The main legal point established in the judgment is the limited scope of the Court's interference in the award of contracts by Government bodies. The Court emphasized the need for judicial restraint and the freedom of contract for the Government, while ensuring that the selection process is not arbitrary or made with mala fide intention.

The first petitioner and the third respondent vied with each other to get at the contract to provide ground handling services in the first respondent Airport which is nearing completion. The third respondent was awarded the contract by the first respondent. The challenge in this Original Petition is against the above award of contract to the third respondent. According to the petitioners, the first petitioner (hereinafter referred to as 'the Company') has been operating at the Mumbai and Delhi Airports for more than three decades in the field of ground handling services to various Airlines including the third respondent. The first respondent as per Exhibit P-1 informed the Company that it was setting up an International Airport at Cochin and requested to submit a detailed proposal with regard to the entrusting of ground handling services at the Airport if the Company was interfered in the same. The Company as per Exhibit P 2 informed the first respondent that it was interested in the above proposal. Thereafter the representatives of the Company had detailed discussion with respondents 1 and 2. The Company submitted its detailed proposal in Exhibit P 3. The salient features of the proposals of the Company were as follows :

"(I) The Company would, at its own cost, procure and provide all the necessary brand new equipment at a cost of about R. 25 crores;

(II) The Company would pay to the Ist respondent a licence fee of 11% of the Company's gross receipts from providing ground handling services at the airport;

(III) The Company would further pay a sum of US $1,000,000/- to the Ist respondent by way of equity capital contribution;

(IV) In addition to the foregoing monetary compensation and contribution, the Company would also pay to the Ist respondent rental for the area provided by the Ist respondent to the Company for parking and maintenance of the equipment; and

(V) The Ist respondent would have the option, at the end of the contract period, to buy over the equipment and machinery, of the Company or to continue the arrangement."

Later by Exhibit P4 the Company submitted three alternative proposals which were as follows :

(I) pay licence fee to the Ist respondent starting at 11% of its gross receipts and escalating to 16% of its gross receipts from ground handling services at the airport; or

(II) enter into a profit sharing arrangement whereby the Ist respondent would receive 30% of the Company 's pre-tax net profits escalating to 50% of such profits over the contract period; or

(III) establish with Ist respondent a joint venture company for providing ground handling services at the airport."

On receipt of Exhibit P4 the first respondent by letter dated 27-2-1998 sought certain clarifications with reference to the above proposals furnished by the Company. In Exhibit P5 dated 13-7-1998 the first respondent informed the Company as follows:

(I) The Ist and 2nd respondent's decision to award the contract for ground handling services was on the basis of the highest offer;

(II) Some agencies had recently submitted offers;

(III) The Ist respondent had "decided to provide a fair opportunity to all the eligible agencies, one final chance to give their best offer before (the Ist and 2nd respondents) taking a final decision"; and

(IV) The selection criteria would be :-

(a) quantum of equity participation/interest free deposit offered;

(b) quantum of annual licence fees (as a percentage of gross turnover from ground handling services at the airport);

(c) the tenderer must provide all brand new equipment;

(d) the tenderer must take on full management and responsibility for ground handling services, including manpower, thereby making it clear that no sub-contracting would be permitted; and

(e) on the basis of the above criteria, the Company should submit its best offer on or before July 28, 1998 so that the respondents could take a decision and award the contract soon thereafter."

2. Pursuant to Exhibit P5 the Company by Exhibit P6 submitted a revised of