TaxTMI 
TaxTMI 
2008 (12) TMI 807
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....n which it has sought to restrict issuance of tender documents and consideration of bids only from five persons is arbitrary and discriminatory, that the evaluation of the E.O.I by respondents 3 & 4 with respect to Retail and Duty-Free shop to be established in the International Departure and Arrival Duty-free at the New BIAL, Devanahally is arbitrary, discriminatory and further directions to declare the action of the respondents 3 & 4 in short-listing only respondents 5 to 9 for issuance of tender documents and excluding the petitioner from the said list and decision to issue the tender documents in pursuance of invitation dated 26/7/2006 with respect to Retail and Duty-free shops in the BIAL as stated supra is arbitrary, discriminatory and violative of Article 14 of the Constitution of India and direction to respondent No. 3 to issue tender documents and the amended prayer to quash the tender allotted in favour of 5th respondent, urging various facts and legal contentions. 2. Brief foots and rival legal contentions are referred to in this order with a view to appreciate the contentions and to answer the contentious issues that would arise for our consideration and determinatio....
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....esign, financing, construction, operation and management of the Airport for a period of 30 years. On the opening of BIAL the existing Airport has to close commercial, civil aviation operation and any existing airport should not be developed or upgraded into an International Airport within 150 kms of BIAL for a period of 25 years. 3. The Union of India entered into concession agreement with BIAL granting exclusive right to establish Airport and its operation. The Government of Karnataka has extended several concessions to it by providing large extent of agricultural lands for the establishment of a new Airport. It is also the case of the petitioner that both Union of India and Government of Karnataka have extended various benefits by way of concession in favour of BIAL keeping in view the nature of project undertaken by it. Therefore, it is stated that BIAL is a 'State' within the meaning of Article 12 of the Constitution of India and same is amenable to writ jurisdiction of this Court under Article 226 Constitution of India. It is further stated that BIAL being the public body is discharging duties of a public character, for this reason also it is amenable to the writ ju....
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....ice to customers in the defined of packages. Further it is specified and expected by it that commitment to India and an undertaking of the Indian consumer thereby indicate that it was looking at persons with experience in duty-free retailing in India. 5. It is the case of the petitioner that it operates airport duty-free shops in three regions with 25 shops in international arrival and departure terminals across 12 international airports in India. (The petitioner is a consortium of AerRianta International ctp). The parent company owns and operates duty-free show rooms, braided warehouses and related businesses in various locations in UAE, Kenya, Tanzania, Malawi, Burundi, Srilanka and in India. The said company has offices in Jebel Ali Free Trade Zone in UAE as well as in Nairobi, Kenya and Dar-Es-Salam (Tanzania). 6. It is its further case that it has well established logistic centers with warehouses at Mumbai, Chennai and New Delhi, which act as distribution center for all surrounding locations and it has got a strong supply chain to international logistic center in Jebel Ali, UAE which helps it in getting container loads or assorted supplies of any product in the least pos....
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....ail on 1st, 4th and 15th September 2006 expressing its surprise with a request to consider the B.O.I submitted by it. It has not been made known the reasons for its exclusion from the competition. It had issued tender documents only to respondents 5 to 9. Therefore, it has urged that the entire process of inviting bids by BIAL for grant of concession contracts for conducting duty-free retail business in the BIAL is unfair and arbitrary. Therefore, the same cannot be allowed to sustain. If a decision was taken by the BIAL to have a pre-qualification for prospective tenderers, then the authority deciding to resort to such procedure ought to have set out detailed minimum criteria to be met by persons interested in submitting the tenders. The criteria cannot be vague and it ought to have been applied objectively and it should have been communicated to the prospective bidders so as to find out whether they would be eligible or not. When such criteria is not laid, the very pre-qualification itself could be manipulated arbitrarily applying so in favour of certain players in market and exclude certain other players. In the absence of the criteria spelt out by the BIAL for the purpose of sh....
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....on having vast and international experience in airport retailing, strong relation and access to international as well as domestic brands and a proven track record in providing quality services to its consumers. It is stated that the process of assessment of the persons who have submitted E.O.I, BIAL has not even issued communication to the petitioner disclosing its decision on the short-listing, The said process has been adopted and applied with a view to exclude the petitioner from the fray knowing fully well that, if, it were allowed to bid, it would have the best chance of bagging the contract by offering best price. 11. It is further alleged that Zurich Airport Authority is a shareholder in the BIAL owning 17% of the shares. The 4th respondent is the person responsible for the tender process who was an employee of the Zurich Airport Authority till he was appointed in BIAL. He was brought into BIAL as per the recommendation of 4th respondent- Zurich Airport, it is apprehended that the 4th respondent deliberately planned to bring the Companies based in Switzerland with whom he had opportunity to work earlier into the Indian market, this was the reason beyond for the BIAL for n....
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....before it, the same will be discussed in the Board of the BIAL provided that the same are in its interest and not adversely affecting the interest of the respondent. Further it is stated that the decision regarding disqualification of the petitioner was not discussed and passed by the Board of the Directors of BIAL. Therefore, the second respondent was neither involved in the decision process by BIAL nor regarding disqualification of the petitioner in the tender process. 16. The respondents 3 & 4 have filed joint statement of counter traversing the petition averments inter alia contending that the writ petition is not maintainable against the BIAL as it is neither a 'State' or instrumentality of a State or a body discharging public duties for the purpose of Article 12 of the Constitution of India to exercise power of this Court under Article 226 of the Constitution of India. Further it is contended in the statement of objections that as per the request made by the Managing Director of the petitioner, the 4th respondent met him on 12/9/2006, which fact is established by E-Mail sent by the business development and marketing Manager of A.E.R.I, which is venture partner of t....
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....ment of the airport. From the above said agreement, it is very clear and unambiguous fact that the BIAL is neither an agency or instrumentality of the U.O.I or G.O.K in terms of Article 12 of the Constitution of India in view of sub-clause 3.1.1 of Article 3 of C.A. In view of the nature of the above exclusive rights and privileges granted to BIAL for the purpose of development and maintenance of infrastructural facilities required to be provided in the airport and facilities for commercial activities at the airport, award of duty-free shops according to the power of attorney of the Company is with the authority of the Manager of the company, therefore it is purely a management decision in the day-today affairs of the BIAL. Having regard to the right of the management of the airport under the C.A, the activities of the BIAL partake the character of Government Functions such as Customs, Immigration, Quarantine, Communication and Navigation services to be carried out by the relevant authority namely, (GOI, AAI, Director General of Civil Aviation, Bureau of Civil Aviation security etc.,) only and not by BIAL. As per Part-IV-Financial Provision of C.A, sub-clause-10 of Article 10 autho....
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....L. The land referred to by the petitioner in the petition is concerned, the KSIIDC vide land lease dated 30th April 2005 provided land to the BIAL for construction of the airport on lease basis for a period of 30 years and it continues to be the lessee to the land, no ownership rights are transferred to it, Therefore, on the basis of the aforesaid detailed averment regarding the grant of land by the State Government to BIAL cannot be construed to be a 'State', 'Agency' or instrumentality of State in terms of Article 12 for the purpose of Article 226 of the Constitution of India. Therefore, it is stated that the writ petition is liable to be dismissed at the threshold itself on the ground of its maintainability. 19. The BIAL further submits that in the C.A, it is entitled to make available duty free shops and other amenities in the airport. In this view of the matter, it had called for E.O.I by 26/7/2006 in respect of five packages, which consisted of (i) retail package and (ii) Food and Beverage (F & B) Packagel, F & B Package 2 and F & B Package 3. Clause 2.4 of the EOI deals with the aforesaid aspects. Under clause 3 of the EOI selection process was determined.....
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.... grievance is not tenable in law. The allegation made against the respondents 3 & 4 in this petition for first time is an after thought only to make out a case for grant of the reliefs sought for by it, therefore, the allegations made by the petitioner against them is misconceived, hence not sustainable in law. Further the allegations made in the Writ Petition has been denied as totally baseless and unfounded. The 4th respondent categorically denies any personal interest regarding Swiss companies in the matter of awarding major concessions or in the other concessions for the airport such as ground handling tender conducted by the 4th respondent on behalf of BIAL, the world largest ground handling company, Swissport from Switzerland as also another ground handling company based in Zurich, Jet Aviation, both applied for a concession and were not selected. According to respondents 3 & 4 evaluation is done by the BIAL and not by the 4th respondent alone and further the 4th respondent submits that be was not in favour of any company as alleged by the petitioner and the mere fact that he was an employee of Zurich Airport Authority cannot be a ground for casting aspersions against him. In....
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....ent of counter. 22. The petitioner has submitted rejoinder submission on 13/11/2006 traversing the averments made in the statement of counter filed by respondents 3 & 4. The same are not required to be referred to in this order as they are nothing but reiteration of their plea taken in the writ petition with reference to the documents produced along with the writ petition. 23. The 5th respondent has filed its statement of counter on 17/9/2007 justifying the process adopted in respect of short-listing and awarding contract in its favour, it has submitted that the petitioner has been disabled to invoke the jurisdiction of this Court, it is further submitted that, if, the prayers of the petitioner were considered and granted, the entire process of tender and exclusion of award contract would result in great hardship, extensive loss and prejudice not only to the 5th respondent, but also to BIAL, at it would have to pay huge penalties to the first respondent in the event of non completion of the international airport within the scheduled time and also City of Bangalore and India as a country would be put to shame in the international scenario, if, the project is not completed. ....
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....ration of flights is a statutory function under Section 12 of Airport Authorities Act, 1994? 3. Whether BIAL is amenable to writ jurisdiction under Article 226 of the Constitution for judicial review? 4. Whether the petitioner has got locus standi to file this writ petition and the writ petition is maintainable? 5. Whether the petitioner has waived/ acquiesced its right having participated in the selection process? 6. Whether the short listing of tenders in the absence of any guidelines in the letter of expression of interest by the BIAL is reasonable, legal and valid? 7. Whether the exercise of administrative power by the BIAL for issuing the tender documents in favour of respondents 5 to 9 by short-listing without assigning reasons for ignoring the petitioner is legal and valid and finally awarding contract in favour of 5th respondent is legal and valid in law? 8. Whether the action of BIAL the award of contract in favour of 5th respondent has affected public interest? 9. Whether the denial of opportunity to offer financial bid to the 9th respondent requires interference by this Court? 10. What Order? Poin....
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....74)49 L.Ed. 2D 477 (per Douglas J. dissenting, @ 488, 489, 490) 27. Further the learned Sr. counsel submitted that the functions which are being carried on by the BIAL are public functions/ statutory duties in view of Section 12 of the A.A.I.A Act. Therefore, it is a "State" within the meaning of Article 12 of the Constitution of India and therefore, it is amenable to writ jurisdiction of this Court under Article 226 of the Constitution. 28. The above contentions are rebutted by learned Senior Counsel Sri R.N. Narasimha Murthy on behalf of respondents 3 and 4 placing reliance upon the decision of Supreme Court reported in [2002]3SCR100 in the case of Pradeep Kumar Biswas. He submits that in view of the ratio laid down therein by the Seven Judges Bench of the Apex Court and having regard to the facts of this case, particularly the shareholding agreement entered into between the Consortium members of BIAL and KSIIDC, S.S.A dated 20/1/2005 and C.A dated 5/7/2004 between the first respondent/Union of India- RI, Civil Aviation and BIAL. On the basis of the lease deed entered between KSIIDC and BIAL dated 30/ 4/ 2005 to establish a private airport at Devanahalli to assist the 2nd r....
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....onstitute partnership. Under Clause 25.4 sovereign immunity, unconditionally and irrevocably agreed to by first respondent/Union of India to constitute either a private commercial establishment or public or governmental acts, any proceedings should be brought against it or its assets by any party in relation to the agreement Therefore, it is contended that the nature of functions and duties cannot be at any stretch of imagination termed as public duties/functions, much less statutory in nature. Therefore, contention urged on behalf of the petitioner BIAL is a "State" as defined under Article 12 is wholly untenable. It is not a "State" in terms of Article 12 of the Constitution. 29. Merely because Chapter V-A, Section 28-A of the A.A.I.A Act is applicable to the premises of the Airport for the purpose of eviction of unauthorised occupants from that premises, it cannot be construed by this Court that the functions of BIAL are that of public duties/functions. Therefore, it is contended by the learned Sr. counsel that BIAL is not a State as defined under Article 12 of the Constitution of India. 30. Sri V. Lakshminarayana, learned Counsel for 9th respondent supported the submissio....
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.... The benefit of Chapter V-A of the A.A.I.A Act is incorporated in the Concession agreement to evict the unauthorised occupants from the premises of BIAL, (ii). We are required to examine the nature of functions and duties performed by BIAL. It is necessary for this Court to extract 'air traffic service', 'air transport service' and the functions of the Airport Authority enumerated in Sections 2(d) , (e), (nn) and 12 of A.A.I.A Act reads as under: 2(d) "air traffic service" includes flight information service,, alerting service, air traffic advisory service, air traffic control service, area control service, approach control service and airport control service; (e) "air transport service" means any service, for any kind of remuneration, whatsoever, for the transport by air of persons, mail or any other thing, animate or inanimate, whether such service relates to a single flight or series of flights; Section 2(nn) reads: 2(nn) 'private airport' means an airport owned developed or managed by: (i) any person or agency other than the Authority or any State Government, or (ii) any person or ag....
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.... safety services or any facilities thereat; (l) establish and manage heliports and airstrips; (m) provide such transport facility as are, in the opinion of the Authority, necessary to the passengers travelling by air; (n) form one or more companies under the Companies Act, 1956 or under any other law relating to companies to further the efficient discharge of the functions imposed on it by this Act; (o) take all such steps as may be necessary or convenient for, or may be incidental to, the exercise of any power or the discharge of any functions conferred or imposed on its by this Act; (p) perform any other function considered necessary or desirable by the Central Government for ensuring the safe and efficient operation of aircraft to, from and across the air space of India; (q) establish training institutes and workshops; (r) any other activity at the airports and the civil enclaves in the best commercial interests of the Authority including cargo handling, setting up of joint ventures for the discharge of any function assigned to the Authority; (4) In the discharge of its functions under this section, the Auth....
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....of the Apex Court in Ujjam Bai v. State of Uttar Pradesh reported in AIR 1962 SC 1621@ 1678 para 132 has held as hereunder: 152. In the first place, it has to be pointed out that the definition is only inclusive, which itself is apt to indicate that besides the Government and the Legislature there might be other instrumentalities of State action which might be comprehended within the expression 'State'....Again, Article 12 winds up the list of authorities falling within the definition by referring to 'other authorities' within the territory of India which cannot obviously be read as ejusdem generis with either the Government or legislature or local authorities. The words are of wide amplitude and capable of comprehending every authority created under a statute and functioning within the territory of India. There is no characterization of the nature of the 'authority' in this residuary clause and consequently it must include every type of authority set up under a statute for the purpose of administering the laws made by the Parliament or by the State including those vested with the duty to make decisions in order to implement those laws. (vi....
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....Nixon v. Condon 268 US 73. Activities which are too fundamental to the society are by definition too important not to be considered government function. (vii). The next noteworthy decision of the Constitutional Bench of the Apex Court in Ajay Hasla and Ors. v. Khalid Mujib Sehravardi and Ors. reported in (1981)ILLJ103SC wherein the Apex Court after referring to its decision in International Airport Authority case has kid down the law as hereunder: 11. We may point out that it is immaterial for this purpose whether the corporation is created by or under a statute. The test is whether it is an instrumentality or agency of the State and not as to how it has been created. The inquiry has to be not as to how the juristic person is born but why it has been brought into existence. The corporation may be a statutory corporation created by a statute or it may be a Government Company or a company formed under the Companies Act, 1956 or it may be a society registered under the Societies registration Act or any other similar statute. Whatever may be its genetical origin, it would be an 'authority' within the meaning of Article 12 if it is an instrumentality or agency ....
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.... the three Corporations represented the "voice and hands'' of the Central Government. The Court came to the conclusion that although the employees of the three Corporations were not servants of the Union of the State, "these statutory bodies are 'authorities' within the meaning of Article 12 of the Constitution". 16. Mathew, J. in his concurring judgment went further and propounded a view which presaged the subsequent developments in the law. He said: (SCC p.449 para 82) A State is an abstract entity. It can only act through the instrumentality or agency or natural or juridical persons. Therefore, there is nothing strange in the notion of the State acting through a corporation and making it an agency or instrumentality of the State. It is further held by Mathew J, that; The State may aid a private operation in various ways other than by direct financial assistance. It may give the organization the power of eminent domain, it may grant tax exemptions, or it may give monopolistic status for certain purposes. All these are relevant in making an assessment whether the operation la private or savours of State action. See generally: The....
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....d that entity with power to make law or issue binding directions amounting to law within the meaning of Article 13(2) governing its relationship with other people or the affairs of other people - their rights, duties, liabilities or other legal relations. If created under a statute, then there must exist some other statute conferring on the entity such powers. In either case, it should have been entrusted with such functions as are governmental or closely associated therewith by being of public importance or being fundamental to the life of the people and hence governmental. Such authority would be the State, for, one who enjoys the powers or privileges of the State. It is this strong statutory flavour and clear indicia of power -constitutional or statutory, and its potential or capability to act to the detriment of fundamental rights of the people, which makes it an authority; though in a given case, depending on the facts and circumstances, an authority may also be found to be an instrumentality or agency of the State and to that extent they may overlap.... (ix). In view of Zee Telefilms Ltd. and Anr v. Union of India and Ors. reported in AIR2008SC2675 , in which tests a....
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....uilding was dedicated to 'public uses' in performance of the Authority's 'essential governmental functions'. Addition of all these activities, obligations and responsibilities of the Authority, the benefits mutually conferred, together with the obvious fact that the restaurant is operated as an integral part of a public building devoted to a public parking service, indicates that degree of state participation and involvement in discriminatory action which it was the design of the Fourteenth Amendment to condemn.... By its inaction, the Authority, and through it the State, has not only made itself a party to the refusal of service, but has elected to place its power property and prestige behind to place the admitted discrimination. The State has so far insinuated itself into a position of interdependence with Eagle that it must be recognised as a joint participant in the challenged activity, which on that account cannot be considered to have been to 'purely private' as to fall outside the scope of the Fourteenth Amendment... what we hold today is that when at State leases; public property in the manner and for the purpose shown to have been the c....
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....uthorised by state law and were made enforceable by the weight and authority of the State. Moreover, the State retains the power of oversight to review and amend the regulations if the public interest so requires. Respondent's action are sufficiently intertwined with these of the State, and its termination of service provisions are buttressed by state law, to warrant a holding that respondent's actions in terminating this house-holder's service were 'state action' for the purpose of giving federal jurisdiction over respondent under 42 USC s. 1983. (xiv). From the aforementioned legal principles laid down by the Constitutional Benches of the Supreme Court and American Law, the doctrine of "State action" would with all fours applicable to the facts of the case to come to the conclusion that to provide duty free shops in the BIAL as per the agreement referred to supra is necessary in the international airport. The facilities provided therein are in the nature of Statutory functions/ public functions by BIAL for the convenience of travelling public. All the facilities provided by BIAL, be it a State, lessee or entity, performs statuary/public functions in t....
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....al Bench of the Apex Court at para 69 in the case of Ashoka Marketing Ltd. and Anr. v. Punjab National Bank and Ors. after referring to its earlier decision in the case of Dwarakadas Marfatia & Sons v. Board of Trustees of The Port of Bombay reported in [1989]2SCR751 has kid down the law as under: 69 ... every activity of a public authority especially I the background of the assumption on which such authority enjoys immunity from the rigours of the Rent Act, must be informed by reason and guided by the public interest All exercise of discretion or power by public authorities as the respondent, in respect of dealing with tenants in respect of which they have been treated separately and distinctly from other landlords on the assumption that they would not act as private landlords, must be judged by that standard. (xvii). The assistance provided by both the Union of India and State Government and other statutory authorities in permitting BIAL to establish and maintain BIAL at Devanahalli, without which the airport could not have been established, and Re. 250 crores provided to BIAL by the Government of Karnataka under the State agreement and capital of BIAL partly ow....
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....trumentalities of State for issuing writs against any persons. They may cover any person or body performing statutory, public functions and duties. Hue form of the body is not relevant for the purpose of exercise of power of this Court under Article 226 of Constitution of India. What is relevant is the nature of functions or duties imposed upon such person and performed by it. As per the development of law, Prof. D. Smith, whose statement is extracted in Anadi Muktas case at paras 17-23, it is stated thus: The words 'any person or authority' used in Article 226 are, therefore, not to be confined only to statutory authorities and instrumentalities of the State. They may court any other person or body performing public duty. The form of the body concerned is not very much relevant. What ftp relevant is the nature of duly imposed on the body....Here again we may point out that mandamus cannot be denied on the ground that the duty to be enforced is not imposed by the status. Commencing on the development of the law, professor be Smith status 'To be enforceable by mandamus a public duty does not necessarily have to be one imposed by statute. It may be sufficient for....
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....en it seeks to achieve some collective benefit for the public or a section of the public and is accepted by the public or that section of the public as having authority to do so. Bodies therefore exercise public function when they intervene or participate in social or economic affairs in the public interest. (xxiii.) For the foregoing reasons, we answer Point Nos. 1 to 3 in favour of the petitioner. Point Nos. 4 and 5: 32. The learned Senior Counsel has submitted that the petitioner has got locus standi to file the writ petition as it being the member of the consortium of AerRianta, he has placed strong reliance upon the petition averments contending that the petitioner has entered into consortium agreement with AerRianta International opt, which is a company incorporated under the laws of Ireland to obtain contract for running duty-free retail business with BIAL and the said company is dedicated to International Division of the Dublin Airport Authority. It was the first to start duty-free retailing business in the world and it has fulfilled the experience wanted by the BIAL in its tender notification as it has set up free retailing business at Trivandrum, Jaipur, Am....
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....ontesting respondents therein was considered by that High Court and held that such an objection is not well founded for the reason that EOI was submitted by the petitioner in partnership with AerRianta and therefore when opportunity to submit tender was denied, rights of the petitioner as its partner were also violated. Therefore, it cannot be said that the petitioner does not have cause of action for challenging action of the respondents 3 & 4. The said reasoning of the Bombay High Court decision with all fours applicable to the case on hand for the reason that cause of action arose for the petitioner particularly having regard to the fact that it is vitally aggrieved party being a consortium partner of Air Rianta who has got excellent experience for running duty-free shops in various places in India. 35. The contention urged on behalf of the respondents No. 3 and 4 that the petitioner and AerRianta have participated in the tender process by submitting E.O.I pursuant to the tender invitation accepting the conditions enumerated therein without demur. Therefore the petitioner has acquiesced its right in challenging the impugned action. Further contention urged on behalf of respon....
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.... to secure the larger interests of the community. The Preamble of the Constitution says that India is a democratic Republic. It is in order to fulfil the promise of the Preamble that fundamental rights are conferred by the Constitution, some on citizens like those guaranteed by Articles 15, 16, 19, 21 and 29 and, some on citizens and non-citizens alike, like those guaranteed by Articles 14, 21, 22 and 25 of the Constitution. No individual can barter away the freedoms conferred upon him by the Constitution. A concession made by him in a proceeding, whether under a mistake of law or otherwise, that he does not possess or will not enforce any particular fundamental right, cannot create an estoppel against him in that or any subsequent proceeding. Such a concession, if enforced, would defeat the purpose of the Constitution. Were the argument of estoppel valid, an all-powerful State could easily tempt an individual to forego his precious personal freedoms on promise of transitory, immediate benefits. Therefore, notwithstanding the fact that the petitioners had conceded in the Bombay High Court that they have no fundamental right to construct hutments on pavements and that they will not ....
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..... Further the contention urged on behalf of the respondents No. 3 and 4 that the petitioner has no locus standi for filing this petition is contrary to the Federal Court decision in the case of United Provinces v. Atiqa Begum reported in, wherein the Federal Court has held that a party whose presence is essential, no effective decree can be passed, hence, this Court has got power to give appropriate writ and quash the contract awarded in favour of 5th respondent and with regard to the contention urged on behalf of the respondents 3 & 4 that the petitioner has no locus standi is wholly untenable in law and liable to be rejected. Accordingly, we reject the same and answer the aforesaid point Nos. 4 and 5 in favour of the petitioner company holding that the action of the respondents No. 3 and 4 in short listing the tenders without there being any intelligible guidelines enumerated in this regard in the EOI and without assigning any reasons or communicating the same whatsoever to the petitioner has certainly affected the legal right of the petitioner to submit its bid to get the contract awarded in its favour as it it more qualified. Point No. 6: 38. The submission of the lear....
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....oposition that "it is now well settled that an executive authority must be rigorously held to the standards by which it professes its actions to be judged and it must scrupulously observe those standards", wherein the Apex Court in the aforesaid decision @ para 10 after referring to its earlier decisions in Dr. A.S. Ahluwalia and Sukhdev's has laid down the law, which relevant portion reads as under: 10. ... It may be noted mat this rule, though supportable also as an emanation of Article 14, does not rest merely on that Article. It has an independent existence. It is a rule of administrative law which has been judicially evolved as a check against exercise of arbitrary power by the executive authority.... Whatever be the concept of the rule of law, whether it be the meaning given by Dicey in his "The Law of the Constitution" or the definition given by Hayek 1 his "Road to Serfdom" and "Constitution of Liberty or the exposition set forth by Harry Jones in his "The Rule of Law and the Welfare State", there is as pointed out by Mathew, J., in his article on "The Welfare State", Rule of Law and Natural Justice" in "Democracy, Equality and Freedom", substantial agreement i....
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....xtracted hereunder: 6. ... Then alone administrative authorities and tribunals exercising quasi-judicial functions will be able to justify their existence and carry credibility with the people by inspiring confidence in the adjudicatory process. The rule requiring reasons is, like the principle of audi alteram partem, a basic principle of natural justice which must inform every quasi-judicial process and this rule must be observed in its proper spirit and mere pretence of compliance would not satisfy the requirement of law. (v). The aforesaid decision is again followed by the Apex Court in the case of Organo Chemical Industries v. Union of India reported in (1979)IILLJ416SC and laid down the law at para 33 which relevant portion is extracted hereunder: 33. This Court has impressed the requirements of natural justice on such jurisdictions and one such desideratum is spelling out reasons for the order made, in other words, a speaking order. The inscrutable face of a sphinx is ordinarily incongruous with a judicial or quasi-judicial performance. (vi). Further the learned Sr. counsel has aptly relied upon the decision of the Apex Court reported in B. Ramakicheni....
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....s to decide whether the observance of that rule was necessary for a just decision of the case. (viii). In the said decision the Apex Court has clearly obliterated the distinction between administrative and quanta-judicial power for applying the principles of natural justice. The learned Sr. counsel for the petitioner has further placed reliance upon another decision of the Supreme Court in L.I.C. of India and Anr. v. Consume Educational and Research Centre and Ors. reported in AIR1995SC1811 in support of the proposition that 'every action of the public authority or the person acting in public interest or its acts give rise to public element, should be guided by public interest', he also placed strong reliance upon the decision of the Supreme Court in Star Enterprises and Ors. v. City and Industrial Development Corporation of Maharashtra Ltd. and Ors. reported in [1990]2SCR826 in which it has referred to the decisions of R.D SHETTY, AJAY HASLA and number of decisions in support of the proposition that the Authority who is required to discharge statutory functions/ duties has to act within the ambit of Rule of Law and would not be allowed to conduct itself arbitrarily and ....
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....nded as the action of BIAL in short-listing persons who had submitted their E.O.I without guidelines and reasons is contrary to law laid down by the Apex Court in catena of cases referred to supra upon which reliance is placed by the learned Sr. counsel for the petitioner, the legal principles laid down in those decisions would aptly apply to the case on hand. Further it is rightly contended by the learned Sr. counsel for the petitioner that in view of the public character of running the international Airport at Devanahally by BIAL which is the statutory function of the A.A.I, it was bound to follow the doctrine of fair-play, transparency, and good faith in all its activities. Therefore, the BIAL is under a duty to act reasonably and cannot act arbitrarily in a whimsical and capricious manner and further in the invitation for EOI, uncertain elastic and subjective criteria stipulated are bad in law as held by the Apex Court in Reliance Energy case referred to supra. If criteria, valid norms and guidelines which are required to be enumerated in the tender invitation that are required to be followed by BIAL for short listing the tenderers who had submitted their B.O.I, than the BIAL s....
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....cess, as its right to challenge the action of BIAL is neither waived nor it is estopped as contended by respondents No. 3 and 4 to do so before this Court seeking judicial review in the matter. (x). The aforesaid contentions are rebutted by the learned Senior Counsel Mr. R.N. Narasimha Murthy on behalf of respondents No. 3 and 4- placing strong reliance upon clause 3.2 of the invitation for EOI issued by BIAL to short-list maximum out of total EOIs received. The entire process of short listing of persons who have submitted their interest to participate in the bid was conducted by selection committee consisting of employees of third respondent, who had necessary knowledge to evaluate the EOI. Its process was transparent where all parties were evaluated of their strength, experience and the vision they had for the Airport being developed. The decision of the selection committee was based on unanimous decision of all members of the selection committee and BIAL adopted process of calling EOI for short listing certain number of bidders for issuing tender documents, the same was in pursuance of Clause-3.2 of the concession agreement which essentially sets out the fact that the third r....
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....vast extent of nearly 4000 and odd acres of land acquired by the Karnataka State Government in exercise of its eminent domain power in favour of K.I.A.D.B and the Government order produced by the BIAL would establish the fact that the said vast extent of land acquired by the State Government for the purpose of formation of an international Airport and the said land has been transferred in favour of K.S.I.I.D.C and in turn it is leased in favour of BIAL and the companion shareholders. The board of management of the BIAL, its administrative functions required to be performed by the Board of Directors, its decision and their activities are subject to regulations of the statutory provisions of the A.C and A.A.I.A Act and Rules framed therein. Therefore, we have already held that BIAL is an Authority and State which comes as defined under Article 12 of the Constitution of India and as interpreted by the Supreme Court in the catena of decisions which are extracted in the preceding paragraphs of this judgment while answering the aforesaid contentious point Therefore, award of contract by extending invitation to persons inviting their interest must provide certain requirement under clause ....
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.... Even in the absence of such guidelines and norms, it is the bounden duty of the BIAL to assign reasons as to why the petitioner has been excluded from issuance of tenders and prefer only respondents 5 to 9 by accepting their E.O.I and short-listing others, particularly the experience petitioner has got in India. Therefore, we have to answer the aforesaid points in favour of the company holding that the action of respondent No. 3 not only suffers from arbitrariness but also suffers from legal mala fides and its short listing is an administrative action the same must be supported by valid and acceptable reasons. The reasons are not forthcoming from the records. Therefore, we have to hold that the short listing of respondents 5 to 9 for issuing tenders and further without giving opportunity to the 9th respondent at the time of financial bid and awarding contract in favour of 5th respondent BIAL is once again a clear case of arbitrary exercise of power by it. Accordingly we answer the above point in the affirmative. Point Nos. 7 to 9: 39. We have to answer the above points against the BIAL for the following reasons: (i). As we have already answered point Nos. 5 & 6 a....
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....d to respondent No. 5 which is Swiss Entity and further allegations made at para 34 in the writ petition that the 5th respondent was unit of Swiss Air (SAIR) which has also owned the Zurich Airport and Flughafen Zuerich AG, shareholder of BIAL were both owned by Swiss Air and it; went bankrupt in 2001. (both the units were sold). Although respondents' objection is that he was an employee of the Zurich Airport Authority and there was no such company whereas he admits that he was an employee of Zurich Airport Authority which holds 17% shares in BIAL and further contention of the 5th respondent that 5th respondent is owned and controlled by two Italian Companies and further it is the contention that the 4th respondent alone do not makes a decision but the BIAL decided the matter. This fact is falsified by the affidavit of Airport Authority of India, which clearly stated in para 9 that the matter was never placed before the Board of Directors of the Company. (ii). Therefore, it is clear that Board of Directors including two promoters were kept out from the decision making process, short listing and final choice of awarding contract ignoring the experience of the petitioner....