- 1 - IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.617 OF 2007 1.Flemingo Duty-Free Shop Pvt.Ltd. 2.Mr.Vivek S.Bhatt. ...Petitioners vs. 1.Union of India 2.Airports Authority of India 3.Mumbai International Airports Pvt.Ltd 4.ITDC Aldeasa India Pvt.Ltd. 5.DFS Venture Singapore(Pte) Ltd. 6.DFS India Pvt.Ltd. ...Respondents. --- Mr.R.A.Nariman, Sr.Advocate with V.A.Bobade, Sr.Advocate, @ V.R.Dhond, A.Choudhary & Shailesh Merdon i/b. M/s.Crawford Baylay & Co., for Petitioners. Mr.G.E.Vahanvati, Solicitor General, for Respondent no.1. Mr.G.E.Vahanvati, S.G. With F.Divitre i/b. Rekha Rajgopal, for Respondent no.2. Mr.Dushant Dave, Sr.Advocate with P.K.Samdhani, Sr.Advocate , Farid Karachiwala, S.Jagtap i/b. M/s.Wadia Gandhy & Co., for Respondent no.3. Mr.Janak Dwarkadas, Sr.Advocate with N.H.Seervai, Sr.Advocate, Direndra Negi, Z.Doctor, Ms.A.Chandrachud i/b. J.Sagar & Associates, for Respondent nos.5 & 6. Ms.Vandana S. Mishra i/b. M/s.Little & Co., for Respondent no.4. - 2 - CORAM: D.K.DESHMUKH & N.D.DESHPANDE, JJ. DATE : 5th June,2008. --- ORAL JUDGMENT:(PER D.K.Deshmukh, J.) 1. By this petition the Petitioner challenges the process adopted by the Respondent No.3 beginning with the Expression of Interest and followed by issuance of Request for Proposal and culminating in the award of contract initially to Respondent No.4 and then to the Respondent No.5. 2. The facts that are material and relevant for deciding this petition are that the Petitioner No.1 is a company incorporated under the Companies Act and having its registered office in New Mumbai. According to the Petitioner No.1, it is engaged in the business of operating - 3 - and running duty Free Retail Outlets in International Airports in India. The Respondent No.1 is the union of India and the Respondent No.2 is Airports Authority of India constituted under Section 3 of the Airports Authority of India Act, 1994. According to the Petitioners, the Respondent No.2 is owned and controlled by the Respondent No.1. The International Airport at Mumbai i.e. Chhatrapati Shivaji International Airport was exclusively controlled and managed and operated by the Respondent No.2. The Respondent no.3 is a company registered under the Companies Act 1956 and is a Joint Venture Company. Respondent No.3 is a consortium of GVK Airport Holdings Pvt.Ltd.; ACSA Global Limited; Bid Services Division (Mauritius) Ltd., and the Respondent No.2. Respondent No.4 is a consortium between ALDEASA S.A. a company established and existing under the laws of Spain and Indian Tourism Development Corporation (ITDC) incorporated under the laws of India. Respondent - 4 - No.5 is a company established and existing under the laws of Singapore. Respondent No.6 is a wholly owned subsidiary of Respondent No.5. According to averments in the petition, the Respondent No.3 has been created with the objective of operating, maintaining, developing, designing, constructing, upgrading, modernizing, financing and managing Airports. The Respondent No.2 holds 26% in the equity of the Respondent No.3. According to the petitioners, Respondent No.3 operates under the pervasive control of Respondent No.1 & Respondent No.2. According to the petitioners, after the Airports Authority of India Act was amended by the amendment Act of 2003, pursuant to the provisions of section 12A of the Act on 4-4-2006 an agreement was executed between the Respondent No.2 and the Respondent No.3 called the Operation, Management and Development Agreement (herein after referred to as OMDA) whereby and where under the Respondent No.2 leased out the - 5 - Chhatrapati Shivaji International Airport to Respondent No.3 for a period of 30 years. The lease is renewable for further period of 30 years. The Petitioners in the petition refer to the provisions of OMDA in detail. According to the Petitioners, on 9-10-2006 the Respondent No.3 made a public announcement in the newspapers calling for Expression of Interest for setting up Duty free Shops at Chhatrapati Shivaji International Airport, Mumbai. The Petitioner No.1 entered into a consortium arrangement with Aer Rianta International (herein after referred to as ARI) which is a company incorporated under the laws of Ireland for the purpose of submitting the tenders pursuant to the public announcement dated 9-10-2006. According to the Petitioner, its partner ARI is a dedicated international division of the Dublin Airport authority and was the first to start duty-free business in the world. It founded first duty-free shop at Shannon Airport at Ireland in 1947. According to the Petitioner, - 6 - AIR has 60 years of experience in duty-free retailing. Its managed retail business turn over for 2006 is in excess of 900 million US$. The Petitioner and the said ARI intended to jointly bid for the tender. According to averments in the petition, this agreement and arrangement reached between the Petitioner and the ARI is still subsisting. According to the Petitioner, pursuant to the public announcement referred to above, the petitioner submitted its Expression of Interest along with Joint Venture Partner ARI on 11-10-2006 to the Respondent No.3, which was duly accepted. It was submitted within time and it was also accompanied by the prescribed fee. Pursuant to the Expression of Interest submitted by the Petitioner along with ARI, the petitioner was invited to make a presentation by the Respondent No.3 on 9-11-2006 at ITC Grand Maratha Sheraton, Mumbai, Mumbai. According to the petitioner on 9- 11-2006 the Petitioner satisfactorily made its presentation to the representative of the - 7 - Respondent No.3. According to the Petitioner, thereafter on 12-1-2007, Senior Vice President of the Respondent No.3 addressed an e-mail to the petitioner-company asking for details like sales turnover at Shops operation, international traffic etc. It was replied to by the Petitioner. According to the Petitioner, this was the last correspondence addressed to the Petitioner by the Respondent No.3. Thereafter, there was, according to the Petitioner, no communication from the Respondent No.3. According to the Petitioner, though the Petitioner thereafter sent number of reminders to the Respondent No.3, they evoked no response. According to the Petitioner, it has not been informed either orally or in writing the decision of the Respondent No.3 in short-listing the persons to whom the tender documents would be issued. The Petitioner, thus, stated in the petition that, therefore, the Petitioner was stunned to learn that a Request for Proposal document has been issued to the participants. - 8 - According to averments in the petition, the Petitioner has learnt that the persons to whom RFP was issued are required to submit their bids/proposals by 23-2-2007. The Petitioner submitted that the Petitioner has not been asked to submit the RFP. The Petitioner feeling aggrieved by the non-issuance of RPF document to the Petitioner, filed this petition on 20-2-2007 challenging basically the action of the Respondent No.3 of non-issuance of RFP to the Petitioner for operating and setting up the duty- free shop at Chhatrapati Shivaji International Airports, Mumbai. It appears that the Petition was mentioned before the Division Bench on 22-2- 2007. The Division Bench after hearing the counsel appearing for the Petitioner, the Counsels appearing for the Respondents Nos. 1 & 2 by order dated 22-2-2007 dismissed the petition on the ground that the Petitioner is guilty of latches in approaching the Court. That order was challenged before the Supreme Court by the - 9 - Petitioner. The order of the Division Bench has been set aside by the Supreme Court by order dated 22-2-2008 and the Supreme Court has directed this Court to hear the petition on merits. 3. It appears that after the Writ Petition was dismissed by the Division Bench, the Respondent No.3 awarded the contract to Respondent No.4/ITDC Aldeasa India Pvt. On 26-2- 2007. The contract awarded in favour of the Respondent No.4 was cancelled by the Respondent No.3 on 23-11-2007 and thereafter the contract has been awarded to the Respondent No.5. The contract has been awarded to Respondent No.5, because according to Respondent No.3 the Respondent No.5 was the second highest bidder. The Petitioner because of these developments taking place after rejection of the petition by the Division Bench and during the pendency of Special Leave Petition in the Supreme Court amended the petition and has challenged the - 10 - awarding of contract by Respondent No.3 to Respondent No.5. 4. The Respondents have filed their affidavits-in-reply. The Petitioner has also filed rejoinder. In short the defence put up by the Respondents is that the R.P.F. documents were not issued to the petitioner because the Respondent no.3 found that the petitioner is not entitled to be short listed. It is also contended that because the respondent no.3 is not State it is not bound by the Part III of the Constitution and is not so amenable to the jurisdiction of the Court under Article 226 of the Constitution of India. 5. We have heard the learned Counsel appearing for the Petitioner as also the learned Counsels appearing for the Respondents in detail. The parties have also filed their written - 11 - submissions. 6. Shri R.F. Nariman, the learned Senior Counsel appearing for the Petitioner No.1 submitted that the issues which arise for consideration in the present Writ Petition are: (i) Whether the Respondent No 3 Company, MIAL, is ‘State’ within the meaning of Article 12? (ii) Whether, even if it is not ‘State’, is it amenable to the writ-jurisdiction under Article 226 of the Constitution? (iii) Whether the Invitation for Expression of Interest is so designed as to introduce inherent and complete arbitrariness and unreasonableness in the whole tender process in that inter-alia, (a) it does not set out any criteria, much less definite, clear and objective criteria, for evaluation of Expressions of Interest; (b) it does not specify the absolute or relative importance, if any, of experience, turnover or the financial offer ;(c) it expressly states that the final criteria used for short-listing would be determined by MIAL in its sole - 12 - discretion; (d) it provides for short-listing (without even specifying the number to be short-listed) thereby denying opportunity to all persons interested to submit their bids and thereby provide a level-playing field; (e) it provides for MIAL’s right to accept or reject any or all offers ‘at any stage of the process and/or modify the process at its sole discretion, without assigning any reason whatsoever’? (iv) Whether the impugned process beginning with the Invitation, Expression of Interest, the exclusion of the Petitioner’s consortium from the bidding process, the issuance of the RFP to four parties, culminating in the award of the contract to a fifth party, the Respondent No. 4 and thereafter to the Respondent No. 5 is vitiated by lack of transparency which is the sine-qua-non of the tender process in the realm of public law for public utility services functioning in the public interest? (v) Whether MIAL acted most arbitrarily in short- listing only four parties and then issuing the bid-document to a fifth party (ITDC/ALDAESA) well after the last date for - 13 - issuance thereof, hurriedly awarding the contract to it on 26th February 2007, the very date on which the Special Leave Petition was filed in the Supreme Court even though the scheduled date for awarding contract was 7th March 2007, and then cancelling the contract on 24.11.2007 , and lastly, awarding the contract to DFS (Respondent No. 5) on 29.11.2007,without calling for fresh tenders and considering afresh the claims of all others, including the Petitioner? (vi) Whether the grant in favour of the Respondent Nos. 5 & 6 which is contrary to the express terms of the RFP (tender document) is sustainable, legal and valid? (vii) Whether the decision to deny even the opportunity to the Petitioner’s consortium to bid for the contract for duty- free retail shop, particularly when the offer i.e. Expression of Interest, is not expressly rejected for stated reasons is wholly arbitrary, unreasonable and unjust? 7. The learned Counsel further submitted that the Respondent No. 3 is a Joint Venture Company in which 26% shareholding is held by the Airports Authority of India(AAI) and this gives - 14 - control to the AAI over vital matters which require 3/4th majority. Respondent No. 3 has been specially incorporated “inter alia with the objectives of operating, maintaining, developing, designing, constructing, upgrading, modernizing, financing and managing the Airport” . Airport is defined in Clause 1.1. of OMDA to mean “the Chhatrapati Shivaji International Airport”. The learned Counsel submitted that the Respondent No. 3 is the lessee of the AAI under Section 12-A of the Airports Authority of India Act, 1994, as amended in 2003, which provides that some of the functions of the AAI may be transferred to the Respondent No. 3 and that the said Respondent No. 3 shall have all the powers of the AAI in the performance of any such functions in terms of the lease. MIAL was granted lease on 26.4.2006 vide Lease Deed. The operation, maintenance and development of the airport is governed by OMDA executed between the AAI and MIAL. The relationship between the shareholders is governed - 15 - by the Shareholders Agreement dated 4-4-2006 entered into between the shareholders of MIAL including AAI. The governmental services to be provided to MIAL is governed by the State Support Agreement dated 26-4-2006 entered into between MIAL and the Government of India. It is further submitted by the learned Counsel that Respondent No. 3 is a Joint Venture Company. In a joint venture Company where the government holds shares, 50% and over makes the company a Government Company and therefore “State”, under Article 12. Mere reduction of the shareholding below 50% does not make it a “purely private” company outside Article 12. In support of this proposition he relied on the judgment of the Supreme Court in the case of Amar Alcohol Ltd. V/s. SIICOM Ltd. 2006 (10 SCC 199). Clearly therefore, he submits MIAL is a special purpose joint venture Company formed only because of Section 12 A and is not a purely private Company. There is public- private participation - 16 - right from the inception of the Company. 8. The learned Counsel took us through the relevant provisions of OMDA as also the State support agreement and the provisions of the Act. Then the learned Counsel submits that Section 12 of the Act delineates the functions of the Authority and under Section 12 (3) thereof, the specific functions of AAI have been mentioned. Section 12-A (1), introduced by Act 43 of 2003 , begins with a non-obstante clause and empowers the AAI “ in the public interest or in the interest of better management of airports” to make a lease “ to carry out some of its functions under Section 12.” This lease requires the previous approval of the Central Government under sub-section (2). Under sub-section (4) “the lessee, who has been assigned any function of the Authority under sub-section (1) shall have all the powers of the Authority necessary for the performance of such functions in terms of the - 17 - lease.” Therefore, the Respondent No. 3 carries out and performs the functions of the Airports Authority of India imposed upon the Authority by the Parliamentary enactment. A lease has been executed between the Airport Authority of India and MIAL dated 26.4.2006 whereby Chhatrapati Shivaji International Airport has been leased to the Respondent No.3 for a period of 30 years from the effective date and for a further period of thirty years . It is this Lease dated 26.4.2006 which makes Section 12A operational. It is under this provision that MIAL has been assigned functions by the OMDA and granted a lease. 9. It is submitted that the scheme of the Act discloses that, in essence and truth, the lessee under Section 12A of an existing airport carries out the functions of the Authority and enjoys the powers necessary to carry out such functions. Such an entity exercising such public/governmental functions is clearly an - 18 - instrumentality or agency of the State and is covered by Article 12. It is submitted that Section 22-A empowers the Authority to levy on and collect from embarking passengers, ‘development fees’ for the purpose of clauses (b) and (c) viz. ‘establishment or development of a new airport in lieu of the airport referred to in clause (a)’ and for ‘investment in the equity in the shares to be subscribed by the Authority in Companies engaged in establishing, owning, developing, operating or maintaining a private airport…’ Thus money is collected from the air- traveling public under law for the funding of the new airport and for the Authority to acquire shares in the company setting up the same or for developing or maintaining an existing airport leased under Section 12 A. Fee under Section 22A can be appropriated by MIAL because it functions in place of the Airport Authority of India. He further submited that Chapter VA (comprising of Section 28 A to Section 28 R) provides the - 19 - procedure for eviction of unauthorised occupants of airports. The provisions are on the lines of the Public Premises (Eviction) Act. Thus the property of the airport is public property even when given on lease and the lessee can resort to the provisions for eviction, without having to file a regular Civil suit. This section is a strong and powerful indicator that airports are public premises and the company running them is ‘State’ because if it were not so, the Company would never have been allowed to avail of the summary power of eviction and would instead have been relegated to the ordinary civil law for eviction of unauthorised occupants or trespassers. Section 37 authorises the issuance of directions by AAI to ‘person or persons engaged in aircraft operations or using any airport, heliport, airstrip or civil enclave’ under specified clauses of Section 5(2) of the Aircraft Act, 1934, under which Rules have been framed in the Aircraft Rules,1937. - 20 - 10. The learned Counsel relied on the judgment of the Supreme Court in the case of Ashoka Marketing Ltd. V.s,. Punjab National Bank (1990) 4 SCC 406 and submitted that the Hon’ble Supreme Court of India in its judgment in the case “Ashoka Marketing Ltd.” referred to above has while considering the provisions of the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 referred to its judgment in the case of Dwarkadas Marfatia and Sons Vs. Board of Trustees of the Port of Bombay. The learned Counsel submits that the observations in that judgment were made in the context of the provisions of the Bombay Rents, Hotel and Lodging Houses Rates (Control) Act, 1947 whereby exemption from the provisions of the Act has been granted to premises belonging to the Bombay Port Trust. The consequence of giving overriding effect to the provisions of the Public Premises Act is that premises belonging to companies and - 21 - statutory bodies referred to in clauses (2) and (3) of Section 2(e) of the Public Premises Act would be exempted from the provisions of the Rent Control Act. The actions of the companies and statutory bodies mentioned in clauses (2) and (3) of Section 2(e) of the Public Premises Act while dealing with their properties under the Public Premises Act will, therefore, have to be judged by the same standard”. 11. The learned Counsel submitted that the Petitioner has the largest experience of running duty-free retail shops at international airports in India and its partner Aer Rianta, which, according to the Petitioner, opened the world’s first ever duty-free retail shop at Shannon Airport in Ireland in 1947, has the largest international experience in this field. At present the Petitioner is operating at 13 international airports and running 37 duty-free retail shops. Inspite of this, MIAL has excluded - 22 - the Petitioner’s consortium at the threshold and prevented it even from bidding for the contract, without even rejecting their offer. It is submitted that, ex-facie, the action of the MIAL is arbitrary and illegal. 12. No reason has been assigned by the Respondent No.3 to the Petitioner herein and none of its letters were replied or responded to by the said Respondent No.3. There is complete lack of transparency in the Tender process and the absence of criteria in the EOI has given MIAL unbridled and arbitrary powers to act according to its whims and fancies. 13. The learned Counsel submits that the Respondent No.3 is an instrumentality of the State within the meaning of Article 12 of the Constitution of India. He submits that the definition of the State in Article 12 is an inclusive one. The Article says “ includes”, not - 23 - “means” or “means and includes”. What is included is “all…other authorities within the territory of India or under the control of the Government of India.” The learned counsel referred to the observations of the Supreme Court in the case of Rajasthan State Electricity Board v/s. Mohan Lal, AIR 1967 SC 1857 ; and the judgment of the Supreme Court in the case of Pradeep Kumar Biswas v/s. IICB, (2002) 5 SCC 111. The learned Counsel then took us through the judgment of the Supreme Court in the case of Sukhdev Singh v/s. Bhagatram, (1975) 1 SCC 421, specially the judgment of Justice Mathew. The learned Counsel pointed out that on the same day on which the Supreme Court decided Sukhdev's case, the same Constitution Bench held in Sabhajit Tewary v/s. Union of India (1975) 1 SCC 485 that the Council of Scientific and Industrial Research was not 'State'. It was pointed out that the view taken in the Sabhajit's case was later over-ruled by a Seven Judges Bench in Pradeep Kumar Biswas's - 24 - case. The learned Counsel also took us through the judgments of the Supreme Court in the case of Ramana Dayaram Shetty v/s. International Airport Authority of india and ors, (1979) 3 SCC 489 and the judgment in the case of Ajay hasia v/s. Khalid Mujib (1981) 1 SCC 722. The learned Counsel relying on the observations of the Supreme Court in all the above referred judgments submitted that the Respondent No.3 is the instrumentality of the State. The learned Counsel also took us through the judgment of the Supreme Court in the case of Zee Telefilms ltd. v/s. Union of India, (2005) 4 SCC 649. The learned Counsel submitted that because Respondent No.3 is an instrumentality of the State, it is bound by Article 14 of the Constitution, and therefore, its conduct of not issuance of RPF to the Petitioner and awarding contract to the Respondent No.5 is liable to be set aside being violative of Article 14 of Constitution. The learned Counsel also relied on - 25 - the judgment of US Supreme Court in the case of Burton v/s. Wilmington Parking Authority, (1961) 6 L.Ed. 2D 45 and in the case of Evans v/s. Newton, (1966) 15 L.Ed.2d. 373, and in the case of Jackson v/s. Metropolitan Edison Co. (1974) 49 L.Ed.2d 477 and submitted that where the State and AAI are obliged to provide and maintain airports adequately equipped for for international air travel which necessarily involves providing for a superlative duty free- shop and this function is delegated to Respondent No.3 under Section 12A and the Respondent No.3 assumes it voluntarily than the Respondent No.3's actions are State actions. The learned Counsel, then, submitted that the following factors in the present case show that the Respondent Nos. 1, 2 and 3 are joint actors and therefore the Respondent No.3’s actions are amenable to the writ jurisdiction including application of Article 14: - 26 - 1. Even though Respondent No.3 is a company registered under the companies Act, its functions in operating, managing and developing the Mumbai International Airport cannot be characterized “Purely Private”. Indeed, OMDA read with the Shareholders Agreement and the lease deed specifically speak of Respondent No.3 being a “Joint Venture” between Airport Authority of India and its private partners. In addition, there is an agreement directly entered into between the Union of India and Respondent No.3, which is called “State Support Agreement”. The documents produced on record therefore clearly show that Respondent No. 3 is a Joint Venture company supported by the Union of India in operating, managing and developing the Mumbai International Airport on property