MIHAN INDIA LTD. versus GMR AIRPORTS LTD. & ORS

Citation: [2022] 19 S.C.R. 523 · Decided: 09-05-2022 · Supreme Court of India · Bench: VINEET SARAN, J.K. MAHESHWARI · Disposal: Dismissed

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Judgment (excerpt)

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MIHAN INDIA LTD.
v.
GMR AIRPORTS LTD. & ORS.
(Civil Appeal No. 3699 of 2022)
MAY 09, 2022
[VINEET SARAN AND J. K. MAHESHWARI, JJ.]
Tenders: Annulling of bidding process – Justification of – As
per instructions of the Government of India, for upgradation,
modernization, operation and maintenance of the Nagpur
International Airport, appellant company-MIL invited tenders from
private parties – Respondents-GAL was the highest bidder – During
negotiations regarding the offered revenue share, GAL agreed for
the revised revenue share – Thereafter, MIL, accepted the proposal
and selected GAL as a highest bidder – However, even on completion
of formalities, the Concession Agreement was not executed so as to
enable GAL to implement the project – Request made by GAL to
MIL but the said letter was neither responded nor any steps were
taken to execute the Concession Agreement – MIL then annulled
the bidding process and also informed GAL to take back the bid
security submitted towards bid and thereafter, re-tendering the bid
– Challenged to, by GAL and GNAIL – High Court quashed and
set-aside the action of MIL in annulling the bidding as arbitrary,
unreasonable and unfair – On appeal, held: Letter dated 07.03.2019
endorsing GAL as a selected bidder would amount to Letter of
Acceptance-LoA in terms of the Request for Proposal-RFP and,
would be treated as a concluded contract – GAL has qualified the
test of responsiveness and on making offer of highest revenue, it
was declared selected bidder – LoA has been acknowledged and
signed on duplicate copy and returned to Authority within the period
as specified – GAL being selected as a highest bidder, acquired the
status of concessionaire – It was only the Concession Agreement
required to be executed and there was no fault on the part of the
GAL in complying with the provisions of RFP – Thus, after proposal
of highest revenue share, on issuing the letter of acceptance and
also as reflected by conduct, it has become a concluded contract –
Letter for annulment of binding process is arbitrary and not in
conformity to the terms of RFQ/RFP by following the procedure –
[2022] 19 S.C.R. 523
523
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524
SUPREME COURT REPORTS
[2022] 19 S.C.R.
Merely having the power of rejection of bids doesn’t entitle
authorities to exercise the said power arbitrarily – Public law remedy
has rightly been availed, invoking the jurisdiction of the High Court
u/Art. 226 – It cannot be said that GAL has limited right only to ask
for specific performance – Furthermore, UoI and AAI were not
necessary parties and without joining them, the relief as granted by
the High Court does not warrants interference – Necessary parties
– Public law remedy – Constitution of India – Art. 14, 226 –Airports
Authority of India Act, 1994 – S. 12A.
Government contracts – Tenets of law – Explanation of – Held:
In government contracts, if granted by the government bodies, it is
expected to uphold fairness, equality and rule of law while dealing
with contractual matters - Right to equality u/Art.14 abhors
arbitrariness - Transparent bidding process is favoured by the Court
to ensure that constitutional requirements are satisfied - State to act
in a fair and reasonable manner unless public interest demands
otherwise – It is expedient that the degree of compromise of any
private legitimate interest must correspond proportionately to the
public interest – Using a ground of public interest or loss to the
treasury cannot undo the work already undertaken by the authority.
Dismissing the appeals, the Court
HELD: 1.1 Letter dated 07.03.2019 is a Letter of
Acceptance-LoA after selecting the GAL as a highest bidder and
it acquired the status of concessionaire. It was only the
Concession Agreement required to be executed and there was
no fault on the part of the GAL in complying with the provisions
of Request for Proposal-RFP. The conduct of appellant MIL also
indicates that concession agreement is required to be executed
by concessionaire (GAL). Thus, after proposal of highest revenue
share on issuing the letter of acceptance and also as reflected by
conduct, it has become a concluded contract. When the steps for
execution of the Concession Agreement had not been taken after
LoA for quite sometime, a request was made by GAL on
25.02.2020 for execution of 26 the Concession Agreement being
Concessionaire, but no heed was paid. [Para 24 and 25][541-A-
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525
1.2 As per RFP, it is clear that MIL floated a te

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