TMI Blog2000 (1) TMI 991X X X X Extracts X X X X X X X X Extracts X X X X ..... ctor undertaking. Some other public sector undertakings and the State of Kerala are its shareholders. It has been established for setting up and maintaining a new International Airport at Cochin. For awarding a contract for ground handling facilities at the new Airport it invited offers by writing letters to some companies having experience of that type. The letter were written on 12-11-1997 to Cambatta; Air India and six others. Proposals were to be submitted by 31-12-1997. Kambatta, Air India, M/s. DNATA of Dubai, M/s. Ogden Aviation Services of Hong Kong and M/s. P.S.M. Aviation Pvt. Ltd. - responded. Proposals of some of them contained alternative proposals also. On 13-7-1998 CIAL again wrote to them to make their best offers on or before 28-7-1998. Air India submitted its proposal on 20-7-1998 Cambatta did so on 28-7-1998 3. The Committee constituted by CIAL for evaluation of the offers met on 28-9-1998. It found that Cambatta, Air India, DNATA and Ogden Aviation were on par as regards technical competence, organizational capacity and past experience. It took note of the fact that Cambatta and Air India are Indian organisations, operate mainly in India and have better pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntract to Air India 4. Cambatta filed a writ petition in the Kerala High Court challenging that action of CIAL. Its contention was that its offer was the highest and it had fulfilled all the conditions. The offer given by Air India did not come anywhere near their offer, yet the contract was given to Air India because of influence exerted by Air India and the Secretary of Ministry of Civil Aviation. It was also challenged on the ground that CIAL had not acted fairly and impartially as it had carried on negotiations with Air India behind the back of Cambatta and no opportunity was given to Cambatta to give a better offer. In the counter affidavit filed on behalf of CIAL it was stated that this was not a case where tenders were invited. It was a project to be implemented by raising finances from various sources and, therefore, it was decided to invite offers from reputed agencies in order to decide best terms and conditions and then to award the contract to the best suited party in order to make the project viable and successful. It was further stated that individual offers were assessed considering the background and infrastructure of the companies, their financial capacity, ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he view that if the other tenderers had also been invited for negotiations by CIAL then possibly they would have given better offers and pointed out demerits of the offers made by the rival tenderers. It held that the Board of Directors was influenced by the threat to the effect that if Air India was not given the contract, the International Airport will be bereft of flights as Air India will not allow other flights to land there. It then held that the action of CIAL in awarding contract to Air India was arbitrary, illegal and opposed to the principles of natural justice. It allowed the appeal, cancelled the contract in favour of Air India and directed CIAL to re-consider the valid tenders once again and, if necessary, to call all those tenderers for negotiations before finalising the contract 6. Challenging this decision of the High Court, Air India has filed Civil Appeal No. 3641 of 1999 and CIAL has filed Civil Appeal No. 3642 of 1999. Mr. Nariman, learned senior counsel appearing for Air India and Mr. Venugopal, learned senior counsel appearing for CIAL contended that the Division Bench has gone wrong in its conclusion as it adopted a wrong approach in a matter of this typ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the decision making process the Court must exercise its discretionary power under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point. The Court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the Court should intervene 8. In view of this settled legal position, Mr. Andhyarujina, learned senior counsel appearing for Cambatta rightly and fairly did not dispute that CIAL was not bound to accept the highest offer or that it was entitled to enter into negotiations with Air India. What he contended was that CIAL ought to have treated all the tenderers fairly. As Air India was given an opportunity to give a presentation and revise its offer it ought to have given a chance to Cambatta also to have its say with respect to the offer made by Air India and to match its offer with the offer of Air India. He submitted that the evaluation committee had recommended Cambatta for awarding the contract after considering all the relevant facto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se. But in view of Board of Directors' decision to be fair and the ClAL's letter dated 13-7-1998 calling upon the tenderers to give the best offer before it took a final decision and informing them that the contract period would be 10 years and the subsequent letter dated 5-8-1998 requiring the tenderers to give a bank guarantee, CIAL was bound to treat this case as a case of public tender and for that reason it was not open to it to say that it was free to accept that offer which was best suited to it. It is, however, not necessary to deal with this aspect more elaborately and point out how the High Court's view is wrong as it was not disputed by the learned counsel appearing for Cambatta that it was open to CIAL not to accept the highest offer of Cambatta if it had good reasons to do so. It was at no point of time declared by CIAL that it would accept the highest offer or accept the offer on a particular basis. All along it had made clear that it would accept that offer which was found to be the best in their interest 10. The only point that really falls for consideration is whether CIAL had acted fairly after it had invited fresh offers by its letter dated 13-7- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on 27-11-1998. It was also felt necessary to take a final decision in its next meeting to be held on 27-11-1998 as the matter was pending since long and it was necessary to solve the financial crunch of CIAL. Cambatta had protested against giving of an opportunity to Air India to make a presentation by its letters dated 12-11-1998 and 23-11-1998 on the ground that what was being done by CIAL was improper and in violation of global competitive bidding norms. In spite of the protest of Cambatta the Board of Directors of CIAL permitted Air India to make a presentation for outlining in detail its ground handling capabilities, packages of services which it wished to offer and other relevant advantages including financial. Air India by its letter dated 1-12-1998 recapitulated the details of the offer which it had already made, and the subsequent presentation and discussion on 27-11-1998. The said letter discloses that some changes were made by Air India in its original offer to make it more acceptable to CIAL. In that letter it was also indicated that it would try to enhance Air India and other Airlines' - domestic and international operations through CIAL and pointed out that only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll view of the transaction. It is true that even though Cambatta had called upon CIAL to produce the minutes of the meeting of the Board of Directors held on 27-11-1998 the same was not made available to Cambatta. But that did not entitle the High Court to draw any adverse inference. The High Court had not called upon CIAL to produce those minutes 12. As regards the merits of Cambatta's proposal, it was contended by Mr. Andhyarujina that all the three offers of Cambatta were superior in terms of parameters laid down by CIAL than Air India's offer. He submitted that even after CIAL unilaterally raised the license fee of Air India from 17 per cent to 20 per cent in the 10th year to match Cambatta's offer and imposed a condition that Air India would not sub-contract, it did not become comparable with the offer of Cambatta as Air India did not offer to pay 2 per cent bonus in license fee. It was also submitted that Air India's representation that it would be able to bring more traffic was illusory and for that reason also Air India's proposal cannot be regarded as superior or even comparable with the proposal of Cambatta. We do not think that CIAL did any wrong ..... X X X X Extracts X X X X X X X X Extracts X X X X
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