2022 (10) TMI 53 - SC - Indian Laws

Non-profit lacks standing to challenge tender conditions; Court upholds eligibility criteria, dismisses writ petition.

The Supreme Court held that a non-profit organization lacked standing to challenge tender conditions, ruling it was not an 'aggrieved party.' The Court ... Locus standi of a non-profit/NGO to challenge tender conditions - judicial review of tender conditions - arbitrariness, discrimination, mala fides - administrative/policy discretion in framing tender terms - applicability of MSME procurement orders to concession/license-like grantsLocus standi of a non-profit/NGO to challenge tender conditions - Respondent No.1 (an NGO) lacked locus standi to maintain the writ petition challenging the tender conditions. - HELD THAT: - The Court observed that the writ petition was not a public interest litigation and that none of the actual Ground Handling Agencies who were or could have been affected had challenged the tender. On this basis the Court held that the NGO could not be treated as an 'aggrieved party' entitled to invoke Article 226 to assail the eligibility criteria and tender conditions, and that the High Court erred in entertaining the petition at the instance of respondent No.1. [Paras 5]Writ petition ought to have been dismissed for want of locus standi of respondent No.1.Judicial review of tender conditions - arbitrariness, discrimination, mala fides - administrative/policy discretion in framing tender terms - The challenged eligibility criteria and tender conditions were not arbitrary, discriminatory or mala fide, and the High Court erred in striking them down on merits. - HELD THAT: - Applying settled principles that tender terms lie within the commercial and administrative domain of the tendering authority and are amenable to judicial interference only if arbitrary, discriminatory or mala fide, the Court reviewed the rationale offered by AAI for clustering airports, prescribing past experience with scheduled flights and fixing financial capacity (reduced turnover requirement). The Court concluded that the impugned conditions fell within the authority's commercial discretion and were supported by discernible reasons; hence interference by the High Court was unwarranted. [Paras 6, 9, 10, 12]High Court's quashing of the eligibility criteria and tender conditions was set aside and the writ petition on merits was dismissed.Applicability of MSME procurement orders to concession/license-like grants - The MSME procurement orders relied upon by respondent No.1 did not render the tender conditions invalid in the facts of this case. - HELD THAT: - The Court held that selection of Ground Handling Services for concession cannot be equated with procurement of goods and services forming the core of MSME orders; further, the MSME orders contemplate departures subject to substantiation. Consequently, the High Court's reliance on those MSME orders to strike down the tender conditions was misplaced. [Paras 3, 11]MSME orders do not invalidate the tender conditions in this case and do not justify quashing of the RFPs.Final Conclusion: The appeals are allowed; the High Court's judgment and the review order are quashed and set aside, and the writ petition filed by respondent No.1 is dismissed, with no order as to costs. Issues Involved:1. Locus Standi of the original writ petitioner.2. Judicial scrutiny of tender conditions.3. Applicability of MSME orders of 2012 and 2018.Issue-wise Detailed Analysis:1. Locus Standi of the Original Writ Petitioner:The Supreme Court examined whether the respondent, a non-profit organization, had the standing to challenge the tender conditions. The Court noted that the writ petition was not in the nature of Public Interest Litigation and that none of the Ground Handling Agencies (GHAs) who could have participated in the tender process challenged the tender conditions. The Court held that the respondent, being an NGO, had no locus standi to maintain the writ petition as it could not be considered an 'aggrieved party.' Consequently, the High Court erred in entertaining the writ petition on this ground.2. Judicial Scrutiny of Tender Conditions:The Supreme Court reiterated the settled position of law that terms and conditions of an Invitation to Tender are within the domain of the tender-making authority and are not open to judicial scrutiny unless they are arbitrary, discriminatory, or mala fide. The Court cited several precedents, including Maa Binda Express Carrier v. North-East Frontier Railway and Michigan Rubber (India) Ltd. v. State of Karnataka, to support this principle. The Court emphasized that the government and its instrumentalities must have a free hand in setting the terms of the tender. The rationale behind the respective conditions, such as clustering of airports, criteria for evaluation, and financial capacity, was explained by the AAI and found to be reasonable. The Court concluded that the High Court erred in quashing the eligibility criteria/tender conditions as they could not be said to be arbitrary, mala fide, or actuated by bias.3. Applicability of MSME Orders of 2012 and 2018:The Supreme Court addressed the High Court's reliance on MSME orders of 2012 and 2018. The Court clarified that these orders are applicable to the procurement of goods and services and not to the selection of Ground Handling Services (GHS) providers, which is akin to granting a license. The Court further noted that the MSME orders are subject to the fulfillment of other conditions of the tender documents. Therefore, the High Court should not have entertained the writ petition on this ground either.Conclusion:The Supreme Court quashed and set aside the impugned judgment and order(s) passed by the High Court, holding that the High Court had erred in entertaining the writ petition and in quashing the eligibility criteria/tender conditions. The writ petition filed before the High Court at the instance of the respondent was dismissed, and the appeals were allowed with no order as to costs.