RELIANCE AIRPORT DEVELOPERS PVT. LTD. v. AIRPORTS AUTHORITY OF INDIA AND ORS

Citation: [2006] SUPP. 8 S.C.R. 398

Court: Supreme Court of India

Bench: ARIJIT PASAYAT, S.H. KAPADIA

Case summary

RELIANCE AIRPORT DEVELOPERS PVT. LTD. v. AIRPORTS AUTHORITY OF INDIA AND ORS.pdf

Judgment text

RELIANCE AIRPORT DEVELOPERS PVT. LTD. v. . AIRPORTS AUTHORITY OF INDIA AND ORS. NOVEMBER 7, 2006 [ARIJIT PASAYAT AND S. H. KAPADIA, JJ.

] Administrative Law: Administrative authority-Exercise ofdiscretion-Judicial review-Scope of-Privatization of airports of Delhi and Mumbai on joint venture basis- Bids invited-Evaluation ofbids-Constitution ofCommittee (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 ofone airport each-One of unsuccessful bidders challenging constitution ofGETE-Held, necessityfor taking views ofdifferent 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 ofGETE clearly untenable-GET£ has gone by objective standards-Criterion adopted by GETE more rational- Ultimately, the authority concerned rightly exercised its discretion in larger public interest-Privatization Po/icy-Contract-Government contract- Evaluation ofbids-Confidential and sensitives meetings-Need to maintain secrecy.

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 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 -- · RELi. AIRPORTDEVELOPERS PVT. LTD. v. AIRPORTSAUTH. OF INDIA 399 - nature of mandatory norms. The third stage was technical evaluation stage; and the final stage was financial evaluation stage. Before approval oftransaction 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 entrusted to Global Tl! chnical Adviser, Legal Consultant and Financial Consultant (GTA, 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 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 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 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 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 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 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 Ltd. , AIR (1995) Cal 327; Man Mal Sharma v.

Bikaner Sahkari Upbnokta Bhandar, AIR (1999) Raj 13; Rekha Bhasin v. Union ofIndia, 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 ofIndia,, AIR (1967) SC 1427 and Commissioner ofIncome-tax v. Mahindra and Mahindra Ltd. , AIR (1984) SC 1182, referred to. Breem v. Amalgamated Engineering Union, f19711 1All ER 1148; Chief Constable ofNorth 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; 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) 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 discretion to another body it acts ultra vires. (45J. ·E-F) .... RELi. AIRPORTDEVELOPERS PVT. LTD. v. AIRPORTS AUTH. OF INDIA 401 Padfieldv. Minister ofAgriculture, Fisheries and Food LR, (1968) AC 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 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 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 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 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 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( 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 ofStatefor the Home Department, ex parte Daly, (2001) 3 All ER 433; R (Mahmood) v. secretary ofStatefor the Home Dept. , (2000)1 WLR 840 and Huang & Ors v. Secretary ofStatefor 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 . l' . Ii ·~ discretion was unfettered. In fact it has on facts found that the discretion . . t ~ t, -l ... ~ Pj was properly exercised to make some variations in the terms of RFP. . (4l7-E-FJ . i' . ' ~ 2. 2. In the multi tier system in the decision making process ~the authority empowered to take adecision can accept the view expressed by 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 ~fdiscretion of the authority to rrodify the norms. It is nota case ofabsolute·di5cretion. While exercising 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 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 aCommittee constituted as a part of the decision making process like other Committees viz. GRC, COS and IMG. (432-A-BJ 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 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 areas where it was noted thi. it the EC's approach in the evaluation ex. ercise RELi. AIRPORTDEVELOPERS PVT. LTD;v. AIRPORTSAUTH. QFINDIA 403 was inconsiste,llt with the terms of the RFP. Essentially there were four 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 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 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. (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 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 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 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 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 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 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 ofall the bids. There 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 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 • • t . ' • • ' ·~ 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 1 financial bid which determines'the ultimate bid• 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 avoidable. cannot be termed as perverse or lacking rationality. (460-:-FJ ,1 1 I; ~ '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 ' ' - • . "it• • .. 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. In such a situation the bidder who would be successful i. e. the highest RELi. AIRPORTDEVELOPERS PVT. LTD. v. AIRPORTSAUTH. OF INDIA 405 bidder would be asked to take the airport when the difference between 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 of financial bid arises. [461-E-G) 7. 2. Ifthe 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 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) 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. 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. 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 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 ofIndia 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 Fatehchand Nursing Das v. Settlement Commission (IT & WT), [1989) 1 SCC 628; N. Parthasarathy v. Controller ofCapital Issues, (1991) 3 SCC 153; Associated Engineering Co. v. Govt.

ofAP, (1991] 4 SCC 93; Shiy Kumar Chadha v. Municipal Corpn. ofDelhi, (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 India and Ors. , (1997) 5 SCC 536, referred to. R (Iran) v. Secretary ofState, (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, referred to. De Smith, Woolfand Jowell - Judicial Review ofAdministrative 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 ofAdministrative Action-edited by Lord WoolfandJowell, Q. C. ; Professor of Public Law, 5th Edn. 1995 "Jurisdiction, Vires, Law andFact" pp.

223; "The Nature ofJudicial Process' by Benjamin Cordozo, referred to. Administrative Law, 7th Edn. , (1994), by H. W. R. Wade and C. F. Forsyth, referred to. 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 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 9. It appears that whatever has been discussed in the various RELi. AIRPORTDEVELOPERS PVT. LTD. v.

AIRPORTS AUTH. OFINDIA 407 meetings apparently found its way outside. Who was responsible for the 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 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 , 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 contrary to the scoring system. (472-D-H; 473-A-B) CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2515 of 2006.. From the Judgment and Order dated 21. 4. 2006 of High Court of Delhi 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. 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, 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. 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 ofjoint venture partnership as a part ofthe 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 relating to re-structuring of airports of AAI through long term leasing route. RELi.

AIRPORTDEVELOPERS PVT. LTD. v. AIRPORTS AUTH. OF INDIA[PASAYAT, J. ]409 On 11. 9. 2003 the GOI approved restructuring of airports of Mumbai and 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 'IMG') was set up to assist EGOM for re-structuring of two airports. The same was set up under the Chairmanship ofAdditional 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, EGOM approved appointment ofGlobal 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 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 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 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 ofoffers 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 review the evaluation carried out by GTA, 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 restructuring 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 clarified the position so far as the queries are concerned. In the Evaluation Report a list ofevaluation 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 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. 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 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 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 evaluation was consistent with the RFP evaluation criteria and the answers RELi. AIRPORTDEVELOPERS PVT. LTD. v.

AIRPORTSAUfH. OFINDIA[PASAYAT,J. )411 given by the Consultants. On 20. 12. 2005 RAL wrote to the Chairman, EGOM 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 ofthe IMG. It decided 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 ofthe 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 :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 offand sensitivity analysis. 'GETE' was accordingly appointed ,to review the Consultants, Evaluation Report (in short 'CER') on 27. 12. 2005. ;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 . 7. 1. 2006. A meeting of the COS was held on 9. 1. 2006. On 12. 1. 2006 . : 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 ofthe other bidders in para 4. 8 of its report. No details of revaluation were available about the. other 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 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 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 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 thathad transpired during the opening of bids. AAI wro~e to RAL setting out the procedure followed while opening and evaluating the financial bids. · Writ Petition was filed by RAL before the Delhi High Court on 2. 2. 2006. 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 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 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 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 ofchoosing 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 RELi. AIRPORTDEVELOPERS PVT. LTD. v. AIRPORTSAUTH. OFINDIA[PASAYAT, J. J4} 3 GMR and GVK are concerned. In the initial assessment, only the GMR and the appellant had crossed the bench mark.

If in respect of one airport GMR was given the option of matching the financial bid ofthe 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, 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 management side. The award ofcontract 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 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 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. Different weightages were justified in case for criteria 1. 2. 2 and 1. 2. 3 and also in respect ofcriteria 3. 1. l and 3. 1. 2. GETE's view as regards non aeronautical revenue being less than 40% is not correct. Its view about the lack of experience of operating in a non-OECD country is also erroneous.

The marking system for absorption of AAI employees as done in the case of the appellant has been wrongly interfered with. Appellant has contended that EC has given marks on the basis of RFP parameters. According to it, the parameters were fixed by the GOI or the EC. · The que~tion is not ofallotting marks, the real issue is whether right parameters have been applied. It has been emphasized that the other Committees consisted. of mainly bureaucrats or persons with inadequate technical knowledge, only the EC was an expert body and, therefore, its view had to be given primacy. . - > GMR had qualified in both the bids. Appellant has contended that the option of choosing one of the airports should not have been given to GMR but it should have been allotted the Mumbai airport because of its superior quality of bid in respect of the said airport. By giving option to choose one of the airports, the fate of the appellant was sealed because in the other, it had fallen below the bench mark.

Though in one case, appellant's Qid was above the bench mark and its bid was the best amongst those who were below the bench mark in respect of the other airport, it has not been able to get any of the airports. Despite the specific mandate GETE had not examined the queries qua the other bidders. Objective criteria assessment which was the foundation for GETE's decision has no basis. In fact GETE itself had indicated that the. assessment was subjective in totality. By making an artificial distinction between the subjective and objective queries, the real essence has been lost and unacceptable yardsticks have been applied. Queries made by members of the Review Committee, comments of the EC, comments of the Planning Commission's representatives and the various queries raised by IMG have been either lightly brushed aside or not considered by the GETE. The decision . for lowering oftechnical standard was arbitrary. EGOM should have examined the conflicting reports given by the experts.

Since no reason has been given by EGOM to adopt the report of the GETE by giving its preference over the report of EC, same cannot be maintained. Report of GETE was not independently examined. By reducing the bench mark, the zone of consideration was enlarged and it was against public interest Since different yardsticks have been adopted and a partisan approach has been adopted, the decision is clearly unsustainable and is amenable to judiciai review. Selective examination by GETE is not bona fide though no personal. allegation of ma/a fide is made against the members of GETE. Adoption of technical criteria for one airport and financial criteria for the other is not in accordance with law. In response, learned counsel for the GMR, GVK, Union of India and the AAI have submitted that the appellant is trying to enlarge the scope of judicial review. It is not a case of non existence of power. It essentially relates to exercise of power.

The appellant is trying to contend that the report of EC was sacrosanct and GETE's report was not to be accepted. GETE has formed its view as to how the allotment of marks made by EC was clearly not in line with the prescription made in the RFP. Marks have been allotted by EC on irrational basis and even marks had been awarded when no marks were to be awarded. Even the EC while commenting upon the weaknesses of RELi. AIRPORTDEVELOPERS PVT. LTD. v. AIRPORTSAUTH. OFINDIA[PASAYAT,J. J4 J5 the airport development plan of GMR itself had said that the weaknesses would be sorted out at the stage when the master plan is drawn up. It is pointed out that EC on whose evaluation appellant has led great stress found only one flaw with the plan given by GVK i. e. lack of re-use of existing facilities and the high cost limits to assess it as medium.

This is really a nonfactor, according to learned counsel for GVK, because plan envisages fresh creation of assets at Mumbai airport whose existing buildings are out-dated. 13 It is characterized as a lack of reuse as well as involving high costs. It is pointed out that GVK's develcpment plan took note of much larger amount of fresh development ofassets considering that the existing buildings are outdated. It has also considered that large sum of money for rehabilitation ofthe slum dwellers is required as they would have to be re-housed if a realistic plan for expansion of facilities and runways was to be drawn up. The development in each of the phases of the 20 years of projected development was also a relevant factor. There was departure by EC from the norms in various cases without good reasons. Where there is such departure it shows arbitrariness. This is a case which relates to judicial review of the exercise of power and not the existence of power.

It is pointed out that the basic fallacy in the argument of the appellant is its stress on EC being the only advisor to assist the EGOM in arriving at a decision. It is submitted that as rightly observed by the High Court, it was a part of multiitier decision making process and appointment of GETE is E' part of the process. It is pointed out that though the appellant has challenged the constitution ofGETE, it, in uncertain terms, asked the GETE to assess the materials placed before it by the appellant. The EGOM has given rea~ons for the appointment of GETE. The EC was not designated in the RFP as an external expert agency on p whose evaluation the Government was obliged to act. In fact at the first stage itself GRC was constituted to review the evaluation done by EC. The report of EC had no binding effect on the IMG much less the EGOM. The AAI required permission from the Cabinet for privatization ofairports. The ultimate decision makirig authority was EGOM.

However, since the decision making process involvt>d inputs from series of 'in house' committees, this creation of GETE is in fact a part of 'in house mechanism'. This itself is clear from the fact that several Committees were constituted like EC, GRC, IMG and COS. In view of the existence of various tiers in the decision making process, EGOM who has delegated the power of Cabinet did not exceed the powers by setting up the committees. If the appellant's submission is accepted, even the GRC, IMG and COS being not the committees mentioned specifically in the RFP, their constitution would be vulnerable. This is certainly not a case of the appellant and these were not external agencies. These committees form part of the 'in-house mechanism' for evaluation of the bids. Their reports were to be used as inputs in the final decision making process and thus imparted a great deal oftransparency. Judicial review cannot involve evaluation of the comparative merits.

It has also been emphasized that the various discussions in the Committees established beyond doubt that the Union of India wanted a transparent process to be adopted considering the fact that this was a first case of private JV. It enabled the EGOM to take note of various view points and take the final decision. These discussions strengthened the decision making process and did not weaken it as contended by the appellant. It has also been submitted that . the conduct of the appellant is itself contrary to the norms fixed by the RFP. Though it was specifically indicated that there shall not be any contract with the authorities connected with the decision making process, several times appellant wrote letters relating to matters which were under consideration. It baffles one as to how the appellant had knowledge as to what had transpired in the meetings. It was conveniently mentioned that the source of appellant's knowledge was "newspaper reports".

The appellant therefore has clearly violated the norms fixed by RFP and on ·that ~core alone, its bid should have been kept out of consideration. A person who seeks relief on r. quitable ground should have clean conduct and surreptitious methods adopted by it cannot be condoned and this, according to learned counsel for the respondents, is an additional factor to dismiss the appeal filed by the appellant. p It appears that whatever has been discussed in the various meetings apparently found its way outside. Who was responsible for the 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. Various clauses of RFP which have relevance read as follows: l. INTRODUCTION l:l. Purpose of this RFP The purpose of this Document is to: RELL AIRPORTDEVELOPERS PVf. LTD. v. AIRPORTSAUTH. OFINDIA [PASAYAT,J.

J4 l 7 Provide an overview ofthe process for Stage 2 ofthe restructuring * and modernization of Mumbai Airport Transaction; Specify the terms and procedures governing the transaction * process for selecting Joint Venture Partners and for the Joint Venture Company (JVC) to be incorporated for the Airport; Specify the requirements for the preparation and lodgement of B. * binding offers and Outline the approach that will be used in evaluating Binding * Offers. Terms used in this RFP are defined in the Glossary section of this RFP. 1. 2. Other Documentation and Information In addition to this RFP, Pre Qualified Bidders (PQB) will be issued the following documentation and material: An Information Memorandum for the Airport; * Draft Transaction Documents for the Airport (open for discussions * before finalising the terms and conditions); Specialist Reports and AAI data substantially in CD ROM form * with some documents in hard copy form for the Airport.

AAI may choose to update, vary or add to all or some ofthis information (including this RFP) at any time during the Transaction process. A separate document will be provided to PQB outlining the times, dates and venues oftheir scheduled meetings with the AAI, the Airport management team and parties of the GTT, as relevant and necessary. 1. 3. Confidentiality PQB receiving this RFP must have completed and returned the required, duly executed Confidentiality Deed. PQB are reminded that information provided in this RFP and the accompanying documentation package is covered by the terms of the Confidentiality Deed and the Disclaimer set out herein. PQB are also reminded that they are not to make any public statements about the Transaction process or their participation in it. 1. 4.

The Transaction AAI is offering a long term Operations, Management and Development Agreement to suitably qualified, experienced and resourced parties to design, construct, operate, maintain, upgrade, modernize, finance, manage and develop the Airport. The Successful Bidder will partkipate in a Joint Venture Company with the AAI (and other GOI public sector entities) and such JVC shall be awarded the right to operate, manage and develop the Airport. An overview of the indicative Transaction structure is set out in Appendix G. The key features of the Transaction are as follows: The Operations, Management and Development Agreement wilJ * be for an initial period of30 years with the JVC having the right to extend this by a further 30 years, i! l acc. ordance with the terms and conditions of the Transaction Documents. The Successful Bidder will have an initial 74% equity interest * and AA! , along with other GOI Public Sector Entities, will have 26% equity interest in the JVC.

AAI will endeavor to contribute (without any binding * commitment) equity funds in cash in proportion to its equity share to assist the JVC in funding working capital and major developments upto a cap of Rs. 5000 million (Rupees five thousand million) for the Airport. It is AAI's intention to maintain 26% equity share capital in the JVC. If AAI along With other GOI Public Sector Entities does not * wish to contribute to further equity calls, the JV Partners will contribute the additional equity and the equity interest, of AAI and other GOI Public Sector En~ities will be correspondingly reduced but the voting rights with regard to reserved board and shareholder matters {as contained in the Shareholders Agreement) will be preserved in the manner set forth in the Shareholders Agreement. JVC will have an Employee Arrangement for a period of three * years whereby AAI employees (other than those pertaining to RELi. AIRPORT DEVELOPERS PVT. LTD. v. AIRPORTSAUTH. OF INDIA [PASAYAT, J.

J 419 - ATC and CNS departments) posted at the Airport on Effective Date continue to provide their services at the Airport. Further the JVC will be required, during the three years period to make offers of employment in order to absorb a minimum of 40% (or such higher percentage as committed by the Bidder) of the existing AAI employees working at the Airport excepting those engaged in Communication Navigation Surveillance (CNS), Air Traffic Management (ATM), Security, as reduced for retirements, resignations, transfers and death. Employment offers can be made at any time during this Employee Arrangement Period but in no event later than three (3) months prior to the end date of the Employee Arrangement Period. At the end of this Employee Arrangement Period those employees who do not take up the employment offers or who are not made such an employment offer will return to the services of AAI.

Additional weightage is provided in the evaluation process to Bidders who commit to make offers of employment in order to absorb more than the minimum level of40%. There will be a financial penalty, as set out in the OMDA, for any shortfall between the 40% or such higher nominated percentage and the result actually achieved. Due to the public and economic importance of the Airport a State Support Agreement will be entered into between the JVC and GOI. The State Support Agreement will address matters such as principles of economic regulation, approvals, assistance with licensing and coordination with government agencies. Under the State Support Agreement, the JVC for a specific Airport will have a "Right of First Refusal (ROFR)" with regard to the second airport in the vicinity (except in the case of a proposed new airport in/for Pune) on the basis ofa competitive bidding process, in which the JVC can also participate.

In the event, the JVC is not the successful bidder, the JVC will have the ROFR by matching the first ranked bid in terms of the selection criteria for the second airport, provided the JVC has satisfactory performance without any material default at the time of exercising the ROFR. It is the endeavour of the AAI/GOI that a State Government' Support Agreement will be entered into with the State Government of Maharashtra wherein the said State Government will provide assistance on a best endeavour basis on dealing with encroachments, reservation of land for settlement of encroachments and . assistance in making land available if required for aeronautical purposes, surface land transport access to the Airport, expediting applicable clearances and the provisions, where applicable, ofessential utility services.

However, bidders should note that the exact form of the State Government Support Agreement and contents thereof will be decided upon receipt of feedback from the said State Government. Upon receipt offeedback from the said State Government and finalization of form and contents of the State Government Support Agreement, the same will be provided to Pre- Qualified Bidders. . The JVC for the Airport will have a lease over the land and assets (with certain exclusions which are not limited only to carve out assets listed in the schedule to the Lease Deed) of the Airport for the tenure of the OMDA. The NC will enter into separate MOUs with various agencies such as Customs, immigration, Health and Plant and Animal Quarantine to deal with issues relating to space, performance standards, facilitation/coordination mechanism.

The NC will be required to prepare a Master Plan for the development, expansion and modernization of the Airport, covering a time period of 20 years as well as the ultimate vision of the Airport at full aeronautical development and to submit th~s for approval of MCA within the stipuiated time frame as outlined in the Transaction Documents. The Master Plan has to be consistent with the Initial Development Plan submitted as part of the Binding Offer. Thereafter, the NC will be required to update the Master Plan every ten years (or upon occurrence of certain traffic trigger events or as and when circumstances warrant). In addition, each major development requires the preparation and approval of a Major Development Plan setting out the proposed details of the development. The Airport, in recognition of its natural monopoly position, will be subjected to economic regulatory measures.

The reg_ulatory authority or the GOI (until such regulatory authority is in place) will set a price cap for aeronautical charges and will be entitled to impose other standards. Over the tenure ofthe OMDA, the Joint Venture Company will pay both a nominal lease rental and a fee (consisting of an upfront fee of Rs. 1,500 million (Rupees one thousand five hundred million) and an annual fee expressed as a percentage of gross revenue of the Airport) for the right to operate, manage and develop the Airport. The fee will be calculated annually in RELi. AIRPORTDEVELOPERS PVT. LTD. v. AIRPORTSAUTH. OFINDIA [PASAYAT, J. J421 advance on projected revenue, paid monthly and with an adjustment at the end of each quarter to reflect any difference between actual and projected revenue.

Revenue for this purpose shall mean all pre-tax gross revenue of JVC, excluding the following: (a) payments made by JVC, if any, for the activities undertaken by Relevant Authorities; (b) Insurance proceeds except insurance indemnification for loss of revenue; (c) any amount that accrues to JVC from sale of any capital assets or items, (d) Payments and/or monies collected by'JVC for and on behalf of any governmental authorities under applicable law. It is clarified that annual fee payable to AAI and Employee Arrangement costs payable to AAI shall not be deducted from revenue, 2. GOVERNMENTOBJECTIVES, REQUIREMENTSAND REGULATION 2.

1 Key Strategic Objectives Key strategic objectives of the GOI are: World class development and expansion: Ensure world class phased development and expansion such that the JVC meets its commitments through the timely provision of high quality airport infrastructure, on both the airside and landside, to meet growing demand; and World class airport management: Ensure the creation ofworld class airport management team and systems through the selection of serious, committed Successful Bidders with suitable operational expertise, managerial and financial capability, Financial commitment and the commitment to provide quality airport services, in order to transform the present Airport into world class international airport. 2. 2. Other Transaction Objectives In addition to the key strategic objectives, other Transaction objective include: Timely completion end certainty ofTransactions, with minimal residual risks.

Appropriate financial consideration for the right to operate, manage and develop the airport. Smooth transition of operations from AAI to JVC. Appropriate regulation - achieving economic regulation ofaeronautical assets that is fair, commercially and economically appropriate, transparent, predictable, consistent and stable while protecting the interests of users and ensuring that the Airports are operated and developed in accordance with world standards; Fair and equitable treatment ofAAI employees, including preservation of accrued entitlements. Diversity ofownership between Mumbai and Delhi Airports, to enhance competition, encourage innovation and allow competitive benchmarking, and Ensure satisfaction on the part of passengers and airlines by the provision of quality services· and the provision of State-of-the-art facilities. The GOI's key strategic and other Transaction objectives will provide the means of establishing the bid evaluation criteria. 2. 3.

Management and Development Requirements Reflecting the focus on the strategic objectives, Bidders will be required to present as part of their Binding Offer a fully detailed Business Plan and Initial Development Plan, as well as a Transition Plan and certain other documents. Tliese documents will be an important element in the selection of the Successful Bidder for the Airport. ·p TERM OF REFERENCE 1. 0. Scope of work I. I. The scope of work for the FINANCIAL CONSULTANT shall consist of the following: a Updating ofthe traffic, financial, commercial and operational data pertaining to the two airports; b. Organizing Road Shows in India and/or abroad, if required; c. Preparation of the Request for Expression of interest. (RFEOI), Request for Proposal ·(RFP), draft concession agreement, draft RELi. AIRPORTDEVEWPERS PVT. LTD. v. AIRPORTSAUTH. OFINDIA[PASAYAT,J. ] 423 Joint venture agreement and all other necessary project documentation. d.

Determining the pre-qualification criteria, technical and financial evaluation criteria which will include formulation and analysis of various options along with the recommended approach in respect of the same; e. Evaluation of Expressions of Interests and Technical and Financial proposals received. f. Organizing and managing interactions and communications with the potential bidders; g. Negotiation assistance together with other advisors to AAI in successfully concluding the transaction; h. Work closely with AAI on overall coordination and management of various aspects of the transaction; i Any other work as may be i:equired for the successful completion of the transaction, Glossary Words and phrases used in the document have the meaning set out below.

AAI Airports Authority of India Airport Operator - The Entity in the Consortium submitting the Binding Offer who has been identified as such by the Bidder and who is assessed for the necessary qualifications for operating, managing and developing a major international airport which seeks to provide airport management services to the Joint Venture Company. Financial Consultant ABN AMRO Asia Corporate Finance (I) Pvt. or Ltd. being the financial adviser to the ABNAMRO Transaction. Foreign Airline(s) Means a Foreign Entity that provides air transport services. GTA or Global The technical adviser, to AAI advising on Technical Adviser or the technical aspects in relation to this Airplan Transaction, being Airport Planning Ply Ltd. (Airplan). Initial Development The Development Plan submitted by the Plan Bidder(s) an part of their Offer which sets out "plans over a calmed period for the development of the Airport to meet traffic growth as per the terms hereof.

ITREOI The Invitation to Register an Expression of interest document issued by AAI in relation to ·tlie Transaction. Legal Consultant or The legal adviser to the Transaction, AMSS being Amarchand & Ma! lgaldas & Suresh A. Shroff & Co. •:.. :.. 5. EVALUATION OF STAGE 2 OFFERS 5. 1 Overview ofEvaluation Process This section sets out the approach that will be applied by the AAI and its advisers when evaluating Offers. General Guidance in relation to the relative importance ofeach of the criteria and certain tender requirements are set out below. The approach to be followed will be undertaken in four phases as set out in summary form in the figure below: Phase Explanation Any Bidder not meeting the mandatory requirement will have its Offer removed from further consideration. Assessment of Phase 1 Mandatory Requirement Clarification Debt and equity commitment RELL AIRPORTDEVELOPERS PVT. LTD. v. AIRPORTSAUTH. OFINDIA [PASAYAT, J.

] 425 as specified at Appendix A is evaluated and Offers not· meeting the requirement are , Assessment of Phase 2 excluded from further Financial Commitment consideration.. All remaining offers are Phase 2 assessed on technical prequalification criteria and · Technical Preonly those assessed with Qualifications technical pre-qualification on *Management Capability, each of the two criteria of Commitment and value 80% or more proceed to add Phase 4 *Development Capability, Commitment and value add The offer of the Bidder with . E highest Financial consideration for the Airport is selected as Successful Assessment of Bidder Phase 4 Financial Consideration 5. 2.

Mandatory· Requirement The Mandatory Requirements for Stage 2 Offers are as follows: Mandatory Requirements for Stage 2 Offers Confinnation of acceptance of final Transaction Documents Confinnation that the Networth criteria of the Bidder as per the requirement in the ITREOI document continues to be fulfilled No Consortium member or Group Entity ofa Consortium member or nominated Airport Operator is participating in more than one Consortium bidding for the same Airport Consortium has an Airport Operator who has relevant and significant experience of operating, managing and developing airports. Confinn that the Offer is capable of acceptance anytime during the Bid Period Confinn that the offer commits the Offeror to the mandatory capital projects and/the Initial Development Plan is in accord with the Development Planning. Principles.

and the Traffic Forecast (It is to be noted that Traffic Forecasts are only the Base level forecast) Equity Ownership in the Joint Venture Company by a Scheduled Airline and their Group Entities does not exceed 10% and there is no participation by any airline that is a Foreign Entity and their Group Entities, subject to the exemption ofgroup Entities that are existing airport operator. FDI in the JVC does not exceed 49% Minimum equity ownership by Indian Entities (other than AAI/ GOI public sector entities) in the NC is 25% Provision of suitable probity and security statements Lodgement ofOffer that incorporates all the material required as set out in Appendices A to E, inclusive, in this Document Submission of Bid Bond. 5. 4. Assessment of Technical Pre-Qualification The Technical pre-qualification is based on two global pre-qualification criteria •Management Capability, Commitment and Value Add RELi. AIRPORTDEVEWPERS PVT. LTD. v. AIRPORTSAUTH. OFINDIA [PASAYAT,J.

]427 ·Development Capability, Commitment and Value Add Each of these is assessed in terms of a set of pre-qualification criteria and supporting pre-qualification factors that are detailed in the Section 5. 6. The purpose of the Technical Pre Qualification phase is to ensure that only those Bidders that can address the GOl's strategic objectives are evaluated at the final phase of the evaluation process and that only Bidders satisfying the benchmark of 80% under the technical pre qualification requirements are allowed into the final phase of Evaluation. A scoring system will be applied based on the assessment of the evaluation terms of the Offer against the Technical pre-qualification criteria. Each of the two global pre-qualification criteria is assessed out of a possible l00 marks. The assessment is on an absolute basis not relative as between the Offers. Hence there is no predetermined number of Offers that will be considered in the final phase. 5. 6.

Technical Pre-Qualification Criteria and Factors This section sets out the pre-qualification criteria and pre-qualification factors that will be used to assess each of the two global pre-qualification factors. Pre-Qualification Pre- Pre-Qualification Criteria Qualification factors Criteria Weighting Global Technical Pre- (A) Management Capability, Qualification Commitment and Value Add Criteria: Sub Criteria: (i) Management Capability (a) Experience of the nominated 25 Each of the following to be supported Airport Operator by documents case studies and relevant statistics (PAX and cargo statistics for each airport nominated) Number, scale and geographic diversity of airports operated and managed by the airport operators with substantial domestic, international and cargo operations including specific role of the airport operator in respect ofeach ofthese operations Experience in operating global or regional hub airports, including achieving improved connectivity.

Track record in route and traffic development and in managing relations with airlines and other key stakeholders. The level of service quality performance achieved at major airports managed by the Airport Operator and trends over the last 5 years. Experience ifany, with operating a multiairport system. The performance of commercial operations at major Airports managed by airport Operators, covering retai~ property and other commercial operations, focusing on airport where nonaeronautical revenue is 40% or more of total revenue. Performance i11 around and improving aeronautical and non-aeronautical operations at airports. Experience in operating and developing airports in non-OECD countries and a track record in improved performance. Experience in proactive environmental monitoring, evaluation, planning and implementation of environmental systems and improvements. RELi. AIRPORTDEVELOPERS PVT. LTD. v. AIRPORTSAUTH. OFINDIA[PASAYAT,J. } 429 (b) Experience of 12.

5 Commercial/retail experience the other Prime Members Experience with major property (separately identifying and development experience with major evaluating Indian and non- infrastructure developments. Indian Prime Member experience Experience with handling , " on an equal weight basis). HR issues in ownership change situations. Sub Criteria: (ii) Management Commitment (a) Commitment of 12. 5 Level of equity commitment airport operator Performance based nature of the Airport Operator Agreement Experience and level of management resources committed to the transaction in , each area of airport management including: Traffic and route development and * marketing Aeronautical operations * Cargo handling * Slot management * * Terminal operations Airport Retail operations * * Airport Property operations ( * Environmental Management (b) Commitment by 12.

5 Experience and level of other Prime Members management resources committed by the (separately identifying and other Prime Members in and nonevaluating Indian aeronautical operations and development Prime Members. 6. 7. Variations to the RFP Q, AAl/GOI reserves the right, in its absolute discretion and at any stage, to cancel, add to or amend the information, terms, procedures and protocols set out in the RFP. PQB and Consortium member will have no claim against AAI with respect to the exercise, or failure to exercise, such rights. J- \_ 6. 12.

Other AA/ rights: " AAl/GOI reserves the right in its absolute discretion without liability and at any stage during the Transaction-proces~, to: • • Add to, or remove parties from any shortlist of PQBs or-Bidders; f; • Require additional information from any PQB or Bidders; • Vary its tender requirements; • Terminate further participation in the Transaction process for any PQB or Bidder; • Change the structure and timing of the Transaction process; • Accept or reject any Offer at any time for any reason; • Not provide PQBs or Bidders any reasons for any actions or decisions it may take including in respect of the exercise by the AAI of any or all of the above mentioned rights; and • Take such other action as it considers, in its absolute discretion, appropriate in relation to the Transaction process for the Airport. xx xx xx APPENDIX 'A' (Information to be included in offer) xx xx xx I A.

7 Relevant Management Experience and Expertise xx xx xx (c) In addition, please provide information on any experience that the airport operator has with turning around the performance ofunder performing airports and in the operation, management, development ofmajor airports in developing countries and handling human resource management issues in ownership change situation, including privatization. xx xx xx A. 11. Initial Development Plan The Initial Development Plan must be prepared in conformity with the Airport Development Planning Principles set out in the Transaction Document, shall incorporate the mandatory capital projects as set out in the Transaction REL!. AIRPORTDEVELOPERS PVT. LTD. v. AIRPORTSAUTH. OFINDIA [PASAYAT, J. ] 431 Documents and shall use the base Traffic Forecasts prepared by SH & E.

Where the PQB has a strong view that an alternative trafficforecast is significantly more likely to occur, it can indicate the implications for the timing of the implementation of the development plan. The Offer should provide the following information in the initial Development Plan: (a) A long-term airport development vision for year 20 and the ultimate vision for the Airport showing the following: (i) The full configuration ofthe Airport identifying all aeronautical facilities and their operating capacity and all commercial development areas and their functions. (ii) Information on traffic, passenger and cargo flows, both landside and airsicte. (b) The development path for the Airport leading up to its long-term vision in year 20, shown in five (5) yearly stages for each functional area, namely airfield, apron, passenger terminals, cargo terminals, car parks, city side access roads and commercial area together with capital expenditure estimates.

The development path should show the linkage of the development to traffic projections, with the indicated trigger points for both the commencement of the development and its . completion. (c) An outline of how the development path can be flexibly adjusted to accommodate both lower and higher traffic flows than the base projection used for Airport development planning. (d) Set out how it is planned to fully maintain aeronautical operation during the development phase. (e) Explain how key stakeholders will be involved during both the planning and implementation stages, including the preparation of the Master Plan, identifying issues that will need to be addressed and the approach to each issue. . (t) Identify any constraints that will negatively impact on the Development Plan, explain the extent ofthe impact and any mitigating strategy proposed. · Pivotal challenge by the appellant is to the constitution of GETE and the scope for its constitution.

It is to be noted that the ultimate authority to take the decision in the matter was EGOM. It was within the powers ofEGOM to decide as to what inputs it can take note of and the source of these inputs. Therefore, the necessity for taking views of various committees constituted appears to be a step in the right direction. This was a step which appears to have been taken for making the whole 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. In the multi tier system in the decision making process the authority empowered to take a decision can accept the view expressed by one committee in preference to another for plausible reasons. It is not bound to accept the view ofany committee.

These committees, it needs no emphasis, are constituted to assist the decision making authority in arriving at the proper decision. It is a matter of discretion of the authority to modify the norms. It is not a case of absolute discretion. While exercising the discretion, certain parameters are to be followed. "Discretion" said Lord Mansfield in R. v. Wilkes, (1770) 4 Burr 2527, when applied to a court of justice, means sound discretion guided by law. It must be governed by rule, n RELi. AIRPORTOEVEWPERS PVT. LTD. i·. AIRPORTS AUTH. OF INDIA[PASAYAT,J. ] 457 called the Asian Development Act, 1966, in pursuance of an international agreement to which India was a signatory. This new financial institution was established for accelerating the economi~ development of Asia and the Far East. Under the Act the Bank and its officers have been granted certain immunities, exemption and privileges.

It is well known that it is difficult for the country to go ahead with such high cost projects unless the financial institutions like the World Bank or the Asian Development Bank grant loan ot subsidy, as the case may be. When such financial institutions grant such huge loans they always insist that any project for which loan. has been sanctioned must be carried out in accordance with the specification and within the scheduled time and the procedure for granting the award must be duly adhered to. In the aforesaid premises· on getting the evaluation bids of the appellant and Respondent- I together with the consultant's opinion after the so-called corrections , made the conclusion of the Bank to the effect "the lowest evaluated substantially responsive bidder is consequently AFCONs" cannot be said to be either arbitrary or capricious or illegal requiring Court's interference in the matter of an award of contract.

There was some dispute between the Bank on one hand and the consultant who was called upon to evaluate on the other on the question whether there is any power of making any correction to the bid documents after a ,E specified period. The High Court in construing certain clauses of the bid documents has come to the conclusion that such a correction was permissible and, therefore, the Bank could not have insisted upon granting the contract in favour of the appellant. We are of the considered opinion that it was not within the permissible limits of interference for a court of law, particularly when there has been no allegation of malice or ulterior motive and particularly when the court has not found any mala fides or favouritism in the grant of contract in favour of the appellant. In Tata Cellular v. Union ofIndia, [1994] 6 SCC 65 l , this Court has held that: The duty of the court is to confine itself to the question of legality. Its concern should be: l.

Whether a decision-making authority exceeded its powers, 2. committed an error of law, 3. committed a breach of the rules of natural justice, 4. reached a decision which no reasonable tribunal would have reached or, 5. abused its powers. Therefore, it is not for the Court to determine whether a particular policy or partic! -Jlar decision taken in the fulfilment of that policy is fair. It is only concerned with the manner in which those decisions have been taken. The extent of the duty to act fairly will vary from case to case. Shortly put, the grounds upon which an administrative action is subject to control by judicial review can be classified as under: (i) Illegality: This means the decision-maker must understand correctly the law that regulates his decision-making power and must give effect to it; (ii) Irrationality, namely, Wednesbury unreasonableness. (iii) Procedural impropriety.

The above are only the broad grounds but it does not rule out addition of further grounds in course of time. " I0. Therefore, though the principle ofjudicial review cannot be denied so far as exercise of contractual powers of government bodies are· concerned, but it is intended to prevent arbitrariness or favouritism and it is exercised in the larger public interest or if it is brought to the notice of the court that in the matter of award of a contract power has been exercised for any collateral purpose. But on examining the facts and circumstances of the present case and on going through the records we are of the considered opinion that none of the criteria has been satisfied justifying Court's interference in the grant of contract in favour of the appellant.

We are not entering into the controversy raised by Mr Parasaran, learned Senior Counsel that the High Court committed a factual error in coming to the conclusion that Respondent- I was the lowest bidder and the alleged mistake committed by the consultant in the matter of bid evaluation in not RELi. AiRPORTDEVELOPERS PVT. LTD. v. AIRPORTSAUTH. OFINDIA [PASAYAT,J. 1'459 taking into account the customs duty and the contention of Mr. Sorabjee, learned senior counsel that it has been conceded by all parties concerned before the High Court that on correctibns being made respondent- I was the lowest bidder. As in our view in the matter of a tender a lowest bidder may not claim . an enforceable right to get the contract though ordinarily the authorities concerned should accept the lowest bid. Further we find from the letter dated 12. 7.

1996 that Paradip Port Trust its~lf has come to the following conclusion: "The technical capability of any of the three bidders (o unde1take the works is not in question. Two of the bids are very 3imilar in price. If additional commercial information which has now been provided by bidders through Paradip Port Trust,