner waived its rights or waived the performance of public duties by MIAL. It was urged that having participated in the process by submitting an Expression of Interest and then giving a presentation and furnishing all required information, without any complaint against the terms of the Invitation, the Petitioner's consortium is estopped from challenging the same. What is invoked is really the Scottish doctrine of 'approbate and reprobate' which is equivalent to the English 'doctrine of election. The answer is that no equitable doctrine can impede a constitutional remedy. Reliance was placed on the Judgment in the case of " P.R.Deshpande v. Maruti ." Furthermore no so-called 'equities' can be pleaded by MIAL or the Respondent No. 5. since the contract was awarded as late as 24-11- 2007 when the matter was sub-judice in the Supreme Court. These Respondents have consciously taken the risk with full knowledge of the proceedings. In fact, they deliberately tried to hastily put up the duty-free shop while attempting to delay the hearing of this petition only to create the so-called 'equities'. They went to the extent of urging before this Hon'ble Court that the petition has become infructuous which plea was turned down by order dated 10-3- 2008. In any event, every impugned action done before and during the pendency of the petition, is the subject matter of challenge and is plainly subject to the result of the petition. In International Airports Authority of India ( at p.524 of SCC) the Supreme Court noted that the writ petition had been filed five months after the acceptance of the tender of respondent no. 4 therein and that he had incurred expenditure and started running the same. On those facts the Court found thus:
It would now be most iniquitous to set aside the contracts of respondents 4 at the instance of the appellant. The position would have been different if the appellant had filed the petition immediately after the acceptance of the tender of respondents 4. But the appellant allowed a period of five months to elapse during which the respondents altered their position.
The present petition was filed on 20-2-2007 and dismissed on 22-2-2007. Respondent No. 4 was awarded the contract on 26-2-2007 , the very day on which Special Leave Petition was filed. In the said S.L.P. Respondent No. 4 was impleaded. When the Petitioner learnt that after cancelling that contract the same has been awarded to Respondent No. 5, this Respondent was also impleaded in the S.L.P. All parties were heard by the Supreme Court before passing the remand order dated 21-22008. Thereafter the Writ Petition was suitably amended and Respondents Nos. 4 and 5 were impleaded. All parties have been heard by this Hon'ble Court at length. There is no scope whatever for claiming any 'equities'. As regards (f) there are three answers:
(1) The litigation against BIAL in the Karnataka High Court was not against an 'airport operator'. BIAL was in the process of setting up a new Greenfield airport at Devanahalli which was scheduled to become operational in April ( now postponed to end of May, 2008). Hence BIAL was not operating an airport but establishing it. Operations start only when the airport is established and fully ready to commence operations. The object of the disclosure was to see if an operator of a duty-free shop litigates with its airport operator. Neither was the Petitioner's consortium an operator of any duty free shop at Devanahalli nor was BIAL an airport operator.
(2) The litigation was disclosed in any case during the presentation on 9-11-2006 and this averment was made in the Petitioner's Rejoinder dated 24-1-2008 but was not controverted in the Additional Affidavit filed by MIAL on 20-2-2008. For the first time, a denial is made in the Sur- Rejoinder filed in this Hon'ble Court during the hearing on 30-4-2008. If in earlier affidavits there is no denial, the denial made during the course of the hearing is obviously an afterthought.
(3) MIAL has nowhere averred when it came to know of the litigation in Bangalore. Since it has now denied that disclosure was not made during the presentation, it was incumbent on it to aver precisely the date on which it became aware. There is no averment that it became aware before 30-1-2008 when the short-listing of four parties had taken place. Thus it is clear that that the so-called non-disclosure was not the reason for refusing to shortlist the Petitioner's consortium. It must be noted that in the Sur- Rejoinder dated 30-4-2008, MIAL gives as one of the reasons for not wanting the Petitioner's consortium : "Habitual litigant; filed cases against various airport operators." This shows, firstly, MIAL does not respect legal and constitutional obligations and finds inconvenient and undesirable those persons who go to Courts of law to vindicate their rights. Secondly, the litigations filed have been occasioned by the arbitrary conduct of companies like the MIAL which underscores the need to lay down the law that they are subject to judicial review.
19. On behalf of the Respondent No. 3 Mr.Dave, the learned Senior counsel submitted that the petition at the instance of the Petitioner is not maintainable. He submitted that the EOI was submitted by the Petitioner and ARI together on the basis of the combined strength of two entities. The Petitioner has not produced any collaboration agreement entered into between the petitioner and the ARI. ARI is not one of the Petitioners before this Court. No affidavit on behalf of the ARI supporting the Petitioner has been produced. Therefore, according to the learned Counsel this petition at the instance of the Petitioner alone is not maintainable. He relies on the observations of the Supreme court in the judgment in the case of Jahar Roy and Anr. v. Premji Bhimji Mansata and Anr. . He also relied on the observations in the case of Monghibai v. Cooverji Umersey , and two other judgments, one in the case of Vyankatesh Oil Mill Co. v. N.V.Velmohamed AIR 1928 Bom, 191; and the judgment in the case of Sarju Prasad v. Badri Prasad AIR 1939 Nagpur, 242. It was contended that the Respondent No. 3 cannot be termed either as a State or a instrumentality of the State or other authorities within the meaning of Article 12 of the Constitution of India. It is submitted that the Respondent No. 3 is purely Private Limited Company incorporated under the Companies Act, in which 74% shares are held by private promoters and 26% are held by Airports Authority of India. It was submitted that the Respondent No. 3 is financially, functionally and administratively independent, managed and controlled by its Board of Directors under its Articles of Association, in which the Chairman and Managing Directors are nominated by the private promoters and further 8 out of 11 directors are nominees of private promoters. It was submitted, therefore, that the ultimate tests propounded by the seven judge constitution bench of the Supreme Court in the case of Pradeep Kumar Biswas, referred to above, are not satisfied in the facts of the present case, so as to make Respondent No. 3 "State" within the meaning of Article 12. The learned Counsel took us through the various clauses of the Sharesholders Agreement, the OMDA, and contended that it is clear that the Respondent No. 3 was functionally, financially and administratively independent of Airports Authority of India. It was submitted by referring to various clauses in State Support agreement that far from deep and pervasive control, there was no control by AAI over Respondent No. 3. In so far as the submissions on behalf of the Petitioner that in view of Clause 3.1A of the State Support Agreement dealing with Passenger Service Fee, the Respondent No. 3 should be construed to be a "State". It was submitted that the Passenger Service Fee is not imposed by Respondent No. 3. It is imposed by the Central Government under Rule 88 of the Aircraft Rules 1937 and collected by the airlines. The security component goes to AAI for meeting the security expenses and the facilitation component is paid to the airport operator to offset the expenses incurred by it for operating and modernising the airport.
20. It was further submitted that earlier decisions of the Supreme Court in the cases of Rajasthan State Electricity Board, Sukhdev Singh and Ramana Dayaram Shetty, referred to above are clearly distinguishable both on principle and on facts. Same is true according to the learned Counsel in relation to Ajay Hasia's case (supra). The learned Counsel submits that the law laid down by the Supreme Court applicable in the present case is the one which is laid down in the Pradeep Kumar Biswas's case, referred to above, General Manager, Kisan Sahkari, Chini Mills Ltd, Sultanpur, U.P. v. Satrughan Nishad and Ors. ; Zee Telefilms Ltd, referred to above; S.S. Rana v. Registrar Co-operative Societies and Anr. ; and the judgment of the Supreme Court in the case of "Federal Bank Ltd. v. Sagar Thomas ". It was contended that the Respondent No. 3 does not have monopoly status merely because some of the functions of the AAI have been conferred on the Respondent No 3 under the OMDA. It is submitted that even the State Support Agreement contemplates the setting up of a second airport within 150 km radius of the existing airport, through a competitive bidding process. In so far as the submission made by the learned Counsel appearing for the Petitioner in relation to the provisions of Chapter VA of the Act are concerned, it was submitted that the Respondent No. 3 is entitled to take the benefits of the provisions of the said Chapter VA is not enough to construe that the Respondent No 3 is a "State". It is submitted that the benefits of provisions of the Chapter VA can be taken also by a person operating a private airport. It was submitted that the provisions in the OMDA and State Support Agreement provides the formation of the Joint Co-ordination Committee, Airport Co- ordination Committee and OMDA Implementation Oversight Committee does not in any manner indicate that there is any deep, pervasive or any control over the Respondent No 3 either by the AAI or the Central Government. It was submitted that the aforesaid Committees are formed only for coordination purposes and for ensuring the smooth and efficient rendering of the services to be provided by the Central Government without any of the aforesaid committees making any dictate/order upon the Respondent No 3 or in any manner interfering with the operation and management of the Airport by the Respondent No 3. It was submitted that the Respondent No. 3 is exercising commercial functions and not public functions and is thus not amenable to the jurisdiction of this Court under Article 226 of the Constitution. By making a reference to OMDA, it was submitted that the rights and obligations are commercial and contractual and are far from being public functions or public duties. It was submitted that so far as action impugned in the petition is concerned, it is purely commercial and private and therefore, writ petition filed under Article 226 of the Constitution of India challenging that action is not maintainable. The learned Counsel, therefore submitted that the ratio of the judgment in Andi Mukta does not apply because it was clearly distinguishable in law as well as on facts. The learned Counsel relied on following judgments of the Supreme court in support of his case:
(i) Commissioner, Lucknow Division and Ors. v. Kumari Prem Lata Misra ;
(ii) Kulchhinder Singh v. Hardayal Singh ;
(iii) C.K. Achutan v. State of Kerala ;
(iv) V.R. Misra v. Managing Committee Shree Jai Narain College ;
(v) Umakant Saran v. State of Bihar ;
(vi) Har Shankar v. Deputy Excise and Taxation Commissioner ;
(vii) Bihar Eastern Gangetic Fishermen Co-op Society v. Sipahi Singh and Ors. ;
(viii) Gujarat State Financial Corporation v. Lotus Hotels Pvt. Ltd ;
(ix) Kerala State Electricity Board and Anr. v. Kurien E Kalathil and Ors. ;
(x) Binny Ltd and Anr. v. V. Sadasivan and Ors. ;
21. It was submitted that no relief can be granted against the Respondent No. 3, which was discharging private and commercial functions and its impugned decision was purely a business decision in view of the policy of privatisation initiated by Govt. of India resulting in the amendment to the Airports Authority of India Act in 2003. It was submitted that these documents need to be construed in a business like manner and to effectuate the purpose, namely, the state distancing itself from commercial activities. Our attention was invited to the statement of objects and reasons of the Airports Authority of India Amending Act 2003 and the observations of the Supreme Court in its judgment in the case of Zee Telefilms (supra). The learned Counsel took us through paragraphs 58, 62, 64, 67 of the judgment in the Reliance Airport Developers's case. It was submitted that in so far as the facts of the present case in the light of the above law it is clear that
(i) the advertisement for inviting EOIs was clear in terms and was not vague;
(ii) The process of consideration of EOIs was divided into two stages, the first stage of evaluation and short listing of offers and the second stage of submission of tender document to short listed persons/ consortia and the consideration of bids submitted by them;
(iii) Advertisement gave detailed criteria for evaluation of offers and also indicated the broad basis of evaluation; The advertisement expressly stated "the final criteria used for short listing would be determined by MIAL in its sole discretion" and further provided that "the tender will be issued only to those persons / consortia shortlisted by MIAL".
(iv) Further express right was reserved in following terms: "MIAL reserves the right to decide on the modalities of the EOI / tender, accept or reject any or all offers at any stage of the process and / or modify the process, at its sole discretion, without assigning any reason whatsoever. No obligation or liability whatsoever shall accrue to MIAL in such event".Undisputably, the offer was made on behalf of ARI / Flemingo in terms of the said advertisement stating "Requirements of Individual EOI". No challenge was raised by ARI/Flamingo at any stage to the advertisement, the criteria provided therein, the process of evaluation set out thereunder, the terms of short listing, the right to issue tender to only those short listed, etc. Even when called upon to make a presentation in person on 9th November 2006 and to submit information on 12th January 2007, no clarification much less challenge to the advertisement was raised. ARI / Flemingo participated in the 1st stage of the process by submitting their EOI in terms of the advertisement. While Petitioner No 1/ ARI were offered the fullest opportunity to represent their case in person and otherwise, they could not be short listed on merits. Even when ARI/Flemigo realised by 24th January 2007 that others had been short listed while they were not, it did not seek to challenge its exclusion until the filing of the Writ Petition, which was only on 20th February 2007. The Writ petition most pertinently does not challenge the advertisement inviting EOI. Therefore, the arguments on behalf of the Petitioners as to the alleged vagueness in the criteria prescribed for evaluation or absence thereof cannot and ought not to be entertained, particularly they having participated in the process and having failed. That in any case Respondent No. 3 have evaluated the EOI of ARI/Flemingo bonafide with the assistance of their team comprising qualified internal and external experts. Clearly Respondent No. 3 had fully complied with even the contractual stipulation as set out under Clause 8.5.7 of the OMDA, which provided as under:
(c) Before entering into contracts or granting any sub-lease or license, the JVC will:
(aa) comply with Applicable Laws including without limitation (where applicable) the procedures for competitive bidding in the field of public works concessions and in any case for every contract whose value exceeds Rs. 50,00,00,000/-(Rupees Fifty Crores Only) the JVC shall ensure that the selection of the counter party is by way of a competitive bidding procedure; and (bb) inform AAI of the counter-party or parties to every contract, sub-lessee or licensee (as the case may be) and their shareholding pattern.
(d) Without prejudice to the foregoing, every contract entered into by the JVC shall be on an arms-length basis....
22. It was submitted that neither in the Writ Petition nor in the course of argument has it been alleged that the award of the contract by the Respondent No 3 either in favour of the ITDC, Aldeasa consortium or subsequently to the Respondent No 5 involves any collateral purpose or there has been a malicious misuse of powers by the Respondent No 3 nor is any malafides alleged against the Respondent No 3. It is submitted that in the absence of proof of malafides, the tender conditions are unassailable and are not open to judicial review. The following decisions were submitted for our consideration:-
(i) Asia Foundation & Consultation Ltd v. Trafalgar House Construction (India) Pvt. Ltd and Ors. ;
(ii) Raunaq International Ltd v. I.V.R Construction Ltd and Ors. ;
(iii) Association of Registration Plates v. Union of India and Ors. ;
(iv) Reliance Airport Developers Pvt. Ltd v. Airports Authority of India and Ors. .
23. The learned Counsel further submitted that most of all, on merits ARI/Flemingo was found to be less meritorious than the five short listed bidders as disclosed in the Affidavit in Reply and more particularly as even admitted by ARI in its email dated 26th February 2008. Therefore, it was submitted that in the light of the law declared by the Hon'ble Supreme Court in Reliance Airport Developers case and Tata Cellular case besides other decisions cited above, the decision making process did not suffer from "illegality", "irrationality" and "procedural impropriety". The decision in the case of Reliance Energy Ltd and Anr. v. Maharashtra State Road Development Corporation and Ors. was clearly inapplicable because therein the Hon'ble Supreme Court had clearly held that the doctrine of "level playing field" was "subject to public interest" and it was held that "Article14 applies to government policies and if the policy or act of government even in contractual matters fail to satisfy that test of reasonableness, then such an act or decision would be unconstitutional". Therein it was held that judicial review must be justified by constitutional principles "which governed the proper exercise of public power in a democracy".
24. The learned Counsel further submitted that ARI / Flemingo having acquiesced in the process of evaluation of EOIs in terms of the advertisement not even having assailed the same in the Writ Petition, have waived any right to question the terms thereof, and are estopped by conduct from questioning the same. It is equally important to state that even though ample opportunity was afforded to make personal representation and to seek clarification in writing, the Petitioners never expressed any doubt, much less challenged the terms of the advertisement including the prescribed criteria for evaluation and manner and power of shortlisting. Knowing fully well they participated, were fairly considered and lost out to better bidders. Even after knowing on 24th January 2007 that the shortlisting of the bidders had taken place, they allowed the process to go into the 2nd stage of submission of tender by shortlisted entities, their consideration and ultimate decision, and moved the Writ Petition only on 20th February 2007 by which time most of the process was already over. This conduct disentitles the Petitioners to any reliefs as authoritatively laid down in "Raunaq International Ltd v. IVR Constructions Ltd. and Tata Cellular v. Union of India (1994) 6 SCC 651 at para 153." The learned Counsel further submitted that the duty free shops are being operated by the Respondent No 6 since 7th March 2008. Any cancellation of the tender would result in huge losses, apart from rendering many employees jobless. Passengers would be deprived of the opportunity of duty free shopping and it is in public interest that the same be allowed to continue especially when equities have been created. It was submitted that even otherwise the Respondent No. 3 did not issue the RFP to the Petitioner No 1 and its partner ARI in view of, inter alia, the fact that the Petitioner No 1 did not fit into or fulfill the criteria for selection for the purpose of the said tender. It is submitted that the Petitioner No 1 deliberately failed to make material disclosures as was required under the EOI such as litigation initiated by them against Bangalore International Airport Pvt Ltd which was filed by the Petitioner No. 1 as early as on 9th October, 2006. It is further submitted that this condition on litigation disclosure was incorporated in the EOI so that the Respondent No 3 would become aware of the nature of relationship and the conduct of the duty free operator vis a vis other airport operators and this deliberate attempt to conceal the litigation spoke volumes of the conduct of the Petitioner No. 1. It is further submitted that even at the time of the presentation made by the Petitioner No 1 before the Respondent No 3 on 9th November, 2006, the Petitioner No 1 failed to disclose the litigation that it had filed against Bangalore International Airport Pvt. Ltd. It is further submitted that the process of evaluation of the EOI's was transparent and full opportunity was afforded to all nine persons including ARI and the Petitioner No. 1, who submitted the EOIs. It is further submitted that after receipt of the EOI submitted on 18th October, 2006, ARI and the Petitioner No. 1 were invited to make a presentation on 9th November, 2006. It is further submitted that the presentation indeed took place and lasted for a couple of hours during which a team of senior, experienced and qualified personnel of Respondent No. 3 assisted by experts present or otherwise had a very frank, open and fruitful discussion with the representatives of ARI/ the Petitioner No. 1, who were also qualified and experienced executives. It is further submitted that during this meeting, the entire process was discussed threadbare and details of clarifications if any were duly provided. It is further submitted that therefore fair opportunity was afforded to ARI/ the Petitioner No. 1. It is further submitted that the process of application of mind in decision making process on the part of Respondent No. 3 even continued thereafter as is clear from the communications exchanged between the Petitioner, Respondent No. 3 and ARI. It is further submitted that these exchanges clearly show that Respondent No. 3 not only considered the EOI filed by the Petitioner No 1 and ARI on 18th October, 2006 seriously, but afforded every opportunity to ARI/ the Petitioner No 1 in support thereof. It is further submitted that the process was clearly fair and reasonable given the nature of the proposed transaction. It is further submitted that at no stage any grievance was made on the part of ARI/ the Petitioner No. 1 as to the procedure/ process not being fair, reasonable or lacking in any objective criteria. It is further submitted that for the purpose of evaluation of the EOIs, the Respondent No 3 appointed Trammell Crow Meghraj and Crossbar Associates both of who are considered experts in the field of duty free retail as set out in the Affidavit in Sur Rejoinder filed by the Respondent No 3. It is further submitted that during this period of evaluation there was a free exchange of views and opinions and ideas and close interaction even with those nine companies who had submitted the EOIs. There was no bias whatsoever against any one nor was there any preference in favour of any one. It is further submitted that the whole process was designed and implemented to find the most suitable person to be shortlisted on merits. It is further submitted that the Respondent No. 3 is a commercial entity and the entire decision making process was taken in the best interest of the Company keeping in mind the requirements of OMDA and interest of passengers needing world class retail facilities. It is further submitted that throughout this process, Respondent No. 3 also had the benefit of advice and guidance from its then Chief Operating Officer Mr. Rudy Vercelli, who had impeccable credentials and vast experience in establishing and operating international airports. It is further submitted that after receiving the EOIs from the said nine companies the same were subject to the scrutiny of the aforesaid experts and the evaluation of EOIs were done on a daily basis. It is further submitted that the aforesaid experts periodically met the senior management of the Respondent No 3 and advised the senior management of the Respondent No 3. It is further submitted that the said experts also prepared a detailed chart which laid down various categories/criteria and categorized as to which consortium fulfilled which condition/criteria and to what extent in order to short list the entities. It is further submitted that it was decided to confine the issue of RFP to four or five of the best potential bidders. It is further submitted that the critical elements were identified as concession turnovers, experience of space managed and total turnover. It is further submitted that the EOIs required that the financial details for the past 3 years be submitted. It is further submitted that as the EOIs were submitted in October 2006, for the purpose of concession turnover and total turnover, the details for the years 2003, 2004 and 2005 and where 2006 details were furnished were considered. It is further submitted that as per the details submitted by the companies for the year 2005, the Respondent No 5 stood at No. 2, the ITDC Aldeasa consortium stood at No 3 and the Petitioner No 1/ARI stood at No 8. It is further submitted that although the concession turnover of Respondent No 5 for the year 2006 was not furnished it being the middle of the year for the Respondent No 5, even then when one compares the concession turnover of the Respondent No 5 for the year 2005 with the concession turnover of the other companies who submitted their details for the year 2006 even then the Respondent No 5 stands at no 2, the ITDC Aldeasa consortium stands at no 3 and the Petitioner No 1/ARI at the bottom of the chart. Given the fact that the Respondent No 5 is the largest duty free operator in the world, it was also expedient to expect that the concession turnover of the Respondent No 5 for the year 2006 would be higher than its concession turnover for the year 2005 and which stands proved if one has a look at Annexure RA/1 to the Affidavit in Rejoinder filed by the Petitioners. It is further submitted that the concession turnover of the ninth bidder, i.e. Valiram was not incorporated in the table inserted in the Affidavit in Reply and the concession turnover of only 8 bidders were set out. It is submitted that the reason why in any of the tables the details of all the bidders is not provided is because what was being submitted by the Respondent No 3 was the comparison of the Petitioner No 1/ARI with those who were ahead of the Petitioner No 1 / ARI and not those who were below the Petitioner No 1/ARI. It is further submitted that in the circumstances as the concession turnover of Valiram was much lower than the Petitioner No 1/ ARI, Valiram was not included in the first table which gave the comparison of the concession turnover of the Petitioner No 1 together with its partner ARI as compared with those whose concession turnover were higher than the Petitioner No 1 and ARI. It is further submitted that likewise the total space managed by Aelia, Kingpower and Valiram were not included in the table which gave the total space managed by the Petitioner No 1 and ARI as compared with those who managed more space than the Petitioner No 1 and ARI and the total turnover of Aelia, Kingpower and Valiram were not included in the table which gave the total turnover by the Petitioner No 1 together with its partner ARI as compared with those whose total turnover were higher than the Petitioner No 1 and ARI. It is submitted that with respect to the total turnover, the figures which were furnished by all including the Petitioner No 1 and its partner ARI were only for the years 2002-03, 2003-04 and 2004-05 and not 2005-06 as was alleged by the Petitioners at the time of arguments. It is further submitted that this was because the EOIs having been submitted only in the middle of the year 2006 one would not be able to have the final figures for the year 2006. It is submitted that initially a decision was taken to invite bids from only four bidders, and subsequently it was decided to include ITDC, along with their partners Aldeasa. It is further submitted that it may be mentioned that ITDC together with Aldeasa was 5th as per the rankings and on all these parameters rated higher than the Petitioner No 1 and ARI. It is further submitted that the fact that ITDC were the incumbent operators of duty free shops at the Mumbai Airport and the fact that a large labour force of ITDC would be rendered unemployed was also borne in mind when taking the decision to invite bids from five of those who had submitted EOIs. It is further submitted that after the contract was awarded to the ITDC Aldeasa consortium, the tender schedule required that the successful bidder pay the performance deposit by 7th March 2007 and execute the contracts with the Respondent No 3 by 15th March 2007. It is further submitted that ITDC Aldeasa consortium neither paid the performance deposit nor executed the contracts within the time provided in the tender schedule and even thereafter. It is further submitted that in fact, it is relevant to point out that at the same time and when the contracts were being considered, as a pre-emptive move the employees of the ITDC moved a labour court and obtained an injunction against ITDC vacating the duty free shops in the Mumbai Airport. It was submitted by the Petitioners at the time of Rejoinder that even though the power was reserved upon the Respondent No 3 under Clause 3.2 of the RFP to consider the remaining bidders there was no need for the Respondent No 3 to exercise the said power. It was further submitted that Clause 3.2 also requires that Respondent No 3 has to evaluate all the shortlisted bidders and not only the Respondent No 5 in order to select Respondent No 5. It is further submitted that the Respondent No 5 was the second highest bidder and in all respects ranked much higher than the other shortlisted bidders and therefore upon cancellation of the award in favour of the ITDC Aldeasa Consortium, the same was awarded in favour of the Respondent No 5. It is further submitted that this action of the Respondent No 3 in awarding the contract to the Respondent No 5 has not been challenged by the other shortlisted bidders and cannot be challenged by the Petitioners. It is not open for the Petitioners to challenge the subsequent award of the contract in favour of the Respondent No 5.
25. It is further submitted that in so far as Clause 2.5.4 of the RFP is concerned, it is submitted that the validity of the bid is for the benefit of the Respondent No 3 in order to ensure that the bidders submitting their respective bids are bound by the same for a period of six months. It is further submitted that not knowing whether the Respondent No 5 would continue to be bound by the amount that it had originally bid in February, 2007, the Respondent No 3 inquired and the Respondent No 5 confirmed that the original bid submitted by the Respondent No 5 would remain valid upto 31st December, 2007. It is further submitted that upon receipt of this confirmation from the Respondent No 5, the Respondent No 3 executed the contract with the Respondent No 5 in terms of the original RFP without the necessity for going in for a fresh tender. It is further submitted that a fresh tender would have caused further delay in the setting up of world class duty free shops and would have deprived passengers of duty free shopping, apart from causing grave financial hardship to the Respondent No 3. It is further submitted none of the companies who were not shortlisted were given any communication about they not being shortlisted, as the EOI did not provide for it. and in view thereof, the grievance raised by the Petitioners on this count is misconceived and unwarranted.
26. The learned Senior Counsel appearing for the Respondent Nos.5 & 6 Mr.Dwarakadas adopted the submissions made on behalf of the Respondent No. 3 in relation to the maintainability of the Writ Petition as also in relation to submissions that the Respondent No. 3 is the instrumentality of the State. He further submits that in so far as the discharge of the function, namely providing duty free shops is concerned, there is no public law element involved in awarding such a contract. It is further submitted that this is because the obligation to provide duty free shops is not a statutory obligation or a public duty, but flows out of a contractual obligation undertaken by MIAL under the OMDA. Secondly, in any event, the commercial risk of operating, managing and developing the CSIA airport having been passed entirely to MIAL, it is for MIAL to ensure that it gets the best commercial advantage for that venture. He further submitted assuming while denying that there is any power conferred with public duty, it is submitted that in any event there is no duty owed by MIAL to the Petitioner or to the public at large. It is further submitted that it is open to MIAL, as long as it discharges its contractual obligation by following a competitive bidding process, to award the contract to such party as MIAL may consider fit in its commercial wisdom. It is further submitted that the invitation/ solicitation in the form of advertisement enumerates the requirements of individual EOIs for duty free shops. It lays down four requirements which person submitting the EOI must comply with;
(1) international experience in operating duty free shop;
(2) details of duty free shops being currently operated;
(3) experience in Asian International Airport;
(4) details of consortium members if any.
It also requires a person submitting the EOI to enclose a presentation setting out a brief proposal for establishing/ managing duty free shops which shall inter alia include (1) key management details;
(2) details of relationships with brands;
(3) maximum period required to commence operation of the duty free shops after obtaining all legal and regulatory approvals;
(4) minimum term of operation of duty free shops;
(5) proposed various revenue share models such as minimum guarantee turnover with revenue share, revenue share or any other innovative revenue model;
(6) details with photographs/videos, floor layout and write ups about its existing duty free outlets in major international airports;
27. The learned Counsel further submits that the invitation makes it abundantly clear under the heading "Other requirements applicable to both EOIs" as to how the EOIs would be evaluated, as also the fact that tenders would be issued only to those persons/consortia shortlisted by MIAL. He further submitted that it makes it clear that submission of EOI does not give rise to any right and the heading "Other requirements applicable to both EOIs" read in the context of what follows thereafter would clearly indicate that the word "requirements" clearly means "conditions" and must be read as such. It is submitted that the first sentence under the heading 'Other requirements' when read in a business like manner or in a commercial sense would indicate to the reader that out of the various requirements and information required to be submitted along with the EOIs and the proposal, prior international experience in running duty free shops, financial and commercial capability and past experience in increasing revenue would, amongst other factors, be used to evaluate the EOIs. The learned Counsel further submits that tender conditions should be read like a business document, irrespective of whether it was issued by a public or a private authority. It is further submitted that the selection of the persons/consortia to be short listed was not dependent merely upon international experience, financial capability and past experience in increasing revenue but also other factors which were required to be enumerated in their proposals/presentations including various revenue share models, either known or innovative in character. It is further submitted that it would not have been possible for MIAL to indicate the final criteria for short listing in the EOI itself. The learned Counsel relied on the judgment of the Supreme Court in the case "New Horizons v. Union of India ". The learned Counsel further submits that the EOI also states that the final criteria used for short listing would be determined by MIAL at its sole discretion. It is further submitted that the second sentence which leaves the final criteria to be used for short listing to the sole discretion of MIAL cannot, and has not been understood either by the Petitioner or any of the other persons who submitted the EOI, including Respondent no.5 that it is ex facie (a) arbitrary (b) unfair (c) malafide (d) discriminatory or (e) an attempt to deliberately or otherwise meant to exclude any of the persons invited to submit an EOI. It is further submitted that MIAL would be entitled issue tenders only to persons short listed by MIAL, and that such short listing would be in its sole discretion. The learned Counsel further submits that the petitioners are attempting to describe the sole discretion of MIAL to shortlist persons invited to submit the EOI as unfair and arbitrary by applying the wisdom of hindsight. It is further submitted that the argument of the petitioner being that when there are only nine persons who submitted interest for EOI, there was no necessity for MIAL to have a discretion to short list. It is submitted that when the advertisement/ solicitation/invitation was issued on October 9,2006 MIAL could not have envisaged how many persons would express their interest. It is further submitted that it is possible that far more than nine persons e.g. Twenty or more could have done so. It is further submitted that the fact that ultimately nine persons expressed their interest, does not mean that the power/discretion to short list, reserved to itself by MIAL, can be described as unfair or arbitrary. The learned Counsel further submitted that the petitioner had submitted its EOI, after having accepted the conditions of EOI and with full knowledge of the discretion reserved to itself by MIAL. It is submitted that the petitioner cannot now challenge the very same conditions and discretion mentioned in EOI merely because it was not short listed. It is submitted that if the petitioner is disentitled to challenge the conditions of the invitation to tender, for the reasons and/or grounds set out during or as submitted by MIAL, it is submitted in that event, it would not be open to the petitioner to question the decision of MIAL after following the competitive bidding process amongst the 5 short listed tenderers to award the tender initially to Respondent no.4, and subsequently, awarding the contract to Respondent no.5.
28. Shri. G.E. Vahanvati, the learned Solicitor General of India appearing for Respondent nos. 1 and 2 submitted that India's policy of liberalisation/ privatisation owes its inception to the Statement on Industrial Policy dated 14.07.1991 and the said Policy envisaged private sector participation in various sectors which were hitherto under the control of public sector enterprises and the first sector to be privatised was the electricity sector in 1991 which was followed by allowing private sector to carry out coal mining operations for thermal power projects in 1993. It is further submitted that in 1994, the National Telecom Policy was announced to allow private companies to provide telecommunication related services in addition to the state owned enterprises viz., MTNL and BSNL. Other sectors to be privatised shortly thereafter were insurance, banking and petroleum etc. Privatisation in the various sectors took various shapes such as:
(i) Selling of assets owned by the State or by public corporations. e.g. Centaur Hotel
(ii) Selling of certain percentage of Government shareholding to private companies e.g. BALCO and VSNL.
(iii) Gradual reduction of Government shareholding. e.g. Maruti and ICICI.
It is further submitted that in certain cases such as banking and petroleum sectors, whilst reducing government shareholding it was ensured that the government retained substantial percentage of the shareholding in order to be able to exercise its control over the companies which were privatised. It is further submitted that by the late nineties, the aviation sector was also privatised, and with the entry of a numbers of private companies and the competition that followed, the infrastructure of the airports was found to be inadequate to sustain the pace of growth in the aviation sector and the sharp increase in air traffic, and therefore, it was decided that the airports were also required to be privatised by allowing private companies to undertake operation, management and development of the major airports in India especially the international airports. It is further submitted that the decision to privatise airports had a two way implication. Firstly, the greenfield projects of setting up new international airports were given out to private players. Secondly, the task of operation and management of existing airports were entrusted to private companies. It is further submitted that greenfield projects included international airports at Bangalore and Hyderabad and upgradation of existing airports were those located cities like Mumbai, Delhi and Cochin. It is further submitted that for this purpose various companies such as Mumbai International Airport Pvt. Ltd. (the Respondent No. 3), Delhi International Airport Pvt. Ltd., Cochin International Airport Pvt. Ltd., Bangalore International Airport Pvt. Ltd. and Hyderabad International Airport Pvt. Ltd. have been incorporated where the Airports Authority of India (the "AAI") is a joint venture partner holding 26 % of the equity share capital. It is further submitted that the nature of private sector participation is determined by the extent to which functions are performed by a private company and the role of a private company is devised by various methods varying from entering into supply and civil works/ technical assistance contracts to entering into management/ leasing agreements to entering BOT/ BOO contracts. It is further submitted that in relation to existing airports, the AAI has undertaken the route of leasing agreement while for greenfield projects AAI has entered into BOT/ BOO route. It is further submitted that the Airports Authority Act, 1994 was enacted to provide for creation of the AAI and for transfer and vesting of the various international airports in the AAI for their management and control. It is further submitted that the Act as it stood at the time of enactment provided for performance of all functions relating to the operation, management and development by the AAI. Section 12 (3) (n) merely enabled the AAI to form subsidiary companies to carry out the said functions. It is further submitted that pursuant to the decision to privatise the international airports as stated above, in 2003, the Act was amended to incorporate provisions in the Act to enable private companies to carry out certain functions which were performed by AAI and the Statement of Objects and Reasons of the Bill to amend the Act reads as under:
1. At present, the Airports Authority of India is a statutory organisation under the administrative control of the Government of India, Ministry of Civil Aviation. It manages 94 civil airports and 28 civil enclaves at defence airports in the country.
2. There is need to improve the standard of services and facilities at the airports to bring them at par with international standards. To facilitate the process for such improvement, there is need, both for the infusion of private sector investments as also for restructuring of airports. This will speed up airport infrastructure development, improve managerial efficiency, increase local responsiveness and improve service levels. It will, in turn, generally stimulate the economy by boosting tourism and trade. It has been decided to undertake the task of restructuring the airports under the Airports Authority of India as well as to encourage private participation for the greenfield airports in the country. Since the Airports Authority of India Act, 1994 is applicable to all airports whereat air transport services are operated or are intended to be operated, significant private sector investments in such project require an effective legal framework within which the investors would feel safe and secure about their operational and managerial independence. To achieve these purposes, the Bill proposes to amend the various provisions of the said Act. The salient features of the Bill are as under:-
(i) It amends Section 1 as well as Section 2 of the Act to exclude the private airports from the purview of the Act except for certain limited purposes and to provide for definition of a private airport. The proposed amendment would also provide adequate comfort levels to enhance investors' confidence and to ensure a level playing field to private sector, greenfield airports by lifting control of the Airports Authority of India except in certain respects.
(ii) It inserts new Clause (aa) in Sub-section (3) of Section 12 and a new Section 12A in the Act. This amendment will enable the Airports Authority of India to establish airport or assist in the establishment of private airports and also to lease the airport premises to private operators with the prior approval of the Central Government. By this amendment, some of the functions of the Airports Authority of India can be assigned to lessees subject to the exception that air traffic service and watch and ward functions will continue to be provided by the Airports Authority of India.
3. The Bill seeks to achieve the aforesaid objects.
It is further submitted that a reading of the said Statement of Objects and Reasons demonstrates the intention of the Legislature in amending the Act. It is further submitted that the new provisions were incorporated into the Act to enable the private entities to have operational and managerial independence in carrying out the functions of the AAI. It is further submitted that the performance of the functions of the AAI by the private entity is in terms of the agreement entered into between the AAI and the private entity and thus, the performance of functions and exercise of the powers of AAI by the private entity is purely contractual in nature without any statutory flavour and the functions performed by the private entity cannot be termed as public functions as the Statement of Objects and Reasons specifically provides that the private entity has to have operational and managerial independence. It is further submitted that the concept of public function militates with that of the operational and managerial independence. The learned Counsel took us through OMDA the provisions of the Act and relying on the Judgment of the Queen Bench, in the case of "R. v. Servite Houses and Anr. Ex Parte Goldsmith and Anr. (2001) LGR 55" claims that a private entity performing the function of public body pursuant to privatisation of such function in terms of the agreement between the parties cannot be said to perform public function. The learned Counsel relied on some judgments of the Supreme Court which were pressed into service by the learned Counsel appearing for respondent no.3 in support of his submission that respondent no.3 cannot be termed as instrumentality of State.
29. In rejoinder , Shri Nariman the learned Counsel appearing for the Petitioner submitted that the submission of the Respondent No. 3 that the Respondent No. 3 is a purely private company engaged in making profits cannot be accepted. He took us through the Statement of Objects and Reasons of the Amendment Act 43 of 2003 and the provisions of the Act and submitted that the public interest is paramount and writ large in Section 12A of the Act. He further submitted that the Grounds (B) and (C) of the Writ Petition at Pages 19-20 and prayer (a) of the Writ Petition at page 27 demonstrates that the Petitioner has challenged the entire process pertaining to the Tender for operating duty free retail outlets at Chhatrapati Shivaji International Airport, Mumbai beginning with the expression of interest followed by the issuance of the request for proposal and for quashing/setting aside the tender as arbitrary, illegal and discriminatory. He submitted that in the Judgment in the case of "Directorate of Education and Ors. v. Educomp Datamatics Ltd. and Ors. " the Hon'ble Supreme Court has held that if the terms of the tender are arbitrary, the Court in exercise of power of judicial review can interfere. So far as submission that ARI has not joined either as a Petitioner or the Respondent in the petition is concerned, the learned Counsel took us through the averments in the petition and also relied on email from John Woodhouse of ARI and submitted that the petition at the instance of the Petitioner is maintainable. So far as the contention that by summiting their EOI without challenging the terms in the public notice, the Petitioners have waived their right to challenge the terms of the public notice is concerned, the learned Counsel relied on the observations of the Supreme Court in the case of Olga Tellis v. Municipal Corporation of Greater Bombay to submit that that if the terms in the public notice violates fundamental rights of the Petitioner, then there can be no waiver. He submitted that the judgments relied upon by Mr. Dave on the powers of the writ Court under Article 226 of the Constitution of India pertains to enforcement of contractual obligations or breach of contract which are in the realm of private law and not public and hence, a writ petition under Article 226 was held to be not maintainable. Moreover, the said judgments reflect the old law pertaining to writ jurisdiction as the scope of mandamus has over the years has been expanded by judicial determination. The position now is that any statutory or public function can be enforced through a mandamus.
30. It is clear from the rival submissions which we have reproduced in detail above, that the principal challenge of the Petitioner is that the term in the public notice inviting EOI regarding short listing is violative of the right of equality. The manner in which the Respondent No. 3 shortlisted the persons/entities who had submitted EOI pursuant to the public notice, according to the Petitioner is also violative of the right of equality. On behalf of the Respondents, apart from the objections raised to the maintainability of the petition, two principal defences were raised (i) right of the quality is not available to the Petitioner as against the Respondent No. 3 and (ii) even assuming that right of equality is available, neither the terms in the public notice regarding shortlisting nor the process adopted by the Respondent No. 3 in short listing the entities which had submitted their EOIs is violative of the right of equality.
31. As is evident from the rival submissions, there was considerable debate before us on the question whether the Respondent no.3 can be termed as an instrumentality of the State. Obviously, that debate was raised because if the Respondent No. 3 is held to be an instrumentality of the State, it will be bound by the provisions of Article 14 of the Constitution of India. Alternatively, it was submitted by the Petitioner that even assuming that the Respondent No. 3 is not an instrumentality of the State, because in allotting duty-free shop it is performing public function, it is bound to act in a fair and reasonable manner and therefore, even if it assumed that the Respondent No. 3 is not an instrumentality of the State, its action can be judged on the touch-stone of the right of quality. In our opinion, before considering the question whether the Respondent No. 3 is an instrumentality of the State, and whether even if it is not an instrumentality of the State, its action can be judged on the touch-stone of the equality clause, because it is performing public function, it will be convenient and proper first to consider the question of the validity of the action of the Respondent No. 3, assuming that the validity of the action of the Respondent No. 3 in the allotment of duty-free shop can be judged on the touch stone of the equality clause. In other words, for the purpose of examining the conduct of the Respondent No. 3 in issuing a public notice inviting EOIs and awarding contract , we will assume that it is an instrumentality of the State and therefore, is bound by the provisions of Article 14 of the Constitution. In case we reach the conclusion that the Respondent No. 3 has acted arbitrarily, then we will examine the above referred two contentions, because if we find that the action of the Respondent No. 3 cannot be faulted even if it is assumed to be bound by the provisions of Article 14 of the Constitution, then it will not be necessary for us to examine the validity or otherwise of the contentions of the Petitioner referred to above.
32. Looking at the matter from this point of view, we find that following are the admitted positions: The Airports Authority of India Act, 1994 was amdnded by Amendment Act 43 of 2003. By the Amending Act, Section 12A was inserted in the Act, whereby power was conferred on the Airports Authority to grant lease of the premises of the Airport to carry out some of its function enumerated under Section 12 of the Act. The lessee could be assigned any function of the Authorities under Sub-section 1 and on function being assigned the lessee also possessed the power necessary for performing the functions. In exercise of its power under Section 12A of the Act, admittedly the Respondent No. 2 has executed lease of Chhatrapati Shivaji International Airport, Mumbai in favour of the Respondent No. 3. It is also an admitted position that the Respondent No. 3 is under a duty as a lessee to set up duty free shop and it is for that purpose that the Respondent No. 3 issued the public notice on 9th October, 2006. By that public notice, the Respondent No. 3 solicited expression of interest from interested persons for establishment , management and operation of duty free shop at CSIA. The public notice stated that EOI may be submitted by the single person or a consortium with an identified lead member along with the details of the holding pattern of the members in the consortium. The public notice further stated "Please note that prior international experience in the relevant areas, financial and commercial capability and past experience in increasing revenue in similar situations would, inter alia, be used to evaluate the EOIs. The final criteria used for short-listing would be determined by MIAL in its sole discretion.... The tender will be issued only to those persons/consortia short-listed by MIAL."
Reading of the above quoted portion from the public notice makes it clear that the Respondent No. 3 contemplated short-listing the persons from amongst the persons who will submit EOIs for the purpose of issuing tender. It is an admitted position that pursuant to the public advertisement, the Petitioner along with its partner ARI, the Respondent No. 5, Respondent No. 4 and six other entities submitted their EOIs. Thus, there were only 9 EOIs received by the Respondent No. 3. On behalf of the Petitioner reliance was placed on a judgment of the Supreme Court in the case of B. Ramakichen, referred to above. It was submitted that considering that there was an obligation on the Respondent No. 3 to allot the duty-free shop after following the process of competitive bidding and considering that there were only 9 EOIs received, there was no need to resort to the device of short-listing. It was submitted that the Supreme Court has observed in the aforesaid judgment in the case of B. Ramakichen that the device of short-listing can be adopted by the authority when there is response from a large number of persons and it is impracticable for the authority to consider all those persons. Reliance was placed on following observations in paragraph 17 of that judgment. It reads as under:-
However, for valid shortlisting there have to be two requirements-(i) has to be on some rational and objective basis. For instance, if selection has to be done on some post for which the minimum essential requirement is a B.Sc. Degree, and if there are a large number of eligible applicants, the selection body can resort to shortlisting by prescribing certain minimum marks in B.Sc. And only those who have got such marks may be called for the interview. This can be done even if the rule or advertisement does not mention that only those who have the aforementioned minimum marks, will be considered or appointed on the post. Thus the procedure of shortlisting is only a practical via media which has been followed by the courts in various decisions since otherwise there may be great difficulties for the selecting and appointing authorities as they may not be able to interview hundreds and thousands of eligible candidates; (ii) if a prescribed method of shortlisting has been mentioned in the rule or advertisement then that method alone has to be followed." It was submitted that there was no need to do any shortlisting in the present case. From the reply of the Respondents as also the affidavits we find that except for saying that there was a provision made in the public advertisement for shortlisting and therefore the experts evolved the procedure for shortlisting, we do not find any justification given as to why considering that only a small number of persons and entities had submitted EOIs, it was found necessary by the Respondent No. 3 to adopt the procedure of short- listing.
33. Even assuming that even though the number of EOIs submitted was only nine, the Respondent No. 3 was justified in adopting the procedure of short-listing, then for the purpose of short-listing it was necessary for the Respondent No. 3 to adopt an objective and rational criteria. Perusal of the public notice shows that in the public notice itself there is no criteria for short-listing mentioned. The public notice states that the final criteria to be used for short-listing will be determined by the Respondent No. 3 in its sole discretion. Now, even assuming that the criteria to be adopted for short-listing could be in the sole discretion of the Respondent No. 3, the Respondent No. 3 being bound by the equality clause would be liable to fix the criteria for short-listing, which will be objective, rational and will have nexus with the purpose to be achieved. Now, because of a series of well-known judgments of the Supreme Court it can be safely taken as a settled law that in the early stages of the evolution of Constitution, principles of equality contained in Article 14 came to be identified with the doctrine of classification because the view taken was that that article forbids discrimination and there would be no discrimination where the classification making the differentia fulfills two conditions i.e. (i) that the classification is founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group; and (ii) that that differentia has a rational relation to the object sought to be achieved by the impugned legislative or executive action. For the first time in E.P.Rayappa v. State of Tamil Nadu the Supreme Court laid bare a new dimension of principle of equality and pointed out that it embodied the guarantee against the arbitrariness. The Supreme Court held that equality is antithetic to arbitrariness. That equality and arbitrariness are sworn enemies; one belongs to the rule of law in a republic while the other, to the whim and caprice of an absolute monarch. It was held that the principle of equality strikes at arbitrariness and ensure fairness and equality of treatment. Therefore, the sole discretion which was conferred by public advertisement on the Respondent No. 3 was to be exercised by it fairly and for doing that, it was necessary for it to adopt objective rational and reasonable criteria for the purpose of short-listing the entities who had submitted their EOIs. The Respondent No. 3 will have to determine that criteria and will have to do the short-listing on the basis of that criteria.
34. We do not find any pleading on behalf of the Respondent No. 3 that at any point of time the Respondent No. 3 decided that short-listing will be done on the basis of "A particular criteria". The EOI specified three criteria for evaluation, viz. (1) prior international experience in the relevant area; (2) financial and commercial capability; (3) past experience in increasing revenue in the similar situation. In the counter-affidavit dated 6-12-2007 filed before the Supreme Court the Respondent No. 3 mentioned 10 criteria as a whole which form the basis evaluation of short-listing. i.e.
1. The total turnover of the bidder for the least 3 years.
2. The total space managed.
3. The total airport duty free sales.
4. Total airport duty free sales under concessionaire type agreements.
5. Total airport duty free sales under management contract/non-concessionaire type agreement.
6. Asian airport presence and experience.
7. Asian duty free sales.
8. Type of merchandise sold.
9. Number of international Indian passengers.
10. Customs inquiry resulting in adverse findings or payment of penalty.
In the additional affidavit dated 28-2-2008 filed before the Supreme Court the Respondent No. 3 averred that three critical elements were identified as concession turnover, experience of space managed and total turnover, which forms the basis for short-listing. These three critical elements have been reiterated in the affidavit in reply filed in this petition. In the affidavit in reply filed by the Respondent No. 3, three charts have been included giving comparative figures of various entities, who had submitted EOI i.e. (i) the duty free sales under the Concession Model, (ii) the total space managed in square feet and (3) the total turnover. Perusal of the chart in relation to duty free sales shows that out of five entities who were shortlisted, three entities namely NUANCE, ITDC ALDEASA & DUFRY had not given their sales figures for the year 2003 whereas the Respondent No. 5 DFS had not given its sale figure for the year 2006. If one goes by this chart, then ITDC is at serial No. 3. The second chart given by the Respondent No. 3 is in relation to space management. This Chart shows that the Respondent No. 5 is at serial No. 1, whereas the Respondent No. 4 who was also short- listed is at serial No. 4. What is pertinent to be noted here is that no attempt has been made to co-relate the figures of sales with the space under management. In our opinion, it was necessary for the Respondent No. 3 to consider what is the figure of total duty free sales in relation to the area under the management. In our opinion, the figures of duty free sales cannot be considered in isolation, they will have to be considered with the area in which the business was being done. The third Chart is in relation to total turnovers. In this chart, the Respondent No. 5 is at serial No. 1 and the ITDC, Respondent No. 4 is at serial No. 4. Thus, if the shortlisting was done on the basis of these charts, then the ITDC which was at serial No. 4 in two Charts and was at serial No. 3 in one Chart could not have been placed at serial No. 5. But according to affidavit of the Respondent No. 3 initially it was decided to short list only four entities, who had submitted EOI and admittedly the Respondent No. 4 ITDC was not one of the four. It is stated by the Respondent No. 3 that subsequently after discussing the matter with the representative of the Government, it was decided to short list the Respondent No. 4 which was at serial No. 5 in the list prepared for the purpose of shortlisting the entities who had submitted EOIs. It is no where explained if the short listing was done on the basis of these three Charts, how the ITDC could be listed at serial No. 5 and at no point of time a copy of the original list prepared of the entities who are to be shortlisted has ever been produced. In our opinion, this aspect creates doubts in relation to the correctness of the assertion on behalf of the Respondent No. 3 that shortlisting was done on three critical elements which are concession turn over, experience of space management and total turn over. In our opinion, therefore, the procedure of short listing was resorted to by the Respondent No. 3 without determining any objective criteria for short listing and the process of short listing was gone through in a most arbitrary manner.
35. In our opinion, firstly the Respondent No. 3 should have decided considering that there are only nine EOIs received, whether it is at all necessary to do any shortlisting. In case the Respondent No. 3 found for good reasons that it was necessary to do shortlisting despite there being only a small number of entities had submitted EOIs, the Respondent No. 3 should have in terms of the public advertisement before undertaking the process of short listing decided the objective criteria for short listing, made that criteria known to all the concerned entities and then should have proceeded to do short listing on the touch-stone of that criteria alone. It was necessary for the Respondent No. 3 to proceed in this manner because it is under an obligation to act fairly and reasonably. It is to be noted that at no point of time before affidavits were filed before the Supreme Court and in this Court, the Respondent No. 3 even informed the Petitioner that it has not been chosen as one of the entities who can submit its tender. No reasons obviously was also communicated. In our opinion, the total absence of any reason in in any formal document of evaluation, admitted non-communication of any reason to the Petitioner, and the contradictory and untenable stands taken in different affidavits filed by respondent No. 3, clearly shows that the Respondent No. 3 has acted in arbitrary manner in the process of short listing of the entities.
36. Now, that we have found that the Respondent No. 3 has acted in arbitrary manner in short listing the entities, which resulted in denial of rights of the Petitioner to submit its tender, it will be necessary for us to examine whether the Respondent No. 3 is bound by the equality clause. Before us the contention that because the Respondent No. 3 performs the public function it is obliged to observe equality clause and it is also amenable to the jurisdiction of this Court under Article 226 of the Constitution of India was advanced as an alternate argument, in our opinion, it will be appropriate to examine that argument first.
37. For the purpose of examining this contention, in our opinion, the first judgment that is relevant is the judgment of the Supreme Court in the case of Comptroller and Auditor-General of India v. K.S. Jagannathan and Anr. . In paragraph 20 of that judgment the Supreme Court observed thus :
20. There is thus no doubt that the High Courts in India exercising their jurisdiction under Article 226 have the power to issue a writ of mandamus or a writ in the nature of mandamus or to pass orders and give necessary directions where the government or a public authority has failed to exercise or has wrongly exercised the discretion conferred upon it by a statute or a rule or a policy decision of the government or has exercised such discretion mala fide or on irrelevant consideration or by ignoring the relevant considerations and materials or in such a manner as to frustrate the object of conferring such discretion or the policy for implementing which such discretion has been conferred. In all such cases and in any other fit and proper case a high Court can, in the exercise of its jurisdiction under Article 226, issue a writ of mandamus or a writ in the nature of mandamus or pass orders and give directions to compel the performance in a proper and lawful manner of the discretion conferred upon the government or a public authority, and in a proper case, in order to prevent injustice resulting to the concerned parties, the court may itself pass an order or give directions which the government or the public authority should have passed or given had it properly and lawfully exercised its discretion.
Perusal of the above referred judgment shows that if in a petition filed under Article 226 of the Constitution of India, High Court finds that a public authority has wrongly exercised its discretion conferred upon it by a statute or by a Rule or by a policy decision, or has exercised that power on irrelevant consideration, then a writ of mandamus can be issued by the High Court against that public authority. The second decision, in our opinion, which is relevant is the decision of the Supreme Court in the case of "Amarjit Singh Ahluwalia v. State of Punjab 1975 (3) SCC 489", where the Supreme Court has held that a challenge to arbitrary and irrational or malafide action can be made in a writ petition under Article 226 without invoking Article 14. Following observations from paragraph 9 of that judgment, in our opinion, are relevant.
...The sweep of Articles 14 and 16 is wide and pervasive. These two articles embody the principle of rationality and they are intended to strike against arbitrary and discriminatory action taken by the "State". Where the State Government departs from a principle of seniority laid down by it, albeit by administrative instructions, and the departure is without reason and arbitrary, it would directly infringe the guarantee of equality under Articles 14 and 16. it is interesting to notice that in the United States it is now well settled that an executive agency must be rigorously held to the standards by which it professes its actions to be judged and it must scrupulously observe those standards on pain of invalidation of an act in violation of them. Vide the judgment of Mr.Justice Frankfurter in Vitaralli v./ Seaton. This view is of course not based on the equality clause of the United States Constitution and it is evolved as a rule of administrative law. But the principle is the same, namely, that arbitrariness should be eliminated in State action.
The Supreme Court in its judgment in the case of "Unnikrishnan and Ors. v. State of Andhra Pradesh and Ors. has considered this aspect of the matter in detail. The Supreme Court in paragraph 78 of the judgment has considered the observations of the Supreme Court in its judgment in the case of Andi Mukta Sadguru's case referred to above, especially the observations in paragraphs 12, 15 to 20 and has held that the term 'authority' used in Article 226, must receive a liberal meaning unlike the term in Article 12. The words 'any person or authority' used in Article 226 are not to be confined to statutory authorities and instrumentalities of the State. They cover any other person or body performing public duty. The form of the body concerned is not very much relevant. What is relevant is the nature of the duty imposed on the body, and the duty must be judged in the light of positive obligation owed by the person or authority to the affected party and then in paragraph 79 the Supreme Court has observed thus:
79.The emphasis in this case is as to the nature of duty imposed on the body. It requires to be observed that the meaning of authority under Article 226 came to be laid down distinguishing the same term from Article 12. In spite of it, if the emphasis is on the nature of duty on the same principle it has to be held that these educational institutions discharge public duties. Irrespective of the educational institutions receiving aid it should be held that it is a public duty. The absence of aid does not detract from the nature of duty.
Perusal of paragraph 81 of the judgment in Unnikrishnan shows that the Government found itself unable to aid any private institution financially and therefore, the Government came out with a policy to involve private and voluntary efforts in the sector of education in conformity with accepted norms and goals. The Supreme Court found that the institutions set up pursuant to this policy of the Government for public purpose are amenable to the jurisdiction of the High Court under Article 226 of the Constitution of India. Thus, it becomes clear that if we find that the Respondent No. 3 in allotting duty free shops was performing public duty, then in our opinion, it can be safely said that it was under a duty to act reasonably and fairly in the matter of allotment of duty free shops and is also amenable to the jurisdiction of this Court under Article 226 of the Constitution of India.
38. So far as this aspect of the matter is concerned, it is clear that the Respondent No. 3 is allotting duty free shop as a lessee of the Airports authority of India/Respondent No. 2 and that lease has been given by Respondent No. 2 to the Respondent No. 3 because of the provisions of Section 12A of the Act. Section 12A of the Act reads as under:-
12-A Lease by the Authority.- (1) Notwithstanding anything contained in this Act, the Authority may, in the public interest or in the interest of better management of airports, make a lease of the premises of an airport including buildings and structures thereon and appertaining thereto) to carry out some of its functions under Section 12 as the Authority may deem fit; provided that such lease shall not affect the functions of the Authority under Section 12 which relates to air traffic service or watch and ward at airports and civil enclaves.
(2) No lease under Sub-section (1) shall be made without the previous approval of the Central Government.
(3) Any money, payable by the lessee in terms of the lease made under Sub-section (1) shall form part of the fund of the Authority and shall be credited thereto as if such money is the receipt of the Authority for all purposes of Section 24.
(4) The lessee, who has been assigned any function of the Authority under Sub-section (1), shall have all the powers of the Authority necessary for the performance of such functions in terms of the lease.
Perusal of the above provisions shows that the lease has been granted by the Respondent No. 2 to Respondent No. 3 to carry out some of its functions and for the purpose of carrying out those functions the Respondent No. 3 also is clothed with the necessary powers of the Respondent No. 2. Thus, on execution of the lease for the purpose of discharging functions for which lease has been granted, the Respondent No. 3 also gets the powers of the Respondent No. 2 which are necessary for performing those functions. The functions of the Respondent No. 2 are enumerated in Section 12 of the Act. Thus, the functions which are to be performed by Respondent No. 3 are statutory functions and the power that it exercised in performing those functions is also statutory power. A part of the amount that will be paid by the person who is allotted the duty free shop as per the terms of the agreement would go to the Respondent No. 2 as also the Respondent No. 1. Following statements found in paragraph 4 (xxii) of the affidavit in reply filed by the Respondent No. 3, in our opinion, is relevant. It reads as under:-
xxii. It is submitted that the Respondent No. 3 has the responsibility not just to build a world class airport but has a commitment to share revenue with the Govt. and is expected to generate high revenues from the Non Aeronautical Services. One important Non Aeronautical Service which can generate revenues is the running of duty free shops. Apart from generating revenues for the Respondent No. 3 and the Government, the duty free shop is very important for the overall class, public perception and stature of an international airport. It is a known fact that airports like Schipol, Frankfurt, Singapore (changi) and Dubai international are known the world over for excellent duty free shopping. It would not be an overstatement to say that one of the reasons these international airports have become successful international hubs is because of the attraction of duty free shopping. The intent of the Respondent No. 3 was to establish a duty free shopping facility of international class and caliber.
All monies payable by the lessee in terms of the lease made under Section 12A is to form part of the fund of the authority and is to be created thereto as if such money is received by the authority for all purposes of Section 24. Thus, the monies payable by the lessee to the authority are public monies and public fund. Thus, the higher amount received from the allotees of the duty free shops will augment to be public monies and public funds.
39. Under the Act it is contemplated that the Respondent No. 2 may make profit from the operations of the Airports. Section 11 obliges the Respondent No. 2 to act on business principles. Section 22 gives it power to charge fees, rent etc. for the landing, housing or parking of aircraft or for any other service or facility offered in connection with aircraft operations at any airport, heliport or airstrip. Section 22A empowers the Respondent No. 2 to levy development fees at airports. Section 23 provides for the funds of the authority and its investment. Section 25 contemplates allocation of surplus funds. Section 28 obliges AAI/ Respondent No. 2 to submit accounts and audit to central Government. It is to be noted that under the OMDA apart from Rs. 150 crores, the Respondent No. 2 annually gets 38.7% of the revenue earned by Respondent No. 3, so that large amount of money earned goes to the public exchequers.
40. Taking overall view of the matter, therefore, it can be safely said that in providing duty free shops at the International Airports, the Respondent No. 3 is performing the public function in the public interest and therefore in performance of those functions, it is obliged to act fairly and reasonably and justly, so that when it chooses to give a contract for any particular activity at the airports which is for the benefits of the public, it must choose a person by a open competition according to objects and clear norms and its action should be transparent. And this action can be examined by this Court in a petition filed under Article 226 of the Constitution of India on the touch-stone of fairness and reasonableness. In our opinion, therefore, even assuming that the Respondent No. 3 is not an instrumentality of the State, because the functions it performs are essentially the functions of the Respondent No. 2, which are statutory, the Respondent No. 3 while discharging those functions is amenable to the jurisdiction of this Court under Article 226 of the Constitution and in that petition this Court would be entitled to examine the action of the Respondent No. 2 on the touch-stone of reasonableness and fairness.
41. In our opinion, the question whether in discharging the functions conferred on it in terms of the lease executed under Section 12A of the Act and in exercising powers of the Airports authorities necessary for the discharge of those functions, the Respondent No. 3 is bound by the provisions of Article 14 of the Constitution can be looked at from a slightly different angle also. The Airports Authority of India Act,has been enacted by the Parliament in exercise of the legislative powers conferred on it by the Constitution. Because of the provisions of Article 13(2) of the Constitution, the Parliament does not have powers to make any law which takes away or abridges the rights conferred by Part-III of the Constitution. By enacting Section 12 of the Constitution the Parliament enumerated the functions that are to be performed by the airports authority. It is clear from the judgment of the Supreme Court in the case of Ramana Dayaram Shetty, referred to above that the airports authority was to perform those functions in consonance with the provisions of Part-III of the Constitution. It is in this background that the Parliament in the year 2003 enacted Section 12A which permits the Airports authority to delegate or assign some of its functions to a third party. If Section 12A of the Act is so read to mean that the Parliament by enacting Section 12A relieves the third party from the obligations to comply with Part-III of the Constitution, then the exercise of the legislative power of the Parliament in enacting Section 12A will be hit by provisions of Sub-article 2 of Article 13 of the Constitution. In our opinion, Section 12A cannot be read to mean that it was enacted to do away with the compliance of provisions of Part-III of the Constitution in performing the functions and in exercising the powers which till the date the lease deed is executed under 12A in favour of a third party can be exercised only subject to the provisions of Part-III of the Constitution.
42. Sub-Article 2 of Article 13 of the Constitution reads as under:-
13 (2) The State shall not make any law which takes away of abridges the rights conferred by this Part and any law made in contravention of this clause shall, to the extent of the contravention, be void.
Perusal of the above provision shows that the provision is in the nature of an injunction issued by the Constitution against the Legislature restraining it from making any law which takes away or abridges the rights conferred by Part-III of the Constitution. Therefore, when the Parliament enacted Section 12A, it cannot be said that its intention was to take away or abridge operation of fundamental rights guaranteed by Part III of the Constitution in relation to some of the functions and powers of the Airports authority enumerated in Section 12, on those functions and powers being assigned or delegated to lessee of the authority. Even in the hands of the lessee, the functions and powers continue to be that of the airports authority. The lessee discharges those functions and exercises the powers necessary for discharging those functions on behalf of the airports authority, and therefore, as there was an obligation on the airports authority to discharge its functions and exercise its powers under Section 12, subject to Article 14 of the Constitution, the delegate or assignee of the airports authority would also be bound by the provisions of Article 14 while discharging the functions and exercising the powers of the airports authority. In our opinion, therefore, even assuming that the lessee of the airports authority is not an instrumentality of the State, still the functions that the lessee would be discharging and the powers that the lessee would be exercising would be statutory powers and therefore, the lessee would be bound by the provisions of Article 14 of the Constitution. In our opinion, therefore, the actions of the Respondent No. 3 have to be judged on the touch- stone of Article 14 of the Constitution. In other words, the Respondent No. 3 cannot avoid scrutiny of its action on the touch-stone of Article 14 of the Constitution merely by claiming that it is only a lessee of airports authority and the transaction entered into by it is a commercial transaction. So far as maintainability of the petition under Article 226 of the Constitution against the Respondent No. 3 is concerned, we have already observed above that because it is an authority exercising public function it is amenable to the jurisdiction of this Court under Article 226 of the Constitution of India, and therefore, in a petition filed against the Respondent No. 3 under Article 226 of the Constitution of India, the action of the Respondent No. 3 can be judged on the touch-stone of Article 14 of the Constitution. While considering the question whether the Respondent No. 3 is bound by Article 14 of the Constitution of India, one more aspect has to be taken into consideration. According to the Respondent No. 3 what it is carrying on is purely commercial activities. Assuming it that to be so, it is an admitted position that the property belonging to the Respondents Nos. 1 & 2, i.e. the land and building have been handed over by the Respondent Nos. 1 & 2 to the Respondent No. 3 for the purpose of carrying out functions of the airports authority. Admittedly, the land was acquired by the Government in exercise of its power to compulsorily acquire the land and building that have been handed to the Respondent No. 3 were constructed by spending money from the public fund. Even the building that the Respondent No. 3 may construct on the land for the purpose of discharging the functions of the Respondent No. 2 would be owned by Respondent No. 2 and ultimately on expiry of the lease it will be the Respondent No. 2 who would be entitled to the possession of both the building and properties. Thus, it is clear that the property that the Respondent No. 3 is using for its activities is admittedly public property owned by Respondents Nos.1 & 2. In this background, therefore, the judgment of the Supreme Court of the United State of America, which was relied on by the learned Counsel appearing for the Petitioner in the case of William H. Burton v. Wilmington Parking Authority, referred to above becomes relevant. The facts involved in that case were that the Defendant was a Private Corporation and as a lessee operated the Restaurant in an automobile parking building owned and operated by the lessor, an agency created by the State of Delaware to provide parking facilities. The restaurant constituted an integral part of the state's plan to operate the building as a self- sustaining unit. The lessee refused to serve the Plaintiff solely on the ground that he was a Negro. Claiming violation of his rights under the equal protection clause of the Fourteenth Amendment of the Constitution of United States, the Plaintiff instituted an action for declaration and injunction. The matter ultimately went to the Supreme Court of America. The opinion of the court was delivered by Justice Clark. He noted that the State acquired the land and spent money from the state funds for parking facility. Then, he observed that "*Before it began actual construction of the facility, the Authority was advised by its retained experts that the anticipated revenue from the parking of cars and proceeds from sale of its bonds would not be sufficient to finance the construction costs of the facility. Moreover, the bonds were not expected to be marketable if payable solely out of parking revenues. To secure additional capital needed for its "debt-service" requirements, and thereby to make bond financing practicable, the Authority decided it was necessary to enter long- term leases with responsible tenants for commercial use of some of the space available in the projected "garage building." The public was invited to bid for these leases." He noted that in 1957 a private lease for 20 years was made with Eagle Coffee Shoppe for use as a restaurant, dinning room, banquet hall, cocktail lounge and bar. Then, in the judgment, the terms of the lease have been referred to. Then, it observed :
In August 1958 appellant parked his car in the building and walked around to enter the restaurant by its front door on Ninth Street. Having entered and sought service, he was refused it. Thereafter, he filed this declaratory judgment action in the Court of Chancery. On motions for summary judgment, based on the pleadings and affidavits, the Chancellor concluded, contrary to to the contentions of respondents, that whether in fact the lease was a "device" or was executed in good faith, it would not "serve to insulate the public authority from the force and effect of the Fourteenth Amendment." 150 A2d 197. He found it not necessary, therefore, to pass upon the rights of private restaurateurs under state common and statutory law, including 24 Del ( ode $1501. The Supreme Court of Delaware reversed, as we mentioned above, holding that Eagle "in the conduct of its business, is acting in a purely private capacity.... The Civil Rights Cases, 109 US 3, 27, L ed 835, 3.S. Ct.18 (1883) "embedded in our constitutional law" the principal" that the action inhibited by the first section (Equal Protection Clause) of the Fourteenth Amendment is only such action as may fairly be said to be that of the States. That Amendment erects no shield against merely private conduct, however, discriminatory or wrongful...the commercially leased areas were not surplus state property, but constituted a physically and financially integral and, indeed, indispensable part of the State's plan to operate its project as a self-sustaining unit. Upkeep and maintenance of the building, including necessary repairs, were responsibilities of the Authority and were payable out of public funds. It cannot be doubted that the peculiar relationship of the restaurant to the parking facility in which it is located confers on each an incidental variety of mutual benefits. Guests of the restaurant are afforded a convenient place to park their automobiles, even if they cannot enter the restaurant directly from the parking area. Similarly, its convenience for diners may well provide additional demand for the Authority's parking facilities. Should any improvements effected in the leasehold by Eagle become part of the realty, there is no possibility of increased taxes being passed on to it since the fee is held by a tax-exempt government agency. Neither can it be ignored, especially in view of Eagle's affirmative allegation that for it to serve Negroes would injure its business, that profits earned by discrimination not only contribute to but also are indispensable elements in, the financial success of a governmental agency.
Addition of all these activities, obligations and responsibilities of the Authority, the benefits mutually conferred, together with the obvious fact that the restaurant is operated as an integral part of a public building devoted to a public parking service, indicates that degree of state participation and involvement in discriminatory action which it was the design of the Fourteenth Amendment to condemn. It is irony amounting to grave injustice that in one part of a single building, erected and maintained with public funds by an agency of the State to serve a public purpose, all persons have equal rights, while in another portion, also serving the public, a Negro is a second- class citizen, offensive because of his race, without rights and unentitled to service, but at the same time fully enjoys equal access to nearby restaurants in wholly privately owned buildings. As the Chancellor pointed out, in its lease with Eagle the Authority could have affirmatively required Eagle to discharge the responsibilities under the Fourteenth Amendment imposed upon the private enterprise as a consequence of state participation. But no State may effectively abdicate its responsibilities by either ignoring them as by merely failing to discharge them whatever the motive may be. It is of no consolation to an individual denied the equal protection of the laws that it was done in good faith. Certainly the conclusions drawn in similar cases by the various Courts of Appeals do not depend upon such a distinction. By its inaction, the Authority, and through it the State, has not only made itself a part to the refusal of service, but has elected to place its power, property and prestige behind the admitted discrimination. The State has so far insinuated itself into a position of interdependence with Eagle that it must be recognized as a joint participant in the challenged activity, which, on that account, cannot be considered to have3 been so "purely private" as to fall without the scope of the Fourteenth Amendment.
Then in the conclusion it is observed:
Specifically defining the limits of our inquiry, what we hold today is that when a State leases public property in the manner and for the purpose shown to have been the case here, the proscriptions of the Fourteenth Amendment must be complied with by the lessee as certainly as though they were binding covenants written into the agreement itself.
In our opinion, the facts which were considered by the Supreme Court of the U.S. in its judgment in the case of Burton are similar to the facts of the present case. In this case also the Respondent No. 3, a lessee is using the public property for the purpose of carrying out its business and therefore, the lessee is bound by Article 14 of the Constitution, which is analogous to the 14th Amendment of the United States' Constitution.
43. Now, that we have reached this conclusion, it is really not necessary for us to examine whether the Respondent No. 3 can be said to be an instrumentality of the State in view of the law laid down by the Supreme Court in its judgment starting with the case of Rajasthan State Electricity Board (supra) and ending with the judgment of the Supreme Court in the case of Pradeep Kumar Biswas (supra). However, as we have spent considerable time in hearing the learned Counsel for both sides on this question, in our opinion, it will be appropriate to decide this aspect of the matter also.
44. In its judgment in the case of Pradeep Kumar Biswas (supra), which is a judgment of a Constitution Bench consisting of Seven Hon'ble Judges of the Supreme Court, the Supreme Court has considered in detail development of law on this aspect of the matter., initially the definition of the State found in Article 12 of the Constitution was treated as exhaustive and confined to the authorities or those which could be read ejusdem generis with the authorities mentioned in the definition of Article 12 itself. The next stage was reached when the definition of "State" came to be understood with reference to the remedies available against it. Thus a statutory corporation, with regulations framed by such corporation pursuant to statutory powers was considered a State, and the public duty was limited to those which were created by statute. It was so held by the Supreme court in its judgment in the case of Rajasthan Electricity Board (supra). In 1975, in his judgment in the case of Sukhdev Singh and ors, (supra), Mathew J. noted that the concept of "State" in Article 12 had undergone "drastic changes in recent years ". The question in that case was whether the Oil and Natural Gas Commission, the Industrial Finance Corporation and the Life Insurance Corporation, each of which were public corporation set up by statutes, were authorities and therefore within the definition of State in Article 12. The Supreme Court affirmed its decision in Rajasthan Electricity Board and held that the court could compel compliance with the statutory rules. For identifying an instrumentality of the State, Justice Mathew propounded four indicia. The tests propounded by Justice Mathew in his judgment in the case of Sukhdev Singh referred to above, were affirmed by the Supreme Court in its judgment in the case of Ramanana Shetty, referred to above. Thus, the tests propounded by Mathew J. in Sukhdev's case were eleborate in the judgment in the case of Ramanna Shetty. The tests were referred to in the judgment of the Constitution Bench of the Supreme Court in the case of Ajay Hasia, referred to above. The Supreme court in its judgment in the case of Pradeep Kumar Biswas after referring to the development of law right from the judgment in Rajasthan Electricity Board 's case till the judgment in Ajay Hasia's case in paragraph 27 of its judgment observed thus:
27. Ramana was noted and quoted with approval in extenso and the tests propounded for determining as to when a corporation can be said to be an instrumentality or agency of the Government therein were culled out and summarised as follows:(SCC p.737, para9) (1) One thing is clear that if the entire share capital of the Corporation is held by Government, it would go a long way towards indicating that the corporation is an instrumentality or agency of Government. (SCC p.507, para 14) (2) Where the financial assistance of the State is so much as to meet almost entire expenditure of the corporation, it would afford some indication of the corporation being impregnated with governmental character. (SCC p.508, para 15) (3) It may also be a relevant factor...whether the corporation enjoys monopoly status which is State-conferred or State-protected. (SCC p.508, para 15) (4) Existence of deep and pervasive State control may afford an indication that the corporation is a State agency or instrumentality. (SCC p.508, para 15) (5) If the functions of the corporation are of public importance and closely related to governmental functions, it would be a relevant factor in classifying the corporation as an instrumentality or agency of Government. (SCC p.509, para 16) (6) 'Specifically, if a department of Government is transferred to a corporation, it would be a strong factor supportive of this inference' of the corporation being an instrumentality or agency of Government. (SCC p.510, para 18) Then in para.40 the Supreme Court observed thus:-
40. The picture that ultimately emerges is that the tests formulated in Ajay Hasia care not a rigid set of principles so that if a body falls within any one of them it must, ex hypothesi, be considered to be a State within the meaning of Article 12. The question in each case would be - whether in the light of the cumulative facts as established, the body is financially, functionally and administratively dominated by or under the control of the Government. Such control must be particular to the body in question and must be pervasive. If this is found then the body is a State within Article 12. On the other hand, when the control is merely regulatory whether under statute or otherwise, it would not serve to make the body a State.
45. Now, if in the light of this law laid down by the Supreme Court, if we examine the status of the Respondent No. 3, we find even though Respondent No. 3 is a company registered under the companies Act, its functions in operating, managing and developing the Mumbai International Airport cannot be characterized "Purely Private". Indeed, OMDA read with the Shareholders Agreement and the lease deed specifically speak of Respondent No. 3 being a "Joint Venture" between Airport Authority of India and its private partners. In addition, there is an agreement directly entered into between the Union of India and Respondent No. 3, which is called "State Support Agreement". The documents produced on record therefore clearly show that Respondent No. 3 is a Joint Venture company supported by the Union of India in operating, managing and developing the Mumbai International Airport on property that is owned by the Airports Authority of India - i.e. public property. Respondent No. 3 in fact performs statutory functions and exercises statutory powers - under the Airport Authority of India Act, 1994; it performs the Airport Authority of India's statutory functions of operating, managing and developing Mumbai International Airport and exercises the powers of the Airport Authority for performing the functions assigned or delegated to it. Under Section 12A of the said Act, it is not a simple lessee of public property. The lease with Respondent No. 3 has to be made with the previous approval of the Central Government. All moneys payable by the lessee in terms of the lease made under Section 12A is to form part of the fund of the Authority and is to be credited thereto as if such money is the receipt of the Authority for all purposes of Section 24. Thus, the moneys payable by the lessee to the Authority are public money and public funds. Further, the lessee statutorily is given all powers of the Authority necessary for the performance of its functions in terms of the lease. Thus, Respondent No. 3 is a lessee under a statutory lease exercising Governmental or public functions. It is because Respondent No. 3 performs Governmental functions that Chapter VA of the said Act applies to it and it can just like Government use a summary procedure to evict unauthorized occupants on the area leased to it without following the rigor of the Rent Act. This shows unmistakably that Respondent No. 3 is "State" for the purpose of Article 12.The Government has a large financial stake - not only does the Airport Authority of India own 26% of the paid up share capital of Respondent No. 3 the Respondent No. 3 has to give 38.7% of its gross revenue quite apart from the down payment made by way of consideration for the grant of the lease to Airport Authority of India. OMDA clearly shows that for the purpose of operating, managing and developing Mumbai International Airport Respondent No. 3 has been conferred a monopoly status - it alone may "exclusively" perform all these functions and indeed cannot perform any other function. That Government exercises control in various ways is clear -26% of the share capital of Respondent No. 3 is held by the Airport Authority of India, which can therefore block any Special Resolution that is to be passed under the Companies Act. Further, no change in the Memorandum of Association or Articles of Association of the company can be made unless Airport Authority of India gives its consent, since it can block a special resolution. Both under the State Support Agreement and under OMDA, a Master Plan has to be formulated by Respondent No. 3 in accordance with the criteria set out. After the Master Plan is so formulated a final Master Plan can only come into existence after the Government makes comments and suggests changes, which comments and changes are binding on Respondent No. 3. Further, monthly and other reports of the day-to-day functioning of Respondent No. 3 have to be submitted by Respondent 3 to the Airport Authority of India. The fact that the OMDA and the Shareholders Agreement say that no agency is created is not determinative. Control is not exercised by way of agency but by way of what has been observed hereinabove. It is obvious that the Government and Respondent No. 3 are jointly interested - Joint Coordination Committees have to be set up both for Government services as well as Airports services and it is here that it is again clear that Respondents No. 1 to 3 have necessarily to function together in running the Airport. OMDA itself specifically states that in the granting of sub-contracts Respondent No. 3 has to do so fairly, objectively and without discrimination - in short the State as traditionally defined insists that Respondent No. 3 be subject to the same constitutional obligations under Article 14 as the State is itself subject to. Under the State Support Agreement, fees that are statutorily levied and collected under Section 22A of the 1994 Act are to be paid to Respondent No. 3 - in fact, 35% of the fees so collected by the collecting agency - that is the airlines - have to be paid directly to Respondent No. 3. This again makes it clear that the sovereign authority of the State in levying and collecting fees is utilized in order to distribute a large part of it to Respondent No. 3. OMDA says that whenever contracts are entered into by the Respondent No. 3, such contracts must contain a clause stating that all contractual rights are to stand transferred automatically to the Airport Authority of India under certain specified circumstances.
46. In our opinion , availability of the powers under Chapter VA to the Respondent No. 3 of summary eviction of unauthorised occupant is strong indicator that the Respondent No. 3 is bound by Part III of the Constitution. In its judgment in the case of Ashoka Marketing Ltd., one of the reason that weighed with the Supreme Court in holding the provisions of the Public Premises Act, which are analogous to the provisions of Chapter VA to be valid was that power of summary eviction of unauthorized occupant is available in relation to the premises owned by the authorities which are subject to Part -III of the Constitution. The Supreme Court in paragraph 64 of its judgment in the Ashoka Marketing Ltd. (supra) has observed that a special provision has been made by the Parliament of enacting Public Premises Act in relation to the premises belonging to the Government and by excluding the operation of Rent Act in relation to those premises, is that the Government while dealing with the citizens would act in public interest and what can be said with regard to companies and corporation in relation to whose properties also the Public Premises Act operates. Following observations from paragraph 64 of that judgment are relevant.:
64...The reason underlying the exclusion of property belonging to the Government from the ambit of the Rent Control Act, is that the Government while dealing with the citizens in respect of property belonging to it would not act for its own purpose as a private landlord but would act in public interest. What can be said with regard to government in relation to property belonging to it can also be said with regard to companies, corporations and other statutory bodies mentioned in Section 2(e) of the Public Premises Act. The Supreme Court again considered the question of operation of Rent Act in relation to the premises to which the Public Premises Act applies in paragraph 69 and has observed thus:
69. It has been urged by the learned Counsel for the petitioners that many of the corporations referred to in Section 2 (e)(2)(ii) of the Public Premises act, like the nationalised banks and the Life Insurance Corporation, are trading corporations and under the provisions of the enactments whereby they are constituted these corporations are required to carry on their business with a view to earn profit, and that there is nothing to preclude these corporations to buy property in possession of tenants at a low price and after b uying such property evict the tenants after terminating the tenancy and thereafter sell the said property at a much higher value because the value of property in possession of tenants is much less as compared to vacant property. We are unable to cut down the scope of the provisions of the Public Premises Act on the basis of such an apprehension because as pointed out by this Court in Dwarkadas Marfatia and Sons v. Board of Trustees of the Port of Bombay:(SCC p.306, para 27) ...every activity of a public authority especially in the background of the assumption on which such authority enjoys immunity from the rigours of the Rent Act, must be informed by reason and guided by the public interest. All exercise of discretion or power by public authorities as the respondent, in respect of dealing with tenants in respect of which they have been treated separately and distinctly from other landlords on the assumption that they would not act as private landlords, must be judged by that standard.
These observations were made in the context of the provisions of the Bombay Rents, Hotel and Lodging Houses Rates (Control) Act,1947 whereby exemption from the provisions of the Act has been granted to premises belonging to the Bombay Port Trust. The consequence of giving overriding effect to the provisions of the Public Premises Act is that premises belonging to companies and statutory bodies referred to in Clauses (2) and (3) of Section 2(e) of the Public Premises Act would be exempted from the provisions of the Rent Control Act. The actions of the companies and statutory bodies mentioned in Clauses (2) and (3) of Section 2(e) of the Public Premises Act while dealing with their properties under the Public Premises Act will, therefore, have to be judged by the same standard.
The Supreme Court read an obligation on companies and authorities in relation to which the Public Premises Act was applicable to act reasonably and fairly and in public interest even while carrying on commercial activities, because they were instrumentality of the State and therefore, bound by the provisions of Part-III of the Constitution. In our opinion, therefore, conferal of power on lessee of the airports authority also to summarily evict under Chapter VA strongly indicates that the intention of the Legislature was that the lessee of the airports authority was also an instrumentality of the State. We , thus, find that the Respondent No. 3 is in truth and substance is an instrumentality of the State and is, therefore, bound by Part-III of the Constitution.
47. An objection was raised to the maintainability of this petition on the ground that ARI has not joined as a party to the petition. In our opinion, the objection is not well founded. The EOI was submitted by the Petitioner in partnership with ARI. Therefore, when an opportunity to submit tender was denied, rights of the Petitioner as also its partner were violated. In our opinion, therefore, it cannot be said that the Petitioner does not have a cause of action for challenging the action of the Respondent No. 3.
48. It was also contended that in view of the fact that the Petitioner instead of challenging the public notice submitted its EOI, it is estopped from challenging the public notice. In our opinion, this objection is also not well founded. Because in the EOI only a provision has been made for short-listing. Therefore, the Petitioner was justified in believing that the short-listing will be resorted to only if it becomes necessary and before doing the actual short-listing, the Respondent No. 3 will adopt an objective and relevant criteria for short-listing. In our opinion, merely by submitting EOI, no estoppal will operate against the Petitioner.
49. It was also submitted that the Petitioner had not disclosed to the Respondent No. 3 the fact that it had filed petition before the Karnataka High Court against Bangalore International Airport Ltd. (BIAL). It may be pointed out that the explanation that has been given by the Petitioner is that according to public notice, information about litigation pending against the Airports operator was to be given. At the relevant point of time the Bangalore International Airports Ltd., a company against which the petition was filed was not an Airports operator and therefore, that information was not supplied, in our opinion, is a reasonable explanation. Even the Respondent No. 3 did not submit that this information was intention ally suppressed with any ulterior motive. Merely, because a Writ Petition has been filed by the Petitioner before the High Court, the party cannot be debarred from claiming that it is entitled to submit a tender. If that party is otherwise entitled to or eligible to submit the tender. In our opinion, the relief cannot be denied to the Petitioner for that reason alone.
50. It was submitted on behalf of the Respondents Nos. 5 & 6 that because they have invested considerable amounts, contract in their favour should not be cancelled. It is an admitted position that the contract in favour of Respondents Nos. 5 & 6 was granted in the month of November, 2007, when the proceedings were pending. Obviously, therefore, the contract in favour of Respondents Nos. 5 & 6 was subject to the decision in the proceedings and the contract was taken by them with full knowledge about the pendency of the proceedings. In any case, we propose to protect the interest of Respondents Nos. 5 & 6 till on fresh consideration the Respondent No. 3 takes a decision about awarding of contract. It is possible that in the fresh process also the Respondents Nos. 5 & 6 may turn out to be the highest bidder.
51. In the result, therefore, the petition succeeds and is allowed.
(i) The contract awarded to Respondent No. 5 on 29-11-2007 and its subsequent novation in favour of Respondent No. 6 is set aside.
(ii) The Respondent No. 3 is directed to reconsider the question of grant of duty-free shop pursuant to the public advertisement afresh, in accordance with law and in the light of the observations made above.
(iii) The Respondent No. 3 shall do so as expeditiously as possible, in any case, within a period of eight weeks from today. (iv) Though, by this order the grant of contract in favour of Respondents Nos. 5 & 6 is cancelled, the Respondent No. 3 shall be at liberty to continue running of duty free shop by Respondents Nos. 5 & 6 on the same terms and conditions and to the same extent that is existing today till a fresh grant is made pursuant to this order.
(v) Rule made absolute. No order as to costs.
At this stage a request is made for stay of the operation of the order. We have given eight weeks time for the Respondent no.3 to initiate and complete the procedure, therefore, we do not see any reason to stay the operation of the order.