Case Note & Summary
The dispute arose from a writ petition filed by the Centre for Aviation Policy, Safety & Research (CAPSR) challenging the eligibility criteria in Request for Proposal (RFP) tenders floated by the Airport Authority of India (AAI) for ground handling services at Group C, D1, and D2 airports. CAPSR argued that the criteria, including region-wise sub-categorisation, experience requirements limited to scheduled aircrafts, and high annual turnover thresholds, were arbitrary and discriminatory, ousting existing small ground handling agencies. AAI defended the criteria as necessary for commercial efficiency, expertise, and financial stability, reducing some requirements during proceedings. The High Court allowed the writ petition, striking down the contested conditions as discriminatory and arbitrary. AAI appealed to the Supreme Court, raising issues of locus standi for CAPSR as an NGO, limited judicial review of tender conditions, and inapplicability of MSME orders. The Supreme Court analyzed these issues, referencing precedents on judicial restraint in tender matters and locus standi. The Court held that tender conditions are within the commercial wisdom of the authority and not subject to judicial interference unless arbitrary, discriminatory, or mala fide. It found the conditions rational and upheld them, reversing the High Court's decision. The Court also ruled that CAPSR lacked locus standi as an NGO in a contractual dispute and that MSME orders did not apply to license-like services. The appeals were allowed, setting aside the High Court's judgment.
Headnote
A) Administrative Law - Judicial Review - Tender Conditions - Constitution of India, Article 226 - The Supreme Court considered the scope of judicial review under Article 226 regarding tender conditions set by a public authority. The Court held that setting terms and conditions of invitation to tender is within the ambit of administration/policy decision of the tender-making authority and are not open to judicial scrutiny unless they are arbitrary, discriminatory, or mala fide. The Court emphasized that the tender-making authority has commercial wisdom to formulate conditions based on commercial considerations and expediency. (Paras 3.6-3.7) B) Civil Procedure - Locus Standi - NGO in Tender Dispute - Constitution of India, Article 226 - The Supreme Court addressed the locus standi of a non-profit organization challenging tender conditions. The Court noted that NGOs have no locus standi to maintain a writ petition challenging tender conditions especially when the same is not in the nature of a Public Interest Litigation, as an NGO has no business to enter into tender disputes falling in the realm of contract. The Court referred to the decision in Anand Sharadchandra Oka v. University of Mumbai. (Paras 3.1, 3.5) C) Contract Law - Tender Eligibility Criteria - Arbitrariness and Discrimination - Not mentioned - The Supreme Court examined specific tender conditions including region-wise sub-categorisation of airports, experience criteria for ground handling services, and annual turnover requirements. The Court found that these conditions had sound rationale, such as promoting regional connectivity, ensuring expertise with scheduled aircrafts, and requiring financial strength, and were not arbitrary or discriminatory. The Court held that the High Court erred in striking them down. (Paras 3.2-3.4) D) Statutory Interpretation - MSME Orders - Applicability to Tenders - MSME Order, 2012; MSME Order, 2018 - The Supreme Court considered the applicability of MSME orders to the tender for ground handling services. The Court held that the reliance on MSME orders was misplaced as the tenders were for selecting ground handling agencies akin to grant of a license, as opposed to procurement of goods and services that form the crux of the MSME orders. The Court also noted that the MSME order's mandate is not absolute and allows departure with reasons. (Paras 3.8-3.9)
Issue of Consideration
Whether the High Court erred in interfering with the tender conditions set by the Airport Authority of India under Article 226 of the Constitution of India, including locus standi of the writ petitioner, arbitrariness of eligibility criteria, and applicability of MSME orders
Final Decision
The Supreme Court allowed the appeals, quashed and set aside the impugned judgment and order passed by the High Court
Law Points
- Judicial review of tender conditions is limited to arbitrariness
- discrimination
- or mala fides
- tender-making authority has commercial wisdom to set terms
- NGOs lack locus standi in tender disputes unless in public interest
- MSME orders not applicable to license-like services
