2021 Supreme(Del) 1079

IN THE HIGH COURT OF DELHI AT NEW DELHI
Vipin Sanghi, Rekha Palli, JJ.
Centre For Aviation Policy, Safety And Research (capsr) - Appellant
Versus
Union Of India & Ors. - Respondents
W.P. (C) No. 5722 of 2020; C.M. Appl No. 20676 of 2020
Decided On : 14-07-2021

The Court held that the eligibility criteria prescribed in the impugned RFPs were arbitrary and discriminatory, and violated the principles of natural justice. The Court also held that the tender conditions were in violation of the MSME Orders 2012 and 2018. Further, the Court held that it could interfere with the tender conditions and quash the RFPs. Additionally, the Court held that the clustering of airports and the sub-categorization of Group D-1 airports were arbitrary and unreasonable. Lastly, the Court held that the financial criteria and technical criteria prescribed in the RFPs were arbitrary and discriminatory.

Headnote:

GROUND HANDLING SERVICES (GHS) - AIRPORTS AUTHORITY OF INDIA (AAI) - REQUEST FOR PROPOSALS (RFPs) - ELIGIBILITY CRITERIA - ARBITRARINESS - DISCRIMINATION - MICRO, SMALL AND MEDIUM ENTERPRISES (MSMEs) - NATIONAL CIVIL AVIATION POLICY - AIRPORTS AUTHORITY OF INDIA (GROUND HANDLING SERVICES) REGULATIONS, 2018 - MINISTRY OF CIVIL AVIATION (GROUND HANDLING SERVICES) REGULATIONS, 2017 - MSME ORDERS 2012 AND 2018 - TENDER CONDITIONS - JUDICIAL INTERFERENCE - SCOPE - PUBLIC INTEREST - FAIR COMPETITION - ATMANIRBHAR BHARAT POLICY - REASONABLENESS - RATIONAL NEXUS - COURT'S POWER TO OVERTURN EXECUTIVE DECISIONS - PRINCIPLES OF NATURAL JUSTICE - EMD REQUIREMENT - ANNUAL TURNOVER REQUIREMENT - TECHNICAL CRITERIA - EXPERIENCE IN HANDLING SCHEDULED AIRLINES - CLUSTERING OF AIRPORTS - SUB-CATEGORIZATION - FINANCIAL CRITERIA - TECHNICAL QUALIFICATIONS - TECHNICAL CAPACITY - SELF-CERTIFICATION - SCOPE OF JUDICIAL REVIEW - JUDICIAL ACTIVISM - JUDICIAL RESTRAINT - DOCTRINE OF PROPORTIONALITY - DOCTRINE OF SEVERABILITY.

Fact of the Case:

The petitioner, a non-profit organization registered in 2012, claims to be carrying out independent research, advisory and advocacy in the field of civil aviation. As per the petitioner, its members comprise of firms and entities providing services in the aviation sector, including the micro, small and medium enterprises providing Ground Handling Services (hereinafter referred to as 'GHS') across the airports in the country. The petitioner's grievance against the impugned RFPs is that the eligibility criteria contained therein are not only a radical departure from the past, but also stipulate onerous technical and financial qualifications, thereby rendering most of the extant ground handling agencies ineligible to participate in the tender process, especially those which have been providing GHS at the smaller airports of the country, that fall under the categories of Groups C, D-1 and D2 airports, for the last many years. The petitioner is also aggrieved that the prescribed technical and financial qualifications have no correlation with the ground handling services that the service providers are expected to provide at the Groups C, D-1 and D-2 airports, and that the same have been arbitrarily and whimsically tailored with a view to oust the existing GHS providers, who have been providing these services for years, without any complaint.

Finding of the Court:

The Court found that the decision to cluster the 49 airports and fix an exorbitant and prohibitive Annual Turnover criterion appeared to have been taken in a complete vacuum; they were an antithesis to the Atmanirbhar Bharat policy, far removed from a rational nexus with the national civil aviation policy of the respondent no.1 or, any meaningful explanations. The impugned conditions also stare in the face of the MSME Order of 2018.

Issues: 1. Whether the eligibility criteria prescribed in the impugned RFPs were arbitrary and discriminatory, and violated the principles of natural justice? 2. Whether the tender conditions were in violation of the MSME Orders 2012 and 2018? 3. Whether the Court could interfere with the tender conditions and quash the RFPs? 4. Whether the clustering of airports and the sub-categorization of Group D-1 airports were arbitrary and unreasonable? 5. Whether the financial criteria and technical criteria prescribed in the RFPs were arbitrary and discriminatory?

Ratio Decidendi: 1. The Court held that the eligibility criteria prescribed in the impugned RFPs were arbitrary and discriminatory, and violated the principles of natural justice. The Court found that the decision to cluster the 49 airports and fix an exorbitant and prohibitive Annual Turnover criterion appeared to have been taken in a complete vacuum; they were an antithesis to the Atmanirbhar Bharat policy, far removed from a rational nexus with the national civil aviation policy of the respondent no.1 or, any meaningful explanations. The impugned conditions also stare in the face of the MSME Order of 2018. 2. The Court held that the tender conditions were in violation of the MSME Orders 2012 and 2018. The Court found that the financial criteria prescribed in the RFPs were designed to virtually prohibit the participation of micro enterprises. 3. The Court held that it could interfere with the tender conditions and quash the RFPs. The Court found that the fundamental structure of the tender/RFP in question in respect of Group D-1 airports having been found to be offensive, the entire tender/RFP would fall to the ground, as the offensive parts cannot be culled out for the purpose of saving the rest of the tender/RFP. 4. The Court held that the clustering of airports and the sub-categorization of Group D-1 airports were arbitrary and unreasonable. The Court found that the decision to carry out region-wise sub-categorisation of the 49 airports falling under Group D1; the stipulation that only previous work experience in respect of providing GHS to scheduled aircrafts shall be considered acceptable for the purpose of the impugned tender/RFP and the revised minimum Annual Turnover criteria of INR 18 crore are discriminatory and arbitrary and, require to be struck down. 5. The Court held that the financial criteria and technical criteria prescribed in the RFPs were arbitrary and discriminatory. The Court found that the financial criteria prescribed in the RFPs were designed to virtually prohibit the participation of micro enterprises. The Court also found that the technical criteria prescribed in the RFPs were arbitrary and discriminatory, as they excluded the petitioner's members from participating in the tender process.

Final Decision: The Court allowed the writ petition and quashed the tender/RFP in question in respect of Group D-1 airports. The Court also directed the respondents to come up with a fresh tender process keeping in view the Court's findings.