Terms Of Invitation To Tender Are Not Open To Judicial Scrutiny Unless They Are Arbitrary, Discriminatory Or Mala Fide : Supreme Court

Observing that the terms of invitation to tender are not open to judicial scrutiny, the Supreme Court set aside a Delhi High Court's order which had quashed the Airport Authority of India's tender conditions for selecting Ground Handling Agencies(GHA) agencies at Group D Airports.

A bench comprising Justices MR Shah and Krishna Murari observed that the Delhi High Court committed a "serious error" by entertaining a writ petition at the instance of a third party- an advocacy group called Centre For Aviation Policy -when none of the GHAs challenged the tender conditions. Hence, the writ petition should have been dismissed on the ground of locus standi(Airports Authority of India versus Centre for Aviation Policy).

"In that view of the matter, it is not appreciable how respondent No.1 (CAPSR) - original writ petitioner being an NGO would have any locus standi to maintain the writ petition challenging the tender conditions in the respective RFPs. Respondent No.1 cannot be said to be an" aggrieved party", it said. 

Even on merits, the High Court should not have interfered with the tender conditions, observed the Supreme Court. Referring to various precedents regarding limited scope of judicial interference in tender conditions, the Court said:

"As per the settled position of law, the terms and conditions of the Invitation to Tender are within the domain of the tenderer/tender making authority and are not open to judicial scrutiny, unless they are arbitrary, discriminatory or mala fide. As per the settled position of law, the terms of the Invitation to Tender are not open to judicial scrutiny, the same being in the realm of contract. The Government/tenderer/tender making authority must have a free hand in setting the terms of the tender.

"The courts cannot interfere with the terms of the tender prescribed by the Government because it feels that some other terms in the tender would have been fair, wiser, or logical", the bench said. 

AAI approached the Supreme Court against the order of the High Court dated July 14, 2021, by which it has allowed the said writ petition of the NGO and has struck down the decision to carry out region-wise sub-categorisation of the 49 airports falling under Group D-1 and the stipulation that only previous work experience in respect of providing GHS to scheduled aircrafts shall be considered acceptable. The High Court also found that the revised minimum Annual Turnover criteria of INR 18 crores as discriminatory and arbitrary.

The Supreme Court noted that the AAI explained before the High Court the rationale behind the respective conditions, namely, clustering of 49 airports into 4 region-wise sub-categories/clusters; criteria for evaluation - 36 months experience in the past 7 years in providing 3 out of 7 Core GHS and the financial capacity- Annual Turnover of Rs. 30 crores (modified as Rs. 18 crores) in any one of last three financial years.

"Having gone through the respective clauses/conditions which are held to be arbitrary and illegal by the High Court, we are of the opinion that the same cannot be said to be arbitrary and/or malafide and/or actuated by bias. It was for the AAI to decide its own terms and fix the eligibility criteria", it said. 

Case Title : Airports Authority of India versus Centre for Aviation Policy

Citation : 2022 LiveLaw (SC) 814

Headnotes

Constitution of India- Article 226 - Judicial interference in tender conditions - As per the settled position of law, the terms and conditions of the Invitation to Tender are within the domain of the tenderer/tender making authority and are not open to judicial scrutiny, unless they are arbitrary, discriminatory or mala fide. As per the settled position of law, the terms of the Invitation to Tender are not open to judicial scrutiny, the same being in the realm of contract. The Government/tenderer/tender making authority must have a free hand in setting the terms of the tender-Para 6.

Constitution of India - Article 226 - The courts cannot interfere with the terms of the tender prescribed by the Government because it feels that some other terms in the tender would have been fair, wiser, or logical -Para 7

Constitution of India - Article 226 - Tender condition of Airport Authority of India challenged by NGO - Supreme Court says NGO had no locus standi to challenge as none of the bidders challenged the conditions- Para 5

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