AIR INDIA LIMITED Vs. COCHIN INT AIRPORT LIMITED

JUDGEMENT

(1.) Both these appeals arise out of the judgment of Kerala High Court in Writ Appeal No. 462 of 1999. Cambatta Aviation Ltd. (hereinafter referred to as 'Cambatta') had filed that appeal against the decision of a learned single Judge of that High Court in O.P.No. 25560 of 1998 whereby its said petition was dismissed. Cambatta had challenged the action of the Cochin International Airport Ltd. (for brevity sake referred to as the 'CIAL') of awarding contract for ground handling service at the new Cochin Airport at Nedumbassery to Air India Ltd. The learned single Judge held that the impugned action of CIAL was neither arbitrary nor illegal. On appeal Division bench of that Court held that the said action was violative of principles of natural justice, arbitrary and illegal.

(2.) CIAL is a public sector 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 letters 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. Cambata 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, organisational capacity and past experience. It took note of the fact that Cambatta and Air India are Indian organisation, operate mainly in India and have better proven adaptability for operating in Indian conditions. Out of those two it recommended Cambatta for awarding the work. On 11-8-1998 the Government of India wrote a letter to the Government of Kerala recommending Air India for awarding the contract on the ground that Air India is the national carrier and has better experience. Thereafter a meeting took place between the Managing Director of Air India and the Chief Minister of Kerala. That was followed by a letter dated 29-10-1998 by Mr. P. Mascarenhas, Managing Director of Air India to the Chief Minister of Kerala seeking an opportunity to make a more detailed presentation to the Board of CIAL on the advantages CIAL would derive of Air India was appointed its exclusive handling agent. The Board of Directors met on 7-11-1998 and decided to have a detailed discussion with Air India before taking a final decision and informed it to give a presentation before the Board on 27-11-1998. Having come to know about this development Cambatta wrote a letter on 10-11-1998 to the Chief Minister of Kerala pointing out that their company is also an Indian company and they also have experience of over 30 years in ground handling work. It also took exception to the effort made by Air India to revise its offer on the ground that it was unethical and deserved to be condemned by the Board. It again wrote to the Chief Minister on 12-11-1998 against giving preference to a national carrier in view of the policy of liberlisation. On 23-11-1998 Cambatta wrote to CIAL that it was extremely perturbed over the fact that Air India was given a further opportunity to make a presentation to the Board and requested it not to go back upon its earlier decision to give the contract to Cambatta. It also warned that not adhering to its earlier decision would be a retrograde step and shake the confidence of the people in fairness and impartiality of CIAL. Air India gave the presentation and by its letter dated 1-12-1998, reaffirmed its proposal with some changes as discussed and requested CIAL to accept it as it was better than the offer made by any other party. Cambatta again protested by its letter dated 7-12-1998 and informed CIAL that to accept the revised offer of Air India and not to accept its offer would be unfair and unethical and violative of Limited Global Competitive Building Norms. On 12-12-1998 the first respondent awarded the contract to Air India.