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2008(4) ALL MR 663
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
D. K. DESHMUKH & N. D. DESHPANDE, JJ.
Flemingo Duty-Free Shop Pvt Ltd. & Am. – Appellant
Vs.
Union of India & Ors. – Respondent
Writ Petition No.6I7 of 2007
Decide on: 5th June, 2008.
Constitution of India, 1950 - Article 14-Award of contract-For setting up and operating duty free shop at Chhatrapati Shivaji International Airport, Mumbai-Public notice for-Nine Expressions of Interest only received for purpose of issuing tender-Procedure adopted by respondent-3 for shortlisting not proper and arbitrary-As no objective criteria adopted for shortlisting.-In Court’s opinion, firstly the respondent No. 3 should have decided considering that there are only nine EOIs received, whether it is at all necessary to do any shortlisting. In case the respondent No. 3 found for good reasons that it was necessary to do shortlisting despite there, being only a small number of entities had substituted EOIs, the respondent No. 3 should have in terms of the public advertisement before undertaking the process of shortlisting decided the objective criteria for shortlisting, made that criteria known to all the concerned entities and then should have proceeded to do shortlisting on the touchstone of that criteria alone. It was necessary for the respondent No. 3 to proceed in this manner because it is under an obligation to act fairly and reasonably. It is to be noted that at no point of time before affidavits were filed before the Supreme Court and in this Court, the respondent No. 3 even informed the petitioner that it has not been chosen as one of the entities who can submit its tender. No reasons obviously was also communicated. In Court’s opinion, the total absence of any reason in any formal document of evaluation, admitted non- communication of any reasons to the petitioner, and the contradictory and untenable stands taken in different affidavits filed by respondent No. 3, clearly shows that the respondent No. 3 has acted in arbitrary manner in the process of shortlisting of the entities.
Constitution of India, 1950 - Articles 14 and 226-Airports Authority of India Act, 1994, Section 12-A-Award of contract-Jurisdiction of Court under Article 226 of Constitution-Allotment of duly free shop at International Airport, Mumbai-A public function in public interest-Airport authority, while awarding such contract, obliged to act fairly and reasonably-Authority discharging these functions amenable to jurisdiction of Court under Article 226 of Constitution.-Taking overall view of the matter, therefore, it can be safely said that in providing duty free shops at the International Airports, the respondent No. 3 is performing the public function in the public interest and therefore in performance of those functions, it is obliged to act fairly and reasonably and justly, so that when it chooses to give a contract for any particular activity at the airports which is for the benefits of the public, it must choose a person by a open competition according to objects and clear norms and its action should be transparent. And this action can be examined by this Court in a petition filed under Article 226 of the Constitution of India on the touch-stone of fairness and reasonableness. Therefore, even assuming that the respondent No. 3 is not an instrumentality of the State because the functions it performs are essentially the functions of the respondent No. 2, which are statutory, the respondent No. 3 while discharging those functions is amenable to the jurisdiction of the Court under Article 226 of the Constitution and in that petition the Court would be entitled to examine the action of the respondent No. 2 on the touchstone of reasonableness and fairness.
2. The facts that are material and relevant for deciding this petition are that the Petitioner No.1 is a company incorporated under the Companies Act and having its registered office in New Mumbai. According to the Petitioner No.1, it is engaged in the business of operating and running duty Free Retail Outlets in International Airports in India. The Respondent No.1 is the union of India and the Respondent No.2 is Airports Authority of India constituted under Section 3 of the Airports Authority of India Act. 1994. According to the Petitioners, the Respondent No.2 is owned and controlled by the Respondent No.1. The International Airp0l1 at Mumbai i.e. Chhatrapati Shivaji International Airport was exclusively controlled and managed and operated by the Respondent No.2. The Respondent no.3 is a company registered under the Companies Act 1956 and is a Joint Venture Company. Respondent No.3 is a consortium of GYK Airport Holdings Pvt. Ltd.; ACSA Global Limited; Bid Services Division (Mauritius) Ltd., and the Respondent No.2. Respondent No.4 IS a consortium between ALDEASA S.A. a company established and existing under the laws of Spain and Indian Tourism Development Corporation (ITDC) incorporated under the laws of India. Respondent No.5 is a company established and existing under the laws of Singapore. Respondent No.6 is a wholly owned subsidiary of Respondent No.5. According to averments in the petition, the Respondent No.3 has been created with the objective of operating. Maintaining, developing, designing, constructing, upgrading, modernizing. Financing and managing Airports. The Respondent No.2 holds 26% in the equity of the Respondent No.3. According to the petitioners, Respondent No.3 operates under the pervasive control of Respondent No.1 & Respondent No.2. According to the petitioners, after the Airports Authority of India Act was amended by the amendment Act of 2003, pursuant to the provisions of section 12-A of the Act on 4-42006 an agreement was executed between the Respondent No.2 and the Respondent No.3 called the Operation. Management and Development Agreement (herein after referred to as OMDA) whereby and where under the Respondent No.2 leased out the Chhatrapati Shivaji International Airport to Respondent No.3 for a period of 30 years. The lease is renewable for further period of 30 years. The Petitioners in the petition refer to the provisions of OMDA in detail. According to the Petitioners. on 9-10-2006 the Respondent No.3 made a public announcement in the newspapers calling for Expression of Interest for setting up Duty free Shops at Chhatrapati Shivaji International Airport. Mumbai. The Petitioner No.1 entered into a consortium anangement with Aer Rianta International (herein after referred to as ARI) which is a company Incorporated under the laws of Ireland for the purpose of submitting the tenders pursuant to the public announcement dated 9-10-2006. According to the Petitioner, its partner ARI is a dedicated international division of the Dublin Airport authority and was the first to start duty-free business in the world. It founded first duty-free shop at Shannon Airport at Ireland in 1947. According to the Petitioner, AIR has 60 years of experience in duty-free retailing. Its managed retail business turn over for 2006 is in excess of 900 million US$. The Petitioner and the said ARI intended to jointly bid for the tender. According to averments in the petition, this agreement and arrangement reached between the Petitioner and the ARI is still subsisting. According to the Petitioner, pursuant to the public announcement referred to above. the petitioner submitted its Expression of Interest along with Joint Venture Par
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