# RELi. AIRPORT DEVELOPERS PVT.LTD v. AIRPORTS AUTH.OF INDIA

- **Citation:** [2006] Supp. 8 S.C.R. 398
- **Court:** Supreme Court of India
- **Decided:** 2006-11-07
- **Bench:** Arijit Pasayat, S.H. Kapadia
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/reli-airport-developers-pvt-ltd-v-airports-auth-of-india-21902
- **Pages:** 76

## Headnote

Administrative Law:
Administrative authority-Exercise of discretion-Judicial review-Scope
C of-Privatization of airports of Delhi and Mumbai on joint venture basisBids invited-Evaluation of bids-Constitution of Committee (ECJ-Approach
of EC in evaluation being inconsistent with terms of request for proposal
(RPF)-Another committee (GETE) constituted-Reports submitted-Two
bidders awarded contract of one airport each-One of unsuccessful bidders
D challenging constitution of GETE-Held, necessity for taking views of different
committees was a step towards making the whole decision making process
transparent-In multi tier system in decision making process, authority
empowered to take decision can accept view expressed by one committee in
preference to another for plausible reasons-On facts, discretion properly
exercised-Challenge to constitution of GETE clearly untenable-GET£ has
E gone by objective standards-Criterion adopted by GETE more rationalUltimately, the authority concerned rightly exercised its discretion in larger
public interest-Privatization Po/icy-Contract-Government contractEvaluation of bids-Confidential and sensitives meetings-Need to maintain
secrecy.
F
Words and Phrases:
Expressions 'contract' and 'discretion'-Connotation of
In furtherance of the privatization policy of the Government of India,
"Invitation To Register An Expression of Interest" was issued for
G privatization of two airports of Mumbai and Delhi on a joint venture basis.
The bidders were invited to bid on certain basis and pattern. The tendering
process involved two tiers, i.e., Expression-cum-Request for Qualification
and a Request for Proposal (RFP). At 01e RFP stage, evaluation was
carried out in four stages. The first two stages involved verification in the -- ·
H
398
-
RELi. AIRPORT DEVELOPERS PVT.LTD. v. AIRPORTS AUTH.OF INDIA
399
nature of mandatory norms. The third stage was technical evaluation A
stage; and the final stage was financial evaluation stage. Before approval
of transaction document by Empowered Group of Ministers (EGOM), RFP
documents of two airports were forwarded to the bidders. Thereafter final
transaction documents were forwarded to the bidders. There were six
bidders for Delhi and five bidders for Mumbai. Bid evaluation was B
entrusted to Global Tl!chnical Adviser, Legal Consultant and Financial
Consultant (GT A, LC and FC) which was also described as Evaluation
Committee (EC). The technical bids were opened and a Government
Review Committee (GRC) was constituted to undertake an independent
review of evaluation report of bids of the two airports and restructuring
process prepared by the Evaluation Committee/Advisers. EC submitted C
their evaluation report. A Committee called as Group of Eminent
Technical Experts (GETE) was appointed to review the Consultants'
Evaluation Report. Accordingly, GETE submitted its reports. On
31.1.2006, Executive Director of AAI informed appellant RAL that GMR
would be given a choice of the two airports and whichever airport it
chooses it would be required to match the higher fi~ancial bid. RAL wrote D
to AAI alleging change of procedure and protesting against the same. It
also wrote to the members of the EGOM alleging illegalities in
consideration of the bids, and later filed a writ petition before the High
Court on 2.2.2006. On 4.2.2006 GOl informed GMR and GVK that they
were selected as successful bidders for undertaking the re-structuring and E
modernization_ of the Delhi and the Mumbai airports respectively. It was
contended for the petitioner that the EGOM/ GOI should have accepted
the recommendations of the EC and should not have asked the GETE to
make further examination. It is submitted that GETE did not examine the
queries relating to GMR as raised by the IMG and the reduction of
technical qualification from 80% to 50% was impermissible; that the F
appointment of GETE itself was illegal and unauthorized. On dismissal
of writ petition RA! filed the present appeal.
On the questions: Wh

## Text

_Characters 0–39,902 of 166,310. This is a partial read: ask again with offset=39902 for what follows._

A
RELIANCE AIRPORT DEVELOPERS PVT. LTD.
v .
. AIRPORTS AUTHORITY OF INDIA AND ORS.
NOVEMBER 7, 2006
B
[ARIJIT PASAYAT AND S.H. KAPADIA, JJ.]
Administrative Law:
Administrative authority-Exercise of discretion-Judicial review-Scope
C of-Privatization of airports of Delhi and Mumbai on joint venture basisBids invited-Evaluation of bids-Constitution of Committee (ECJ-Approach
of EC in evaluation being inconsistent with terms of request for proposal
(RPF)-Another committee (GETE) constituted-Reports submitted-Two
bidders awarded contract of one airport each-One of unsuccessful bidders
D challenging constitution of GETE-Held, necessity for taking views of different
committees was a step towards making the whole decision making process
transparent-In multi tier system in decision making process, authority
empowered to take decision can accept view expressed by one committee in
preference to another for plausible reasons-On facts, discretion properly
exercised-Challenge to constitution of GETE clearly untenable-GET£ has
E gone by objective standards-Criterion adopted by GETE more rationalUltimately, the authority concerned rightly exercised its discretion in larger
public interest-Privatization Po/icy-Contract-Government contractEvaluation of bids-Confidential and sensitives meetings-Need to maintain
secrecy.
F
Words and Phrases:
Expressions 'contract' and 'discretion'-Connotation of
In furtherance of the privatization policy of the Government of India,
"Invitation To Register An Expression of Interest" was issued for
G privatization of two airports of Mumbai and Delhi on a joint venture basis.
The bidders were invited to bid on certain basis and pattern. The tendering
process involved two tiers, i.e., Expression-cum-Request for Qualification
and a Request for Proposal (RFP). At 01e RFP stage, evaluation was
carried out in four stages. The first two stages involved verification in the -- ·
H
398
-
RELi. AIRPORT DEVELOPERS PVT.LTD. v. AIRPORTS AUTH.OF INDIA
399
nature of mandatory norms. The third stage was technical evaluation A
stage; and the final stage was financial evaluation stage. Before approval
of transaction document by Empowered Group of Ministers (EGOM), RFP
documents of two airports were forwarded to the bidders. Thereafter final
transaction documents were forwarded to the bidders. There were six
bidders for Delhi and five bidders for Mumbai. Bid evaluation was B
entrusted to Global Tl!chnical Adviser, Legal Consultant and Financial
Consultant (GT A, LC and FC) which was also described as Evaluation
Committee (EC). The technical bids were opened and a Government
Review Committee (GRC) was constituted to undertake an independent
review of evaluation report of bids of the two airports and restructuring
process prepared by the Evaluation Committee/Advisers. EC submitted C
their evaluation report. A Committee called as Group of Eminent
Technical Experts (GETE) was appointed to review the Consultants'
Evaluation Report. Accordingly, GETE submitted its reports. On
31.1.2006, Executive Director of AAI informed appellant RAL that GMR
would be given a choice of the two airports and whichever airport it
chooses it would be required to match the higher fi~ancial bid. RAL wrote D
to AAI alleging change of procedure and protesting against the same. It
also wrote to the members of the EGOM alleging illegalities in
consideration of the bids, and later filed a writ petition before the High
Court on 2.2.2006. On 4.2.2006 GOl informed GMR and GVK that they
were selected as successful bidders for undertaking the re-structuring and E
modernization_ of the Delhi and the Mumbai airports respectively. It was
contended for the petitioner that the EGOM/ GOI should have accepted
the recommendations of the EC and should not have asked the GETE to
make further examination. It is submitted that GETE did not examine the
queries relating to GMR as raised by the IMG and the reduction of
technical qualification from 80% to 50% was impermissible; that the F
appointment of GETE itself was illegal and unauthorized. On dismissal
of writ petition RA! filed the present appeal.
On the questions: Whether GETE's constitution was legal and
whether jurisdiction conferred on GETE has been properly exercised,
Dismissing the appeal, the Court
HELD: Per Pasayat, J
1.1. 'Discretion' means when it is said that something is to be done
G
H
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400
SUPREME COURT REPORTS [2006]SUPP. 8 S.C.R.
A within the discretion of the authorities that something is to be done
according to the rules of reason and justice, not according to private
opinion: according to law, and not humour. It is to be not arbitrary, vague
and fanciful, but legal and regular. And it must be exercised within the
limit, to which an honest man, competent to the discharge of his office
B ought to continue himself. (432-G)
Ramji Dayawala & Sons (P) Ltd. v. Invest Import, (1981) l SCC 80;
Dhurandhar Prasad Singh v. Jai Prakash University and Ors., (2001) 6 SCC
534; Kumaon Manda/ Vikas Nigam Ltd. v. Girja Shankar Pant and Ors.,
(2001) 1 SCC 182; Siben Kumar Monda/ v. Hindustan Petroleum Corporation
C Ltd., AIR (1995) Cal 327; Man Mal Sharma v. Bikaner Sahkari Upbnokta
Bhandar, AIR (1999) Raj 13; Rekha Bhasin v. Union of India, AIR (1998)
Del 3!4; National Insurance Co. Ltd. v. Keshav Bahadur, AIR (2004) SC
1581; Kumaun Manda/ Vikas Nigam Ltd. v. Girja Shanker Pant, (2001( l SCC
182; Jaisinghani v. Union of India,, AIR (1967) SC 1427 and Commissioner
of Income-tax v. Mahindra and Mahindra Ltd., AIR (1984) SC 1182, referred
D to.
Breem v. Amalgamated Engineering Union, f 19711 1 All ER 1148; Chief
Constable of North Sales Police v. Evans, (1982) 3 All ER 141; Susannah
Sharp v. Wakefield, (1891) AC 173; Sharp v. Wakefield, (1891) Appeal Cases
173; Hindson and Kersey, (1680) 8 How St Tr 57; R. v. Kay, 52 LJMC 90;
E Lee v. Bude Railway Co., (1871) LR 6 CP 576; Morgan v. Morgan, 1869,
LR 1 P & M 644; and Gardner v. Jay, (1885) 29 Ch D 50; John Wilke 's
case, (1970) 4 Hurr 2528, Council of Civil Service Unions v. Minister for
the Civil Service, (1984) 3 All.ER.935; Sharp v. Wakefield, 1891 AC 173;
Lee v. Budge Railway Co., (1371) LR 6 .CP 57·6 and Morgan v. Morgan,.
p (1869) LR 1 P & M 644 and Roberts v. Hopwood, (1925) AC 578 and R v.
Wilkes, (1770) 98 ER 327, referred to.
1.2. The authority in which a discretion is vested can be compelled
to exercise that discretion, but not to exercise it in any particular manner.
(451-C)
G
The principles can conveniently be grouped in two main categories:
(i) failure to exercise a discretion, and (ii) excess or abuse of discretionary
power. The two classes are not, however, mutually exclusive. Thus,
discretion may be improperly fettered because irrelevant considerations
have been taken into account, and where an authority hands over its
H discretion to another body it acts ultra vires. (45J.·E-F)
....
RELi. AIRPORT DEVELOPERS PVT. LTD. v. AIRPORTS AUTH.OF INDIA
401
Padfieldv. Minister of Agriculture, Fisheries and Food LR, (1968) AC A
997, referred to.
1.3. One of the points that falls for determination is the scope for
judicial interference in matters of administrative decisions. Administrative
action is stated to be referable to broad area of Governmental activities
in which the repositories of power may exercise every class of statutory B
function of executive, quasi-legislative and quasi-judicial nature. It is trite
law that exercise of power, whether legislative or administrative, will be
set aside if there is manifest error in the exercise of such power or the
exercise of the power is manifestly arbitrary. In the realms of contract,
various choices are available. Comparison of the respective merits, offers C
of choice and whether that choice has been properly exercised are the
deciding factors in the judicial review. (450-H; 451-A-B; 460-D)
State of U.P. and.Ors. v. Renusagar Power Co. and Ors., AIR (1988)
SC 1737, relied on.
1.4. The Court will be slow to interfere in such matters relating to D
administrative functions unless decision is tainted by any vulnerability like
illegality, irrationality and procedural impropriety. Whether action falls
within any of the categories has to be established. Mere assertion in that
regard would not be sufficient. To arrive at a decision on "reasonableness"
the Court has to find out if the administrator has left out relevant factors E
or taken into account irrelevant factors. The decision of the administrator
must have been within the four corners of the law, and not one which no
sensible person could have reasonably arrived at, and must have been a
bona fide one. The decision could be one of many choices open to the
authority but it was for that authority to decide upon the choice and not
for the Court to substitute its view. To characterize a decision of the F
administrator as "irrational" the Court has to hold, on material, that it is
a decision "so outrageous" as to be in total defiance of logic or moral
~tandards. In essence, the test is to see whether there is any infirmity in
the decision making process and not in the decision itself.
(452-H; 453-A; 454-A, B, H; 455-A( G
Indian Railway Construction Co. Ltd. v. Ajay Kumar, (2003( 4 SCC 579
and Asia Foundation & Construction Ltd. v. Trafalgar House Construction
(!) Ltd. and Ors., [1997( 1 SCC 738, referred to.
Associated Provincial Picture Houses Ltd. v. Wednesbwy Corpn. KB
229: All ER 682; R. v. Secreta1J1 of State for the Home Department, ex parte H
402
SUPREME COURT REPORTS [2006] SUPP. 8 S.C.R.
A Daly, (2001) 3 All ER 433; R (Mahmood) v. secretary of State for the Home
Dept., (2000)1 WLR 840 and Huang & Ors v. Secretary of State for the Home
Department, (2005) 3 All ER 435, referred to.
2.1. In the instant case, though the High Court seems to have noted
that the EGOM has absolute discretion, it has really not held that the
.
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B discretion was unfettered. In fact it has on facts found that the discretion
.
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was properly exercised to make some variations in the terms of RFP.
.
(4l7-E-FJ
. i'
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~
2.2. In the multi tier system in the decision making process ~the
authority empowered to take a decision can accept the view expressed by
C one committee in preference to another for plausible reasons. It is not
bound to accept the view of any committee. These committeesfit.needs
no emphasis, are constituted to assist the decision making authority in
arriving at the proper decision. It is a matter ~f discretion of the authority
to rrodify the norms. It is nota case of absolute·di5cretion. While exercising
D
the discretion, certain parameters are to be followed. (432-C-DJ
2.3. It is to be noted that the ultimate authority to take the decision
in the matter was EGOM. It was within the powers of EGOM.to decide
as to what inputs it can take note of and the source of these inputs.
Therefore, the necessity for taking views ofvarious committees constituted
appears to be a step in the right direction. 'Fhis was a step which appears
E to have been taken for making the whoJe decision making process
transparent. There was no question of having the view of one Committee
in preference to another. EC was a Committee constituted as a part of
the decision making process like other Committees viz. GRC, COS and
IMG. (432-A-BJ
F
Craies Statute Law, 6th Edn. P. 273 and Corpus Jur.is Secundum, Vol
27, page 289 and "Advanced law Lexiconn by P. Ramanath Aiyar, referred
to.
2.4. Coming to the constitution of GETE, no malafides are alleged
G against the members. About the constitution ofGETE, the stand is clearly
untenable. (437-F)
3.1. So far as evaluation of the marks as done by EC is concerned,
GETE has given reasons for altering the marks allotted which ultimately
led to the non-qualification of the appellant. There were four identified
H areas where it was noted thi.it the EC's approach in the evaluation ex.ercise
RELi. AIRPORT DEVELOPERS PVT. L TD;v. AIRPORTS AUTH.QF INDIA
403
was inconsiste,llt with the terms of the RFP. Essentially there were four A
instances of rewriting of priorities and weightages as contained in the RFP
and valuation was then made by the EC on the basis of these re-written
priorities and weightages. (437-G; 438-D-E)
3.2. If EC felt that the priorities and weightages as indicated in the
RFP were inappropriate, it should have requested AAl/GOI to amend the B
RFP before the bids were received. Interestingly, the modifications were
resorted to after the bids were opened. That is the principal reason for
which·EGOM appears to have sought views of the COS and the COS was
equally entitled to invite a group of experts to examine the matter.
(447-G-H; 448-AI
3.3~ The GETE's report shows that even taking the said four C
modifications led to some of the bidders getting more marks. GVK and
others did not cross the bench inark of 80% and even after exclusion of
these marks, GMR had more than 80% marks. It was only the appellant
who crossed the threshold of80°/o on account of these four variations and
fell below 80°/o when the effect of these four variations was excluded.
D
(449-E-F)
3.4. Departure from the RFP made by EC after opening the bids can
reasonably raise a doubt that EC knew that the modalities would benefit
the appellant. GETE's report shows that it enunciated the principle to
carry out an nercise that would be more in the nature of validation E
dealing with the four variations made by EC. GETE also noted that certain
issues can be more satisfactorily addressed by process of validation that
would involve a re-allocation of marks, on the assessment made by the
EC of the bids albeit in a manner that would be consistent with the RFP.
It essentially was not an exercise of re-evaluation but of a re-allocation
consistent with RFP. (449-G-H; 450-A-BJ
F
3.5 As noted .in GETE's first report, its attempt was to assess whether
EC had assigned weightages and marks in a logical and transparent
manner to the sub-factors and whether there had been any bias in favour
of or against any of tlie bidders while assigning marks, with reference to
the RFP. While making such examination, the issues raised by the G
members of IMG were kept in view, but as stated in the report, GETE
was not solely guided by their views. Though the first report itself indicated
the reasons as to why the evaluation process containing the moderation
exercise was no.t undertaken in respect Of bidders, as desired by EGOM,
GETE did so and submitted its second report. Undisputedly, GMR crossed H
404
SUPREME COURT REPORTS [2006] SUPP. 8 S.C.R.
A the bench mark of.80% in respect of bothrthc bids while others did not.
· (450-C-DJ
3.6. Weightage introduces subjectivity.' GETE h'as gone by objective
standards. The criterion adopted by GETE 'appears 'to· be nio're rational.
It proceeded with the idea that more objec~ivity was necessary. So it has
B called the process to be validation processd461~Bl
"
4. Challenge has been made by the appellant to the lowering of the
bench mark. It is to be noted that the ap'pellant h·ad come into' the zone of
consideration only because of lowering" of the' bench mark as otherwise
after the modifications were made by GETE, it had riot cross'ed'the bench
C mark. (450-EJ
5. As regards the appellant's stand that if none was fourid eligible
on the basis of 80% bench mark, there should have·been :a fresh bid, it
has been· pointed out that the number of bidders was small. The bidders
after opening of the bid knew the merits and demerits of all the bids. There
D was an urgency for early completion of the airports keeping·in view the
2010 Commonwealth Games. (450-F-G) ·
6.1. There was no stand before the High rc~~ri'th~t the appellant
,.t1
J
•
l
. '' J.
wanted to match the bid. Even if it is accepted foi the sake of argument,
that it was no urged, it would have no coriseqiience. The argument that
E as GMR has been atiowed to match the financfai 'dealing ~f appellant for
Mumbai airport, the same m~dality should ha~e been adopted for the
other bidders, cannot be accepted for the'si~ple reason that when bench
mark is crossed, financial considerati~n is the deter~inative faci6r b~cause
•
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t .
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•
•
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of revenue sharing. The safety valve is the OMDA. The ranking becomes
irrelevant after the bidders have co~e to the aren~ aitd then finaliy the
F financial bid which determines'the ultimate bid
1
• f459~H; 460-A~B, d( ·.
6.2. It is to be noted that if no one was qualified; two alternatives
were available either to scrap or abandon.the process and second·to·re~
conduct the tenders. The practical compulsion \Vhich made the. choice
G avoidable. cannot be termed as perverse or lacking rationality. (460-:-FJ , 1
1
I;
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'f ~ 1 1
• _ 1 ..
7.1. It is to be noted that Clause 5.5. deals with a situation of the
same bidder being the highest bidder for both the airports. It proceeds
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"it•
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on the basis that there would be an~th.e~ eligible _bidder for th~ ot.~er
airport and on that basis t.he procedure to be adopte~ h~s ~een pre~c~ibed.
H In such a situation the bidder who would be successful i.e. the highest
RELi. AIRPORT DEVELOPERS PVT.LTD. v. AIRPORTS AUTH.OF INDIA
405
bidder would be asked to take the airport when the difference between A
his bid and the next higher bid is greater. Such a procedure could be
followed where there is second valid bid at the final phase. This procedure
does not deal with a situation where there is only one bidder with valid
bids for both the airports. In such a situation he becomes the highest bidder
for both the airports and for that reason alone, the question of evaluation B
of financial bid arises. [461-E-G)
7 .2. If the RFP was to consider at the final phase of evaluation there
would be only one bid for each of the airports. In that event, there would
be no question of finding out difference between the various bids or
comparing bids. That left no option with the EGOM but to either vary C
RFP or to award one of the airports to GMR and to cancel the process
for the second or cancel the entire process. The latter course would not
have been in larger public interest. Therefore, the EGOM exercised its
option. (461-H; 462-A)
Raunaq International Ltd. v. /. V.R. Construction Ltd. and Ors., (1999) D
1 SCC 492 and Master Marine Services (P) Ltd. v. Metcalfe & Hodgkinson
(P) Ltd. and Anr., (2005) 6 SCC 138, referred to.
R. v. Department of Constitutional Affairs, (2006) All ER (D) 101,
referred to.
7.3. It is to be noted that in respect of both the appellant and the
GETE wherever subjectivity criterion is involved, GETE has not dealt with
the same. The mandate of EGOM was to validate and not to invalidate.
E
It was a process for overall validation and calibration to apply the correct
standard. It is the texture of the tendered document which is of paramount
importance. EC has changed the texture whereas GETE did not do it. H F
needs no emphasis that uneven denomination breaks the integrity and
textures. (462-H; 463-A-B)
7.4. Perverseness in connection with a finding of fact is an aspect of
mistake of law. In the "public law" domain, in order to examine whether
the entire proceeding before the appropriate authority is illegal and G '
without jurisdiction or the defect or infirmity in the order goes to the root
of the matter and makes it in law invalid or void, the matter may have to
be considered in the light of the provisions of the particular statute in
question and the fact-situation obtaining in each case. If the decision is
without jurisdiction, notwithstanding the provisions for obtaining reliefs H
406
SUPREME COURT REPORTS (2006] SUPP. 8 S.C.R.
A contained in the Act and the "ouster clauses", the jurisdiction of the
ordinary court is not excluded. So, the matter assumes significance.
(463-C, F, G, HJ
Union of India v. Tarachand Gupta & Bros., [1971) I SCC 486; A.R.
Antulay v. R.S. Nayak, (1988] 2 SCC 602; R.B. Shreeram Durga Prasad and
B Fatehchand Nursing Das v. Settlement Commission (IT & WT), [1989) 1 SCC
628; N. Parthasarathy v. Controller of Capital Issues, (1991) 3 SCC 153;
Associated Engineering Co. v. Govt. of AP, (1991] 4 SCC 93; Shiy Kumar
Chadha v. Municipal Corpn. of Delhi, (1993) 3 SCC 161; ML. Sethi v. R.P.
Kapur, (1972) 2 SCC 427; Hari Prasad Mulshanker Trivedi v. V.B. Raju and
Ors., (1974) 3 SCC 415 and Mafatlal Industries Ltd. and Ors. v. Union of
C India and Ors., (1997) 5 SCC 536, referred to.
R (Iran) v. Secretary of State, (2005) EWCA Civ 982; Anisminic Ltd.
v. Foreign Compensation Commission, (1969) 1 ALL E.R. 208; O'Reilly v.
Mackman, (1982) 3 All. E.R. 1124; Re. v. Hull University Visitor, (19931 1
All E.R. 97 and Re: Racal Communications Ltd., (19801 2 All E.R. 634,
D referred to.
De Smith, Woolf and Jowell - Judicial Review of Administrative Action
(1995 Edn.) p. 238; Halsbury's Laws of England (4th Edn.) p. 114; Sir
William Wade, Administrative Law (7th Edn.), 1994 De Smith, Judicial Review
of Administrative Action-edited by Lord Woolf and Jowell, Q.C.; Professor of
E Public Law, 5th Edn. 1995 "Jurisdiction, Vires, Law and Fact" pp. 223; "The
Nature of Judicial Process' by Benjamin Cordozo, referred to.
Administrative Law, 7th Edn., (1994), by H. W.R. Wade and C.F. Forsyth,
referred to.
F
8. The plea of the appellant that the expression 'contact' obviously
means an illegal attempt for bribery etc. and cannot stand on the way of
submission of documents for consideration, is clearly untenable. Though,
there is no penal clause for such breach it goes against the very concept
of fairness in the process and evaluation of bids. Whatever documents are
G to be submitted are clearly stipulated. Any attempt to take advantage of
any newspaper report, clearly falls foul of the mandate that there shall
not be any contact with any person involved in the process of selection. It
is unusual that the RFP did not make such a contact is a factor for
disqualification. This is to be kept in view in future tenders.
(471-H; 472-A-BJ
H
9. It appears that whatever has been discussed in the various
RELi. AIRPORT DEVELOPERS PVT.LTD. v. AIRPORTS AUTH.OF INDIA
407
meetings apparently found its way outside. Who was responsible for the A
leak is not very clear but it is not a very healthy trend. The meetings were
highly confidential and sensitive in nature dealing with global tenders.
(416-Ff
Per Kapadia, J
1. In Order to see whether the EC had exceeded its authority in the B
assessment of technical pre-qualification, it has to be borne in mind that
in the scoring system objectivity has an important role to play, and
identification of factors (including sub-factors), allocation of marks to each
of these factors (including sub-factors) and giving of marks are three
distinct and different stages. Clause 5.4 dealt with assessment of technical C
, pre-qualification. Under that clause a scoring system was to be applied
based on the assessment of the Terms of the Offer against the Technical
pre-qualification criteria. It further stipulated that assessment shall be on
absolute basis and not relative as between the offers. Under the said
system, each factor had to be allocated certain marks. Objectivity had to
be provided in the allocation of marks (and not in giving of marks) to each I?
factor (including sub-factors). This was not done. It may be seen that RFP
required certain marks to be allocated for absorption of existing staff.
Greater the absorption, higher the marks to be given. In the present cas~,
the EC changed the factor, namely, "absorption of employees" to the
overall approach. This led to change in priority. Similarly, in the RFP, E,
the factor earmarked was "property development" which EC compared
to "infrastructure development", Experience in property development is
different from experience in infrastructure development. Similarly, RFP
had given weightage to aeronautical, revenues, revenue whereas in ·
allocation of marks, E.D. obliterated the difference between aeronautical
and non-aeronaut ical revenues. Thus, the objectivity which was the
~
underlying principle in clause 5.4 is completely lost either by expanding
the enumerated factors like aeronautical revenue, overall capability visa-vis capacity to absorb existing work-force and comparison of property
development with infrastructure development or by allocating un-even
marks to sub-factors. EC had no business to expand or narrow down the
scope of any of the above factors as it was beyond its authority and G
contrary to the scoring system. (472-D-H; 473-A-B)
CIVIL APP ELLA TE JURISDICTION : Civil Appeal No. 2515 of 2006 ..
From the Judgment and Order dated 21.4.2006 of High Court of Delhi H
408
SUPREME COURT REPORTS [2006) SUPP. 8 S.C.R.
A at New Delhi, in W.P. (C) No. 1581/2006.
Mukul Rohtagi, Soli J. Sorabjee, Saurabh Kirpal, Mahesh Agrawal,
Manali Singhal, Nikhil Sakhardande, Rishi Agrawal and E.C. Agrawal For
the Appellant.
B
Gopal Subramanium, A.S.G., Harish N. Salve, R.F.Nariman, L.
Nageshwar Rao, K. Parasaran, K.K. Venugopal, V.A. Mohta, Dr. A.M.
Singhvi, R.N. Karanjawala, Gopal Jain, Ramesh Singh, Ankur Chawla,
Meenakshi Grover, Ruby Singh Ahuja, Pragya Singh Baghel, Gayatri
Goswami, Akshay Babu, Manik Karanjawal!l> M.V. Kini, V.B. Joshi, T.S.
Murthy, Saket Singh, Siddharth Aggarwal, Senthil Jagadeesan, Atul Shanna,
C Munish Shanna .• Ravi Venna, Ashish Ahuja, Amit Sethi, Milanka Chaudhary,
Prashanto Sen, Haripriya, Vibhuti Kabra, Devansh A. Mohta, Sonam Shanna,
Nilankanta Nayak and M.A. Chinnasamy for the Respondents.
D
E
F
G
The Judgment of the Court was delivered by
ARIJIT PASAYAT, J. Challenge in this appeal is to the judgment of
a Division Bench of the Delhi High Court. Decision taken by a group of
Ministers in a matter of joint venture partnership as a part of the privatization
policy of the Government of India was assailed before the High Court.
According to the appellant, the project has to be grounded because of
several major defects which would render the project, take off disastrous.
The.respondents on the other hand contend that minor technical flaws, if any,
have been rectified before the ultimate decision was taken and the project has
been rightly held to be in a fit condition to take off.
The key players in this dispute are M/s Reliance Airports Developers
Pvt. Ltd. (in short 'RAL'); Airports Authority of India (in short 'AAI'),
Government of .India (in short 'GOI'), GMR Infrastructures Ltd. (in short
'GMR'), GVK Industries Ltd. (in short 'GVK').
Background facts sans unnecessary details are as follows:
As a part of the GOl'S avowed policy of privatization of strategic
national assets, the first step appears to be privatization of two airports i.e.
Mumbai and Delhi on a joint venture basis. In March, 2003 AAI initiated
process to consider modernization· of Delhi and Mumbai Airports on the
basis of an earlier decision taken on January 12, 2000 by the Union Cabinet
H relating to re-structuring of airports of AAI through long term leasing route.
RELi. AIRPORT DEVELOPERS PVT.LTD. v. AIRPORTS AUTH.OF INDIA [PASAYA T, J.]409
On 11.9.2003 the GOI approved restructuring of airports of Mumbai and A
Delhi through joint venture (shortly called 'JV') route and constituted
Empowered Group of Ministers (in short 'EGOM') to decide the detailed
modalities including design parameters, bid evaluation criteria etc. based on
which JV partners were to be selected. It was required to submit the final
proposal for Governments approval. An Inter Ministerial Group (in short B
'IMG') was set up to assist EGOM for re-structuring of two airports. The
same was set up under the Chairmanship of Additional Secretary-cum-Financial
Adviser of Ministry of Civil Aviation. Subsequently, on 15.6.2004, EGOM
was ·re-constituted under the Chairmanship of Minister of Defence. On
12.10.2004 IMG was re-constituted under the Chairmanship of Secretary,
Ministry of Civil Aviation. On the basis of recommendations made by IMG, C
EGOM approved appointment of Global Technical Adviser, Legal Consultant
and Financial Consultant (called GTA, LC and FC in short respectively).
They were Airport Planning Ply Ltd., Amarchand, Mangaldas and Suresh A.
Shroff and Co. and ABN AMRO Asia Corporate Finance (I) Pvt. Ltd (in
short Airplan, AMSC and ABN AMRO respectively). The Consultants D
prepared thelnvitation To Register An Expression of Interest (shortly called
'ITREOI') and the same was endorsed by IMG. Subsequently, EGOM
approved the same. On 17.2.2004, ITREOI was issued for the two airports.
Request for proposal was routed by AAI and the bidders were invited to bid
on certain basis and pattern. The tendering process involved two tiers; i.e. an
Expression Cum Request for Qualification (in short 'ECRQ') and a Request E,
for Proposal (in short 'RFP'). At the RFP stage, evaluation was carried out
in four stages. The first two stages involved verification in the nature of
mandatory norms. The third stage was technical evaluation stage and the
final stage was financial evaluation stage. On 15.2.2005, EGOM finalized
and approved key principles of RFP and draft transaction documents. The F
RFP documents were issued on 1.4.2005.
Certain changes to the draft transaction documents were approved by
EGOM. Before such approval, RFP documents of the two airports were
forwarded to the bidders. On 30.8.2005 final transaction documents were
forwarded to the bidders. The deadline for submissions of bids was fixed as G
14.9.2005. There were in fact six bidders for Delhi and five bidders for
Mumbai. On 19.9.2005, a meeting of IMG was held relating to methodology
for evaluation of offers and evaluation criteria in RFP documents. IMG decided
that bid evaluation on all parameters shall be carried out by a composite team
of GTA, LC and FC. IMG also decided to set up a review committee to H
410
SUPREME COURT REPORTS (2006] SUPP. 8 S.C.R.
A review the evaluation carried out by GT A, LC and FC. The same was also
described as an Evaluation Committee (in short 'EC').
The technical bids were opened on 22.9.2005. On 10.10.2005
Government Review Committee (in short 'GRC') was co11stituted to undertake
an independent review of evaluation report of bids of two airports and reB structuring process prepared by the Evaluation Committee/ Advisers. The
Consultants submitted their evaluation report. GRC held its meeting on
23.11.2005 and 24.11.2005 to review the Consultants' Evaluation Rep0rts.
GRC endorsed the views expressed in the Consultants' Evaluation Reports.
Certain queries were raised by members of the GRC and the Consultants
C clarified the position so far as the queries are concerned. In the Evaluation
Report a list of evaluation criteria where a different approach has been adopted ·
by the Consultants was indicated. On 1.12.2005, GRC submitted its report to
IMG. In the meeting of IMG held on 2.12.2005 reports of Consultants and
GRC were placed. ~onsultants made a representation to the IMG. The majority
members felt that the terms of the RFP had been adhered to and there had
D been sufficient transparency in the process. It is to be. noted that one of the
members who was the member of the Planning Commission had recorded his
personal opinion. Majority of the members of the Committee felt that if the
entire bid process was transparent and GRC was satisfied with the process it
would not be necessary to go by the advise of the member of the Planning.
E Commission and the final decision should be left to the EGOM. The matter
was placed before the EGOM on 5.12.2005. EGOM directed IMG to undertake
an independent review of the Consultants' evaluation with GRCs assistance
and give a clear recommendation to EGOM. It was noted that the bid
documents could be made available to the IMG and they could seek
F clarification from the Consultants. It was felt that there was no need for
change in the evaluation criteria as stipula~ed in the RFP documents .. It was
stipulated that IMG would not undertake any fresh evaluation or allocate
marks for any of the criteria and finally the mandate of IMG will be restricted
to ascertain as to whether it is in agreement or otherwise with the assessment/
findings and allocation of marks across various criteria in respect of various
G bids. IMG was required to complete the exercise in two weeks. Oil 6.12.2005
a meeting of the IMG was held. Bid documents were shown to the members
of the lMG. Another meeting was held on 9.12.2005 and the Consultants
were directed to re-work the marks matrix by striet adherence to RFP norms.
On foar days i.e. 12th, 13th, 14th and 16th December, 2005 meeting of IMG
was held. In the meeting queries were raised by IMG members as to whether
H evaluation was consistent with the RFP evaluation criteria and the answers
.:
RELi. AIRPORT DEVELOPERS PVT. LTD. v. AIRPORTSAUfH.OFINDIA [PASAYAT,J.)411
given by the Consultants. On 20.12.2005 RAL wrote to the Chairman, EGOM A
criticizing the SKYTRAX Repor:t and denying that Consultants acted in an
improper/biased manner or that the technical evaluation conducted by the
Consultants was flawed. RAL wrote another letter on the same day to the
EGOM pointing out its alliance with international players.
On 21.l2.2005 EGOM metto consider the views of the IMG. It decided B
that a Committee of Secretaries (in short 'COS') should be set up to advise
the EGOM on all issues relating to the restructuring and modernization of the
two airports. The COS was required to consider and recommend the selection
of appropriate JV bidders for executing the works related thereto. The COS
was set up by order dated 21.12.2005 to assist the EGOM. It met and decided C
: to set up two members Committee consisting of Mr. Sreedharan & Mr.
Sevadasan (hereinafter described as Sreedharan Committee or Group of
Eminent Technical Experts (in short 'GETE') to recommend to the COS on
the overall validation of the evaluation process including calibration of the
·qualifying cut off and sensitivity analysis. 'GETE' was accordingly appointed
, to review the Consultants, Evaluation Report (in short 'CER') on 27 .12.2005. D
; RAL wrote to the Ministry of Civil Aviation (in short 'MCA') asking that
! copies of its letters dated 20.12.2005 be forwarded to the GETE.
'
ABN AMRO wrote a letter regarding clarification sought by MCA on
' determination of bids attached to the criteria used in the technical
· prequalification of bidders for the two airports. GETE submitted its report on E
. 7.1.2006. A meeting of the COS was held on 9.1.2006. On 12.1.2006 a
meeting of EGOM was held where GETE's report was considered. EGOM
' felt that the GETE had apparently done the evaluation of all the bidders as
is evident from the conclusion drawn about status of the other bidders in para
4.8 of its report. No details of revaluation were available about the. other F
bidders, as have been provided in respect of RAL. EGOM therefore decided
that in order to reach a definite conclusion, GETE was to be requested fo do
a similar revaluation exercise in respect of other bidders. Supplementary
report of GETE was submitted on 17. l.2006. On 23. l.2006 RAL Airport
Operator wrote to the GOI asserting that it had the requisite qualification. On
24.1.2006 meeting of EGOM was held and several decisions were taken. On G
28.1.2006 RAL wrote to GOI asking it to adhere to the RFP norms. On
30.1.2006 AAI wrote to the bidders informing them that the final bids were
to be opened on January 31, 2006.
On 31.1.2006 Executive Director of AAI informed RAL that GMR H
412
SUPREME COURT REPORTS (2006] SUPP. 8 S.C.R.
A would be given a choice of the two airports and whichever airport w'Chooses,
it would be required to match the higher financial bid. On that 'day itself,
RAL wrote to the AAI alleging change of procedure and protesting against
the same. Later on, the financial bids were opened that day. A report was
submitted by the Committee opening the financial bids. RAL again wrote to
B the members of the EGOM alleging illegalities in consideration of the bids.
On the next day again RAL wrote to the members of the EGOM regarding
the events that had transpired during the opening of bids. AAI wro~e to RAL
setting out the procedure followed while opening and evaluating the financial
bids.
· C
Writ Petition was filed by RAL before the Delhi High Court on 2.2.2006.
D
On 4.2.2006 GO! informed GMR and GVK that they have been selected as
successful bidders for undertaking the restructuring and modernization of the
. Delhi and Mumbai airports respectively and required them to furnish enhanced
bid bonds guarantees for Rs.500 crores. Both GMR and GVK furnished their
b.id bonds guarantees of Rs.500 crores each on 6.2.2006 and 8.2.2006.
On 1.3.2006 Special Purpose Vehicle (in short 'SPY') was formed for
Delhi while on the next day SPY was formed for the. Mumbai airport. On
4.4.2006 Operations Management and Development Agreement (in short
'OMDA') was signed by the concerned parties. At this stage, it would be
appropriate to take note of what has been described as OMDA. Shareholders
E agreement with GMR and GVK was signed. Consequently 26% shares in
SPY were allotted to AAI and 74% shares allotted to GMR. Similarly, 26%
shares in SPY were allotted to AAI and 74% shares allotted to GVK. ·
By the impugned order, RAL's writ petition before the Delhi High
F Court was dismissed by orde.r dated 21.4.2006.
The primary stand of the appellant is that the EGOM/GOI should have
accepted the recommendations of the EC and should not ha".e asked the
GETE to make further examination. It is submitted that GETE did not examine
the queries relating to GMR as raised by the !MG and the reduction of
G technical qualification from 80% to 50% was imp~rmissible. It is also submitted
that the appointment of GETE itself was illegal and unauthorized. The High
Court proceeded on the basis as if EGOM had absolute discretion in the
matter of choosing the modalities. It is also submitted that the, uniform patte~
of assessment has not been done and while reducing the marks so far as the
appellant is concerned, similar procedure has not been adopted so far as
H
.-
RELi. AIRPORT DEVELOPERS PVT. LTD. v. AIRPORTSAUTH.OF INDIA [PASA YAT, J.J4} 3
GMR and GVK are concerned. In the initial assessment, only the GMR and A
the appellant had crossed the bench mark. If in respect of one airport GMR
was given the option of matching the financial bid of the appellant, in respect
of the other airport similar option should have been given to the appellant
who was at the relevant point of time and even now willing to match the,
financial bid of GVK. There was no justification for reduction of standard, B
from 80% to 50%, particularly when at all stages EGOM had emphasized.
that there shall not be any compromise with quality. The argument that any
bidder who had crossed the mandatory requirement stage would be competent
to execute the contract is completely erroneous since in that case there was
no need to fix the high bench mark of 80%. Appellant had scored over 80%
on the development side and fell short of merely 6% less than 80% on the C
management side. The award of contract to the third ranked bidder i.e. GVK
who had scored only 59% on the development side and whose bid had been
adversely commented upon by all committees is against public interest. The
bench mark of 80% had been approved by the EGOM. The EC expressly
recommended against lowering the bench mark and the EGOM in its meeting D
on 5.12.2005 had also wanted the bench mark to remain at 80%. GETE had
also not recommended lowering of the bench mark.
The constitution of GETE was without jurisdiction as it was outside the
RFP. Allegations made by the respondents in the arguments that EC was
"t
biased are not factually correct. As noted above, GETE was not competent E
to deal with the issues relating to airports and, therefore, it was not a competent
body to express any view. GETE's evaluation of appellants bid was wrong
and it should not have interfered with EC's evaluation.