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M/s. Brandmidas Hospitality & Aviation Services (P) Ltd. Rep. by its Director N. Preetham Chengappa v/s Airports Authority of India Rep. by its Airport Director Chennai Airport Chennai & Another

    W.A.No. 97 of 2022
    Decided On, 30 June 2022
    At, High Court of Judicature at Madras
    By, THE HONOURABLE CHIEF JUSTICE MR. MUNISHWAR NATH BHANDARI & THE HONOURABLE MRS. JUSTICE N. MALA
    For the Appellant: Dr. R. Maheswari, Advocate. For the Respondents: R1, Fr.Xavier Arulraj, Senior Counsel, A. Arul Mary, R2, K. Suresh Babu, Advocate.


Judgment Text
(Prayer: Appeal filed under Clause 15 of the Letters Patent against the order dated 07.12.2021 made in W.P.No.35845 of 2019.)

Munishwar Nath Bhandari, CJ

By this writ appeal, a challenge is made to the order dated 07.12.2021, by which, the writ petition preferred by the writ appellant was dismissed.

2. The writ petition was filed to challenge the order dated 10.12.2019 rejecting the technical bid of the writ appellant. The tender was invited by the first respondent for the grant of license for Smoking Lounge and Sale Kiosk at the Chennai Airport. Pursuant to the e-tender floated by the first respondent, the writ appellant, apart from the second respondent, submitted its technical bid. After the receipt of the tender documents from both the parties, the writ appellant was declared to be technically disqualified as it failed to submit no due certificate of all the previous projects.

3. The rejection of the technical bid was despite the writ appellant having satisfied the eligibility criteria as per Clause 10 of the Notice inviting e-tenders. Clause 10 states that a company was required to have experience of operating at least 3 Smoking Lounges at Indian Airports / 5 Star Hotels / Malls etc. or having experience of running at least 5 tobacco sales kiosk at two or more Airports in India.

4. The case of the writ appellant is that despite having experience of running three Smoking Lounges in different Airports and no due certificates of those Airports, namely the Airports at Agartala, Chennai and Indore, it was disqualified. The writ appellant was disqualified on the ground that it failed to submit no due certificates of all the Airports where it had operated Smoking Lounges, namely Airports at Goa and Bhopal.

5. According to the writ appellant, they had submitted all the relevant documents to the tender. However, it is only to benefit the second respondent, who was the remaining single bidder, the writ appellant was disqualified for the financial bid.

6. The challenge to the order of rejection of the technical bid of the writ appellant was not accepted by the learned Single Judge on the ground that it had failed to submit the required no due certificates and therefore, the action of the first respondent in rejecting the technical bid was justified.

7. It is also the case of the writ appellant that the rejection of the technical bid was made without giving an opportunity of hearing and therefore, on the aforesaid ground also, the order of rejection was unsustainable and it ought have been set aside by the learned Single Judge, with a direction to the first respondent to open the financial bid of the writ appellant.

8. The documents in respect of other Airports where the writ appellant operated the Smoking Lounges were produced, but ignored by the learned Single Judge.

9. Per contra, the writ appeal is seriously contested by the respondents. It is stated that the tender was floated to grant licence to run the Smoking Lounges and Sale Kiosk. The tender consisted of two stage process. First was technical bid and the second was financial bid. Subject to qualifying in the technical bid, the financial bid of the bidder is to be opened.

10. In the instant case, the writ appellant failed to submit no due certificates of all the Airports where they had operated Smoking Lounges. It is despite a specific direction in Clause (f) of the General Information and Guidelines pertaining to the tender that no due certificate of all Airports under its control was to be submitted. The writ appellant failed to submit no due certificates of Bhopal and Goa Airports and therefore, it was disqualified in the technical bid. No due certificates were submitted along with the writ petition. Thus, on the relevant date of submission of the tender, outstanding dues were existing against the writ appellant and for the aforesaid reason alone, no due certificates of Bhopal and Goa Airports were not submitted. Therefore, the technical bid of the writ appellant was rejected.

11. Further, for declaring any party to have disqualified in the technical bid, there is no provision to provide an opportunity of hearing. Rather, it is unknown to law and therefore, the second argument raised by the writ appellant to challenge the order of rejection is not sustainable in law.

12. It is also the case of the respondents that the tender documents submitted by the writ appellant was not in the form of Annexure G and I, which was again a condition precedent for the submission of document and therefore also the writ appellant was rightly disqualified in the technical bid.

13. The challenge to the order of rejection was not accepted by the learned Single Judge by referring to the facts of the case and in the light of the judgment of the Apex Court in the case of Uflex Ltd. v. Government of Tamil Nadu and Ors. [2021 SCC Online SC 738]. In view of the above, the prayer is to dismiss the writ appeal.

14. We have considered the rival submission of the parties and perused the records.

15. The facts relevant to address the issue raised by the writ appellant would be as to whether the writ appellant could have been disqualified in the technical bid on the grounds taken by the respondents and would it be without an opportunity of hearing the writ appellant. It has not been disputed by the writ appellant that it was operating Smoking Lounges at five Airports, which includes three Airports, namely Chennai, Indore and Agartala for which no due certificates were submitted while it was not for two Airports at Goa and Bhopal.

16. As regards no due certificates of all the Airports and eligibility criteria, we need to refer certain Clauses of the tender, namely Clause 10(a) of the Notice Inviting e-Tender and Clause 3(f) of the General Information and Guidelines pertaining to tender, which are quoted under for ready reference:

Clause 10(a) of the Notice Inviting e-Tender

10. Eligibility Criteria

a. Technical Criteria:

i. Cigarettes manufacturer or Branding agencies or event management companies or companies having experience of operating at least 3 smoking lounges at Indian Airports / 5 Star Hotels / Mall etc.

OR

Companies having experience of running at least five (05) tobacco sales kiosk at two or more airports in India.

ii. The agency should have a minimum of two (02) years of relevant experience as described above. The experience shall be during the last seven (07) years.

Note:

The experience, as claimed by the bidders should be duly supported by documents establishing the claim of the bidders. An indicative list of such documents can be copies of award letters supported by experience certificate issued by the contract awarding authority; copy of work completion certificate issued by the contract awarding authority. Books of accounts shall clearly depict the incomes from the claimed business. in the absence of above mentioned supporting documents, merely submitting an experience certificate issued by CA will not be considered to testify the claimed experience. An undertaking / self-declaration that the furnished information is true also needs to be submitted along with supporting documents.

Clause 3(f) of the General Information and Guidelines pertaining to tender:

No Dues Certificate:

i. Self-Declaration of Dues:

The party should submit the details of contracts held (current and past) at all AAI controlled airports and offices and the details of disputed and undisputed dues there on along with the details of Security Deposit and mode of Security Deposit (Refer Annexure -G-).

ii. No Dues Certification from AAI:

The party should also enclose the no dues certificate issued by AAI (Up to June 30th 2019, except where the dues are pertaining to current quarter ie. the quarter in which tender is invited) in respect of all airports under its control. Only signed certificate will be valid. Photocopy of the signed certificate to be attested by the party at the time of tender submission. Format as per Annexure -I- is to be submitted.

iii. If the entity participating in the e-tender is a private or public limited company, Partnership Fir or Sole Proprietor and any of the Directors / Partners / Sole Proprietor of such company is also a director of any other company or partner of a concern or a Sole Proprietor having established business with AAI and has outstanding dues payable to the Authority, then the said entity shall not be allowed in AAI e-tenders. A declaration to this effect has to be submitted by the party / tenderer. (Refer Annexure -G-)

17. As per Clause (10), a company having experience of operating at least three Smoking Lounges at Indian Airports / Five Star Hotels / Mall etc. was eligible and accordingly, the writ appellant was possessing the required qualification.

18. As regards Clause 3(f) of the General Information and Guidelines, no due certificate was to be submitted in respect of all the Airports under the control of the bidder. It could not be disputed even by the writ appellant that no due certificates of Bhopal and Goa Airports were not submitted along with the tender documents. However, they had been submitted subsequently along with the writ petition. But, it cannot fill up the lapse committed by the writ appellant while submitting the tender documents though it had submitted no due certificates of other three Airports.

19. According to the respondents, non submission of the tender documents by the writ appellant as per Annexures G and I would also amount to defective bid and therefore, it could not have been accepted, rather the bid had to be rejected.

20. In the light of what has been stated by the parties, we find that as per the General Information and Guidelines pertaining to the tender, no due certificate of all the Airports was to be submitted. The writ appellant failed to do so. It is also evident that the tender document was not submitted as per Annexures G and I. Thus, for the aforesaid reasons also, the writ appellant could have been disqualified in the process of the tender. This Court, while examining the issue, cannot sit as an appellate authority over the decision of the technical experts, in the light of the judgment of the Apex Court in the case of M/s. N.G. Projects Limited v. M/s. Vinod Kumar Jain [C.A.No.1846 of 2022 dated 21.03.2022] wherein, in paragraph 23, it was held as under:

“23. In view of the above judgments of this Court, the Writ Court should refrain itself from imposing its decision over the decision of the employer as to whether or not to accept the bid of a tenderer. The Court does not have the expertise to examine the terms and conditions of the present day economic activities of the State and this limitation should be kept in view. Courts should be even more reluctant in interfering with contracts involving technical issues as there is a requirement of the necessary expertise to adjudicate upon such issues. The approach of the Court should be not to find fault with magnifying glass in its hands, rather the Court should examine as to whether the decision-making process is after complying with the procedure contemplated by the tender conditions. If the Court finds that there is total arbitrariness or that the tender has been granted in a malafide manner, still the Court should refrain from interfering in the grant of tender but instead relegate the parties to seek damages for the wrongful exclusion rather than to injunct the execution of the contract. The injunction or interference in the tender leads to additional costs on the State and is also against public interest. Therefore, the State and its citizens suffer twice, firstly by paying escalation costs and secondly, by being deprived of the infrastructure for which the present-day Governments are expected to work.“

21. Further, a reference to the judgment in the case of Bakshi Security and Personnel Services Private Limited v. Devkishan Computed Private Limited [(2016) 8 SCC 446] would be relevant. Paragraphs 12, 13 and 19 of the said judgment is quoted hereunder:

“12. First and foremost, under tender condition 2.5.5, commercial bids have to strictly conform to the format provided in Annexure 2 of the tender document. Annexure 2 which contains the format for the price bid makes it clear that the salary paid to deployed manpower should not be less than the minimum wage. It further goes on to state in paragraph 3 thereof that if the component of salary quoted is less than the minimum wage prescribed, the bid is liable to be rejected. On this ground alone, Respondent 1‘s bid is liable to be rejected inasmuch as, vide its letter dated 3.9.2015, Respondent 1 stuck to its original figure of Rs.2,77,68,000/- which is way below the minimum wage fixed by the Government. Secondly, Shri Raval is also right in stating that the without prejudice offer of Rs.3,00,92,346/- is an offer which is not fixed, but open ended. This is clear from the fact that it was up to the Government then to pick up either figure by way of acceptance. This is clearly interdicted by clause 2.5.6 of the tender which states that prices quoted by the bidder have to be fixed, and no open- ended bid can be entertained, the same being liable to be rejected straightaway. Such condition is obviously an essential condition of the tender which goes to the eligibility of persons who make offers under the tender.

13. Unfortunately, even though the High Court noticed the open-ended nature of Respondent 1’s bid, it went on to add that the offer of Respondent 1 shall be treated as matching with the revised minimum wage calculation and that it is nowhere envisaged by the tender conditions that rejection of an offer which may have the potential of causing loss to the tenderer is present. It is not for the High Court to revisit a condition contained in Annexure 2 read with 2.5.5 of the tender in the manner aforesaid. Once the tender condition states that the tender must strictly conform to the format provided in Annexure 2, and Annexure 2 in turn clearly states that if the component of salary quoted is less than the minimum wage prescribed, the bid is liable to be rejected, and the High Court cannot hold otherwise. The High Court’s further finding that Respondent 1’s offer was “clear” is wholly incorrect. It was a without prejudice offer which muddied the waters and rendered the price quoted by the bidder as variable and not fixed.

...

19. It is also well to remember the admonition given by this Court in Michigan Rubber (India) Ltd. v. State of Karnataka in cases like the present, as under: (SCC p.228, para 21)

21. In Jagdish Mandal v. State of Orissa, the following conclusion is relevant:

22. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose is to check whether choice or decision is made ‘lawfully’ and not to check whether choice or decision is ‘sound’. When the power of judicial review is invoked in matters relating to tenders or award of contracts, certain special features should be borne in mind. A contract is a commercial transaction. Evaluating tenders and awarding contracts are essentially commercial functions. Principles of equity and natural justice stay at a distance. If the decision relating to award of contract is bona fide and is in public interest, courts will not, in exercise of power of judicial review, interfere even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil court. Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice to self, and persuade courts to interfere by exercising power of judicial review, should be resisted. Such interferences, either interim or final, may hold up public works for years, or delay relief and succour to thousands and millions and may increase the project cost manifold. Therefore, a court before interfering in tender or contractual matters in exercise of power of judicial review, should pose to itself the following questions:

(i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone;

OR

Whether the process adopted or decision made is so arbitrary and irrational that the court can say: ‘the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached’;

(ii) Whether public interest is affected.

If the answers are in the negative, there should be no interference under Article 226. Cases involving blacklisting or imposition of penal consequences on a tenderer / contractor or distribution of State largesse (allotment of sites/shops, grant of licences, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action.”

22. As against the decision aforesaid, learned counsel for the writ appellant has referred to the judgment of the Apex Court in the case of Poddar Steel Corporation v. Ganesh Engineering Works [(1991) 3 SCC 273] wherein it was held that minor technical irregularity can be waived and accordingly, the requirement of depositing earnest money with the tender either in cash or by demand draft was held to be justified in waiving technical compliance with the tender condition.

23. Another judgment was referred by learned counsel for the writ appellant in the case of Union of India v. Dinesh Engineering Corporation [(2001) 8 SCC 491], wherein it was held about the power to reject any tender without assigning any reason or to accept or not to accept the lowest offer. The issue was decided holding that whenever a tender is to be rejected, the reasons have to be assigned. Therefore, the said decision would govern the present writ appeal for holding that non submission of no due certificates of two Airports was bona fide, as, the appellant was required to submit no due certificate of three Airports only, as per the eligibility criteria.

24. We are unable to accept the argument aforesaid for the following reasons:

(i) When the General Information and Guidelines pertaining to tender was clear in terms to direct the tenderer to submit no due certificate of all the Airports, there was no reason for the appellant not to comply aforesaid condition. The eligibility criteria had not required the bidder to submit no due certificate, rather required the bidder to submit the certificate of experience of operating Smoking Lounges in three Airports or Five Star Hotels or Mall, etc. No due certificate was required to be furnished under General Information and Guidelines to find out whether the bidder

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has committed any default so as to determine the status of the bidder. The writ appellant had submitted no due certificate of three Airports, leaving two where there were outstanding dues on the date of submission of bid. Though subsequently no due certificates were submitted along with the writ petition, it cannot improve the position of the writ appellant, because, the assessment of the bidder has to be made by the respondents at the time of opening of the technical bid; (ii) The non submission of no due certificate of Bhopal and Goa Airports speaks against the writ appellant. At the time of submission of bid, there were outstanding dues against the appellant. Therefore, the appellant could not furnish no due certificates of the Airports at Bhopal and Goa. The power of the Court is otherwise very limited as it cannot sit as an appellate authority over the decision of technical experts, especially when the non submission of relevant documents is not a minor discrepancy. The expert, while evaluating the technical bid, would analyse the technical qualification and competence or eligibility of the bidder in all respects, which includes their previous similar projects and performance therein with status. The writ appellant remained defaulter in payment of dues to other Airports while operating Smoking Lounges and it was to be analysed by the respondents while evaluating the technical bid. Moreover, the tender documents were required to be submitted with Annexure G and I which also the writ appellant failed to do so. Thus, the rejection of the tender for that reason cannot be said to be illegal; and (iii) Before rejection of the bid, there is no provision for an opportunity of hearing and otherwise, it has been given by the Court. 25. For the reasons stated above, we are unable to accept any of the grounds raised by the learned counsel for the appellant so as to cause interference with the judgment of the learned Single Judge and accordingly, finding no error in the judgment, the writ appeal of is dismissed. There will be no order as to costs. Consequently, CMP Nos.835 and 3114 of 2022 are also dismissed.
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