RAMANA DAYARAM SHETTY versus THE INTERNATIONAL AIRPORT AUTHORITY OF INDIA AND ORS.

Citation: [1979] 3 S.C.R. 1014 · Decided: 04-05-1979 · Supreme Court of India · Bench: P.N. BHAGWATI · Disposal: Dismissed

Cited by 61 judgment(s) · cites 9 · see the full citation network in Lexace

Judgment (excerpt)

A 
B 
RAMANA DAYARAM SHETTY 
v. 
THE INTERNATIONAL AIRPORT AUTHORITY OF INDIA AND 
ORS. 
May 4, 1979. 
[P. N. BHAGWATI, V. D. TULZAPURKAR AND R. S. PATHAK, JJ.] 
International Airport Authority Act 1971-Whether an instrumentality of 
State-Authority called for tenders for a iob-lj could accept a tender not 
confonninR to conditions in notice. 
C 
Administrative law-Statutory- body-When an instnunentality of State. 
I) 
E 
F 
G 
The first respondent, by a public notice, invited tenders for putting up and 
running a second class restaurant and two snack bars at the International Air-
port, Bombay. The notice stated in Paragraph (1) that. sealed tenders in the 
prescribed form were invited from registered second class hoteliers 
having 
at least five years' experience for putting up and running a second cla-,s restau-
rant and two snack bars at the Bombay Airport for a period of three years. 
Paragraph (8) stated that acceptance of the tender would rest v .. ·ith the Airport 
Director who does not bind himself to accept ilny tender and reserYe~ to him-
self the right to reject all or any of the tenders received without as-.igning any 
reasons therefor. 
Out of the six tenders received only the tender of the 4th respoo.dents was 
complete and offered the highest amount as licence fee. 
All the otheI" tenders 
were rejected because they were incomplete. 
Since the fourth respondents did not satisfy the description of "registered 
second class hoteliers having at least 5 years' experience" prescribed in para-
graph (1) of the tender notice, the 1st respondent called upon the fourth res-
pondents to produce documentary ewidence \Vhether they were registered second 
class hotliers having at least 5 years' experience. 
The fourth respondents 
stated once again that they had considerable experience of catering for various 
reputed commercial houses, clubs, messes and banks and that they had Eating 
Houses C.atering Establishment (Canteen) Licence. 
Satisfied with the informa-
tion given by the fourth respondents, the first respondent accepted their tender 
on the terms and conditions set out in its letter. 
The aiipellant filed a writ petition before the High Court challenging the 
decision of the first respondent in accepting the tender of the fourth respondents. 
But it was rejected. 
In appeal to this Court it was contended on behalf of the appellants that ( l) 
the first respondent which is a public authority 'vas bound to give effect 
to the most important condition of eligibility and acceptance of the tender by 
the first respondent was in violation of the standard or norm of eligibility set 
up by the first respondent and (2) had the appellant known that non-fulfilment 
of tbe condition of eligibility would be no bar for considering a tender he ·too 
would he.ve competed for obtaining the contract. 
1014 
• 
• 
• 
• 
R. D. SHETTY V. AIRPORT AUTHORITY 
1015 
The fourth respondents, on the other hand, contended that the requirement 
that the tenderer must be a registered second grade hotlier was meaningless 
because the grading is given by the Bombay City Municipal Corporation only 
to hotels or resta·1irants and not to persons running them and, therefore there 
could be no second grade hotlier; (2) the notice Setting out the conditions 
of eligibility having had no stautory force, even if there was a departure from 
the standard or norm of eligibility, it was not justiceablc and the first respon-
dent was competent to give the conract to anyone it thought fit; and (3) the 
Airport Authority reserved to itself the right to reject all or any of the ten-
ders without assigning any reasons and, therefore, it \\1as competent to it to 
reject all the tenders or negotiate with any person it considered fit to enter into 
a contract. 
HELD 
The action of the first respondent in accepting the tender of the 
fourth respondents, who did not satisfy the standard or norm, was clearly dis-
criminatory since it excluded other persons similarly situate from tendering for 
the contract and it was arbitrary and without reason. 
Acceptance of the tender 
·was invali4 as being violative of the equality c'Iause of the Constitution as also 
of administrative la\V inhibiting arbitrary action. [1056 C] 
(a) What paragraph (1) of the notice required was that only a person 
rum1ing a registered second class hotel or restaurant and having at least 5 years' 
experience as such should be eligible to submit the tender. 
The test of 
eligibility laid d

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