JUDGMENT
Badar Durrez Ahmed, J.
1. Rule. With the consent of the parties the matter is taken up for final hearing and disposal.
2. The present petition relates to the export cargo handling services at Indira Gandhi International Airport (Cargo Terminal). Cargo Handling is divided into two sub groups: one for imports and one for exports. In March 2002 a tender was floated for Cargo Handling Services at Indira Gandhi International Airport (Cargo Terminal). The tender comprised of a two part bid: (i) a technical bid and (ii) a price/commercial bid. The petitioner along with several others submitted their bids for the export cargo handling services. After the evaluation of the technical bids only three parties remained: the petitioner, respondent No. 4 and respondent No. 3.
3. In April, 2002 the price bids of the said three parties were opened. Respondent No. 4 was found to be L-1. The petitioner was L-2 and the Respondent No. 3 was L-3. In this view, the tender was awarded to respondent No. 4 being L-1 and an agreement was entered into by and between respondent No. 4 and the Airport Authority of India (Respondent No. 2) on 13.4.2002 for the period 13.4.2002 to 12.4.2004 which was also extendable by one to two years.
4. The notice inviting tender which had been published in the newspapers on 24.1.2002 had, inter alia, the following conditions attached to it:-
“Wax sealed tenders in the prescribed form are hereby invited from reputed firms/Registered Societies Freight forwarders/IATA Approved Agents/Ground Handling Agencies having minimum three years experience in preceding five years in physical handling of international cargo by air, sea, surface with reference to relevant documents and having annual turn over of not less than Rs. 2.5(two and a half) crores and having cargo handlers over 300 for rendering aforesaid services at the cargo terminal, IGI Airport, New Delhi.”
(Underlining added)
From the aforesaid condition, it is clear that it was of paramount importance that the tenderer ought to have had, on the date of the submission of the bid, over 300 cargo handlers for rendering the export cargo handling services at the cargo terminal, IGI Airport, New Delhi. The petitioner submitted that this was a pre-condition for the submission of a bid and if at the technical stage this pre-condition was found to be lacking then the tenderer could not proceed to the next stage i.e. opening of the price bid. The petitioner, on coming to learn that the respondent No. 4 did not have 300 cargo handlers, wrote a letter dated 14th June, 2002 to the General Manager-Cargo(HQ), Airport Authority of India, New Delhi. The subject of of letter was “wrong information furnished by M/s Prompt Agencies in the tender for Handling Export Cargo at IGI Airport, New Delhi.” Prompt Agencies are Respondent No. 4. The contents of the said letter are as under:-
“We , understand the above tenderer and your present Handling Agent for Export Cargo at IGI Airport, New Delhi given misleading facts regarding the requirement of 300 international cargo handlers he is supposed to have in his pay roll in Madras. We also understand he has hardly 100/120 international cargo handlers and the rest are employed in some other jobs and not as international cargo handleRs.
Also Prompt Agencies track report about the payment of ESI/P.F. is always not in time and regular defaulter.
If above is true this is a very serious matter and needs to be investigated as you are the Principal employer.”
5. The Petitioner’s request for investigation was acceded to and a detailed inquiry was carried out by the Vigilance Department of the Airport Authority of India (Respondent No. 2). The result of the inquiry and investigation was indicated in the letter dated 17th July, 2003 which was issued to respondent No. 4 whereby the respondent No. 4’s said contract for export Cargo handling services was terminated with effect from midnight17th/18th July, 2003. The letter dated 17th July, 2003 is as under:-
” AIRPORT AUTHORITY OF INDIA
No. IGIA/CGO/ADMN/03/EXP/2003/309 17thJuly, 2003
By Hand
WITHOUT PREJUDICE
M/s Prompt Logisties & Travels (P) Ltd.
No. 50, South Usamn Road,
T. Nagar,
Chennai-600 017.
Sub: Termination of Export Cargo Handling Contract at IGIA- Cargo Terminal awarded to M/s Prompt Logistics & Travels(P) Ltd.
Dear Sir,
Reference is invited to the export cargo handling contract which was awarded to you vide this office letter No. IGIA/CGO/ADMN/03/EXP/2002 dated 30th March, 2002.
Investigations were carried out by AAI based on the complaints received against your organisation regarding submission of false documents while bidding for export cargo handling contract at IGIA–Cargo Terminal and found that the agency indulged in submission of false, fabricated, tampered, falsified and forged documents along with their tender while tendering for the contract at IGIA – Cargo Terminal and finally secured the contract by fraudulent means.
In view of the above, I have been directed to terminate the said contract w.e.f. Midnight of 17th/18th July, 2003. You are requested to handover possession of all AAI documents, Customs documents, equipments and all other AAI property and premises in your possession in the Export Cargo Terminal to DGM (Cargo)/Asstt. General Manager (Cargo)-Export.
Further Airports Authority of India reserves the right to recover any amount due on account of shortages / damages / unpaid staff wages / unfulfilled statutory obligations from you besides any other legal action as deemed fit.
Yours faithfully,
-Sd-
(DINESH KUMAR)
General Manager (Cargo)”
On the very next day, i.e. on 18th July, 2003 the petitioner on coming to learn that the contract of respondent No. 4 had been terminated with effect from 17.7.2003 requested the respondent No. 2 to award the contract in its favor. The purported reason and logic for such a request was that the respondent No. 4, through fraud and falsification/fabrication/forgery of documents, managed to obtain the contract. Had the fraud of the respondent No. 4 been unearthed prior to the opening of the price bid, the respondent No. 4 would not even have been considered beyond the technical stage and certainly not at the stage of opening of the price bids. In that view of the matter only two tenderers would have survived the evaluation of the technical stage. The petitioner would then have been L-1 and respondent No. 3 would have been L-2.
6. However, no response was received to the petitioner’s said letter dated 18.7.2003. On the other hand, the petitioner came to learn that instead of awarding the contract to the petitioner, by a letter dated 17th July, 2003 which is impugned herein, the respondent No. 2 awarded the contract to respondent No. 3 on the same terms and conditions of the contract hitherto undertaken by respondent No. 4, i.e. at the rate of Rs. 226.82 per MT. It was also recorded in the said letter dated 17th July, 2003 which is impugned herein that the arrangement was purely temporary and would confer no right for continuation of this work. The impugned letter dated 17.7.2003 is as under:-
“AIRPORT AUTHORITY OF INDIA
No. IGI/COO/ADMN/03/EXP/2003/310 17th July, 2003
By Hand
M/s JAC Air Services Pvt. Ltd.
Vaibhav Apartment, (Ashok Vatika)
Sahar Pipe Line Road, Sahar,
Mumbai-400 099.
Sub: Handling of Export Cargo Operation at IGIA-Cargo Terminal Temporary Arrangements …….reg.
Dear Sir,
Please refer to the discussions held in the office of General Manager Cargo regarding temporary arrangements for handling export cargo at IGIA-Cargo Terminal and your acceptance vide letter No. Nil dated 17th July, 2003 regarding taking over of Export Cargo Handling Functions with immediate effect.
Since the existing contract of export cargo handling undertaken by M/s Prompt Logistics & Travels(P) Ltd. has been terminated w.e.f. midnight of 17/18th July, 2003. You may ensure smooth handling of export functions as per laid down procedures of AAT/Customs the contract on the existing terms and condition of the contract hitherto undertaken by M/s Prompt Logistics & Travels(P) Ltd i.e. @ Rs. 226.82 per M.T.
This is purely a temporary arrangement and will confer no right for continuation of this work.
You are hereby requested to co-operate and take over these functions for smooth and uninterrupted handling from DGM (Cargo) Asstt. General Manager(Cargo)-[Export].
Yours faithfully,
sd/-
(Dinesh Kumar)
General Manager(Cargo)
Typed True Copy.”
7. Learned senior counsel, Mr. Valmiki Mehta, who appeared on behalf of the petitioner, drew my attention to paragraph 14 of the said NIT which reads as under:-
“The successful tenderer shall only be entitle to award of contract for one function, i.e. either of import or export cargo handling. However, AAI reserves the right to award both the contracts to a single party if the situation so demands, in the best interest of AAI.”
It is an admitted fact that respondent No. 3 was already providing the import cargo handling services. This being so, Mr. Mehta contended that as a general rule respondent No. 3 ought not to have even been considered for the export cargo handling services. He fairly stated that while it is true, that the Airport Authority of India (Respondent No. 2) by virtue of the said Clause 14 had the right to award both the contracts to a single party if the situation as demanded in the best interest of AAI, this was not such a situation. The petitioner was ready and willing to discharge the obligations if the contract was awarded to it. Thus, in the first instance the petitioner ought to have been approached. It is further pointed out that the petitioner was not even called for discussions whereas the letter dated 17.7.2003 itself indicates that respondent No. 3 was called for discussion held in the office of the General Manager, Cargo regarding temporary arrangement for handling export cargo at the IGI Airport Cargo Terminal. Mr Mehta further submitted that the award of the temporary contract to respondent No. 3 was clearly arbitrary and was done behind the back of the petitioner who was also keenly interested in the matter as it was the petitioner’s initial letter dated 14.6.2003 and subsequent follow up action which resulted in respondent No. 4’s contract being cancelled on the ground that it had been obtained on mis-representation, false documents and upon playing a fraud. Thus, it was natural and reasonable for the respondent No. 2 to have first approached the petitioner for taking over the export cargo handling functions which had been hitherto carried out by the respondent No. 4.
8. In short, Mr. Mehta has simply asked the question–why respondent No. 4? Respondent No. 4 was L-3 while petitioner was L-1. Respondent No. 4 was already in change of import cargo handling services and Clause 14 of the NIT clearly indicated that under normal circumstances the same person should not handle both import and export cargo. Why was respondent No. 4 alone called for discussions and not petitioner No. 2.
9. These are serious questions which have not been satisfactorily answered by learned counsel appearing on behalf of respondent No. 2. I had called for the original files of the respondent No. 2 in respect of the original tender, Vigilance Inquiry and the report and the termination notice/action in respect of respondent No. 4. From the file No. AAD/CGO/ADMN/03/2003 and in particular from note N-1 thereof which has been prepared by Shri P.K. Tahim, DGM, Cargo on 17.07.2003 itself, it is clearly indicated that to make interim arrangement and to terminate the contract with respondent No. 4 immediately “the only course” of action available to respondent No. 2 was to ascertain from the existing import contractor, if they could take up the job at the existing terms of respondent No. 4. Accordingly, representatives of respondent No. 4 were called in the office of General Manager (Cargo)/IGIA where the representative of respondent No. 3 was asked if he could take over the export cargo handling temporarily at the cargo terminal at a short notice. It is further indicated that the representative of respondent No. 3 gave his consent in writing to take over the export handling immediately, on existing rates and terms and conditions of respondent No. 4. Based on the above discussions and decisions the termination letter dated 17.7.2003 was issued to respondent No. 4 and the temporary award letter of the same was issued to respondent No. 3. Thus, according to respondent No. 2 the action of terminating the contract of respondent No. 4 as well as of temporarily awarding the work to respondent No. 3 was neither arbitrary nor unreasonable and was purely to ensure that there was no break in the handling of export cargo at the cargo terminal. He further submitted that this was not in any event an award of the contract as such but was purely a temporary arrangement which is also acknowledged by the respondent No. 3 and no right for continuation of the work at all was conferred on the respondent No. 3. This may appear to be an attractive explanation. But, in point of fact, it is not a satisfactory one. There is no mention nor is there any reference as to why the petitioner was not called for discussions. The petitioner submits that it was ready and wiling to perform the work within 24 hours notice and had indicated so on several occasions. Even now, it is indicating so. In fact, learned senior counsel appearing on behalf of the petitioner categorically stated that he is wiling to step into the shoes of respondent No. 3 and carry on the export cargo handling service purely as a temporary arrangement at the same price of Rs. 226.82 per MT.
10. Mr Mehta, learned senior counsel for the petitioner also referred to the decision of the Supreme Court in the case of Union of India and Others v. Dinesh Engineering Corporation and Another, . In particular he referred to paragraph 12 thereof which reads as under:-
“12. A perusal of the said letter shows that the Board adopted this policy keeping in mind the need to assure reliability and quality performance of the governors and their spare parts in the context of sophistication, complexity and high degree of precision associated with governoRs. It is in this background that in para (i) the letter states that the spares should be procured on proprietary basis from EDC. This policy proceeds on the hypothesis that there is no other supplier in the country who is competent enough to supply the spares required for the governors used by the Indian Railways without taking into consideration the fact that the writ petitioner has been supplying these spare parts for the last over 17 years to various divisions of the Indian Railways which fact has been established by the writ petitioner from the material produced both before the High Court and this Court and which fact has been accepted by the High Court. This clearly establishes the fact that the decision of the Board as found in the letter dated 23-10-1992 suffers from the vice of non-application of mind. On behalf of the appellants, it has been very seriously contended before us that the decision vide letter dated 23-10-1992 being in the nature of a policy decision, it is not open to courts to interfere since policies are normally formulated by experts on the subjects and the courts not being in a position to step into the shoes of the experts, cannot interfere with such policy matteRs. There is no doubt that this Court has held in more than one case that where the decision of the authority is in regard to a policy matter, this Court will not ordinarily interfere since these policy matters are taken based on expert knowledge of the persons concerned and courts are normally not equipped to question the correctness of a policy decision. But then this does not mean that the courts have to abdicate their right to scrutinise whether the policy in question is formulated keeping in mind all the relevant facts and the said policy can be held to be beyond the pale of discrimination or unreasonableness, bearing in mind the material on record. It is with this limited object if we scrutinise the policy reflected in the record. It is with this limited object if we scrutinise the policy reflected in the letter dated 23-10-1992, it is seen that the Railways took the decision to create a monopoly on proprietary basis on EDC on the ground that the spares required by it for replacement in the governors used by the Railways required a high degree of sophistication, complexity and precision, and in the background of the fact that there was no party other than EDC which could supply such spares. There can be no doubt that an equipment of the nature of a spare part of a governor which is used to control the speed in a diesel locomotive should be a quality product which can adhere to the strict scrutiny/standards of the Railways, but then the pertinent question is: has the Board taken into consideration the availability or non-availability of such characteristics in the spare parts supplied by the writ petitioner or, for that matter, was the Board alive to the fact that like EDC the writ petitioner was also supplying the spare parts as the replacement parts for the GE governors for the last over 17 years to the various divisions of the Railways? A perusal of the letter dated 23-10-1992 does not show that the Board was either aware of the existence of the writ petitioner or its capacity or otherwise to supply the spare parts required by the Railways for replacement in the governors used by it, an ignorance which is fatal to its policy decision. Any decision, be it a simple administrative decision or a policy decision, if taken without considering the relevant facts, can only be termed as an arbitrary decision. If it is so, then be it a policy decision or otherwise, it will be violative of the mandate of Article 14 of the Constitution.”
Relying upon the above learned senior counsel for the petitioner submitted that the decision to award the export cargo handling services, albeit temporarily, to respondent No. 3 was taken completely ignoring the fact that the petitioner was ready and willing and available to do the same and had been pursuing the matter from the very beginning. The petitioner is aggrieved not so much by the decision itself but the fact that it was completely ignored and not even called for discussions. At best it was a case of non-application of mind and at the worst it was one of rank arbitrariness. Either way, the decision was bad. This is further aggravated by the fact that if it is held that respondent No. 4 had fraudulently got the contract then in law it was the petitioner who would have been L-1 as fraud vitiates everything and the respondent No. 4’s bid would be non-est. In that event, the petitioner would clearly be L-1 and the contract would have been awarded to him. Respondent No. 4’s fraudulent actions have resulted in injustice to the petitioner. This injustice is further compounded by the fact that when the temporary arrangement was made the petitioner was not even considered or called for discussions. To my mind, the submissions made on behalf of learned counsel for the petitioner are very compelling and no reasonable explanation has been offered by the respondent for excluding the petitioner from even discussions while the cargo handling services were temporarily awarded to the respondent No. 3.
11. In this view of the matter, the decision of the respondent No. 2 to award the contract temporarily to respondent No. 3 cannot stand the scrutiny of reasonableness and is liable to be set aside on the ground of arbitrariness. Accordingly, the letter dated 17.7.2003 of the respondent No. 2 whereby the respondent No. 3 has been granted the work temporarily is quashed and set aside. Since the petitioner was L-1 (behind the bid of respondent No. 4), and was ready and willing at all stages to take on the job, the petitioner ought to have been approached first for the export cargo handling services. Learned counsel for the petitioner has clearly submitted that the petitioner would be satisfied entirely if the work awarded to respondent No. 3 is awarded to the petitioner on the same terms and conditions. In view of this, he would not press for the other prayers and particularly prayer (c). He would also not press for the award of the contract proper as the respondents have indicated that a fresh tender would be called in the near future. He would be fully satisfied if a temporary arrangement till such fresh tender is finalised is made with the petitioner instead of the respondent No. 3. It is also clear that awarding the temporary arrangement to the petitioner would also be in consonance with Clause 14 of the original NIT which indicated that in normal circumstances both export and import cargo handling services should not be handled by the same person. The impugned order dated 17.7.2003 in favor of respondent No. 3 is quashed and it is directed that the respondent No. 2 award the same to the petitioner on the same terms and conditions. The respondent No. 2 shall at the same time ensure that the transition from respondent No. 3 to the petitioner is done smoothly and without any disruption in the export cargo handling services. It is also pertinent to note that, despite service, respondent No. 3 chose not appear in the present proceedings.
12. Finally, the only thing that needs to be considered is this: The Respondent No. 4, who was also imp leaded as a party in the present proceedings, has submitted that no order be passed in this petition which would prejudice its case. Mr. Jayant Bhushan, learned senior counsel who appeared on behalf of respondent No. 4 indicated that the respondent No. 4 had challenged the cancellation of its contract by way of a suit being S.No. 209/2003 before the Civil Judge, Delhi. On 18.7.2003 itself an ex parte injunction was granted. Thereafter, the respondent No. 2 appeared in the said suit and indicated that there was an arbitration clause in the contract and as such, the suit would not lie. On 31.7.2003 the suit was dismissed on account of the presence of the arbitration clause. In the meanwhile, the respondent No. 4 had issued a notice to respondent No. 2 to appoint an arbitrator in terms of the said arbitration clause. The respondent No. 4 also filed an application under Section 9 of the arbitration and Conciliation Act, 1996 for interim ordeRs. That application was filed before this Court and was numbered as OMP 314/2003. By an order dated 1.9.2003 the said OMP was dismissed. The learned senior counsel appearing for respondent No. 4 submitted that it was dismissed on account of the fact that circumstances have changed and respondent No. 3 had already been granted the temporary work of export cargo handling services. He further submitted that an appeal has been filed by respondent No. 4 against that order and the appeal is numbered as FAO (OS) 318/2003. A Division Bench of this Court issued notice on 09.09.2003 in the said appeal and the returnable date is 18.9.2003. He submitted that no order be passed in this writ petition in favor of the petitioner as that would create further equities in the petitioner’s favor and would adversely affect the case of the respondent No. 4. I fail to appreciate the submission of the learned counsel for respondent No. 4. The award of the temporary arrangement as indicated above is clearly without any conferment of any right for continuation of the work. It does not create any special equities in favor of the petitioner. The temporary arrangement is on account of the fact that the respondent No. 4’s contract has been cancelled. If for some reason the contract is restored then obviously, the petitioner’s temporary arrangement would come to an end. This is the clear understanding of all the parties. It is also clear that the award of the temporary arrangement to the petitioner will not, in any way, prejudice any of the rights of the respondent No. 4 in the pending proceedings qua the cancellation of the contract. The two are in entirely different domains.
13. In view of the foregoing discussion, the writ petition is allowed to the extent indicated above. No order as to costs.