In CIVIL APPEAL NO. 3699 OF 2022- SC-Right of authorities to annul bidding process should be in conformity to Article 14 of Constitution; Merely having power of rejection does not entitle authorities to exercise such power arbitrarily: SC Justices Vineet Saran & J.K. Maheshwari[09-05-2022]

Read Judgment: MIHAN INDIA LIMITED & ORS Vs. GMR AIPORTS Ltd. & ORS.

Mansimran Kaur

New Delhi, May 10, 2022: Reaffirming that any arbitrary exercise of power to reject bids is violative of Article 14 of the Constitution of India, the Supreme Court has held that after declaring GAL as concessionaire by issuing a letter of award and then issuing letter of annulment of bidding process on the basis of the meeting of Project Monitoring Committee which directed for re-tendering of the bid, was completely an arbitrary exercise of power and violative of Article 14.

The Division Bench of Justice Vineet Saran and Justice J.K. Maheshwari was considering the appeals assailing the judgment passed by the Bombay High Court whereby the writ petition instituted by the first respondent- GMR Airports Limited and GMR Nagar International Airport Limited against the MIHAN India Limited and Government of Maharashtra was allowed. 

The facts relevant for the perusal of the present appeals were that the Nagpur Airport was being run by AAI.  a multi-modal international passenger and cargo hub airport at Nagpur (MIHAN) was prepared.  Thereafter it was decided that for the up gradation of the infrastructure of the Airport global tenders were required. Consequently,  bids were  invited and On the final date for submission of bids MIL received only two bids out of which the bid submitted by GAL proposing a revenue share of 5.76% was found to be the highest. Thereafter, revenue share was revised to 14.49%. The said revised revenue share was communicated by GAL through a letter dated March 6, 2019 with a request to declare it as the selected bidder. 

The dispute in the instant case arose when even after completing the formalities, the Concession Agreement was not executed even after multiple requests were made by GAL to MIL. Thus, GIL and GINAL, both instituted the writ petition for seeking direction to the MIL and GOM to take all necessary and consequential steps pursuant to the letter dated March 7, 2019  and to sign the Concession Agreement. Aggrieved by the writ pertion being allowed, the present appeals were filed by MIL, GoM, UOI and AAI. 

Considering the issue whether the right exercised to annul the bidding process by the authorities was in conformity to the touchstone of Article 14, the Court observed that the letter dated March 7, 2019 was a LoA  granted to  GAL on the account of being the highest bidder and it acquired the status of concessionaire. It was only the Concession Agreement required to be executed and there was no fault on the part of the GAL in complying with the provisions of RFP. The conduct of appellant MIL also indicated that the concession agreement was required to be executed by the concessionaire (GAL). Thus, after the proposal of highest revenue share on issuing the letter of acceptance and also as reflected by conduct, it became a concluded contract, the Court stated. 

Further reliance was placed on the judgment of this Court in   Union of India and others vs. Dinesh Engineering Corpn. and another. It was asserted, “ Bare perusal of the above stated case-law in light of the facts of the instant case makes it clear that merely having the power of rejection of bids does not entitle authorities to exercise the said power arbitrarily.”

While discussing the applicability of Clauses 2.16.1, 3.3.1 and 3.3.5, it was made clear that in pre-bid procedure prior to acceptance, the bidding process may be annulled otherwise after issuance of LoA, the annulment cannot be done. The authorities further acted arbitrarily relying upon the GoMs letter dated March 16, 2020 in reference to PMICs meeting dated October 14, 2019 in which re-tendering was directed, the Court noted. Thus, the Court opined that the findings recorded by the High Court did not suffer from any illegality, warranting interference by this Court in exercise of the power under Article 136 of the Constitution of India.