# MIHAN INDIA LTD v. GMR AIRPORTS LTD. & ORS

- **Citation:** [2022] 19 S.C.R. 523
- **Court:** Supreme Court of India
- **Decided:** 2022-05-09
- **Case number:** Civil Appeal No. 3699 of 2022
- **Bench:** Vineet Saran, J. K. Maheshwari
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/mihan-india-ltd-v-gmr-airports-ltd-ors-36238
- **Pages:** 40

## Headnote

Tenders: Annulling of bidding process - Justification of - As
per instructions of the Government of India, for upgradation,
modernization, operation and maintenance of the Nagpur
International Airport, appellant company-MIL invited tenders from
private parties - Respondents-GAL was the highest bidder - During
negotiations regarding the offered revenue share, GAL agreed for
the revised revenue share - Thereafter, MIL, accepted the proposal
and selected GAL as a highest bidder - However, even on completion
of formalities, the Concession Agreement was not executed so as to
enable GAL to implement the project - Request made by GAL to
MIL but the said letter was neither responded nor any steps were
taken to execute the Concession Agreement - MIL then annulled
the bidding process and also informed GAL to take back the bid
security submitted towards bid and thereafter, re-tendering the bid
- Challenged to, by GAL and GNAIL - High Court quashed and
set-aside the action of MIL in annulling the bidding as arbitrary,
unreasonable and unfair - On appeal, held: Letter dated 07.03.2019
endorsing GAL as a selected bidder would amount to Letter of
Acceptance-LoA in terms of the Request for Proposal-RFP and,
would be treated as a concluded contract - GAL has qualified the
test of responsiveness and on making offer of highest revenue, it
was declared selected bidder - LoA has been acknowledged and
signed on duplicate copy and returned to Authority within the period
as specified - GAL being selected as a highest bidder, acquired the
status of concessionaire - It was only the Concession Agreement
required to be executed and there was no fault on the part of the
GAL in complying with the provisions of RFP - Thus, after proposal
of highest revenue share, on issuing the letter of acceptance and
also as reflected by conduct, it has become a concluded contract -
Letter for annulment of binding process is arbitrary and not in
conformity to the terms of RFQ/RFP by following the procedure -
[2022] 19 S.C.R. 523
523
A
B
C
D
E
F
G
H
524
SUPREME COURT REPORTS
[2022] 19 S.C.R.
Merely having the power of rejection of bids doesn't entitle
authorities to exercise the said power arbitrarily - Public law remedy
has rightly been availed, invoking the jurisdiction of the High Court
u/Art. 226 - It cannot be said that GAL has limited right only to ask
for specific performance - Furthermore, UoI and AAI were not
necessary parties and without joining them, the relief as granted by
the High Court does not warrants interference - Necessary parties
- Public law remedy - Constitution of India - Art. 14, 226 -Airports
Authority of India Act, 1994 - S. 12A.
Government contracts - Tenets of law - Explanation of - Held:
In government contracts, if granted by the government bodies, it is
expected to uphold fairness, equality and rule of law while dealing
with contractual matters - Right to equality u/Art.14 abhors
arbitrariness - Transparent bidding process is favoured by the Court
to ensure that constitutional requirements are satisfied - State to act
in a fair and reasonable manner unless public interest demands
otherwise - It is expedient that the degree of compromise of any
private legitimate interest must correspond proportionately to the
public interest - Using a ground of public interest or loss to the
treasury cannot undo the work already undertaken by the authority.
Dismissing the appeals, the Court
HELD: 1.1 Letter dated 07.03.2019 is a Letter of
Acceptance-LoA after selecting the GAL as a highest bidder and
it acquired the status of concessionaire. It was only the
Concession Agreement required to be executed and there was
no fault on the part of the GAL in complying with the provisions
of Request for Proposal-RFP. The conduct of appellant MIL also
indicates that concession agreement is required to be executed
by concessionaire (GAL). Thus, after proposal of highest revenue
share on issuing the letter of acceptance and also as reflected by
conduct, it has become a c

## Text

_Characters 0–39,818 of 92,128. This is a partial read: ask again with offset=39818 for what follows._

A
B
C
D
E
F
G
H
523
MIHAN INDIA LTD.
v.
GMR AIRPORTS LTD. & ORS.
(Civil Appeal No. 3699 of 2022)
MAY 09, 2022
[VINEET SARAN AND J. K. MAHESHWARI, JJ.]
Tenders: Annulling of bidding process - Justification of - As
per instructions of the Government of India, for upgradation,
modernization, operation and maintenance of the Nagpur
International Airport, appellant company-MIL invited tenders from
private parties - Respondents-GAL was the highest bidder - During
negotiations regarding the offered revenue share, GAL agreed for
the revised revenue share - Thereafter, MIL, accepted the proposal
and selected GAL as a highest bidder - However, even on completion
of formalities, the Concession Agreement was not executed so as to
enable GAL to implement the project - Request made by GAL to
MIL but the said letter was neither responded nor any steps were
taken to execute the Concession Agreement - MIL then annulled
the bidding process and also informed GAL to take back the bid
security submitted towards bid and thereafter, re-tendering the bid
- Challenged to, by GAL and GNAIL - High Court quashed and
set-aside the action of MIL in annulling the bidding as arbitrary,
unreasonable and unfair - On appeal, held: Letter dated 07.03.2019
endorsing GAL as a selected bidder would amount to Letter of
Acceptance-LoA in terms of the Request for Proposal-RFP and,
would be treated as a concluded contract - GAL has qualified the
test of responsiveness and on making offer of highest revenue, it
was declared selected bidder - LoA has been acknowledged and
signed on duplicate copy and returned to Authority within the period
as specified - GAL being selected as a highest bidder, acquired the
status of concessionaire - It was only the Concession Agreement
required to be executed and there was no fault on the part of the
GAL in complying with the provisions of RFP - Thus, after proposal
of highest revenue share, on issuing the letter of acceptance and
also as reflected by conduct, it has become a concluded contract -
Letter for annulment of binding process is arbitrary and not in
conformity to the terms of RFQ/RFP by following the procedure -
[2022] 19 S.C.R. 523
523
A
B
C
D
E
F
G
H
524
SUPREME COURT REPORTS
[2022] 19 S.C.R.
Merely having the power of rejection of bids doesn't entitle
authorities to exercise the said power arbitrarily - Public law remedy
has rightly been availed, invoking the jurisdiction of the High Court
u/Art. 226 - It cannot be said that GAL has limited right only to ask
for specific performance - Furthermore, UoI and AAI were not
necessary parties and without joining them, the relief as granted by
the High Court does not warrants interference - Necessary parties
- Public law remedy - Constitution of India - Art. 14, 226 -Airports
Authority of India Act, 1994 - S. 12A.
Government contracts - Tenets of law - Explanation of - Held:
In government contracts, if granted by the government bodies, it is
expected to uphold fairness, equality and rule of law while dealing
with contractual matters - Right to equality u/Art.14 abhors
arbitrariness - Transparent bidding process is favoured by the Court
to ensure that constitutional requirements are satisfied - State to act
in a fair and reasonable manner unless public interest demands
otherwise - It is expedient that the degree of compromise of any
private legitimate interest must correspond proportionately to the
public interest - Using a ground of public interest or loss to the
treasury cannot undo the work already undertaken by the authority.
Dismissing the appeals, the Court
HELD: 1.1 Letter dated 07.03.2019 is a Letter of
Acceptance-LoA after selecting the GAL as a highest bidder and
it acquired the status of concessionaire. It was only the
Concession Agreement required to be executed and there was
no fault on the part of the GAL in complying with the provisions
of Request for Proposal-RFP. The conduct of appellant MIL also
indicates that concession agreement is required to be executed
by concessionaire (GAL). Thus, after proposal of highest revenue
share on issuing the letter of acceptance and also as reflected by
conduct, it has become a concluded contract. When the steps for
execution of the Concession Agreement had not been taken after
LoA for quite sometime, a request was made by GAL on
25.02.2020 for execution of 26 the Concession Agreement being
Concessionaire, but no heed was paid. [Para 24 and 25][541-AC]
A
B
C
D
E
F
G
H
525
1.2 As per RFP, it is clear that MIL floated a tender for
upgradation, modernization, operation and maintenance of Nagpur
Airport. Apparently, the primary impression which can be gathered
from the objection raised in the meeting held on 30.08.2019 and
the meeting of PMIC dated 14.10.2019 indicates the prospective
revenue gain but it does not indicate the investment in upgradation and modernization of the Nagpur Airport for which
planning and designing of a world class international airport, not
only for the passengers but also for the cargo transport in the
name of MIHAN is required. As per the RFP and the Concession
Agreement, all the investment for design, up-gradation, operation
and maintenance has to be borne out by the private player and
not by MIL. After issuance of LoA by the internal correspondence
of MoCA and GoM on the note of AAI, the financial viability
relying upon the report of E&Y has been considered. If there
was any issue regarding financial viability, it was the duty of the
GoM, AAI or MoCA to call GAL, to whom the right has accrued
and has to pay the revenue share as proposed and agreed to by
MIL, for justification. Otherwise, taking a decision on the said
basis behind the back of GAL was violative of Article 14 of the
Constitution of India and also against the principles of natural
justice. [Para 38][553-E-H]
1.3 It is clear that Section 12A applies in the case of lease
by the authority and no such lease under sub-section (1) shall be
made without previous approval of the Central Government. In
the present case, no lease is required to be executed in favour of
GAL or GNIAL. The pretext taken on the basis of Section 12A
of AAI Act in a case of annulment of bidding process by the AAI
and the GoI primarily appears to be fallacious. On the basis of
the material on record, it is clear that the appellants were aware
of the procedure which is being adopted. After completion of the
bidding process, GAL was declared as a selected bidder on
offering highest revenue share and on issuance of LoA, it has
been declared as a concessionaire and at the stage of execution
of Concession Agreement, all these formalities are not relevant
and it amounts to arbitrary exercise of the power by the authorities
which is not permissible under law. Merely having the power of
rejection of bids does not entitle authorities to exercise the said
power arbitrarily. While discussing the applicability of Clauses
MIHAN INDIA LTD. v. GMR AIRPORTS LTD. & ORS.
A
B
C
D
E
F
G
H
526
SUPREME COURT REPORTS
[2022] 19 S.C.R.
2.16.1, 3.3.1 and 3.3.5, it is made clear that in pre-bid procedure
prior to acceptance, the bidding process may be annulled
otherwise after issuance of LoA, the annulment cannot be done.
The authorities further acted arbitrarily relying upon the GoM's
letter dated 16.03.2020 in reference to PMIC's meeting dated
14.10.2019 in which re-tendering was directed. Re-tendering was
not possible without ignoring the bid already accepted. Therefore,
the order of annulment has been directed applying Clause 2.16.1
arbitrarily. In the present case, the selection of the bidder was
complete. Thereafter, LoA was issued as per Clause 3.3.5 and by
issuance of draft of Concession Agreement, it has been declared
as a concessionaire. At that stage, Clause 2.16.1 for annulment
of the bidding process would not apply. It appears to us that as
per the objections raised in the Meeting dated 30.08.2019 held
by MoCA, clause (iv) in paragraph 5 persuaded the MIL and
GoM to pass the order of re-tendering. [Para 41, 42, 43, 44][557A-D; 559-B-C, E-F]
1.4 It is apparent that in government contracts, if granted
by the government bodies, it is expected to uphold fairness,
equality and rule of law while dealing with contractual matters.
Right to equality under Article 14 of the Constitution of India
abhors arbitrariness. The transparent bidding process is favoured
by the Court to ensure that constitutional requirements are
satisfied. It is said that the constitutional guarantee as provided
under Article 14 of the Constitution of India demands the State
to act in a fair and reasonable manner unless public interest
demands otherwise. It is expedient that the degree of compromise
of any private legitimate interest must correspond proportionately
to the public interest. It is specified that using a ground of public
interest or loss to the treasury cannot undo the work already
undertaken by the authority. [Para 46][560-F-H; 561-A]
1.5 After issuing the LoA in terms of Clause 3.3.5 of RFP
and declaring GAL as concessionaire as per Clause 3.3.6, issuing
letter of annulment of bidding process on the basis of the meeting
of PMIC on 14.10.2019, which directed for re-tendering of the
bid, is completely an arbitrary exercise of power, contrary to the
A
B
C
D
E
F
G
H
527
provisions of RFP and violative of Article 14 of the Constitution
of India. [Para 47][561-B]
1.6 The findings as recorded by the High Court in the
impugned judgment are in consonance with the above reasonings.
The impugned judgment passed by the High Court is based on
the sound reasonings and true analysis of facts, which do not
warrant interreference by this Court. [Para 48][561-C-D]
1.7 The authorities have acted arbitrarily in violation of
Article 14 of the Constitution of India. In such a situation, the
public law remedy has rightly been availed, invoking the
jurisdiction of the High Court under Article 226 of the Constitution
of India. The findings recorded by the High Court to entertain
the petition are just and proper and those findings are accepted.
In the facts of the instant case, the argument advanced by the
appellants to compel GAL to take the remedy of specific
performance under the provisions of Specific Relief Act is hereby
repelled. [Para 49][561-D-F]
1.8 In pursuance to the decision taken by the Cabinet, the
second JV is required to be selected through competitive bidding.
In the present case, global tenders were invited and competitive
bidding process was followed. The procedure of issuance of LoA
is completely a fair procedure as prescribed in RFP. As per the
decision taken by MoCA, AAI and MADC, MIL is the authority
to complete the bidding process and PMIC, acting on behalf of
GoM was supervising the entire process. The annulment has
been directed in reference to the letter dated 16.3.2020 for
retendering of bid. Therefore, in issuing the annulment letter,
there is no role of UoI and AAI. The serious objection has been
raised regarding the grant of relief as prayed in Clause (b) by the
High Court. In this regard, the court examined the said relief
and direction, as issued by the High Court in terms of the Cabinet
decision dated 11.2.2009, the Court is satisfied that UoI and AAI
are not adversely affected after issuing the direction to select
the second JV by competitive bidding. Except to produce the
first approval of the Cabinet dated 11.02.2009, letters dated
02.08.2019, 20.08.2019 and 30.08.2019, nothing new has been
MIHAN INDIA LTD. v. GMR AIRPORTS LTD. & ORS.
A
B
C
D
E
F
G
H
528
SUPREME COURT REPORTS
[2022] 19 S.C.R.
brought before us to show what serious prejudice has been caused
to them due to non-joinder by the Writ Court. The objection
regarding non-joinder raised by the appellants is bereft of any
merit and the High Court has rightly rejected the same. The
findings recorded by the High Court allowing the Writ Petition
are in accordance to law. Those findings do not suffer from any
illegality, warranting interreference by this Court in exercise of
the power under Article 136 of the Constitution of India. [Para
51 and 52][561-G-H; 562-A-D]
Union of India and Others v. Dinesh Engineering Corpn.
and Another (2001) 8 SCC 491; Vice-Chairman &
Managing director, City and Industrial Development
Corporation of Maharashtra Ltd. and Another v. Shishir
Realty Private Limited and Ors. Civil Appeal No. 395657 of 2017 - relied on .
Case Law Reference
(2001) 8 SCC 491
relied on
Para 42
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3699
of 2022.
From the Judgment and Order dated 18.08.2021 of the High Court
of Judicature at Bombay, Nagpur Bench, Nagpur in Writ Petition No.
1723 of 2020.
With
Civil Appeal Nos. 3701, 3702 and 3700 of 2022
 K. M. Natraj, Ms. Aishwarya Bhati, ASGs, Dushyant Dave,
Shyam Divan, Sr. Advs., Rahul Bhangde, Satyajit A. Desai, Siddharth
Gautam, Himanshu Sharma, Ms. Neha Sangwan, Satya Kam Sharma,
Mrs. Anagha S. Desai, Nikhilesh Ramachandran, Vinayak Sharma,
Shubham Seth, Ms. Mrinal Chaudhry, Vibhu Shanker Mishra, Shailesh
Madiyal, Rajat Nair, Ms. B. L. N. Shivani, Nitin Pavuluri, Ms. Kirti
Khangarot, Ms. Manisha Chava, Shivika Mehra, Rustam Singh Chauhan,
Raj Bahadur Yadav, Amrish Kumar, Sachin Patil, Rahul Chitnis, Aaditya
A. Pande, Geo Joseph, Ms. Shwetal Shepal, Advs. for the Appellant.
Dr. Abhishek Manu Singhvi, Maninder Singh, Parag P. Tripathi,
Sr. Advs., Mahesh Agarwal, Milanka Chaudhury, M. S. Ananth,
A
B
C
D
E
F
G
H
529
Ms. Naina Dubey, Nishant Rao, Ms. Harshita Agarwal, Ms. Swet Shikha,
Srinivasan, Amit Bhandari, E. C. Agrawala, Pranav Saigal, Prabhas Bajaj,
Advs. for the Respondents.
The following Judgment of the Court was passed:
J U D G M E N T
Leave granted.
2. These four appeals have been filed challenging the judgment
dated 18.08.2021 of the Nagpur Bench of the Bombay High Court
whereby the Writ Petition of the respondent No. 1- GMR Airports Limited
(for short 'GAL') and GMR Nagpur International Airport Limited (for
short 'GNIAL') filed against MIHAN India Limited (for short 'MIL')
and Government of Maharashtra (for short 'GoM') has been allowed.
The High Court set-aside the impugned communication of annulling the
bidding process and directed to take further necessary steps as per prayer
clause (b) of the Writ Petition.
3. The appeal arising out of Special Leave Petition (C) No.15556
of 2021 has been filed by MIL (which was the respondent no.1 before
the High Court) and appeal arising out of Special Leave Petition (C)
No.16737 of 2021 has been filed by the GoM (which was the respondent
No.2 before the High Court). The other two appeals arising out of Diary
No.23479 of 2021 and Diary No.23477 of 2021 have been filed by the
Airports Authority of India (for short 'AAI') and Union of India (for
short 'UoI') respectively, which were not the party before the High
Court and hence applications for permission to file the special leave
petitions have been filed, which are granted in both the special leave
petitions.
4. Since, the order under challenge in all the appeals is the same
and the facts in the said appeals are common, however Special Leave
Petition No.15556 of 2021 titled MIHAN India Limited versus GMR
Airports Limited & Ors. is being treated as the lead petition.
5. Briefly, the facts relevant for the purpose of the appeals are
that the Nagpur International Airport (for short 'Nagpur Airport') was
being run by the AAI. On the initiative of GoM to develop a multi-modal
international passenger and cargo hub airport at Nagpur, for brevity sake
referred as 'MIHAN', in coordination with Government of India (for
short 'GoI'), Ministry of Civil Aviation (for short 'MoCA'), AAI and
MIHAN INDIA LTD. v. GMR AIRPORTS LTD. & ORS.
A
B
C
D
E
F
G
H
530
SUPREME COURT REPORTS
[2022] 19 S.C.R.
Indian Air Force through Ministry of Defence has prepared the report
for MIHAN project. On 18.12.2006, GoI through MoCA and AAI on
one side; and GoM and Maharashtra Airport Development Company
(for short 'MADC') on the other side, entered into a Memorandum of
Understanding (for short 'MoU') for the purpose of establishing a Joint
Venture Company (for short 'JVC') and transferring the Airport to the
said JVC to develop it into MIHAN. As per the said MoU, MADC shall
have 51% of the equity and AAI 49% equity of the JVC. Pursuant to
the MoU, the AAI and MADC entered into a Joint Venture Agreement
(for short 'JVA') on 22.02.2009 for the purpose of incorporating a JVC,
which is known as MIL. As per the terms and conditions of the MoU
dated 18.12.2006 and the JVA dated 22.02.2009, MIL took over the
Airport from AAI on 07.08.2009.
6. As per the instructions of GoI, it was thereafter, decided that
for the upgradation, modernization, operation and maintenance of the
Airport (subsequently named as Dr. Babasaheb Ambedkar International
Airport, Nagpur) global tenders were to be called by MIL by inviting
bids from private parties as per the Request for Qualification (for short
'RFQ') for selection of private developers, through public private
participation (for short 'PPP') on Design, Build, Finance, Operate and
Transfer (DBFOT) basis. On 11.12.2017, GoM constituted a HighPowered Project Monitoring and Implementation Committee (for short
'PMIC') consisting of eleven Members, being officers of GoM, GoI,
MADC and AAI and the Chief Secretary of the GoM would be its
Chairman to look after the MIHAN project on behalf of GoM. The
Request for Proposal (for short 'RFP') was prepared by MIL and
approved by PMIC in its meeting held on 24.01.2018. In response, six
bidders were shortlisted, but, only five of them were approved for the
next stage i.e. for issuance of RFP which was sent vide email dated
01.03.2018. On the final date for submission of bids i.e. 28.09.2018,
MIL had received only two bids out of which the bid submitted by GAL
proposing revenue share of 5.76% was found to be the highest.
Thereafter, MIL asked GAL for discussion and negotiations on 05.03.2019
before PMIC regarding the offered revenue share. During discussion,
GAL agreed for the revised revenue share of 14.49%. The said revised
revenue share was communicated by GAL through letter dated
06.03.2019 with a request to declare it as the selected bidder and to
issue the letter of award (for short "LoA").
A
B
C
D
E
F
G
H
531
7. Thereafter MIL issued the letter dated 07.03.2019 accepting
the revised proposal. GAL accepted the letter dated 07.03.2019 and
acknowledged the same by letter dated 12.03.2019 and communicated
the same through a duly signed duplicate copy of the letter dated
07.03.2019.
8. Even on completing the said formalities, the Concession
Agreement was not executed for a long time, however on 25.02.2020,
request was made by GAL to MIL for execution of Concession
Agreement so as to enable GAL to implement the MIHAN project. The
said letter was neither responded nor any steps were taken to execute
the Concession Agreement in favour of GAL and GNIAL (being the
SPV incorporated for implementing the MIHAN project). Thus, GAL
and GNIAL both filed Writ Petition No.1343 of 2020 before the Nagpur
Bench of the Bombay High Court seeking direction to the MIL and
GoM to take all necessary and consequential steps pursuant to the letter
dated 07.03.2019 and to sign the Concession Agreement. On 11.03.2020,
the High Court issued the notice and listed the case on 18.03.2020 for
hearing. The notices were served on MIL and GoM by GAL on the
same day and, through court bailiff on 16.03.2020. Immediately on
receiving the notice, on the same day i.e. 16.03.2020, GoM issued the
direction to MIL for retendering. Pursuant thereto, MIL annulled the
bidding process vide communication dated 19.03.2020. MIL also informed
GAL to take back the bid security submitted towards bid. Thereafter,
through email dated 04.05.2020 MIL informed GAL that since the bank
guarantee towards bid security expired on 30.04.2020 and because of
lockdown due to Covid-19, the same may be treated as cancelled and
fully discharged and may be taken back.
9. GAL and GNIAL challenged the communication dated
19.03.2020 annulling the bidding process after issuance of LoA by filing
another Petition before the Nagpur Bench of the Bombay High Court
being Writ Petition No. 1723 of 2020. In the said Writ Petition, the
respondents have prayed for appropriate directions to quash the letter of
annulment dated 19.03.2020 and enforcement of letter dated 07.03.2019
with further directions as per prayer clause (b) reproduced as under:
b. Issue a writ or any other appropriate writ, direction or order
directing the Respondents, to comply with the RFP conditions in
its letter and spirit and undertake necessary and consequential
steps in furtherance thereto and the Letter of Award dated
MIHAN INDIA LTD. v. GMR AIRPORTS LTD. & ORS.
A
B
C
D
E
F
G
H
532
SUPREME COURT REPORTS
[2022] 19 S.C.R.
07.03.2019, including but not limited to the execution of the
Concession Agreement in favour of the Petitioner No. 2 and other
ancillary documents;
10. By filing the response, MIL has not disputed the formation of
JVC, execution of MOU, handing over of Nagpur Airport by AAI to
MIL on behalf of JVC, preparation of RFP by State Government,
completing of tender process including offer made by the GAL of 5.76%
revenue share. It is admitted that in front of PMIC, a meeting was held
on 05.03.2019 at Mumbai for negotiation in which enhancement of the
revenue share to 14.49% in place of 5.76% was offered by GAL and
GAL requested for issuance of LoA through communication dated
06.03.2019. The appellant-MIL took stand before the High Court that
the communication dated 07.03.2019 was merely an intimation regarding
acceptance of revised bid subject to the approval of GoI for alienation of
land of AAI in favour of the GAL as per the Concession Agreement and
for formation of SPV. Placing reliance on Clause 3.3.5 it is said that
LoA is different than communication. It is said in furtherance of the
letter dated 07.03.2019, AAI initiated the process. On the proposal of
AAI, the GoI through MoCA asked some explanations through the letter
dated 20.08.2019. In the meeting held by MoCA on 30.08.2019, MIL
and AAI have not submitted the explanation as asked and prayed for
time to submit the same through PMIC. It was said that those explanations
were required to prepare the note for Cabinet approval, otherwise for
want of explanations, approval of Cabinet was not possible. It is said
that GoI through MoCA was a necessary party which is not joined in the
Writ Petition. Due to non-joinder of necessary party, the Writ Petition is
not maintainable and may be dismissed. It is also stated that under the
instructions of GoM, the order of annulling the bidding process was
passed. On acceptance of the refund of the bid security, the GAL is
estopped from challenging the order of annulling the bid process as the
letter dated 07.03.2019 was a conditional and the GoI has not given any
approval, therefore no vested right accrued to GAL to question the order
annulling bidding process. It is also submitted that MIL earned profit of
Rs. 49 crores during the financial year 2018-19 and has estimated gross
profit of Rs. 64 crores during the financial year 2019-20 and the offer of
gross revenue share made by GAL of Rs. 15 crores is extremely low,
which may not be in public interest and shall cause a huge financial loss
to the public exchequer. Therefore, the action has rightly been taken by
the authorities.
A
B
C
D
E
F
G
H
533
11. GoM has filed a separate reply on an affidavit of CS-cumCFO, MIL, not in the capacity of the officer of GoM. In the said reply, it
was urged that GoM is accepting the reply filed by MIL and the stand
and contentions as taken therein. It was urged that MIL for implementation
of MIHAN project is using the resources of respondent No. 2 (GoM)
and AAI. By the outcome of acceptance of subject tender, the land
belonging to AAI and MADC was required to be handed over to the
concessionaire. In such circumstances, the active involvement of GoM,
AAI and MoCA is imperative. Emphasising the importance of bid and
its decision having long term impact, it is said that the revenue paid by
the concessionaire shall be distributed amongst shareholders and the
offer was found to be low in comparison to the profit earned in the year
2018-19. Thus, the bid has rightly been cancelled by annulling the bidding
process. Thus, with the said objections, the Writ Petition filed before the
High Court was resisted by the GoM and MIL.
12. The Nagpur Bench of the Bombay High Court, by impugned
judgment dated 18.08.2021, allowed the Writ Petition and held that: (i)
the letter dated 07.03.2019 is a LoA; (ii) plea taken by MIL that the
letter dated 07.03.2019 is a mere communication of bid acceptance is
not correct. In fact, it has led to a concluded contract between the parties;
(iii) the action of MIL in annulling the bidding process by letter dated
19.03.2020 is arbitrary, unreasonable and unfair, therefore quashed and
set-aside; (iv) in this case there are no such disputed questions of facts
as would shut out the writ jurisdiction of the High Court and (v) this case
does not involve a mere enforcement of contractual obligations simplicitor,
but involves an issue of enforcement of public law arising out of
contractual obligations. Resultantly, the High Court gave a direction to
take further step to implement the prayer as made in clause (b) of the
prayer clause of the Writ Petition.
13. Being aggrieved, the present four Civil Appeals have been
filed, as described above by MIL, GoM, UoI and AAI.
14. We have heard Mr. Dushyant Dave, learned senior counsel
for MIL, Mr. Shyam Divan, learned senior counsel for GoM, Mr. K.M.
Natraj, learned ASG for AAI, Mr. Shailesh Madiyal, learned counsel for
UoI and Dr. Abhishek Manu Singhvi, Mr. Maninder Singh and Mr. Parag
P. Tripathi, learned senior counsels for the respondents at length and
have perused the record.
MIHAN INDIA LTD. v. GMR AIRPORTS LTD. & ORS.
A
B
C
D
E
F
G
H
534
SUPREME COURT REPORTS
[2022] 19 S.C.R.
15. After hearing the arguments as advanced and on perusal of
the material available on record, the issues which arise for consideration
in these appeals are as follows:
1) Whether the letter dated 07.03.2019 endorsing GAL as a
selected bidder and on communication by GAL on a duplicate
copy to MIL on 12.03.2019 would amount to LoA in terms of
Clause 3.3.5 of RFP and, would it be treated as a concluded
contract?
2) Whether the communication dated 19.03.2020 for annulment
of bidding process is arbitrary and not in conformity to the
terms of RFQ/RFP by following the procedure so prescribed?
3) In the facts and circumstances of the case, GAL being a
successful bidder has a limited right only to ask for specific
performance, and being a non-statutory contract, remedy under
Article 226 of Constitution of India cannot be availed ?
4) Whether in the facts and circumstances of the case, UoI and
AAI were necessary parties and without joining them, the relief
as granted by the High Court warrants interference in the
special leave petitions under Article 136 of the Constitution of
India?
16. All the aforesaid questions are inter-related and the
consequential answer would depend upon the conclusion that right
exercised to annul the bidding process by the authorities is in conformity
to the touchstone of Article 14 of the Constitution of India. Therefore, all
the questions are commonly dealt with in succeeding paragraphs. While
dealing with all the aforesaid questions, the background and certain facts
which are on record are required to be traced at the cost of repetition.
17. In the present case, it is not in dispute that Nagpur Airport
was being run by the AAI. On the initiative of GoM, MIHAN project
was approved in coordination with GoI, MoCA, AAI and Indian Air
Force through Ministry of Defence. Based on techno-Economic feasibility
study (in short "TEFS") of MIHAN project and report prepared by L&T
Ramboll Consulting Engineer Limited, MoU was signed on 18.12.2006
between GoI through MoCA and AAI on the one side and GoM and
MADC on the other side and decided to form JVC to whom the Nagpur
Airport would be transferred for development maintenance and operation
as per MIHAN project. After signing the MOU, a note was prepared on
A
B
C
D
E
F
G
H
535
07.02.2009 by MoCA for the purpose of transfer of Nagpur Airport to
the joint venture company comprised of AAI and MADC. The said note
was approved by the Cabinet in its meeting held on 11.02.2009. The
note as approved has been placed for ready reference during hearing,
its contents are relevant, therefore reproduced as thus:
"The Cabinet considered the note dated 07.02.2009 from the
Ministry of Civil Aviation (Nagar Vimanan Mantralaya) and
approved the proposals contained in paragraph 6 with the following
directions:
(i) the valuation of the assets of the respective partners, be carried
out within one month and any dispute in the matter be put to a
Committee of Secretaries for a final decision;
(ii) irrespective of the assets brought in by the Joint Venture (JV)
partners, the equity structure will be 49:51 between AAI and
MADC;
(iii) assets of the JV partners will not be the assets of the JV and
would form the basis for determining the revenue share of
respective partner;
(iv) assets placed at the disposal of second JV, as and when it is
formed, will continue to be the assets of the respective partners;
(v) the proposal for formation of the second JV be brought up
before the Cabinet at an appropriate time; and
(vi) partners for the second JV be selected through competitive
bidding."
The said decision of the Cabinet was communicated by MoCA
vide letter dated 18.2.2009 to the Chairman, AAI with a copy to GoM
including the Ministry of Defence.
18. In terms of the MoU and approval of the Cabinet, JVA was
entered on 22.02.2009 incorporating the first JVC, known as MIL. As
per the MOU and the JVA, MIL took over the Nagpur Airport from
AAI on 07.08.2009. As per the approval of the Cabinet, the valuation of
assets of the respective partners was to be carried out by a Committee
of Secretaries for final decision. MADC and AAI would be the partners
of 51:49% shares respectively. The assets which belonged to AAI and
MADC would not be the assets of JVC. The bifurcation 51:49% is only
MIHAN INDIA LTD. v. GMR AIRPORTS LTD. & ORS.
A
B
C
D
E
F
G
H
536
SUPREME COURT REPORTS
[2022] 19 S.C.R.
for determination of the revenue share of respective partners. Even on
formation of JVC, the assets would continue to be the assets of respective
partners. The partners for the second JVC shall be selected through
competitive bidding and the proposal for formation of second JVC be
brought up before the Cabinet at an appropriate time.
19. In view of the said decisions and to act there upon, MIL
prepared RFQ dated 12.05.2016 for upgradation, modernization, operation
and maintenance of the Airport through PPP mode on DBFOT basis
emphasizing the importance of MIHAN project and specifying that the
MIL shall be authority for implementation of the MIHAN project. The
particulars of the Nagpur Airport, details about the project, eligibility for
the bidders, scope of work, who may participate in bidding process and
also specifying the selected bidder were incorporated in RFQ. On perusal
of the cabinet decision and MoU, it is quite apparent that MIL was the
first JVC incorporated to act on behalf of AAI and MADC who are
banking upon the authority of MoCA and GoM. As explained above,
PMIC is a high powered committee constituted by GoM and held its
meeting on 24.01.2018. MIL presented the RFP for approval which was
approved with certain changes and published on 01.03.2018 with the
intent to carry out and complete the bidding process.
20. On the basis of the said RFQ and RFP, bids were invited by
the MIL and the GAL submitted its bid on 28.09.2018. The bid submitted
by the GAL at revenue share payable @ 5.76% was the highest. But
MIL was not satisfied by the said offer, however invited GAL for
negotiation before PMIC on 05.03.2019. During negotiation, the GAL
gave the offer of 14.49% revenue share in place of 5.76%. After such
negotiation, a request was made by GAL to MIL on 06.03.2019 for
issuance of LoA at the earliest. MIL, vide communications dated
07.03.2019 in reference to the RFP dated 01.03.2018 and the bid submitted
by GAL dated 28.09.2018 and revised financial offer dated 06.03.2019,
accepted the proposal and selected GAL as a highest bidder. In the said
communication MIL informed that the Competent Authority has accepted
the revised bid with clarification that the said acceptance is subject to
further approval of GoI for alienation of land owned by AAI in favour of
the second party and formation of SPV for the project ('Approval')
means second JV. By the said letter, GAL was called upon to submit the
consent for revised bid on the duplicate copy within 7 days, on failure
MIL would have the right to revoke the acceptance, otherwise to follow
A
B
C
D
E
F
G
H
537
the consequences as stated in the letter. The GAL submitted acceptance
after signing on the duplicate copy of letter to the MIL on 12.03.2019
within the time so prescribed.
21. As the tenders were invited in pursuance of RFP, however to
understand the procedure for selection of bid and its acceptance or
rejection and to issue LoA to declare the selected bidder as
concessionaire, relevant clauses are required to be seen. As per Clause
1.2.6 (b) of RFP, it is clear that the bidder, who is offering the highest
revenue share at the time of the evaluation of the bids, would be the
highest bidder subject to the provisions of Clause 2.16.1 of RFP. The
said Clause 2.16 deals with rejection of bids and Clause 3.3 deals with
selection of bidder. All the aforesaid Clauses of RFP are relevant however
reproduced as thus:
CHAPTER -1:
Highest Bidder:
1.2.6 (a) Bids are invited for the Project on the basis of the
Revenue Share payable to the Authority in terms of the Concession
Agreement.
(b) In this RFP, the term "Highest Bidder" shall mean the Bidder
who is offering the highest Revenue Share. The concession period
and other terms are pre-determined, as indicated in the draft
Concession Agreement and the percentage revenue share shall
constitute the sole criteria for evaluation of Bids. Subject to the
provisions of Clause 2.16, the Project will be awarded to the Highest
Bidder.
CHAPTER -2
2.16: Rejection of Bids:
2.16.1 Notwithstanding anything contained in this RFP, the
Authority reserves the right to reject any Bid and to annul the
Bidding Process and reject all Bids at any time without any liability
or any obligation for such acceptance, rejection or annulment and
without assigning any reasons therefor. In the event that the
Authority rejects or annuls all the bids, it may, in its discretion,
invite all eligible Bidders to submit fresh Bids hereunder.
MIHAN INDIA LTD. v. GMR AIRPORTS LTD. & ORS.
A
B
C
D
E
F
G
H
538
SUPREME COURT REPORTS
[2022] 19 S.C.R.
2.16.2: The authority reserves the right not to proceed with the
Bidding Process at any time, without notice or liability, and to
reject any Bid without assigning any reasons.
CHAPTER-3
3.3.1.: Subject to the provisions of Clause 2.16.1, the Bidder whose
Bid is adjudged as responsive in terms of Clause 3.2.1 and, who
quotes the highest Revenue Share offered to the Authority shall
ordinarily be declared as the selected Bidder (the "Selected
Bidder"). In the event that the Authority rejects or annuls all the
Bids, it may, in its discretion, invite all eligible Bidders to submit
fresh Bids hereunder.
3.3.5 : After selection, a Letter of Award (the "LOA") shall be
issued, in duplicate, by the Authority to the Selected Bidder and
the Selected Bidder shall, within 7 (seven) days of the receipt of
the LOA, sign and return the duplicate copy of the LOA in
acknowledgement thereof. After acknowledgement of the LOA
as aforesaid by the Selected Bidder, the Selected Bidder will be
required to submit the Performance Security within the time period
prescribed in the LOA/Concession Agreement. In the event the
duplicate copy of the LOA duly signed by the Selected Bidder is
not received by the stipulated date or the Selected Bidder fails to
provide the Performance Security within the stipulated date, the
Authority may, unless it consents to extension of time for submission
thereof, appropriate the Bid Security of such Bidder as damages
on account of failure of the Selected Bidder to acknowledge the
LOA or submission of Performance Security as the case may be,
and the next eligible Bidder may be considered.
The said Clauses are required to be looked with the intent to know
the scheme of RFP, its applicability and object. Chapter 1, in which the
highest bidder has been defined, deals with the incorporation of the project,
description of bidding process, schedule of bidding process and pre-bid
conference. As per the definition of highest bidder in Clause 1.2.6, it is
clear that if any bid is invited for a project, it shall be on the basis of the
highest revenue share payable to the Authority in terms of Concession
Agreement and the sole criteria would be percentage revenue share
and, on the said basis highest bidder of the project may be declared,
subject to the rejection of bid as per Clause 2.16.
A
B
C
D
E
F
G
H
539
20. Chapter 2 of RFP deals with the general terms of bidding,
change in composition of the Consortium, change in ownership, cost of
bidding, site visit and verification of information, verification and
disqualification, contents of RFP, clarifications, amendment of RFP,
preparation and submission of bids including format and signing of bid,
sealing and marking of bids, due date of bid, late bids, contents of the bid,
modifications/substation/withdrawal of bids, rejection of bids, validity of
bids, confidentiality, correspondence with the bidder, bid security etc.
The abovesaid are the instructions to bidders in general. As per Clause
2.16.1, the Authority reserves the right to reject any bid and to annul the
bidding process and reject all bids at any time without any liability or any
obligation for such acceptance, rejection or annulment and without
assigning any reason therefor. In case the Authority rejects or annuls all
the bids, it has the discretion to invite all eligible bidders to submit fresh
bids hereunder. A literal construction of the said Clause would mean that
the Authority have a right to annul the bidding process, reject all bids
without having any obligation for such acceptance, rejection or annulment,
that too without assigning any reason. As per later part of the Clause, on
rejection or annulment of the bids, the Authority may in its discretion
invite all eligible bidders to submit the fresh bids. Thus annulment of
bidding process, rejection of all bids is without any obligation for
acceptance. It clarifies that prior to acceptance, annulment, rejection
may be done without assigning any reason as per Clause 2.16.2.
22. Chapter 3 deals with evaluation of bids on its opening, test of
responsiveness, selection of bidder, contacts during bid evaluation, bid
parameter. Under Clause 3.3.1, subject to the provision of Clause 2.16.1
means if the bid is not rejected or annulled and whose bid is adjudged as
responsive as per Clause 3.2.1 ({a} to {i}) would be responsive with
highest revenue share and the said bidder shall ordinarily be declared as
a selected bidder. Thus, in the event, the bid is not rejected, the procedure
for selection of the bidder under Clause 3.3.1 shall be observed. If the
bidder quotes highest revenue share and its bid is adjudged as responsive
shall be declared as the selected bidder under Clause 3.3.1. In absence
of the contingencies as specified in Clauses 3.3.2 to 3.3.4, the procedure
contemplated on selection of highest bidder as per Clause 3.3.5 is to be
followed.