http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 55  

CASE NO.: Appeal (civil)  2515 of 2006

PETITIONER: Reliance Airport Developers Pvt. Ltd

RESPONDENT: Airports Authority of India and Ors

DATE OF JUDGMENT: 07/11/2006

BENCH: ARIJIT PASAYAT

JUDGMENT: JUDGEMENT

ARIJIT PASAYAT, J.

Challenge in this appeal is to the judgment of a Division  Bench of the Delhi High Court.  Decision taken by a group of  Ministers in a matter of joint venture partnership as a part of  the privatization policy of the Government of India was  assailed before the High Court.  

       According to the appellant, the project has to be  grounded because of several major defects which would render  the projects’ take off disastrous. The respondents on the other  hand contend that minor technical flaws, if any, have been  rectified before the ultimate decision was taken and the project  has been rightly held to be in a fit condition to take off.  

       The key players in this dispute are M/s Reliance Airports  Developers Pvt. Ltd. (in short ’RAL’), Airports Authority of India  (in short ’AAI’), Government of India (in short ’GOI’), GMR  Infrastructures Ltd. (in short ’GMR’), GVK Industries Ltd. (in  short ’GVK’).

       Background facts sans unnecessary details are as  follows:

       As a part of the GOI’s avowed policy of privatization of  strategic national assets, the first step appears to be  privatization of two airports i.e. Mumbai and Delhi on a joint  venture basis. In March, 2003 AAI initiated process to  consider modernization of Delhi and Mumbai Airports on the  basis of an earlier decision taken on January 12, 2000 by the  Union Cabinet relating to re-structuring of airports of AAI  through long term leasing route. On 11.9.2003 the GOI  approved restructuring of airports of Mumbai and Delhi  through joint venture (shortly called ’JV’) route and  constituted Empowered Group of Ministers (in short ’EGOM’)  to decide the detailed modalities including design parameters,  bid evaluation criteria etc. based on which JV partners were to  be selected. It was required to submit the final proposal for  Government’s approval. An Inter Ministerial Group (in short  ’IMG’) was set up to assist EGOM for re-structuring of two  airports. The same was set up under the Chairmanship of  Additional Secretary-cum-Financial Adviser of Ministry of Civil  Aviation. Subsequently, on 15.6.2004, EGOM was re- constituted under the Chairmanship of Minister of Defence.  On 12.10.2004 IMG was re-constituted under the  Chairmanship of Secretary, Ministry of Civil Aviation. On the  basis of recommendations made by IMG, EGOM approved

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 55  

appointment of Global Technical Adviser, Legal Consultant  and Financial Consultant (called GTA, LC & FC in short  respectively). They were Airport Planning Ply Ltd., Amarchand,  Mangaldas & Suresh A. Shroff & Co. and ABN AMRO Asia  Corporate Finance (I) Pvt. Ltd (in short Airplan, AMSC and  ABN AMRO respectively). The Consultants prepared the  "Invitation To Register An Expression of Interest" (shortly  called ’ITREOI’) and the same was endorsed by IMG.  Subsequently, EGOM approved the same. On 17.2.2004,  ITREOI was issued for the two airports. Request for proposal  was routed by AAI and the bidders were invited to bid on  certain basis and pattern. The tendering process involved two  tiers; i.e. an Expression Cum Request for Qualification (in  short ’ECRQ’) and a Request for Proposal (in short ’RFP’). At  the RFP stage, evaluation was carried out in four stages. The  first two stages involved verification in the nature of  mandatory norms. The third stage was technical evaluation  stage and the final stage was financial evaluation stage. On  15.2.2005, EGOM finalized and approved key principles of  RFP and draft transaction documents. The RFP documents  were issued on 1.4.2005.          Certain changes to the draft transaction documents were  approved by EGOM. Before such approval, RFP documents of  the two airports were forwarded to the bidders. On 30.8.2005  final transaction documents were forwarded to the bidders.  The deadline for submissions of bids was fixed as 14.9.2005.  There were in fact six bidders for Delhi and five bidders for  Mumbai. On 19.9.2005, a meeting of IMG was held relating to  methodology for evaluation of offers and evaluation criteria in  RFP documents. IMG decided that bid evaluation on all  parameters shall be carried out by a composite team of GTA,  LC and FC. IMG also decided to set up a review committee to  review the evaluation carried out by GTA, LC and FC. The  same was also described as an "Evaluation Committee" (in  short ’EC’).  

       The technical bids were opened on 22.9.2005. On  10.10.2005 Government Review Committee (in short ’GRC’)  was constituted to undertake an independent review of  evaluation report of bids of two airports and re-structuring  process prepared by the Evaluation Committee/Advisers. The  Consultants submitted their evaluation report. GRC held its  meeting on 23.11.2005 and 24.11.2005 to review the  Consultants’ Evaluation Reports. GRC endorsed the views  expressed in the Consultants’ Evaluation Reports. Certain  queries were raised by members of the GRC and the  Consultants clarified the position so far as the queries are  concerned. In the Evaluation Report a list of evaluation criteria  where a different approach has been adopted by the  Consultants was indicated. On 1.12.2005, GRC submitted its  report to IMG. In the meeting of IMG held on 2.12.2005  reports of Consultants and GRC were placed. Consultants  made a representation to the IMG. The majority members felt  that the terms of the RFP had been adhered to and there had  been sufficient transparency in the process. It is to be noted  that one of the members who was the member of the Planning  Commission had recorded his personal opinion. Majority of the  members of the Committee felt that if the entire bid process  was transparent and GRC was satisfied with the process it  would not be necessary to go by the advise of the member of  the Planning Commission and the final decision should be left  to the EGOM. The matter was placed before the EGOM on  5.12.2005. EGOM directed IMG to undertake an independent  review of the Consultants’ evaluation with GRC’s assistance  and give a clear recommendation to EGOM. It was noted that

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 55  

the bid documents could be made available to the IMG and  they could seek clarification from the Consultants. It was felt  that there was no need for change in the evaluation criteria as  stipulated in the RFP documents. It was stipulated that IMG  would not undertake any fresh evaluation or allocate marks  for any of the criteria and finally the mandate of IMG will be  restricted to ascertain as to whether it is in agreement or  otherwise with the assessment/findings and allocation of  marks across various criteria in respect of various bids. IMG  was required to complete the exercise in two weeks. On  6.12.2005 a meeting of the IMG was held. Bid documents were  shown to the members of the IMG. Another meeting was held  on 9.12.2005 and the Consultants were directed to re-work  the marks matrix by strict adherence to RFP norms. On four  days i.e. 12th, 13th, 14th and 16th December, 2005 meeting of  IMG was held. In the meeting queries were raised by IMG  members as to whether evaluation was consistent with the  RFP evaluation criteria and the answers given by the  Consultants. On 20.12.2005 RAL wrote to the Chairman,  EGOM criticizing the SKYTRAX Report and denying that  Consultants acted in an improper/biased manner or that the  technical evaluation conducted by the Consultants was  flawed. RAL wrote another letter on the same day to the EGOM  pointing out its alliance with international players.  

On 21.12.2005 EGOM met to consider the views of the  IMG. It decided that a Committee of Secretaries (in short  ’COS’) should be set up to advise the EGOM on all issues  relating to the restructuring and modernization of the two  airports. The COS was required to consider and recommend  the selection of appropriate JV bidders for executing the works  related thereto. The COS was set up by order dated  21.12.2005 to assist the EGOM. It met and decided to set up  two members Committee consisting of Mr. Sreedharan & Mr.  Sevadasan (hereinafter described as ’Sreedharan Committee’  or Group of Eminent Technical Experts (in short ’GETE’) to  recommend to the COS on the overall validation of the  evaluation process including calibration of the qualifying cut  off and sensitivity analysis.  GETE was accordingly appointed  to review the Consultants’ Evaluation Report (in short ’CER’)  on 27.12.2005.  RAL wrote to the Ministry of Civil Aviation (in  short ’MCA’) asking that copies of its letters dated 20.12.2005  be forwarded to the GETE.  

ABN AMRO wrote a letter regarding clarification sought  by MCA on determination of bids attached to the criteria used  in the technical prequalification of bidders for the two airports.  GETE submitted its report on 7.1.2006. A meeting of the COS  was held on 9.1.2006. On 12.1.2006 a meeting of EGOM was  held where GETE’s report was considered. EGOM felt that the  GETE had apparently done the evaluation of all the bidders as  is evident from the conclusion drawn about status of the other  bidders in para 4.8 of its report. No details of revaluation were  available about the other bidders, as have been provided in  respect of RAL. EGOM therefore decided that in order to reach  a definite conclusion, GETE was to be requested to do a  similar revaluation exercise in respect of other bidders.  Supplementary report of GETE was submitted on 17.1.2006.   On 23.1.2006 RAL Airport Operator wrote to the GOI asserting  that it had the requisite qualification. On 24.1.2006 meeting of  EGOM was held and several decisions were taken. On  28.1.2006 RAL wrote to GOI asking it to adhere to the RFP  norms. On 30.1.2006 AAI wrote to the bidders informing them  that the final bids were to be opened on January 31, 2006.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 55  

On 31.1.2006 Executive Director of AAI informed RAL  that GMR would be given a choice of the two airports and  whichever airport it chooses, it would be required to match the  higher financial bid. On that day itself, RAL wrote to the AAI   alleging change of procedure and protesting against the same.  Later on, the financial bids were opened that day. A report was  submitted by the Committee opening the financial bids. RAL  again wrote to the members of the EGOM alleging illegalities in  consideration of the bids. On the next day again RAL wrote to  the members of the EGOM regarding the events that had  transpired during the opening of bids. AAI wrote to RAL setting  out the procedure followed while opening and evaluating the  financial bids.  

Writ Petition was filed by RAL before the Delhi High  Court on 2.2.2006. On 4.2.2006 GOI informed GMR and GVK  that they have been selected as successful bidders for  undertaking the restructuring and modernization of the Delhi  and Mumbai airports respectively and required them to  furnish enhanced bid bonds guarantees for Rs.500 crores.  Both GMR and GVK furnished their bid bonds guarantees of  Rs.500 crores each on 6.2.2006 and 8.2.2006.  

On 1.3.2006 Special Purpose Vehicle (in short ’SPV’) was  formed for Delhi while on the next day SPV was formed for the  Mumbai airport. On 4.4.2006 Operations Management and  Development Agreement (in short OMDA’) was signed by the  concerned parties. At this stage, it would be appropriate to  take note of what has been described as OMDA. Shareholders  agreement with GMR and GVK was signed. Consequently 26%  shares in SPV were allotted to AAI and 74% shares allotted to  GMR. Similarly, 26% shares in SPV were allotted to AAI and  74% shares allotted to GVK.  

By the impugned order, RAL’s writ petition before the  Delhi High Court was dismissed by order dated 21.4.2006.     

       The primary stand of the appellant is that the EGOM/  GOI should have accepted the recommendations of the EC and  should not have asked the GETE to make further examination.   It is submitted that GETE did not examine the queries relating  to GMR as raised by the IMG and the reduction of technical  qualification from 80% to 50% was impermissible. It is also  submitted that the appointment of GETE itself was illegal and  unauthorized.  The High Court proceeded on the basis as if  EGOM had absolute discretion in the matter of choosing the  modalities. It is also submitted that the uniform pattern of  assessment has not been done and while reducing the marks  so far as the appellant is concerned, similar procedure has not  been adopted so far as GMR and GVK are concerned. In the  initial assessment, only the GMR and the appellant had  crossed the bench mark. If in respect of one airport GMR was  given the option of matching the financial bid of the appellant,  in respect of the other airport similar option should have been  given to the appellant who was at the relevant point of time  and even now willing to match the financial bid of GVK. There  was no justification for reduction of standard from 80% to  50%, particularly when at all stages EGOM had emphasized  that there shall not be any compromise with quality. The  argument that any bidder who had crossed the mandatory  requirement stage would be competent to execute the contract  is completely erroneous since in that case there was no need  to fix the high bench mark of 80%. Appellant had scored over

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 55  

80% on the development side and fell short of merely 6% less  than 80% on the management side. The award of contract to  the third ranked bidder i.e. GVK who had scored only 59% on  the development side and whose bid had been adversely  commented upon by all committees is against public interest.  The bench mark of 80% had been approved by the EGOM. The  EC expressly recommended against lowering the bench mark  and the EGOM in its meeting on 5.12.2005 had also wanted  the bench mark to remain at 80%. GETE had also not  recommended lowering of the bench mark.    

       The constitution of GETE was without jurisdiction as it  was outside the RFP.  Allegations made by the respondents in  the arguments that EC was biased are not factually correct.   As noted above, GETE was not competent to deal with the  issues relating to airports and, therefore, it was not a  competent body to express any view. GETE’s evaluation of  appellant’s bid was wrong and it should not have interfered  with EC’s evaluation.  Different weightages were justified in  case for criteria 1.2.2 and 1.2.3 and also in respect of criteria  3.1.1 and 3.1.2. GETE’s view as regards non aeronautical  revenue being less than 40% is not correct. Its view about the  lack of experience of operating in a non-OECD country is also  erroneous. The marking system for absorption of AAI  employees as done in the case of the appellant has been  wrongly interfered with.  

Appellant has contended that EC has given marks on the  basis of RFP parameters. According to it, the parameters were  fixed by the GOI or the EC. The question is not of allotting  marks, the real issue is whether right parameters have been  applied. It has been emphasized that the other Committees  consisted of mainly bureaucrats or persons with inadequate  technical knowledge, only the EC was an expert body and,  therefore, its view had to be given primacy.  

       GMR had qualified in both the bids. Appellant has  contended that the option of choosing one of the airports  should not have been given to GMR but it should have been  allotted the Mumbai airport because of its superior quality of  bid in respect of the said airport. By giving option to choose  one of the airports, the fate of the appellant was sealed  because in the other, it had fallen below the bench mark.  Though in one case, appellant’s bid was above the bench mark  and its bid was the best amongst those who were below the  bench mark in respect of the other airport, it has not been  able to get any of the airports.          Despite the specific mandate GETE had not examined the  queries qua the other bidders. Objective criteria assessment  which was the foundation for GETE’s decision has no basis. In  fact GETE itself had indicated that the assessment was  subjective in totality. By making an artificial distinction  between the subjective and objective queries, the real essence  has been lost and unacceptable yardsticks have been applied.   Queries made by members of the Review Committee,   comments of the EC, comments of the Planning Commission’s  representatives and the various queries raised by IMG have  been either lightly brushed aside or not considered by the  GETE. The decision for lowering of technical standard was  arbitrary. EGOM should have examined the conflicting reports  given by the experts. Since no reason has been given by EGOM  to adopt the report of the GETE by giving its preference over  the report of EC, same cannot be maintained. Report of GETE  was not independently examined. By reducing the bench  mark, the zone of consideration was enlarged and it was

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 55  

against public interest. Since different yardsticks have been  adopted and a partisan approach has been adopted, the  decision is clearly unsustainable and is amenable to judicial  review. Selective examination by GETE is not bona fide though  no personal allegation of mala fide is made against the  members of GETE. Adoption of technical criteria for one  airport and financial criteria for the other is not in accordance  with law.  

       In response, learned counsel for the GMR, GVK, Union of  India and the AAI have submitted that the appellant is trying  to enlarge the scope of judicial review. It is not a case of non  existence of power. It essentially relates to exercise of power.  The appellant is trying to contend that the report of EC was  sacrosanct and GETE’s report was not to be accepted. GETE  has formed its view as to how the allotment of marks made by  EC was clearly not in line with the prescription made in the  RFP.  Marks have been allotted by EC on irrational basis and  even marks had been awarded when no marks were to be  awarded. Even the EC while commenting upon the  weaknesses of the airport development plan of GMR itself had  said that the weaknesses would be sorted out at the stage  when the master plan is drawn up. It is pointed out  that EC  on whose evaluation appellant has led great stress found only  one flaw with the plan given by GVK i.e. lack of re-use of  existing facilities and the high cost limits to assess it as  medium. This is really a non-factor, according to learned  counsel for GVK, because plan envisages fresh creation of  assets at Mumbai airport whose existing buildings are out- dated. It is characterized as a lack of reuse as well as involving  high costs. It is pointed out that GVK’s development plan took  note of much larger amount of fresh development of assets  considering that the existing buildings are out-dated. It has  also considered that large sum of money for rehabilitation of  the slum dwellers is required as they would have to be re- housed if a realistic plan for expansion of facilities and  runways was to be drawn up. The development in each of the  phases of the 20 years of projected development was also a  relevant factor. There was departure by EC from the norms in  various cases without good reasons. Where there is such  departure it shows arbitrariness. This is a case which relates  to judicial review of the exercise of power and not the existence  of power.  

       It is pointed out that the basic fallacy in the argument of  the appellant is its stress on EC being the only advisor to  assist the EGOM in arriving at a decision.  It is submitted that  as rightly observed by the High Court, it was a part of multi-  tier decision making process and appointment of GETE is a  part of the process. It is pointed out that though the appellant  has challenged the constitution of GETE, it, in uncertain  terms, asked the GETE to assess the materials placed before it  by the appellant. The EGOM has given reasons for the  appointment of GETE.  

       The EC was not designated in the RFP as an external  expert agency on whose evaluation the Government was  obliged to act. In fact at the first stage itself GRC was  constituted to review the evaluation done by EC.  The report of  EC had no binding effect on the IMG much less the EGOM.   The AAI required permission from the Cabinet for privatization  of airports. The ultimate decision making authority was  EGOM. However, since the decision making process involved  inputs from series of ’in house’ committees, this creation of  GETE is in fact a part of ’in house mechanism’. This itself is

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 55  

clear from the fact that several Committees were constituted  like EC, GRC, IMG and COS. In view of the existence of  various tiers in the decision making process, EGOM who has  delegated the power of Cabinet did not exceed the powers by  setting up the committees. If the appellant’s submission is  accepted, even the GRC, IMG and COS being not the  committees mentioned specifically in the RFP, their  constitution would be vulnerable.  This is certainly not a case  of the appellant and these were not external agencies. These  committees form part of the ’in-house mechanism’ for  evaluation of the bids. Their reports were to be used as inputs  in the final decision making process and thus imparted a great  deal of transparency. Judicial review cannot involve evaluation  of the comparative merits.

       It has also been emphasized that the various discussions  in the Committees established beyond doubt that the Union of  India wanted a transparent process to be adopted considering  the fact that this was a first case of private JV. It enabled the  EGOM to take note of various view points and take the final  decision. These discussions strengthened the decision making  process and did not weaken it as contended by the appellant.  It has also been submitted that the conduct of the appellant is  itself contrary to the norms fixed by the RFP. Though it was  specifically indicated that there shall not be any contract with  the authorities connected with the decision making process,  several times appellant wrote letters relating to matters which  were under consideration. It baffles one as to how the  appellant had knowledge as to what had transpired in the  meetings. It was conveniently mentioned that the source of  appellant’s knowledge was "newspapers’ reports". The  appellant therefore has clearly violated the norms fixed by RFP  and on that score alone, its bid should have been kept out of  consideration.  A person who seeks relief on equitable ground  should have clean conduct and surreptitious methods adopted  by it cannot be condoned and this, according to learned  counsel for the respondents, is an additional factor to dismiss  the appeal filed by the appellant.         

       It appears that whatever has been discussed in the  various meetings apparently found its way outside. Who was  responsible for the leak is not very clear but it is not a very  healthy trend. The meetings were highly confidential and  sensitive in nature dealing with global tenders.  

       Various clauses of RFP which have relevance read as  follows:

1               INTRODUCTION 1.1     Purpose of this RFP The purpose of this Document is to: \025 Provide an overview of the process for Stage 2 of the  restructuring and modernization of Mumbai Airport  Transaction; \025 Specify the terms and procedures governing the  transaction process for selecting Joint Venture Partners  and for the Joint Venture Company (JVC) to be  incorporated for the Airport; \025 Specify the requirements for the preparation and  lodgement of binding offers and  \025 Outline the approach that will be used in evaluating  Binding Offers.  

Terms used in this RFP are defined in the Glossary section  of this RFP.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 55  

1.2     Other Documentation and Information In addition to this RFP, Pre Qualified Bidders (PQB) will be  issued the following documentation and material: \025 An Information Memorandum for the Airport; \025 Draft Transaction Documents for the Airport (open for  discussions before finalising the terms and conditions); \025 Specialist Reports and AAI data substantially in CD ROM  form with some documents in hard copy form for the  Airport.

AAI may choose to update, vary or add to all or some of this  information (including this RFP) at any time during the  Transaction process.  

A separate document will be provided to PQB outlining the  times, dates and venues of their scheduled meetings with  the AAI, the Airport management team and parties of the  GTT, as relevant and necessary.

1.3 Confidentiality

PQB receiving this RFP must have completed and returned  the required, duly executed Confidentiality Deed.

PQB are reminded that information provided in this RFP  and the accompanying documentation package is covered  by the terms of the Confidentiality Deed and the Disclaimer  set out herein. PQB are also reminded that they are not to  make any public statements about the Transaction process  or their participation in it.

1.4     The Transaction

AAI is offering a long term Operations, Management and  Development Agreement to suitably qualified, experienced  and resourced parties to design, construct, operate,  maintain, upgrade, modernize, finance, manage and develop  the Airport. The Successful Bidder will participate in a Joint  Venture Company with the AAI (and other GOI public sector  entities) and such JVC shall be awarded the right to  operate, manage and develop the Airport.

An overview of the indicative Transaction structure is set  out in Appendix G.

The key features of the Transaction are as follows: \025 the Operations, Management and Development Agreement  will be for an initial period of 30 years with the JVC having  the right to extend this by a further 30 years, in  accordance with the terms and conditions of the  Transaction Documents. \025 the Successful Bidder will have an initial 74% equity  interest and AAI, along with other GOI Public Sector  Entities, will have 26% equity interest in the JVC.

\025 AAI will endeavor to contribute (without any binding  commitment) equity funds in cash in proportion to its  equity share to assist the JVC in funding working capital  and major developments upto a cap of Rs.5000 million  (Rupees five thousand million) for the Airport.  It is AAI’s  intention to maintain 26% equity share capital in the JVC.

\025 If AAI along with other GOI Public Sector Entities does not  wish to contribute to further equity calls, the JV Partners

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 55  

will contribute the additional equity and the equity  interest, of AAI and other GOI Public Sector Entities will be  correspondingly reduced but the voting rights with regard  to reserved board and shareholder matters (as contained  in the Shareholders Agreement) will be preserved in the  manner set forth in the Shareholders Agreement.

\025 JVC will have an Employee Arrangement for a period of  three years whereby AAI employees (other than those  pertaining to ATC and CNS departments) posted at the  Airport on Effective Date continue to provide their services  at the Airport. Further the JVC will be required, during the  three years period to make offers of employment in order  to absorb a minimum of 40% (or such higher percentage  as committed by the Bidder) of the existing AAI employees  working at the Airport excepting those engaged in  Communication Navigation Surveillance (CNS), Air Traffic  Management (ATM), Security, as reduced for retirements,  resignations, transfers and death. Employment offers can  be made at any time during this Employee Arrangement  Period but in no event later than three (3) months prior to  the end date of the Employee Arrangement Period. At the  end of this Employee Arrangement Period those employees  who do not take up the employment offers or who are not  made such an employment offer will return to the services  of AAI. Additional weightage is provided in the evaluation  process to Bidders who commit to make offers of  employment in order to absorb more than the minimum  level of 40%. There will be a financial penalty, as set out in  the OMDA, for any shortfall between the 40% or such  higher nominated percentage and the result actually  achieved.

\025 Due to the public and economic importance of the Airport  a State Support Agreement will be entered into between the  JVC and GOI.  The State Support Agreement will address  matters such as principles of economic regulation,  approvals, assistance with licensing and coordination with  government agencies. Under the State Support Agreement,  the JVC for a specific Airport will have a "Right of First  Refusal (ROFR)" with regard to the second airport in the  vicinity (except in the case of a proposed new airport in/for  Pune) on the basis of a competitive bidding process, in  which the JVC can also participate. In the event, the JVC is  not the successful bidder, the JVC will have the ROFR by  matching the first ranked bid in terms of the selection  criteria for the second airport, provided the JVC has  satisfactory performance without any material default at the  time of exercising the ROFR.

It is the endeavour of the AAI/GOI that a State  Government Support Agreement will be entered into with  the State Government of Maharashtra wherein the said  State Government will provide assistance on a best  endeavour basis on dealing with encroachments,  reservation of land for settlement of encroachments and  assistance in making land available if required for  aeronautical purposes, surface land transport access to the  Airport, expediting applicable clearances and the provisions,  where applicable, of essential utility services. However,  bidders should note that the exact form of the State  Government Support Agreement and contents thereof will  be decided upon receipt of feedback from the said State  Government. Upon receipt of feedback from the said State  Government and finalization of form and contents of the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 55  

State Government Support Agreement, the same will be  provided to Pre-Qualified Bidders.

The JVC for the Airport will have a lease over the land  and assets (with certain exclusions which are not limited  only to carve out assets listed in the schedule to the Lease  Deed) of the Airport for the tenure of the OMDA.

The JVC will enter into separate MOUs with various  agencies such as Customs, immigration, Health and Plant  and Animal Quarantine to deal with issues relating to  space, performance standards, facilitation/coordination  mechanism.

The JVC will be required to prepare a Master Plan for the  development, expansion and modernization of the Airport,  covering a time period of 20 years as well as the ultimate  vision of the Airport at full aeronautical development and to  submit this for approval of MCA within the stipulated time  frame as outlined in the Transaction Documents. The  Master Plan has to be consistent with the Initial  Development Plan submitted as part of the Binding Offer.  Thereafter, the JVC will be required to update the Master  Plan every ten years (or upon occurrence of certain traffic  trigger events or as and when circumstances warrant). In  addition, each major development requires the preparation  and approval of a Major Development Plan setting out the  proposed details of the development.

The Airport, in recognition of its natural monopoly  position, will be subjected to economic regulatory measures.  The regulatory authority or the GOI (until such regulatory  authority is in place) will set a price cap for aeronautical  charges and will be entitled to impose other standards.

Over the tenure of the OMDA, the Joint Venture  Company will pay both a nominal lease rental and a fee  (consisting of an upfront fee of Rs.1,500 million (Rupees one  thousand five hundred million) and an annual fee expressed  as a percentage of gross revenue of the Airport) for the right  to operate, manage and develop the Airport. The fee will be  calculated annually in advance on projected revenue, paid  monthly and with an adjustment at the end of each quarter  to reflect any difference between actual and projected  revenue. Revenue for this purpose shall mean all pre-tax  gross revenue of JVC, excluding the following: (a) payments  made by JVC, if any, for the activities undertaken by  Relevant Authorities; (b) Insurance proceeds except  insurance indemnification for loss of revenue; (c) any  amount that accrues to JVC from sale of any capital assets  or items, (d) Payments and/or monies collected by JVC for  and on behalf of any governmental authorities under  applicable law.  It is clarified that annual fee payable to AAI  and Employee Arrangement costs payable to AAI shall not  be deducted from revenue,

2 GOVERNMENT OBJECTIVES, REQUIREMENTS AND  REGULATION

2.1  Key Strategic Objectives

Key strategic objectives of the GOI are:         World class development and expansion:  Ensure world class phased development and  expansion such that the JVC meets its commitments

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 55  

through the timely provision of high quality airport  infrastructure, on both the airside and landside, to meet  growing demand; and

World class airport management:

Ensure the creation of world class airport  management team and systems through the selection of  serious, committed Successful Bidders with suitable  operational expertise, managerial and financial  capability, Financial commitment and the commitment to  provide quality airport services, in order to transform the  present Airport into world class international airport.

2.2 Other Transaction Objectives In addition to the key strategic objectives, other  Transaction objective include: Timely completion end certainty of Transactions,  with minimal residual risks. Appropriate financial consideration for the right to  operate, manage and develop the airport. Smooth transition of operations from AAI to JVC. Appropriate regulation- achieving economic  regulation of aeronautical assets that is fair,  commercially and economically appropriate, transparent,  predictable, consistent and stable while protecting the  interests of users and ensuring that the Airports are  operated and developed in accordance with world  standards; Fair and equitable treatment of AAI employees,  including preservation of accrued entitlements. Diversity of ownership between Mumbai and Delhi  Airports, to enhance competition, encourage innovation  and allow competitive benchmarking,  and Ensure satisfaction on the part of passengers and  airlines by the provision of quality services and the  provision of State-of-the-art facilities.

The GOI’s key strategic and other Transaction objectives  will provide the means of establishing the bid evaluation  criteria.  

2.3      Management and Development Requirements Reflecting the focus on the strategic objectives, Bidders  will be required to present as part of their Binding Offer a  fully detailed Business Plan and Initial Development Plan,  as well as a Transition Plan and certain other documents.  These documents will be an important element in the  selection of the Successful Bidder for the Airport.

TERM OF REFERENCE

1.0     Scope of work 1.1     The scope of work for the FINANCIAL CONSULTANT shall  consist of the following: a.      Updating of the traffic, financial, commercial and  operational data pertaining to the two airports; b.      Organizing Road Shows in India and/or abroad, if  required; c.      Preparation of the Request for Expression of interest  (RFEOI), Request for Proposal (RFP), draft concession  agreement, draft Joint venture agreement and all other  necessary project documentation. d.      Determining the pre-qualification criteria, technical and  financial evaluation criteria which will include

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 55  

formulation and analysis of various options along with  the recommended approach in respect of the same; e       Evaluation of Expressions of Interests and Technical and  Financial proposals received.  f.      Organizing and managing interactions and  communications with the potential bidders; g.      Negotiation assistance together with other advisors to AAI  in successfully concluding the transaction; h. Work closely with AAI on overall coordination and  management of various aspects of the transaction; i.      Any other work as may be required for the successful  completion of the transaction, Glossary Words and phrases used in the document have the meaning  set out below.                   AAI Airports Authority of India

Airport Operator -       The Entity in the Consortium submitting  the Binding Offer who has been identified  as such by the Bidder and who is  assessed for the necessary qualifications  for operating, managing and developing a  major international airport which seeks to  provide airport management services to  the Joint Venture Company.

Financial Consultant  or ABN AMRO ABN AMRO Asia Corporate Finance (I) Pvt.  Ltd. being the financial adviser to the  Transaction. Foreign Airline(s)  Means a Foreign Entity that provides air  transport services.  GTA or Global  Technical Adviser or  Airplan The technical adviser, to AAI advising on  the technical aspects in relation to this  Transaction, being Airport Planning Ply  Ltd. (Airplan). Initial Development  Plan The Development Plan submitted by the  Bidder(s) an part of their Offer which sets  out plans over a calmed period for the  development of the Airport to meet traffic  growth as per the terms hereof. ITREOI The Invitation to Register an Expression of  interest document issued by AAI in  relation to the Transaction. Legal Consultant or  AMSS The legal adviser to the Transaction, being  Amarchand & Mangaldas & Suresh  A.Shroff & Co.

5.      EVALUATION OF STAGE 2 OFFERS 5.1 Overview of Evaluation Process

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 13 of 55  

This section sets out the approach that will be applied by  the AAI and its advisers when evaluating Offers.  General  Guidance in relation to the relative importance of each of  the criteria and certain tender requirements are set out  below.

The approach to be followed will be undertaken in four  phases as set out in summary form in the figure below: Phase                                                           Explanation

Phase 1

Assessment   of   Mandatory Requirement

? Any Bidder not  meeting the  mandatory  requirement will  have its Offer  removed from  further  consideration.

?  ??   Clarification

Phase 2

Assessment   of   Financial Commitment

?

Debt and equity  commitment as  specified at  Appendix A is  evaluated and  Offers not  meeting the  requirement are  excluded from  further  consideration.

?

Phase 3 Technical Pre- Qualifications ?Management Capability,

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 14 of 55  

Commitment and value  add

?Development Capability,  Commitment and value  add

?

All remaining  offers are  assessed on  technical  prequalification  criteria and only  those assessed  with technical  pre-qualification  on each of the  two criteria of  80% or more  proceed to Phase  4

?

Phase 4 Assessment of Financial  Consideration ? The offer of the  Bidder with  highest Financial  consideration for  the Airport is  selected as  Successful  Bidder

5.2 Mandatory Requirement The Mandatory Requirements for Stage 2 Offers are as  follows:

Mandatory Requirements for Stage 2 Offers \025 Confirmation of acceptance of final  Transaction  Documents \025 Confirmation that the Networth criteria of the Bidder as  per the requirement in the ITREOI document continues to  be fulfilled \025 No Consortium member or Group Entity of a Consortium  member or nominated Airport Operator is participating in  more than one Consortium bidding for the same  Airport \025 Consortium has an Airport Operator who has relevant and  significant experience of operating, managing and  developing airports. \025 Confirm that the Offer is capable of acceptance anytime  during the Bid Period  \025 Confirm that the offer commits the Offeror to the  mandatory capital projects and/the Initial Development  Plan is in accord with the Development Planning.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 15 of 55  

\025 Principles and the Traffic Forecast (It is to be noted that  Traffic Forecasts are only the Base level forecast) \025 Equity Ownership in the Joint Venture Company by a  Scheduled Airline and their Group Entities does not exceed  l0% and there is no participation by any airline that is a  Foreign Entity and their Group Entities, subject to the  exemption of group Entities that are existing airport  operator. \025 FDI in the JVC does not exceed 49% \025 Minimum equity ownership by Indian Entities (other than  AAI/GOI public sector entities) in the JVC is 25% \025 Provision of suitable probity and security statements \025 Lodgement of Offer that incorporates all the material  required as set out in Appendices A to E, inclusive, in this  Document \025 Submission of Bid Bond.

5.4 Assessment of Technical Pre-Qualification The Technical pre-qualification is based on two global pre- qualification criteria \025 Management Capability, Commitment and Value Add \025 Development Capability, Commitment and Value Add Each of these is assessed in terms of a set of pre- qualification criteria and supporting pre-qualification  factors that are detailed in the Section 5.6.

The purpose of the Technical Pre Qualification phase is to  ensure that only those Bidders that can address the GOI’s  strategic objectives are evaluated at the final phase of the  evaluation process and that only Bidders satisfying the  benchmark of 80% under the technical pre qualification  requirements are allowed into the final phase of Evaluation.   A scoring system will be applied based on the assessment  of the evaluation terms of the Offer against the Technical  pre-qualification criteria. Each of the two global pre- qualification criteria is assessed out of a possible 100  marks. The assessment is on an absolute basis not relative  as between the Offers. Hence there is no predetermined  number of Offers that will be considered in the final phase.

5.6 Technical Pre-Qualification Criteria and Factors This section sets out the pre-qualification criteria and pre- qualification factors that will be used to assess each of the two  global pre-qualification factors.

Pre-Qualification  Criteria Pre- Qualification  Criteria  Weighting  Pre-Qualification  factors Global Technical Pre- Qualification  Criteria: (A) Management Capability,  Commitment and Value Add

Sub Criteria: (i) Management Capability (a) Experience of the  nominated Airport

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 16 of 55  

Operator 25 Each of the following to be  supported by documents  case studies and relevant  statistics (PAX and cargo  statistics for each airport  nominated)

Number, scale and  geographic diversity of  airports operated and  managed by the airport  operators with substantial  domestic, international and  cargo operations including  specific role of the airport  operator in respect of each of  these operations

Experience in operating  global or regional hub  airports, including achieving  improved connectivity.

Track record in route and  traffic development and in  managing relations with  airlines and other key  stakeholders.

The level of service quality  performance achieved at  major airports managed by  the Airport Operator and  trends over the last 5 years.

Experience if any, with  operating a multi-airport  system.

The performance of  commercial operations at  major Airports managed by  airport Operators, covering  retail, property and other  commercial operations,  focusing on airport where  non-aeronautical revenue is  40% or more of total  revenue.

Performance in turning  around and improving  aeronautical and non- aeronautical operations at  airports.

Experience in operating and  developing airports in non- OECD countries and a track  record in improved  performance.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 17 of 55  

Experience in proactive  environmental monitoring,  evaluation, planning and  implementation of  environmental systems and  improvements.       (b) Experience of the  other Prime Members  (separately  identifying and  evaluating Indian  and non-Indian  Prime Member  experience on an  equal weight basis). 12.5 Commercial/retail  experience Experience with major  property development Experience with major  infrastructure developments. Experience with handling  HR issues in ownership  change situations.

        Sub Criteria:            (ii) Management Commitment (a) Commitment of  airport operator  12.5 Level of equity commitment

Performance based nature of the  Airport Operator Agreement

Experience and level of  management resources  committed to the transaction in  each area of airport management  including:

?       Traffic and route  development and marketing ?       Aeronautical operations ?       Cargo handling ?       Slot management ?       Terminal operations ?       Airport Retail operations ?       Airport Property operations ?       Environmental  Management

(b)Commitment by  other Prime Members  (separately  identifying and  evaluating Indian  Prime Members. 12.5 Experience and level of  management resources  committed by the other Prime

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 18 of 55  

Members in non-aeronautical  operations and development   

6.7 Variations to the RFP AAI/GOI reserves the right, in its absolute discretion and at  any stage, to cancel, add to or amend the information, terms,  procedures and protocols set out in the RFP. PQB and  Consortium member will have no claim against AAI with  respect to the exercise, or failure to exercise, such rights.

6.12      Other AAI rights:  AAI/GOI reserves the right in its absolute discretion without  liability and at any stage during the Transaction process, to:  ? Add to, or remove parties from any shortlist of PQBs or  Bidders; ? Require additional information from any PQB or Bidders; \025 Vary its tender requirements; \025 Terminate further participation in the Transaction process  for any PQB or Bidder; \025 Change the structure and timing of the Transaction process;  \025 Accept or reject any Offer at any time for any reason; \025 Not provide PQBs or Bidders any reasons for any actions or  decisions it may take including in respect of the exercise by  the AAI of any or all of the above mentioned rights; and \025 Take such other action as it considers, in its absolute  discretion, appropriate in relation to the Transaction process  for the Airport.                         xx              xx                      xx APPENDIX ’A’ (Information to be included in offer)                         xx              xx                      xx A.7 Relevant Management Experience and Expertise xx              xx                      xx  (c) In addition, please provide information on any experience  that the airport operator has with turning around the  performance of under performing airports and in the  operation, management, development of major airports in  developing countries and handling human resource  management issues in ownership change situation, including  privatization.

               xx                      xx                      xx

A.11.  Initial Development Plan

The Initial Development Plan must be prepared in conformity  with the Airport Development Planning Principles set out in  the Transaction Document, shall incorporate the mandatory  capital projects as set out in the Transaction Documents and  shall use the base Traffic Forecasts prepared by SH&E. Where  the PQB has a strong view that an alternative traffic forecast is  significantly more likely to occur, it can indicate the  implications for the timing of the implementation of the  development plan.

The Offer should provide the following information in the  Initial Development Plan: (a)      A long-term airport development vision for year 20 and  the ultimate vision for the Airport showing the following:

(i). The full configuration of the Airport  identifying all aeronautical facilities and their  operating capacity and all commercial  development areas and their functions. (ii). Information on traffic, passenger and

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 19 of 55  

cargo flows, both landside and airside.

(b) The development path for the Airport leading up to its  long-term vision in year 20, shown in five (5) yearly  stages for each functional area, namely airfield, apron,  passenger terminals, cargo terminals, car parks, city side  access roads and commercial area together with capital  expenditure estimates. The development path should  show the linkage of the development to traffic projections,  with the indicated trigger points for both the  commencement of the development and its completion. (c) An outline of how the development path can be flexibly  adjusted to accommodate both lower and higher traffic  flows than the base projection used for Airport  development planning. (d) Set out how it is planned to fully maintain  aeronautical operation during the development phase. (e) Explain how key stakeholders will be involved during  both the planning and implementation stages, including  the preparation of the Master Plan, identifying issues  that will need to be addressed and the approach to each  issue. (f) Identify any constraints that will negatively impact on  the Development Plan, explain the extent of the impact  and any mitigating strategy proposed.

       Pivotal challenge by the appellant is to the constitution of  GETE and the scope for its constitution. It is to be noted that  the ultimate authority to take the decision in the matter was  EGOM. It was within the powers of EGOM to decide as to what  inputs it can take note of and the source of these inputs.  Therefore, the necessity for taking views of various committees  constituted appears to be a step in the right direction. This  was a step which appears to have been taken for making the  whole decision making process transparent. There was no  question of having the view of one Committee in preference to  another. EC was a Committee constituted as a part of the  decision making process like other Committees vis. GRC, COS  and IMG.  

       In the multi tier system in the decision making process  the authority empowered to take a decision can accept the  view expressed by one committee in preference to another for  plausible reasons. It is not bound to accept the view of any  committee. These committees, it needs no emphasis, are  constituted to assist the decision making authority in arriving  at the proper decision. It is a matter of discretion of the  authority to modify the norms. It is not a case of absolute  discretion.  

       While exercising the discretion, certain parameters are to  be followed.   "Discretion" said Lord Mansfield in R. V Wilkes (1770 (4)  Burr 2527, ’when applied to a court of justice, means sound  discretion guided by law. It must be governed by rule, not by  humour; it must not be arbitrary, vague and fanciful but legal  and regular. (See Craies Statute Law, 6th Edn. P.273 and  Ramji Dayawala & Sons (P) Ltd. v. Invest Import (1981 (1) SCC  80).

       ’Discretion’ undoubtedly means judicial discretion and  not whim, caprice or fancy of a Judge. (See Dhurandhar  Prasad Singh v. Jai Prakash University and Ors. (2001 (6) SCC  534). Lord Halsbury in Sharp v. Wakefield (1891 AC 173)

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 20 of 55  

considered the word ’discretion’ with reference to its exercise  and held: "Discretion" means when it is said that something is  to be done within the discretion of the authorities that  something is to be done according to the rules of reason and  justice, not according to private opinion: (Rooke case (1598) 5  Co. Rep. 99b, 100a) according to law, and not humour. It is to  be, not arbitrary, vague, and fanciful but legal and regular.  And it must be exercised within the limit, to which an honest  man competent to the discharge of his office ought to continue  himself. (See Kumaon Mandal Vikas Nigam Ltd. v. Girja  Shankar Pant and Ors. (2001 (1) SCC 182).  

       ’Discretion’ when applied to a court of justice, means  sound discretion guided by law. It must be governed by rule,  not by humour; it must not be arbitrary, vague and fanciful  but legal and regular.  

Though the word, discretion’ literally means and denotes  an uncontrolled power of disposal’ yet in law, the meaning  given to this word appears to be a power decide within the  limits allowed by positive rules of law as to the punishments,  remedies or costs. This would mean that even if a person has  a discretion to do something the said discretion has to be  exercised within the limit allowed by positive rules of law. The  literal meaning of the word ’discretion’ therefore, unmistakably  avoids untrammeled or uncontrolled choice and more  positively pointed out at there being a positive control of some  judicial principles.  

Discretion, in general, is the discernment of what is right  and proper. It denotes knowledge and prudence, that  discernment which enables a person to judge critically of what  is correct and proper united with caution; nice discernment,  and judgment directed by circumspection: deliberate  judgment; soundness of judgment; a science or understanding  to discern between falsity and truth, between wrong and right,  between shadow and substance, between equity and  colourable glosses and pretences, and not to do according to  the will and private -affections of persons. When it is said that  something is to be done within the discretion of the  authorities, that something is to be done according to the  rules of reason and justice, not according to private opinion;  according to law and not humour. It is to be not arbitrary,  vague, and fanciful, but legal and regular. And it must be  exercised within the limit, to which an honest man, competent  to the discharge of his office ought to confine himself (Per Lord  HALSBURY, L C. in Sharp v. Wakefield. (1891) Appeal Cases  173.  

The word "discretion’ standing single and unsupported  by circumstances signifies exercise of judgment, skill or  wisdom as distinguished from folly, unthinking or haste;  evidently therefore a discretion cannot be arbitrary but must  be a result of judicial thinking. (33 Bom 334) The word in itself  implies vigilant circumspection and care: therefore, where the  Legislature concedes discretion it also imposes a heavy  responsibility.  [(See National Insurance Co. Ltd. v. Keshav  Bahadur,  AIR 2004 SC 1581, 1584, para 10) (AIR 1933 Sind  49)].

The discretion of a Judge is the law of tyrants; it is  always unknown. It is different in different men. It is casual,  and depends upon .constitution, temper, passion. In the best  it is often times caprice; in the worst it is every vice, folly, and

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 21 of 55  

passion to which human nature is liable," said Lord Camden,  L.C.J., in Hindson and Kersey, (1680) 8 How St Tr 57. as cited  in National Insurance Corporation Ltd. v. Keshav Bahadur,  AIR 2004 SC 1581, 1584, para 11 and  Kumaron Mandal  Vikas Nigam Ltd. v. Girja Shanker Pant, (2001) 1 SCC 182).  

If a certain latitude or liberty accorded by statute or rules  to a Judge as distinguished from a ministerial or  administrative official, in adjudicating on matters brought  before him. It is judicial discretion. It limits and regulates the  exercise of the discretion, and prevents it from being wholly  absolute, capricious, or exempt from review.

In "ADVANCED LAW LEXICON" BY P. RAMANATHA  AIYAR, it has been stated as follows: "Discretion. Power of the Court or arbitrators to decide as  they think fit. The word "discretion" connotes necessarily an  act of a judicial character, and, as used with reference to  discretion exercised judicially, it implies the absence of a hard- and-fast rule, and it requires an actual exercise of judgment  and a consideration of the facts and circumstances which are  necessary to make a sound, fair and just determination, and a  knowledge of the facts upon which the discretion may properly  operate. [Corpus Juris Secundum, Vol. 27, page 289 as  referred in Aero Traders Pvt. Ltd. v. Ravinder Kumar Suri, VI  (2004) SLT 428, 430, para 6]"

"A discretion", said Lord WRENBURY, "does not empower  a man to do what he likes merely because he is minded to do  so, he must in the exercise of his discretion do not what he  likes but what he ought. In other words, he must, by the use  of his reason, ascertain and follow the course which reason  dictates." (Roberts v. Hopwood, 1925 AC 578). This approach  to construction has two consequences the statutory discretion  must be truly exercised, and when exercised it must be  exercised reasonably. (MAXWELL).

"Discretion", said Lord MANSFIELD in R. v. Wilkes,  (1770) 98 ER 327), ’when applied to a Court of justice, means  sound discretion guided by law. It must be governed by rule,  not by humour, it must not be arbitrary, vague, and fanciful  but legal and regular. (See Craies on Statute Law, 6th Edn.  P.273)    ’Discretion’ means when it is said that something is to  be done within the discretion of the authorities that that  something is to be done according to the rules of reason and  justice, not according to private opinion: Rooke’s case  according to law, and not humour. It is to be not arbitrary,  vague and fanciful, but legal and regular. Lord HALSBURY LC  in Susannah Sharp v. Wakefield, (1891) AC 173 at p. 179  referred to in Siben Kumar Mondal v. Hindustan Petroleum  Corporation Ltd, (AIR 1995 Cal 327, 333-335). (See also Aero  Traders Pvt. Ltd. v. Ravindra Kumar Suri, VI (2004) SLT 428,  430, para 6; Man Mal Sharma v. Bikaner Sahkari Upbhokta  Bhandar, (AIR 1999 Raj 13, 18) and  Rekha Bhasin v. Union of  India,  (AIR 1998 Del 314, 322.)

Discretion, Lord MANSFIELD stated in classic terms in,  John Wilke’s case, (1970) 4 Hurr 2528, must be a sound one  governed by law and guided by rule, not by humour; Lord  DENNING put it eloquently in Breem v. Amalgamated  Engineering Union, (1971) 1 All ER 1148, that in a  Government of Laws’  "there is nothing like unfettered

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 22 of 55  

discretion immune from judicial reviewability." Courts stand  between the executive and the subject alert, to see that  discretionary power is not exceeded or misused. Discretion is a  science of understanding to discern between right or wrong,  between shadow and substance, between equity and  colourable glosses and pretences and not to do according to  one’s wills and private affections. Lord BRIGHTMAN elegantly  observed in the case of, Chief Constable of North Sales Police  v. Evans, (1982) 3 All ER 141 that:

"Judicial review, as the words imply is  not an appeal from a decision, but a  review of the matter in which the decision  was made."  

"The judge, even when he is free, is still not wholly free. He is  not to innovate at pleasure. He is not a knight-errant roaming  at will in pursuit of his own ideal of beauty or of goodness. He  is to draw his inspiration from consecrated principles. He is  not to yield to spasmodic sentiment, to vague and unregulated  benevolence. He is to exercise a discretion informed by  tradition, methodized by analogy, disciplined by system, and  subordinated to ’the primodial necessity of order in the social  life’. Wide enough in all conscience is the field of discretion  that remains." BENJAMIN CARDOZE in ’The Nature of  Judicial Process’.  

The power to decide within the limits allowed by positive  rules of law as to punishments, remedies or costs and  generally to regulate matters of procedure and administration;  discernment of what is right and proper [See Article 136(1),  Constitution)

’Discretion’ is governed by rule and it must not be  arbitrary, vague and fanciful. (See Jaisinghani v. Union of  India, AIR 1967 SC 1427, 1434).

When any thing is left to any person, Judge or magistrate  to be done according to his discretion, the law intends it must  be done with sound discretion, and according to law, (Tomlin).  In its ordinary meaning, the word signifies unrestrained  exercise of choice or will; freedom to act according to one’s  own judgment; unrestrained exercise of will; the liberty of  power of acting without other control than one’s own  judgment. But, when applied to public functionaries, it means  a power or right conferred upon them by law, of acting  officially in certain circumstances according to the dictates of  their own judgment and conscience, uncontrolled by the  judgment or conscience of others. Discretion is to discern  between right and wrong; and therefore whoever hath power to  act at discretion, is bound by the rule of reason and law. ( 2  Inst. 56, 298; Tomlin) There may be several degrees of Discretion, discretio  generalis, discretio legalis, discretio specialis,- Discretio  generalis is required of every one in everything that he is to do,  or attempt "Legalis discretio", is that which Sir E Coke  meaneth and setteth forth in Rooke’s and Keighley’s cases and  this is merely to administer justice according to the prescribed  rules of the law.

"The third discretion is where the laws have given no  certain rule .... and herein discretion is the absolute judge of  the cause, and gives the rule." (Callis. 112. 113) DISCRETION, FREE AND UNQUALIFIED, The "free and

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 23 of 55  

unqualified discretion" to refuse or grant licences, which is  given to justices by the Beer Dealers Retail Licences is  absolute as well as regards the renewal of an old, as the grant  of a new, licence. (R. v. Kay, 52 LJMC 90). Discretion, Judicial is a certain latitude or liberty  accorded by statute or rules to a judge as distinguished from a  ministerial or administrative official, in adjudicating on  matters brought before him, The use of the word "judicial"  limits and regulates the exercise of the discretion, and  prevents it from being wholly absolute, capricious, or exempt  from review. But the presence of the word "discretion" permits  the judge to consider as a judge, what are vaguely termed, all  the circumstances of the case and the purpose for which he is  invested with the considerations of convenience or utility or  saving of expense rather than on considerations of strict law  or technicalities.

Such discretion is usually given on matters of procedure  or punishment, or costs of administration rather than with  reference to vested substantive rights. The matters which  should regulate the exercise of discretion have been stated by  eminent judges in somewhat different forms of words but with  substantial identity. When a statute gives a judge a discretion,  what is meant is a judicial discretion, regulated according to  the known rules of law, and not the mere whim or caprice of  the person to whom it is given on the assumption that he is  discreet (Lee v. Bude Railway Co., (1871) LR 6 CP 576, 580,  WILLES, J.; and see Morgan v. Morgan, 1869, LR 1 P & M 644,  647). "That discretion, like other judicial discretions, must be  exercised according to common sense and according to justice,  and if there is a miscarriage in the exercise of it, it will be  reviewed; but still it is a discretion, and for my own part I  think that when a tribunal is invested by Act of Parliament, or  by rules, with a discretion, without any indication in the Act or  rules of the grounds on which the discretion is to be exercised,  it is a mistake to lay down any rules with a view of indicating  the particular grooves on which the discretion would run, for if  the Act or rules did not fetter the discretion of the judge, why  should the Court do so?" Gardner v. Jay, (1885) 29 Ch D 50 at  58, per BOWEN, L.J.) (See also 5 Cal 259) Discretion of Court. "Ability to discern by the right line of  law, and not by the crooked cord of private opinion, which the  vulgar call discretion"; freedom to act according to the  judgment of the Court, or according to the rules of equity, and  the nature of circumstances; judicial discretion regulated  according to known rules of law; legal discretion, and not  personal discretion sound discretion guided by fixed legal  principles".  

       In the instant case, though the High Court seems to have  noted that the EGOM has absolute discretion, it has really not  held that the discretion was unfettered. In fact it has on facts  found that the discretion was properly exercised to make some  variations in the terms of RFP.  

       Coming to the constitution of GETE, no mala fides are  alleged against the members. It is only the method of  evaluation done by GETE which is challenged apart from  contending that GETE should not have been constituted.  About the constitution of GETE, as noted above, the stand is  clearly untenable. So far as evaluation of the marks as done  by EC is concerned, GETE has given reasons for altering the  marks allotted which ultimately led to the non qualification of  the appellant.  There were four identified areas where it was  noted that the EC’s approach in the evaluation exercise was

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 24 of 55  

inconsistent with the terms of the RFP.  

       EGOM in its order dated 27.12.2005 constituting GETE,  stipulated as follows: "The Group would particularly look into and  present its recommendations before the COS  on:

(a) Overall validation of the evaluation  process, including calibration of the  qualification and sensitivity analysis. The  sensitivity analysis will cover the impact  of inter-se weightages of sub-criteria as  well as scoring.

b) The issues raised by the Members of  the Inter Ministerial Group about the  evaluation process.

c) An overall assessment of transparency  and fairness of the evaluation process,  including steps required, if any, to  achieve a transparent and fair outcome.

d) Suggestions for improving the selection  process for Joint Venture Partner in the  future."

Essentially there were four instances of rewriting of  priorities and weightages as contained in the RFP and  valuation was then made by the EC on the basis of these re- written priorities and weightages.  These were as follows; (i)     Change in priority in the matter of  absorption of staff,

(ii)    Changing the weightage ascribed to  property development by merging the  marks for infrastructure development  and property development,

(iii)   Changing of the weightage ascribed to  non-aeronautical development by failing  to consider aeronautical revenue of 40%  as a "threshold" - less than which would  not get any marks, and

(iv) Changing the weightage of experience in  respect of a non-OECD airport by  treatment of a OECD airport on par with  non-OECD airports.

As regards (i), the EC divided the marks between 3.1.1  and 3.1.2 unequally, and also awarded marks for the extent of  absorption proposed from a baseline of Zero -instead of a  baseline of 40% which was the mandatory absorption criteria.  The RFP accorded a priority to a higher absorption of existing  staff by the new company. The EC proceeded to modify this  priority. It opined that the overall approach was more  important than absorption, and gave marks accordingly.  So  far as (ii) is concerned, the EC again altered the weightages  accorded in the RFP, which considered experience in "property  development" as valuable as "infrastructure development" and  thereby put each of them as a sub-head. According to EC, the  former was not as important as the latter and thus gave 1.6  marks for the former (1.2.2) and 4.7 marks for the latter

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 25 of 55  

(1.2.3.).

As consequence of (iii) above, EC gave marks to the  appellant who had projected less than 40% non-aeronautical  revenue- whereas the RFP clearly gave a weightage to  aeronautical revenue beyond 40%. As rightly contended by the  respondents, if a project has a high revenue share given to the  government, then aeronautical revenue being regulated, the  incomes would flow from non-aeronautical revenues. However  generation of such non-aeronautical revenues would involve a  larger capital investment in property development. EC (a) gave  less marks to GVK because it had a high capital outlay  projected (as compared to the appellant), (b) did not regard  experience in property development as having the same  priority as infrastructure development, and (c) gave marks to  the appellant for its non-aeronautical  revenue, although its  projected revenue was less than 40%.

As a consequence of (iv) above, EC gave marks to the  appellant for Mexico Airport which is admittedly an OECD  Airport - on the spacious reasoning that it is virtually like a  non-OECD Airport since Mexico is like a developing country.          Relevant portions of GETE’s reports read as follows: FIRST REPORT DATED 7.1.2006                 xx              xx              xx                      xx "2.1. The Group of Eminent Technical Experts (GETE)  had their first meeting and deliberations on Friday, 30th  December, 2005\005\005\005\005The presentation was basically  for explaining the contents of the Request for Proposal  (RFP), the approach adopted by the EC in evaluating the  technical bids and the views expressed by Inter  Ministerial Group (IMG) on the EC evaluation. The EC  explained that the weightage marks for the two criteria  and sub-criteria were already indicated in the RFP for the  information of bidders. Splitting up these marks to the  different sub-factors of sub-criteria was done by the E.C.  based on the mandate given to them by the I.M.G. On  query from the GETE, they formed that after the  technical bids were opened certain clarifications were  invited from bidders mainly to sort out discrepancies in  their submittals and not for eliciting additional  Information or submission of additional documents. E.C.  stated that the assignment of marks for technical  evaluation was done strictly based on the submittals of  the tenderers.

2.2 The GETE again met on 2 January when only Shri  Sanjay Narayan and Dr. Sihag were present. The  Consultants were not invited to this meeting. In this  meeting Shri Sanjay Narayan handed over to the GETE a  copy of the Note prepared for the Committee of  Secretaries (COS) dated  23rd December, 2005 together  with all Annexures which also contained details of marks  assigned (both original and revised) to the Consortiums A  to E in The Annexure IX and Appendix- II to Annexure  XII to the Note. In this meeting, the GETE enquired at  what stage the apportionment of marks to the sub- factors was done by the EC and whether after assigning  these marks, the same had the approval of the I.M.G. The  GETE also wanted to know whether after assigning the  marks to the sub-factors, the same were kept in a sealed  cover to obviate the possibility of any changes or  alterations to these marks during evaluation stage. The  GETE also enquired whether a formal Tender Committee

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 26 of 55  

was appointed for the technical and financial evaluation  of the bids and whether the Airport Authority of India, as  the owner, was associated in the technical evaluation. It  was informed to the GETE that there was no Tender  Committee per se and the assignment of marks to the  sub-factors was done entirely by the EC. (The Global  Consultants) and at no stage Airport Authority of India  was associated in assessing and assigning the marks.  The GETE was informed that the E.C. had taken about  one and a half  months to complete this exercise,  scrutinizing about 40,000 pages of submissions.

2.3 The GETE again met on 4th January, 2006 when  ABN-AMRO’s letter dated 3rd January, 2006 in reply to  queries raised was handed over to the GETE (Annexure- B.). From this letter it appears inter-se weightage and  marks to the sub-factors were finalized prior to assigning  scores on the offers, but there was no categorical  assertion that this was finalized before the exercise was  started and kept seated. We are only pointing out that  since these inter-se weightages were not approved by the  Government and kept sealed, the possibility of these  being changed during the course of evaluation cannot be  ruled out.

2.4     With all the papers made available to the GETE, the  need for seeking further clarification from the EC was not  felt. Therefore, they were not invited for any further  clarification by the GETE.

3. Scrutiny of the evaluation procedure adopted by EC.: 3.1:1 We (GETE) did not call for the technical bid papers  nor perused the same. We also did not make any attempt  for a fresh technical evaluation of the bids by assigning  marks to the sub-criteria and sub-factors. Our attempt  was to assess whether the E.C. had assigned weightages  and marks in a logical and transparent manner to the  sub-factors and whether there has been any bias in  favour of or against any of the bidders while assigning  marks. For this we relied upon the RFP and the mark  sheets attached to the Note prepared for the Committee  of Secretaries. 3.1.2 While examining the assignments of marks to the  various bidders we kept in mind the issues raised by the  members of the Inter Ministerial Group but we were not  solely guided by their views. We also examined in a  dispassionate way whether there was any flaw or bias in  the exercise of subjectiveness while assigning marks to  the different consortiums. Our observations in this  matter are briefly given as under- 3.1.3 The Global Consultants prepared ITREOI in  January, 2004 which was approved by the IMG in  February, 2004 but the appointment of the Global  Consultants was approved by EGOM in April, 2004. Thus  the Consultants started working even before their  appointment was approved. 3.1.4 From the report of the Govt. Review Committee, it  is seen that the Evaluation Committee (E.C.) has stated  that their evaluation was not based merely on the  submittals but they relied upon some published  statistics, information available within their setup and  their own perception and understanding of various  aspects of Evaluation (Please refer GRC’s) report on their  meeting dated 23rd/24th November, 2005). This is not in  conformity to RFP.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 27 of 55  

               xx              xx                      xx 4.2     There are 8 sub-criterions in the criteria no. 4.1.1  out of which 4 have further sub-factors. Similarly there  are 11 sub-criterions in the criteria 4.1.2 out of which 8  have further sub-factors. 4.3 Through allocation of weightage to different sub- criterions were  indicated in RFP, weightage to different  sub-factors were not indicated but was assigned later by  EC based on IMG directions. EC has not confirmed  explicitly whether these  weightages were assigned before  or after opening of bids. Certain anomalies have been  observed in the allocation of the weightages. While equal  weightage has been allocated to most of the sub- factors;  un-equal allocation has been done in two cases (1.2.2  /1.2.3 & 3.1.1/3.1.2). The justification given by EC that  these sub-factors are of different importance is not  considered satisfactory and convincing because such a  logic can apply to many other sub-factors as well. Since  weightages of these sub-factors were not mentioned in  RFP and allocation of equal weightage has been done in  majority of sub-factors, we feel the same concept of equal  weightage should have been adopted for these two sub- factors also. By assigning different weightages there is  room to suspect that some of the bidders have been  favoured.  4.4. In sub-factor 1.1.6, the assessment of performance  of commercial operations of major airports covering retail  property and other commercial operations was to be done  focusing on Airports having non-aeronautical revenue of  40% or more of total revenue. Though non-aeronautical  earnings of bidder "E" are only 37%, but they have been  given 75% marks. This is considered to be in non- conformity of the RFP. The explanation of EC that  wording of the Clause did not make the 40% mandatory  is not convincing. In any case, since the non-aeronautical  earnings of "E" was less than the threshold limit of 40%,  assigning a high score of 75% was not justified. This  should have been of the order of 40% to 50%. 4.5 In sub-factor 1.1.8, the assessment of operating in  non-OECD countries was to be as per the RFP. Bidder ’E’  operating in Mexico, which, is an OECD country, has  been awarded 75% marks, which is not in conformity to  RFP. The explanation given by EC to IMG that the bidder  has Airport development experience in other developing  countries like Ecuador, Uruguay and Guatemala, is not  considered convincing. Our considered opinion is the  "track record in improved performance" is also to be  judged only in the context of a non-OECD country.  Therefore, awarding marks against this item is not  considered in conformity to the item in RFP. 4.6 In sub-factor 3.1.2 (proportion of AAI Staff targeted  for absorption into JVC by year 3), EC has awarded 50%  marks for minimum 40% absorption and remaining 50%  on prorata basis between 40% to 100% absorption. Since  RFP has stipulated 40% absorption as minimum  acceptable and additional weightage has been  contemplated for a higher proportion of absorption, we  feel it is more reasonable and rational to distribute full  marks \005\005\005\005 to 100% absorption. 4.7 If moderation of marks for the above mentioned items  is done, following reduction in the score of bidder ’E’ will  take place:

Sr. No. Item

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 28 of 55  

Mumbai Delhi (i) If equal  weightage is  given to sub-factors  1.2.2 & 1.2.3. 1.1 1.1 (ii)  If equal  weightage is  given to sub-factors  3.1.1 & 3.1.2. 0.5 0.6 (iii) If the marks of sub- factor 1.1.6 given for  non-aeronautical  revenue less than 40%  are reduced from 75 %  to 50%. 0.7 0.7 (iv) If score of sub-factor  1.1.8 given for  experience in an OECD  country, is excluded. 2.1 2.1 (v) If marking system of  sub-factor 3.1.2 as  modified keeping ’0’ for  40% absorption and ’5’  for 100% absorption. 1.6 1.9

Total (i) to (vi) 6.0 6.4

Resultant score of ’E’  for criteria 4.1.1. 75.0 74.6

From the above, it is clear that the above moderation clearly  disqualifies bidder ’E’ in criteria 4.1.1.

4.8 Modernization exercise attempted above will not  make any material difference in the position of bidders  ’A’, ’C’, ’D’ and ’F’ who will remain still disqualified. In  regard to bidder ’B’ he will still be well above the  qualifying marks of 80%. In fact his position would  improve marginally. Therefore, we have not attempted to  moderate the marks of the other bidders based on our  observations of paras 4.3 to 4.6.

4.9 While scrutinizing the marks for criteria 4.1.2 we  have the following observations to make:-

The GETE have not studied the development  plan of this bidder or any other bidder  for that

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 29 of 55  

matter. We have also not discussed this with the  GTA (Air Plan). Considering the type of deficiencies  in the developmental plans pointed out by AAI, we  feel the marking of bidder ’E’ has been on a liberal  side in regard to sub-criteria 6.1 to 6.5.  This will  also be the marks if we compare the marks scored  by bidder ’B’ vis-‘-vis marks scored by bidder "E" in  regard to Delhi Airport as brought out under:-

Maximum Score Score of ’B’ Score of ’E’ Delhi 44.5 30.2 43.0

4.10. Admittedly bidder B has better credentials, for  airport development and such vast difference in marks  scored by bidder ’E’ over bidder ’B’ cannot be easily  explained. We feel that if the rational approach has been  adopted bidder ’E’ who now gets qualified by 0.3 marks  for Mumbai and by 1.1 marks for Delhi would have been  disqualified. 4.11 Since in any case in our view bidder ’E’ gets  disqualified on the basis of our assessment contained in  Para-4.7 above, we are of the opinion that qualifying  bidder ’E’ technically is not correct.

SECOND REPORT OF GETE DATED 13th JANUARY, 2006 "xx             xx                      xx              xx Based on the methodology adopted by GETE for  moderating the marks of bidder ’E’, we have now  moderated the scores of all other bidders as well.  Based  on this exercise, the marks secured by the different  bidders are given in a tabulated form separately for Delhi  and Mumbai Airports".

A- Table showing moderated scores of all the bidders in criteria ’A’  (Management Capabilities) for Mumbai Airport Sl. No. Weightage A B C D E F 1.1 25.0 6.7 22.5 17.1 19.7 19.6 17.2 1.2 12.5 2.8 9.7 9.7 4.7 9.2

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 30 of 55  

9.5 2.1 12.5 5.4 7.1 11.7 6.7 9.6 8.8 2.2 12.5 5.0 10.0 11.3 5.0 11.3 10.0 3.1 12.5 6.9 10.5 10.9 7.2 10.8 10.5 3.2 12.5 2.5 12.5 5.0 7.5 11.3 11.3 3.3& 3.4 12.5 6.3 12.5 7.5 6.3 9.4 8.8 Total 100 35.6 84.8 73.2 57.1 81.2 76.1 Score as per shift  35.5  84.7 73.1  57.0  81.0 76.0 Moderation due to

(i) If equal weightage  is given to sub-factor

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 31 of 55  

1.2.2 and 1.2.3 + 0.96 -0.21 -0.02 -0.02 -1.09 -0.23 (ii) If equal weightage  is given to sub-factor  3.1.1 and 3.1.2 +1.85 -0.81 +0.35 -0.32 -0.49 -0.81 (iii) If the marks of  sub-factor 1.1.6 given  to ’E’ for non- aeronautical revenue  less than 40% are  reduced from 75% to  50% - others no  change.   0.0 0.0 0.0 0.0 -0.70 0.0 (iv) If score of sub- factor 1.1.8 given for  experience in OECD  country to ’E’ is  excluded - others no  change.    0.0 0.0 0.0 0.0 -2.1 0.0 (v) If marking system  of sub-factor 3.1.2 is  modified keeping ’0’  for 40% absorption  and ’5’ for 100%  absorption.   0.0 -1.98 -0.17 -3.13 -1.82 -1.98 Total variation +2.81 -3.00 +0.16 -3.47 -6.20 -3.02 Revised score 38.3 81.7 73.3

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 32 of 55  

53.5 74.8 73.0

B- Table showing moderated scores of all the bidders in criteria ’A’  (Management Capabilities) for Delhi Airport

Sl. No. Weightage A B C D E

1.1 25.0 6.7 22.5 17.1 19.7 19.6

1.2 12.5 2.8 9.7 9.7 4.7 9.2

2.1 12.5 7.5 7.1 11.7 6.7 9.6

2.2 12.5 5.0 10.0 11.3 5.0 11.3

3.1 12.5 6.9 10.5 10.9 7.2 10.6

3.2 12.5 2.5 12.5 5.0 7.5 11.3

3.3 &  3.4

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 33 of 55  

12.5 6.3 12.5 7.5 6.3 9.4

Total 100 37.7 84.8 73.2 57.1 81.0

Score as per shift  37.6 84.7 73.1 57.0 80.9

Moderation due to

(i) If equal weightage  is given to sub-factor  1.2.2 and 1.2.3 + 0.96 -0.21 -0.02 -0.02 -1.09

(ii) If equal weightage  is given to sub-factor  3.1.1 and 3.1.2 +1.85 -0.81 +0.35 -0.32 -0.60

(iii) If the marks of  sub-factor 1.1.6 given  to ’E’ for non- aeronautical revenue  less than 40% are  reduced from 75% to  50% - others no  change.   0.0 0.0 0.0 0.0 -0.70

(iv) If score of sub- factor 1.1.8 given for  experience in OECD  country to ’E’ is

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 34 of 55  

excluded - others no  change.    0.0 0.0 0.0 0.0 -2.1

(v) If marking system  of sub-factor 3.1.2 is  modified keeping ’0’  for 40% absorption  and ’5’ for 100%  absorption.   0.0 -1.98 -0.17 -3.13 -1.60

Total variation +2.81 -3.00 +0.16 -3.47 -6.09

Revised score 40.4 81.7 73.3 53.5 74.8

     As rightly pointed out by learned counsel for the  respondents that if EC felt that the priorities and weightages  as indicated in the RFP were inappropriate, it should have  requested AAI/GOI to amend the RFP before the bids were  received. Interestingly, the modifications were resorted to after  the bids were opened.  That is the principal reason for which  EGOM appears to have sought views of the COS and the COS  was equally entitled to invite a group of experts to examine the  matter.          The details relating to the marks allotted to the bids are  as follows:          Delhi airport                     Sl.  No. Name of  Bidder Technical evaluation Financial  Bid %

Management  capability Development  capability

Pre-

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 35 of 55  

Sridharan Post- Sridharan

1 Reliance- ASA    (Bidder E) 80.9 74.8 81.0 45.99 2 GMR- Frapport  (Bidder B) 84.7 81.7 80.1 43.64 3 DS  Construction  Munich  Airport  (Bidder C) 73.1 73.3 70.5 40.15 4 Sterlite -  Macquarie  (Bidder D) 57.0 53.5 61.9 37.04 5 Essel - TAV  (Bidder A) 37.6 40.4 41.4 Bid not  opened                                                                          

Mumbai Airport

Sl.  No. Name of  Bidder Technical evaluation Financial  Bid %

Management  capability Development  capability

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 36 of 55  

Pre- Sridharan Post- Sridharan

1 Reliance- ASA    (Bidder E) 81.0 74.8 80.2 21.33 2 GMR- Frapport  (Bidder B) 84.7 81.7 92.7 33.03 3 DS  Construction  Munich  Airport  (Bidder C) 73.1 73.3 54.7 28.12 4 Sterlite -  Macquarie  (Bidder D) 57.0 53.5 65.1 Bids not  opened 5 Essel - TAV  (Bidder A) 35.5 38.3 29.4 Bids not  opened 6 GVK-ACSA  (Bidder F) 76.0 73.0 59.3 38.70

       Learned counsel for the respondents have emphasized  that a curious feature of the four changes is that at least three  of them were in principle designed to enable the appellant to  get over the shortcomings in its bid. It is to be noted that the  appellant had no property development experience. It had  projected less than 40% non aeronautical revenue and had a

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 37 of 55  

partner from an OECD country.  

       The GETE’s report shows that even taking these four  modifications led to some of the bidders getting more marks.  GVK and others did not cross the bench mark of 80% and  even after exclusion of these marks, GMR had more than 80%  marks. It was only the appellant who crossed the threshold of  80% on account of these four variations and fell below 80%  when the effect of these four variations was excluded.  

       Departure from the RFP made by EC after opening the  bids can reasonably raise a doubt that EC knew that the  modalities would benefit the appellant. In any event, it is not  necessary to go into the question whether EC was partial to  the appellant because that is nobody’s case, though it has  been submitted that after opening the bids, EC made the  variations and beneficiary was the appellant.  

       GETE’s report shows that it enunciated the principle to  carry out an exercise that would be more in the nature of  validation dealing with the four variations made by EC.

       GETE also noted that certain issues can be more  satisfactorily addressed by process of validation that would  involve a re-allocation of marks, on the assessment made by  the EC of the bids albeit in a manner that would be consistent  with the RFP. It essentially was not an exercise of re- evaluation but of a re-allocation consistent with RFP.  

       As noted in GETE’s first report, its attempt was to assess  whether EC had assigned weightages and marks in a logical  and transparent manner to the sub-factors and whether there   had been any biased in favour of or against any of the bidders  while assigning marks, with reference to the RFP.  While  making such examination, the issues raised by the members  of IMG were kept in view, but as stated in the report, GETE  was not solely guided by their views.            Though the first report itself indicated the reasons as to  why the evaluation process containing the moderation exercise  was not undertaken in respect of bidders, as desired by EGOM  GETE did so and submitted its second report. Undisputedly,  GMR crossed the bench mark of 80% in respect of both the  bids while others did not.  

       Challenge has been made by the appellant to the  lowering of the bench mark. It is to be noted that the appellant  had come into the zone of consideration only because of  lowering of the bench mark as otherwise after the  modifications were made by GETE, it had not crossed the  bench mark.  

       The appellant’s stand that if none was found eligible on  the basis of 80% bench mark, there should have been a fresh  bid, has been answered by the respondents. It has been  pointed out that the number of bidders was small. The bidders  after opening of the bid knew the merits and demerits of all  the bids. There was an urgency for early completion of the  airports keeping in view the 2010 Commonwealth Games.  

       The scope for judicial review of administrative actions  has been considered by this Court in various cases.  

One of the points that falls for determination is the scope  for judicial interference in matters of administrative decisions.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 38 of 55  

Administrative action is stated to be referable to broad area of  Governmental activities in which the repositories of power may  exercise every class of statutory function of executive, quasi- legislative and quasi-judicial nature. It is trite law that  exercise of power, whether legislative or administrative, will be  set aside if there is manifest error in the exercise of such  power or the exercise of the power is manifestly arbitrary (See  State of U.P. and Ors. v. Renusagar Power Co. and Ors. (AIR  1988 SC 1737). At one time, the traditional view in England  was that the executive was not answerable where its action  was attributable to the exercise of prerogative power. Professor  De Smith in his classical work "Judicial Review of  Administrative Action" 4th Edition at pages 285-287 states the  legal position in his own terse language that the relevant  principles formulated by the Courts may be broadly  summarized as follows. The authority in which a discretion is  vested can be compelled to exercise that discretion, but not to  exercise it in any particular manner. In general, a discretion  must be exercised only by the authority to which it is  committed. That authority must genuinely address itself to the  matter before it; it must not act under the dictates of another  body or disable itself from exercising a discretion in each  individual case. In the purported exercise of its discretion, it  must not do what it has been forbidden to do, nor must it do  what it has not been authorized to do. It must act in good  faith, must have regard to all relevant considerations and  must not be influenced by irrelevant considerations, must not  seek to promote purposes alien to the letter or to the spirit of  the legislation that gives it power to act, and must not act  arbitrarily or capriciously. These several principles can  conveniently be grouped in two main categories: (i) failure to  exercise a discretion, and (ii) excess or abuse of discretionary  power. The two classes are not, however, mutually exclusive.  Thus, discretion may be improperly fettered because irrelevant  considerations have been taken into account, and where an  authority hands over its discretion to another body it acts  ultra vires.  

       The present trend of judicial opinion is to restrict the  doctrine of immunity from judicial review to those class of  cases which relate to deployment of troupes, entering into  international treaties, etc. The distinctive features of some of  these recent cases signify the willingness of the Courts to  assert their power to scrutinize the factual basis upon which  discretionary powers have been exercised. One can  conveniently classify under three heads the grounds on which  administrative action is subject to control by judicial review.  The first ground is ’illegality’ the second ’irrationality’, and the  third ’procedural impropriety’. These principles were  highlighted by Lord Diplock in Council of Civil Service Unions  v. Minister for the Civil Service (1984 (3) All.ER.935),  (commonly known as CCSU Case). If the power has been  exercised on a non-consideration or non-application of mind to  relevant factors, the exercise of power will be regarded as  manifestly erroneous. If a power (whether legislative or  administrative) is exercised on the basis of facts which do not  exist and which are patently erroneous, such exercise of power  will stand vitiated. (See Commissioner of Income-tax v.  Mahindra and Mahindra Ltd. (AIR 1984 SC 1182). The effect of  several decisions on the question of jurisdiction have been  summed up by Grahame Aldous and John Alder in their book  "Applications for Judicial Review, Law and Practice" thus:

       "There is a general presumption against  ousting the jurisdiction of the Courts, so that

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 39 of 55  

statutory provisions which purport to exclude  judicial review are construed restrictively.  There are, however, certain areas of  governmental activity, national security being  the paradig, which the Courts regard  themselves as incompetent to investigate,  beyond an initial decision as to whether the  government’s claim is bona fide. In this kind of  non-justiciable area judicial review is not  entirely excluded, but very limited. It has also  been said that powers conferred by the Royal  Prerogative are inherently unreviewable but  since the speeches of the House of Lords in  council of Civil Service Unions v. Minister for  the Civil Service this is doubtful. Lords  Diplock, Scaman and Roskili appeared to agree  that there is no general distinction between  powers, based upon whether their source is  statutory or prerogative but that judicial  review can be limited by the subject matter of  a particular power, in that case national  security. May prerogative powers are in fact  concerned with sensitive, non-justiciable  areas, for example, foreign affairs, but some  are reviewable in principle, including the  prerogatives relating to the civil service where  national security is not involved. Another non- justiciable power is the Attorney General’s  prerogative to decide whether to institute legal  proceedings on behalf of the public interest."

       (Also see Padfield v. Minister of Agriculture, Fisheries and  Food (LR (1968) AC 997).

       The Court will be slow to interfere in such matters  relating to administrative functions unless decision is tainted  by any vulnerability enumerated above; like illegality,  irrationality and procedural impropriety. Whether action falls  within any of the categories has to be established. Mere  assertion in that regard would not be sufficient.  

       The famous case commonly known as "The Wednesbury’s  case" is treated as the landmark so far as laying down various  basic principles relating to judicial review of administrative or  statutory direction.   

Before summarizing the substance of the principles laid  down therein we shall refer to the passage from the judgment  of Lord Greene in Associated Provincial Picture Houses Ltd.  v. Wednesbury Corpn. (KB at p. 229: All ER p. 682).  It reads  as follows:

"......It is true that discretion must  be exercised reasonably. Now what  does that mean?  Lawyers familiar  with the phraseology used in  relation to exercise of statutory  discretions often use the word  ’unreasonable’ in a rather  comprehensive sense. It has  frequently been used and is  frequently used as a general  description of the things that must

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 40 of 55  

not be done. For instance, a person  entrusted with a discretion must, so  to speak, direct himself properly in  law.  He must call his own attention  to the matters which he is bound to  consider. He must exclude from his  consideration matters which are  irrelevant to what he has to  consider.  If he does not obey those  rules, he may truly be said, and  often is said, to be acting  ’unreasonably’. Similarly, there may  be something so absurd that no  sensible person could even dream  that it lay within the powers the  authority....In another, it is taking  into consideration extraneous  matters.  It is unreasonable that it  might almost be described as being  done in bad faith; and in fact, all  these things run into one another."

Lord Greene also observed (KB p.230: All ER p.683)

"....it must be proved to be  unreasonable in the sense that the  court considers it to be a decision  that no reasonable body can come  to. It is not what the court considers  unreasonable. ....  The effect of the  legislation is not to set up the court  as an arbiter of the correctness of  one view over another." (emphasis  supplied)

Therefore, to arrive at a decision on "reasonableness" the  Court has to find out if the administrator has left out relevant  factors or taken into account irrelevant factors.  The decision  of the administrator must have been within the four corners of  the law, and not one which no sensible person could have  reasonably arrived at, having regard to the above principles,  and must have  been a bona fide one.  The decision could be  one of many choices open to the authority but it was for that  authority to decide upon the choice and not for the Court to  substitute its view.

                                           The principles of judicial review of administrative action  were further summarized in 1985 by Lord Diplock in CCSU  case as illegality, procedural impropriety and irrationality. He  said more grounds could in future become available, including  the doctrine of proportionality which was a principle followed  by certain other members of the European Economic  Community. Lord Diplock observed in that case as follows:

       "....Judicial review has I think,  developed to a stage today when,  without reiterating any analysis of  the steps by which the development  has come about, one can  conveniently classify under three  heads the grounds on which  administrative action is subject to

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 41 of 55  

control by judicial review. The first  ground I would call ’illegality’, the  second ’irrationality’ and the third  ’procedural impropriety’. That is not  to say that further development on a  case-by-case basis may not in  course of time add further grounds.  I have in mind particularly the  possible adoption in the future of  the principle of ’proportionality’  which is recognized in the  administrative law of several of our  fellow members of the European  Economic Community."

Lord Diplock explained "irrationality" as follows:

"By ’irrationality’ I mean what can  by now be succinctly referred to as  Wednesbury unreasonableness’. It  applies to a decision which is to  outrageous in its defiance of logic or  of accepted moral standards that no  sensible person who had applied his  mind to the question to be decided  could have arrived at it."               

 In other words, to characterize a decision of the  administrator as "irrational" the Court has to hold, on  material, that it is a decision "so outrageous" as to be in total  defiance of logic or moral standards. Adoption of  "proportionality" into administrative law was left for the future.              In essence, the test is to see whether there is any  infirmity in the decision making process and not in the  decision itself. (See Indian Railway Construction Co.Ltd. v.  Ajay Kumar (2003 (4) SCC 579)

Wednesbury principles of reasonableness to which  reference has been made in almost all the decisions referred to  hereinabove is contained in Wednesbury’s case (supra). In that  case Lord Green MR has held that a decision of a public  authority will be liable to be quashed in judicial review  proceeding where the court concludes that the decision is  such that no authority properly directing itself on the relevant  law and acting reasonably could have arrived it.

The standards of judicial review in terms of Wednesbury  is now considered to be ’traditional’ in England in contrast to  higher standards under the common law of human rights.  Lord Cooke in R v. Secretary of State for the Home  Department, ex parte Daly, (2001) 3 All ER 433 observed:

"And I think that the day will come when it will  be more widely recognized that the  Wednesbury case was an unfortunately  retrogressive decision in English  administrative law, in so far as it suggested  that there are degrees of unreasonableness  and that only a very extreme degree can bring  an administrative decision within the  legitimate scope of judicial invalidation. The  depth of judicial review and the deference due  to administrative discretion vary with the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 42 of 55  

subject matter. It may well be, however, that  the law can never be satisfied in any  administrative field merely by a finding that  the decision under review is not capricious or  absurd."

It is further observed that this does not mean that there has  been a shift to merits review. On the contrary, the respective  roles of judges and administrators are fundamentally distinct  and will remain so. To this extent the general tenor of the  observations in R (Mahmood) v. Secretary of State for the  Home Dept. (2000)1 WLR 840 are correct. And Laws L.J. (at  847 (para 18) rightly emphasized in Mahmood’s case "that the  intensity of review in a public law case will depend on the  subject matter in hand".                                                 (underlined for emphasis)  In Huang & Ors v. Secretary of State for the Home  Department, (2005) 3 All ER 435 it is observed: "50....the depth of judicial review and the  deference due to administrative discretion vary  with the subject matter. Can we find a  principled approach to give this proposition  concrete effect in cases such as these appeals?  In R  (on the application of ProLife Alliance) v  BBC (2003 (2)  All ER 977, Lord Hoffmann  said:

’My Lords, although the word  "deference" is now very popular in  describing the relationship between  the judicial and the other branches  of government, I do not think that  its overtones of servility, or perhaps  gracious concession, are appropriate  to describe what is happening. In a  society based upon the rule of law  and the separation of powers, it is  necessary to decide which branch of  government has in any particular  instance the decision-making power  and what the legal limits of that  power are. That is a question of law  and must therefore be decided by  the courts."                                                                                                  (underlined for emphasis)

       Section 9 of the Judicial Review Procedure Act, 1996  (Canada) states that the Court may reject an application for  judicial review of a statutory power of decision, if there is mere  irregularity in form or a technical irregularity, or if the court  feels that there has been no miscarriage of justice.  

Chapter 5 of the US Code 41 also talks about judicial  review of administrative decisions regarding public contracts.  It states that the courts would not interfere in an award  process unless it is shown to be manifestly fraudulent,  capricious and so grossly erroneous as to imply bad faith.  

       While exercising power of judicial review courts should  not proceed where if two views are possible and one view has  been taken. In such a case, in the absence of mala fide taking

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 43 of 55  

one of the views cannot be a ground for judicial review.  In  Asia Foundation & Construction Ltd. v. Trafalgar House  Construction (I) Ltd. and Ors. (1997(1) SCC 738) this Court  observed as follows:

"9. The Asian Development Bank came into  existence under an Act called the Asian  Development Act, 1966, in pursuance of an  international agreement to which India was a  signatory. This new financial institution was  established for accelerating the economic  development of Asia and the Far East. Under  the Act the Bank and its officers have been  granted certain immunities, exemption and  privileges. It is well known that it is difficult for  the country to go ahead with such high cost  projects unless the financial institutions like  the World Bank or the Asian Development  Bank grant loan or subsidy, as the case may  be. When such financial institutions grant  such huge loans they always insist that any  project for which loan has been sanctioned  must be carried out in accordance with the  specification and within the scheduled time  and the procedure for granting the award must  be duly adhered to. In the aforesaid premises  on getting the evaluation bids of the appellant  and Respondent-1 together with the  consultant’s opinion after the so-called  corrections made the conclusion of the Bank to  the effect  "the lowest evaluated substantially  responsive bidder is consequently AFCONS"  cannot be said to be either arbitrary or  capricious or illegal requiring Court’s  interference in the matter of an award of  contract. There was some dispute between the  Bank on one hand and the consultant who  was called upon to evaluate on the other on  the question whether there is any power of  making any correction to the bid documents  after a specified period. The High Court in  construing certain clauses of the bid  documents has come to the conclusion that  such a correction was permissible and,  therefore, the Bank  could not have insisted  upon granting the contract in favour of the  appellant. We are of the considered opinion  that it was not within the permissible limits of  interference for a court of law, particularly  when there has been no allegation of malice or  ulterior motive and particularly when the court  has not found any mala fides or favouritism in  the grant of contract in favour of the appellant.  In Tata Cellular v. Union of India (1994 (6)  SCC 651) , this Court has held that:   "The duty of the court is to confine itself  to the question of legality. Its concern  should be:

1. Whether a decision-making  authority exceeded its powers,

2. committed an error of law,

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 44 of 55  

3. committed a breach of the rules of  natural justice,

4. reached a decision which no  reasonable tribunal would have  reached or,

5. abused its powers.

Therefore, it is not for the Court to determine  whether a particular policy or particular  decision taken in the fulfilment of that policy is  fair. It is only concerned with the manner in  which those decisions have been taken. The  extent of the duty to act fairly will vary from  case to case. Shortly put, the grounds upon  which an administrative action is subject to  control by judicial review can be classified as  under:

(i)     Illegality: This means the  decision-maker must understand  correctly the law that regulates his  decision-making power and must give  effect to it;  

(ii)    Irrationality, namely, Wednesbury  unreasonableness.

(iii) Procedural impropriety.

The above are only the broad grounds but it  does not rule out addition of further grounds  in course of time."

10. Therefore, though the principle of judicial  review cannot be denied  so far as exercise of  contractual powers of government bodies are  concerned, but it is intended to prevent  arbitrariness or favouritism and it is exercised  in the larger public interest or if it is brought  to the notice of the court that in the matter of  award of a contract power has been exercised  for any collateral purpose. But on examining  the facts and circumstances of the present  case and on going through the records we are  of the considered opinion that none  of the  criteria has been satisfied justifying Court’s  interference in the grant of contract in favour  of the appellant. We are not entering into the  controversy raised by Mr Parasaran, learned  Senior Counsel that the High Court committed  a factual error in coming to the conclusion  that Respondent-1 was the lowest bidder and  the alleged mistake committed by the  consultant in the matter of bid evaluation in  not taking  into account the customs duty and  the contention of Mr. Sorabjee, learned senior  counsel that it has been conceded by all  parties concerned before the High Court that  on corrections being made respondent-1 was  the lowest bidder. As in our view in the matter  of a tender a lowest bidder may not claim an  enforceable right to get the contract though  ordinarily the authorities concerned should

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 45 of 55  

accept the lowest bid. Further we find from the  letter dated 12.7.1996 that Paradip Port Trust  itself has come to the following conclusion:

"The technical capability of any of the  three bidders to undertake the works  is not in question. Two of the bids are  very similar in price. If additional  commercial information which has now  been provided by bidders through  Paradip Port Trust, had been available  at the time of assessment, the outcome  would appear to favour the award to  AFCONS."

11. This being the position, in our considered  opinion, the High Court was not justified in  interfering with the award by going into  different clauses of the bid document and then  coming to the conclusion that the terms  provided for modifications or corrections even  after a specified date and further coming to the  conclusion that Respondent 1 being the lowest  bidder there was no reason for the Port Trust  to award the contract in favour of the  appellant. We cannot lose sight of the fact of  escalation of cost in such project on account of  delay and the time involved and further in a  coordinated project like this, if one component  is not worked out the entire project gets  delayed and the enormous cost on that score if  rebidding is done. The High Court has totally  lost sight of this fact while directing the  rebidding. In our considered opinion, the  direction of rebidding in the facts and  circumstances of the present case instead of  being in the public interest would be grossly  detrimental to the public interest".   

       It is also to be noted that there was no stand before the  High Court that the appellant wanted to match the bid. Even if  it is accepted for the sake of argument,  that was so urged it  would have no consequence.  

A very attractive argument was advanced that as GMR  has been allowed to match the financial dealing of appellant  for Mumbai airport, the same modality should have been  adopted for the other bidders. Though the argument is  attractive, at first flush, it cannot be accepted for the simple  reason that when bench mark is crossed, financial  consideration is the determinative factor because of revenue  sharing.         It is to be noted that though emphasis was led that the  constitution of Committees of non technical persons could not  have thrown much light on the ultimate decision, yet it is to be  noted that all the three Committees were part of the  government machinery. The issue was to assess correctness of  the EC’s decision.       

       Expression of different views and discussions in different  meetings really lead to a transparent process and  transparency in the decision making process. In the realms of  contract, various choices were available. Comparison of the  respective merits, offers of choice and whether that choice has  been properly exercised are the deciding factors in the judicial

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 46 of 55  

review.  

       As has been rightly submitted by learned counsel for the  Union of India, the RFP has to be considered in the context of  other documents like substantial document OMDA, execution  of the agreements culminating to the final master plan. Initial  development plan is nothing but a projection which has to be  broadly in line with OMDA. Undisputedly, OMDA is prepared  by the GOI and AAI. One of the documents in the transaction  documents is OMDA.                 It is to be noted that if no one was qualified, two  alternatives were available either to scrap or abandon the  process and second to re-conduct the tenders. As noted above,  the practical compulsion which made the choice avoidable  cannot be termed as perverse or lacking rationality.  

       The safety valve is the OMDA. The ranking becomes  irrelevant after the bidders have come to the arena and then  finally the financial bid which determines the ultimate bid.  

       It is to be noted that GETE wanted to know as to whether  the variation for allotment of marks in respect of the  development side area was done before opening the bids or  after opening it. EC had given a very evasive answer stating  that same was done before allotting marks. GETE’s job was  not the evaluation but verifying the evaluation process.  GETE’s examination was restricted to see whether alignment  with RFP was correctly done. GETE was not expected to give  fresh opinion and no evaluation was necessary.  

       Weightage introduces subjectivity.  GETE has gone by  objective standards. The criterion adopted by GETE appears to  be more rational. It proceeded with the idea that more  objectivity was necessary. So it has called the process to be  validation process.  

       It is pointed out by learned counsel for the respondents  that parameters for judicial review are different in the matters  of contract for normal case of tenders. In case of commercial  contracts the normal contractual matters are excluded. It is  pointed out that there is no overwhelming public interest  involving such matters. GETE had only touched the fallacious  approach of EC to make the process transparent. The view  taken is a possible view supported by reasons and there  should not be any interference.         

       In the ultimate, the question would be whether in the  process of selection the Government had adopted  transparent  and fair process.  

       While balancing several claims a rational approach is  necessary and that is to be formed in line with the scope of  judicial interference.   

       It is to be noted that Clause 5.5. deals with a situation of  the same bidder being the highest bidder for both the airports.  It proceeds on the basis that there would be another eligible  bidder for the other airport and on that basis the procedure to  be adopted has been prescribed. In such a situation the bidder  who would be successful i.e. the highest bidder would be  asked to take the airport when the difference between his bid  and the next higher bid is greater. Such a procedure could be  followed where there is second valid bid at the final phase.  This procedure does not deal with a situation where there is

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 47 of 55  

only one bidder with valid bids for both the airports. In such a  situation he becomes the highest bidder for both the airports  and for that reason alone, the question of evaluation of  financial bid arises.  

       If the RFP was to consider at the final phase of evaluation  there would be only one bid for each of the airports. In that  event, there would be no question of finding out difference  between the various bids or comparing bids. That left no  option with the EGOM but to either vary RFP or to award one  of the airports to GMR and to cancel the process for the  second or cancel the entire process.  The latter course would  not have been in larger public interest. Therefore, the EGOM  exercised its option.  

       In final analysis, what the EGOM has done is to accept  the report of EC subject to validation done by GETE.  

       The extent of judicial review in a case of this nature  where the texture cannot be matched with one relating to  award of contract, the observations of this Court in Raunaq  International Ltd. v. I.V.R. Construction Ltd. and Ors. (1999  (1) SCC 492) are relevant.  It was observed as follows:

"13. Hence before entertaining a writ petition  and passing any interim orders in such  petitions, the court must carefully weigh  conflicting public interests. Only when it  comes to a conclusion that there is an  overwhelming public interest in entertaining  the petition, the court should intervene."                  The view was re-iterated in Master Marine Services (P)   Ltd. v. Metcalfe & Hodgkinson (P) Ltd. and Anr. (2005 (6) SCC  138).           In the Queen’s Bench decision in R. v. Department of  Constitutional Affairs (2006 All ER (D) 101) it was inter-alia  held as follows:

"It is not every wandering from the precise  paths of best practice that lends fuel to a claim  for judicial review."

        Same would be available only if public law element is  apparent which would arise only in a case of "bribery,  corruption, implementation of unlawful policy and the like". In  the case of commercial contract, the aforesaid view about  wandering was noted. In paras 50 and 51 it was noted as  follows:

       "It does not have the material or expertise  in this context to "second guess" the judgment  of the panel. Furthermore, this process is even  more clearly in the realm of commercial  judgment for the defendant, which judgment  cannot properly be the subject of Public Law  challenge on the grounds advanced in the  evidence before me."                                                It is to be noted that in respect of both the appellant and  the GETE wherever subjectivity criteria is involved, GETE has  not dealt with the same.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 48 of 55  

       The mandate of EGOM was to validate and not to  invalidate. It was a process for overall validation and  calibration to apply the correct standard. It is the texture of  the tendered document which is of paramount importance. EC  has changed the texture whereas GETE did not do it. It needs  no emphasis that uneven denomination breaks the integrity  and textures.   Perverseness in connection with a finding of fact is an  aspect of mistake of law. Linked with the question whether  GETE’s constitution was legal, other question is whether the  jurisdiction conferred on GETE has been properly exercised.   Examination of the second question alone would be necessary  since we have held that constitution of GETE does not suffer  from any infirmity.  In R (Iran) v. Secretary of State (2005  EWCA Civ 982 at para 11) it was  observed as follows:

"It is well known that "perversity" represents a  very high hurdle. In Miftari v. SSHD (2005  EWCA Civ 481) the whole court agreed that the  word meant what it said: it was a demanding  concept. The majority of the court (Keene and  Maurice Kay LJJ) said that it embraced  decisions that were irrational or unreasonable  in the Wednesbury sense (even if there was no  wilful or conscious departure from the  rational), but it also included a finding of fact  that was wholly unsupported by the evidence,  provided always that this was a finding as to a  material matter."    

Opinions may differ as to when it can be said that in the  "public law" domain, the entire proceeding before the  appropriate authority is illegal and without jurisdiction or the  defect or infirmity in the order goes to the root of the matter  and makes it in law invalid or void. The matter may have to be  considered in the light of the provisions of the particular  statute in  question and the fact-situation obtaining in each  case. It is difficult to visualise all situations hypothetically and  provide an answer. Be that as it may, the question that  frequently arises for consideration, is, in what  situation/cases  the non-compliance or error or mistake, committed by the  statutory authority or tribunal, makes the decision rendered  ultra vires or a nullity or one without jurisdiction? If the  decision is without jurisdiction, notwithstanding the  provisions for obtaining reliefs contained in the Act and the  "ouster clauses", the jurisdiction of the ordinary court is not  excluded. So, the matter assumes significance. Since the  landmark decision in  Anisminic Ltd. v. Foreign Compensation  Commission  [(1969) 1 ALL E.R. 208], the legal world  seems to  have accepted that any "jurisdictional error" as understood in  the liberal or modern approach, laid down therein, makes a  decision ultra vires or a nullity or without jurisdiction and the  "ouster clauses" are construed restrictively, and such  provisions whatever their stringent language be, have been  held, not to prevent challenge on the ground that the decision  is ultra vires and being a complete nullity, it is not a decision  within the meaning of the Act. The concept of jurisdiction has  acquired "new dimensions". The original or pure theory of  jurisdiction means "the authority to decide" and it is  determinable at the commencement and not at the conclusion  of the enquiry. The said approach has been given a go-by in  Anisminic case as we shall see from the discussion hereinafter  [see De Smith, Woolf and Jowell - Judicial Review of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 49 of 55  

Administrative Action (1995 Edn.) p. 238; Halsbury’s Laws of  England (4th Edn.) p. 114, para 67, footnote (9)]. As Sir  William Wade observes in his book, Administrative Law (7th  Edn.), 1994, at p. 299:

"The tribunal must not only have jurisdiction  at the outset, but must retain it unimpaired  until it has discharged its task."

The decision in Anisminic case (supra) has been cited with  approval in a number of cases by this Court.(See: Union of  India v. Tarachand Gupta & Bros. [(1971) 1 SCC 486], A.R.  Antulay v. R.S. Nayak (1988 (2) SCC 602), R.B. Shreeram  Durga Prasad and Fatehchand Nursing Das v. Settlement  Commission (IT & WT) ( 1989 (1) SCC 628), N. Parthasarathy  v. Controller of Capital Issues (1991 (3) SCC 153), Associated  Engineering Co. v. Govt. of AP (1991 (4) SCC 93),  Shiv Kumar  Chadha v. Municipal Corpn. of Delhi (1993 (3) SCC 161). In  M.L. Sethi v. R.P. Kapur, (1972 (2) SCC 427) legal position  after Anisminic case (supra) was explained to the following  effect:

"12\005\005 The word ’jurisdiction’ is a verbal coat  of many colours. Jurisdiction originally seems  to have had the meaning which Lord Reid  ascribed to it in Anisminic Ltd. v. Foreign  Compensation Commission, namely, the  entitlement ’to enter upon the enquiry in  question’. If there was an entitlement to enter  upon an enquiry into the question, then any  subsequent error could only be regarded as an  error within the jurisdiction. The best known  formulation of this theory is that made by Lord  Darman in R. v. Bolton (1841) 1 QB 66. He  said that the question of jurisdiction is  determinable at the commencement, not at the  conclusion of the enquiry. In Anisminic Ltd.,  Lord Reid said:

’But there are many cases where,  although the tribunal had jurisdiction to  enter on the enquiry, it has done or  failed to do something in the course of  the enquiry which is of such a nature  that its decision is a nullity. It may have  given its decision in bad faith. It may  have made a decision which it had no  power to make. It may have failed in the  course of the enquiry to comply with the  requirements of natural justice. It may  in perfect good faith have misconstrued  the provisions giving it power to act so  that it failed to  deal with the question  remitted to it and decided some  question which was not remitted to it. It  may have refused to take into  account  something which it was required to take  into account. Or it  may have based its  decision on some matter which, under  the provisions setting it up, it had no  right to take into account. I do not  intend this list to be exhaustive."

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 50 of 55  

In the same case, Lord Pearce said:

"Lack of jurisdiction may arise in various ways.  There may be  an absence of those formalities  or things which are conditions precedent to the  tribunal having any jurisdiction to embark on  an  enquiry. Or the tribunal may at the end  make an order that it has no jurisdiction to  make. Or in the intervening stage while  engaged on a  proper enquiry, the tribunal  may depart from the rules of natural justice; or  it may ask itself the wrong questions; or it may  take into account matters which it was not  directed to take into account.  Thereby it  would step outside its jurisdiction. It would  turn into its enquiry into something not  directed by Parliament and fail to make the  enquiry which Parliament did direct. Any of  these things would cause its purported  decision to be a nullity."

The dicta of the majority of the House of Lords, in  the above case would show the extent to which ’lack’  and ’excess’ of jurisdiction have been assimilated or,  in other words, the extent to which we have moved  away from the traditional concept of ’jurisdiction’.  The effect of the dicta in that case is to reduce the  difference between jurisdictional error and error of  law within jurisdiction almost to vanishing point. The  practical effect of the decision is that any error of law  can be reckoned as jurisdictional. This comes  perilously close to saying that there is jurisdiction if  the decision is right in law but none if it is wrong.  Almost any misconstruction of a statute can be  represented as ’basing their decision on a matter with  which they have no right to deal’,  ’imposing an  unwarranted condition’ or ’addressing themselves to  a wrong question’. The majority opinion in the case  leaves a court or tribunal with virtually no margin of  legal error. Whether there is excess of jurisdiction or  merely error within jurisdiction can be determined  only by construing the empowering statute, which  will give little guidance. It is really a question of how  much latitude the court is prepared to allow...."   

In the subsequent Constitution Bench decision in Hari Prasad  Mulshanker Trivedi v. V.B. Raju and Ors.  (1974 (3) SCC 415),  it was held as follows:

"... Though the dividing line between lack of  jurisdiction or power and erroneous exercise of  it has become thin with the decision of the  House of Lords in the Anisminic case (i.e.  Anisminic Ltd. v. Foreign Compensation  Commission (1967) 2 All E.R. 986), we do not  think that the distinction between the two has  been completely wiped out. We are aware of  the difficulty in formulating an exhaustive rule  to tell when there is lack of power and when  there is an erroneous exercise of it. The  difficulty has arisen because the word  ’jurisdiction’ is an expression which is used in  a variety of senses and takes its colour from its  context, (see per Diplock, J. at p. 394 in the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 51 of 55  

Anisminic case). Whereas the ’pure’ theory of  jurisdiction would reduce jurisdictional control  to a vanishing point, the adoption of a  narrower meaning might result in a more  useful legal concept even though the formal  structure of law may lose something of its  logical symmetry. ’At bottom the problem of  defining the concept of jurisdiction for purpose  of judicial review has been one of public policy  rather than one of logic’. [S.A. Smith, ’Judicial  Review of Administrative Action, 2nd Edn., p.  98. (1968 Edn.)"   

The observation of the learned author, (S.A. De Smith)  was continued in its 3rd Edn. (1973) at p.98 and in its 4th  Edn. (1980) at p. 112 of the book. The observation aforesaid  was based on the then prevailing academic opinion only as is  seen from the footnotes. It should be stated that the said  observation is omitted from the latest edition of the book De  Smith, Woolf and Jowell - Judicial Review of Administrative  Action - 5th Edn. (1995) as is evident from p. 229; probably  due to later developments in the law and the academic opinion  that has emerged due to the change in the perspective.

After 1980, the decision in first Anisminic’s case came up  for further consideration before the House of Lords, Privy  Council and other courts. The three leading decisions of the  House of Lords wherein Anisminic principle was followed and  explained, are the following: Re Racal Communications Ltd.,    (1980) 2 All E.R. 634; O’ Reilly v. Mackman (1982) 3 All. E.R.  1124; Re. v. Hull University Visitor (1993) 1 All E.R. 97. It  should be noted that Racal, in re case (supra) the Anisminic  principle was held to be inapplicable in the case of (superior)  court where the decision of the court is made final and  conclusive by the statute. (The superior court referred to in  this decision is the High Court) [1981 AC 374 (383, 384, 386,  391). In the meanwhile, the House of Lords in CCSU case  (supra) enunciated three broad grounds for judicial review, as  "legality", "procedural propriety" and "rationality" and this  decision had its impact on the development of the law in post- Anisminic period. In the light of the above four important  decisions of the House of Lords, other decisions of the Court of  appeal, Privy Council etc. and the later academic opinion in  the matter the entire case-law on the subject has been  reviewed in leading text books. In the latest edition of De  Smith on Judicial Review of Administrative Action-edited by  Lord Woolf and Jowell, Q.C. [Professor of Public Law, 5th Edn.  1995], in Chapter 5, titled as "Jurisdiction, Vires, Law and  Fact" (pp.223-294), there is exhaustive analysis about the  concept "Jurisdiction" and its ramifications. The authors have  discussed the pure theory of jurisdiction, the innovative  decision in Anisminic case, the development of the law in post- Anisminic period, the scope of the "finality" clauses (exclusion  of jurisdiction of courts) in the statutes, and have laid down a  few propositions at pp. 250-256 which could be advanced on  the subject. The authors have concluded the discussion thus  at p. 256:

"After Anisminic virtually every error of law is a  jurisdictional  error, and the only place left for  non-jurisdictional error is where the  components of the decision made by the  inferior body included matters  of fact and  policy as well as law, or where the error was  evidential (concerning for example the burden

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 52 of 55  

of proof or admission of evidence).  Perhaps the  most precise indication of jurisdictional error  is that advanced by Lord Diplock in Racal  Communications, when he suggested that a  tribunal is entitled to make an error when the  matter  ’involves, as may do interrelated  questions of law, fact and degree’. Thus it was  for the county court judge in Pearlman to  decide whether the installation of central  heating in a dwelling amounted to a  ’structural, alteration, extension or addition’.  This was a typical question of mixed law, fact  and degree which only a scholiast would think  it appropriate to dissect into two separate  questions, one for decision by the superior  court, viz., the meaning of these words, a  question which must entail considerations of  degree, and the other for decision by a county  court viz., the application of words to the  particular installation, a question which also  entails considerations of degree.

It is, however, doubtful whether any test  of jurisdictional error will prove satisfactory.  The distinction between jurisdictional and  non-jurisdictional error is ultimately based  upon foundations of sand. Much of the  superstructure has already crumbled. What  remains is likely quickly to fall away as the  courts rightly insist that all administrative  action should be, simply, lawful, whether or  not jurisdictionally lawful."

The jurisdictional control exercised by superior courts  over subordinate courts, tribunals or other statutory bodies  and the scope and content of such power has been pithily  stated in Halsbury’s Laws of England - 4th Edn. (Reissue),  1989 Vol. 1(1), p. 113 to the following effect:

"The inferior court or tribunal lacks  jurisdiction if it has no power to enter upon an  enquiry into a matter at all; and it exceeds  jurisdiction if it nevertheless enters upon such  an enquiry or, having jurisdiction in the first  place, it proceeds to arrogate an authority  withheld from it by perpetrating a major error  of substance, form or procedure, or by making  an order or taking action outside its limited  area of competence. Not every error committed  by an inferior court or tribunal or other body,  however, goes to jurisdiction. Jurisdiction to  decide a matter imports a limited power to  decide that matter incorrectly.  

A tribunal lacks jurisdiction if (1) it is  improperly constituted, or (2) the proceedings  have been improperly instituted, or (3)  authority to decide has been delegated to it  unlawfully, or (4) it is without competence to  deal with a matter by reason of the parties, the  area in which the issue arose, the nature of  the subject-matter, the value of that subject- matter, or the non-existence of any other pre-

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 53 of 55  

requisite of a valid adjudication. Excess of  jurisdiction is not materially distinguishable  from lack of jurisdiction and the expressions  may be used interchangeably.  

Where the jurisdiction of a tribunal is  dependent on the existence of a particular  state of affairs, that state of affairs may be  described as preliminary to, or collateral to the  merits of, the issue, or as jurisdictional. (p.  114).

There is a presumption in construing  statutes which confer jurisdiction or  discretionary powers on a body, that if that  body makes an error of law while purporting to  act within that jurisdiction or in exercising  those powers, its decision or action will exceed  the jurisdiction conferred and will be quashed.  The error must be one on which the decision  or action depends. An error of law going to  jurisdiction may be committed by a body  which fails to follow the proper procedure  required by law, which takes legally irrelevant  considerations into account, or which fails to  take relevant considerations into account, or  which asks itself and answers the wrong  question. (pp. 119-120)

The presumption that error of law goes to  jurisdiction may be rebutted on the  construction of a particular statute, so that the  relevant body will not exceed its jurisdiction by  going wrong in law. Previously, the courts were  more likely to find that errors of law were  within jurisdiction; but with the modern  approach errors of law will be held to fall  within a body’s jurisdiction only in exceptional  cases. The Court will generally assume that  their expertise in determining the principles of  law applicable in any case has not been  excluded by Parliament.(p. 120).   Errors of law include misinterpretation of  a statute or any other legal document or a rule  of common law; asking oneself and answering  the wrong question, taking irrelevant  considerations into account or failing to take  relevant considerations into account when  purporting to apply the law to the facts;  admitting inadmissible evidence or rejecting  admissible and relevant evidence; exercising a  discretion on the basis of incorrect legal  principles; giving reasons which disclose faulty  legal reasoning or which are inadequate to  fulfil  an express duty to give reasons, and  misdirecting oneself as to the burden of proof."  (pp.121-122)

H.W.R. Wade and C.F. Forsyth in their book -  Administrative  Law, 7th Edn., (1994) - discuss the subject  regarding the jurisdiction of superior courts over subordinate  courts and tribunals under the head "Jurisdiction over Fact  and Law" in Chapter 9, pp. 284-320. The decisions before

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 54 of 55  

Anisminic and those in the post - Anisminic period have been  discussed in detail. At pp.  319-320, the authors give the  Summary of Rules thus:

"Jurisdiction over fact and law: Summary

At the end of a chapter which is top- heavy with obsolescent material, it may be  useful to summarise the position as shortly as  possible. The overall picture is of an expanding  system struggling to free itself from the  trammels of classical doctrines laid down in  the past. It is not safe to say that the classical  doctrines are wholly obsolete and that the  broad and simple principles of review, which  clearly now commend themselves to the  judiciary, will entirely supplant them. A  summary can therefore only state the long- established rules together with and broader  rules which have now superseded them, much  for the benefit of the law. Together they are as  follows:

Errors of fact

Old rule : The court would quash only if the  erroneous jurisdictional.

New rule : The court will quash if an erroneous  and decisive fact  was -   (a) jurisdictional

(b) found on the basis of no evidence; or

(c) wrong,  misunderstood or ignored.

Errors of law

Old rule: The court would quash only if the  error was-

(a) jurisdictional; or   (b) on the face of the record.

New rule:  The court will quash for any  decisive error because all errors of law are now  jurisdictional."                                         (emphasis supplied)

       The above position was highlighted by this Court in  Mafatlal Industries Ltd. and Ors. v. Union of India and Ors.  (1997 (5) SCC 536).

       Stand of respondents about appellant’s objectionable  conduct needs consideration.                     Para 1.3 of RFP reads as follows:

"1.3. Confidentiality- PQB receiving this RFP  must have completed and returned the  required, duly executed Confidentiality Deed.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 55 of 55  

       PQB are reminded that information  provided in this RFP and the accompanying  documentation package is covered by the  terms of the Confidentiality Deed and the  Disclaimer set out herein. PQB are also  reminded that they are not to make any public  statements about the Transaction process or  their participation in it".

Para 6.13 speaks of the ’Contract Points’ and in no uncertain  terms provides as follows:         

"\005\005..Any request for information or  clarification of information must be directed  through the questions and answer process set  out in Section 3.3 hereof.

       PQB and their advisers must not make  contact with any employees of AAI or other  GOI agencies or airport customers except as  arranged through ABN AMRO as part of the  Transaction process."   ‘

       Learned counsel for the appellant submitted that the  expression ’contract’ obviously means an illegal attempt for  bribery etc. and cannot stand on the way of submission of  documents for consideration. The plea is clearly untenable.  Though, there is no penal clause for such breach it goes  against a very concept of fairness in the process and  evaluation of bids. Whatever documents are to be submitted  are clearly stipulated. Any attempt to take advantage of any  newspaper report, clearly falls foul of the mandate that there  shall not be any contract with any person involved in the  process of selection. It is unusual that the RFP did not make  such a contract is a factor for disqualification.  This is to be  kept in view in future tenders.

       The inevitable conclusion is that the appeal is sans merit,  deserves dismissal, which we direct. Costs made easy.