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2022 Supreme(Cal) 1634

IN THE HIGH COURT AT CALCUTTA
PRAKASH SHRIVASTAVA, C.J., RAJARSHI BHARADWAJ, J.
Airport Authority of India – Appellant
Versus
Masti Health & Beauty Private Limited and Others – Respondents
MAT No. 1184 of 2022, CAN No. 1 of 2022, CAN No. 2 of 2022
Decided On : 09-09-2022

Advocates:
Advocate Appeared:
For the Appellants : Jishnu Chowdhury, Pratik Shanu, Vishal Sinha
For the Respondents: Sourav Ghosh, Anirban Ray, Snehashis Sen, Debraj Sahu, Abhishek Banerjee

Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 9 - Jurisdiction of courts in tender matters - The tender condition requiring a No Dues Certificate was challenged as arbitrary; the Court found it neither arbitrary nor tailored - Such conditions are valid as they assess bidders' eligibility objectively - Judicial review of tenders warrants restraint. (Paras 25, 28)

Facts of the case:
The Airport Authority of India terminated the license of the respondent for operating a wellness center at the airport based on alleged violations, leading the respondent to challenge a subsequent tender condition requiring a No Dues Certificate claiming it was unjustly restrictive. (Paras 4, 5, 26)

Findings of Court:
The requirement for a No Dues Certificate was justified to ensure bidders without outstanding debts can participate and was not deemed arbitrary. The Court emphasized minimal interference in tender matters. (Paras 24-28)

Issues: Determining the legality of the tender condition requiring a No Dues Certificate and whether it was designed to exclude a particular bidder. (Paras 25-26)

Ratio Decidendi: The court affirmed that the authority choosing tender conditions retains discretion over eligibility criteria, asserting that the courts should not intervene unless there's clear evidence of arbitrariness or mala fides. (Paras 22-23)

Result: Appeal allowed; the order of the learned Single Judge is set aside.

JUDGMENT :

PRAKASH SHRIVASTAVA, C.J.

1. This intra-court appeal is at the instance of the Airport Authority of India (respondent in the writ petition) challenging the order of the learned Single Judge dated 21.07.2022 passed in WPA 16011 of 2022.

2. So far as CAN 2 of 2022, an application under Order 41 Rule 27 of the CPC filed by the appellant is concerned, a perusal thereof reveals that the appellant has placed on record the documents which were already part of the record in the proceedings under Section 9 of the Arbitration and Conciliation Act, 1996 between the parties in Misc. Case No. 2 of 2022. Before the learned Single Judge no affidavits were exchanged, therefore, appellant did not have appropriate opportunity to place these documents on record. Authenticity of these documents has not been disputed. We also find that these documents are relevant for the purpose of deciding the controversy involved in this appeal. Hence, CAN 2 of 2022 is allowed.

3. Learned Counsel for the parties have already advanced argument on merit in the appeal referring to the documents placed on record with CAN 2 of 2022 and the appeal has been heard finally with consent.

4. The respondent No. 1 herein (writ petitioner) had approached the writ Court by filing the petition with the plea that license for operating “wellness centre” inside domestic security hold area, terminal 2 of Netaji Subhas Chandra Bose International Airport, Kolkata dated 28th of May, 2019 was granted to the respondent No. 1 thereafter the appellant had served the letter dated 05.01.2021 alleging that the High Court at Madras had attached the properties of the O2 Spa Salon Pvt. Ltd. at the airport and alleging that the respondent No. 1 had violated the terms and conditions of the license agreement. The license was terminated vide communication dated 18.03.2021. Meanwhile tender notice dated 03.02.2021was issued by the appellant for the same purpose of issuing license for operating wellness centre at the airport. The respondent No. 1 had moved under Section 9 of the Arbitration and Conciliation Act and thereafter had preferred the appeal under Section 37 of the Act being FMAT 6 of 2022 and the Division Bench by order dated 13th of January, 2022 had protected the possession of the respondent No. 1 and since by the time tender process was over, the respondent No. 1 was directed to be given an opportunity to match the highest bid. The tender was subsequently cancelled and demand notice was issued to the respondent No. 1. The appellant had subsequently floated fresh notice inviting e-tender (NIET) for wellness centre at the airport in Kolkata. Being aggrieved with some of the terms and conditions of the same, the respondent No. 1 had filed WPA 16011 of 2022 with the prayer to cancel the NIET and also declare the clause 3(h) of NIET requiring submission of No Dues Certificate as null and void.

5. Learned Single Judge by the impugned order has set aside notice inviting tender and all subsequent steps taken thereto by the appellant. Learned Single Judge has held that the requirement of a No Dues Certificate included as an essential condition of eligibility in the technical bid resulted in effectively putting the respondent No. 1 out of the race and the same have the effect of coercing the respondent No. 1 to the payment of disputed amount. Learned Single Judge has further held that the tender condition was tailor-made to oust the respondent No. 1 from successfully participating in the tender and accordingly has set aside the NIET.

6. Submission of the learned Counsel for the appellant is that the tender condition of requiring No Dues Certificate was neither arbitrary nor tailor-made, therefore, it could not have been set aside. He has further submitted that similar condition exists in all the tenders floated by the appellant all over India and quashing of the NIT on this ground may affect other contracts also. He has further submitted that the respondent No. 1 is a defaulter and amount i

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