"It mocks Atmanirbhar Bharat policy:" Delhi High Court quashes AAI tender for Ground Handling services at Category D-1 airports

The Delhi High Court on July 14 ruled that the tender conditions set out by the Airport Authority of India (AAI) in its new request for proposals (RFPs) for engaging agencies to provide Ground Handling Services (GHS) at Group D-1 airports, stare in the face of Atmanirbhar policy of the Central government and stifle all attempts of smaller entrepreneurs to dream bigger. .A Division Bench of Justice Rekha Palli and Justice Vipin Sanghi found that the conditions mandating previous work experience in providing Ground Handling Services (GHS) with respect to scheduled aircrafts and laying down an annual turnover of Rs. 18 crore are discriminatory and arbitrary."The policy implemented by incorporating the offending terms and conditions that we have taken note of hereinabove, not only stares in the face of the proclaimed Atmanirbhar policy, but also mocks it. It stifles all attempts of smaller entrepreneurs to dream bigger, let alone big," the judgment said. .The Court, therefore, quashed the tender/ RFP issued by AAI and directed them to come up with a fresh tender process.."We are of the view that the decision to carry out region-wise sub-categorisation of the 49 airports falling under Group D1; the stipulation that only previous work experience in respect of providing GHS to scheduled aircrafts shall be considered acceptable for the purpose of the impugned tender/RFP and the revised minimum Annual Turnover criteria of INR 18 crore are discriminatory and arbitrary and, require to be struck down," the Court ruled. .The petitioner, Centre for Aviation Policy, Safety and Research (CAPSR), a non-profit organization, had challenged the RFPs issued by AAI on different dates for the separate categories of airports between January-July 2020.The 83 airports under the control of AAI were classified into 4 categories - A, B, C and D. Group D’ airports comprising of 49 Group D-1 airports and 1 (one) Group D-2 airport were further classified into four categories by clustering the 49 airports into geographical groups, and making it mandatory for interested parties to send their bids for an entire cluster, rather than a single airport – as had been the practice until then. As a result of this clustering of 49 airports falling under Group D-1, the existing criteria which permitted a bidder to submit a single bid to provide GHS for an individual airport was radically altered as no bidder was allowed to bid for a singular airport falling in this category. All bids were required to be placed for a specific region/cluster – which had multiple airports within it. However, the rules of the game remained unchanged for the other categories of airports; bids in the cases of Groups A, B, and C airport had to be placed for each airport individually.The petitioner was aggrieved by the same..The petitioner also raised objection to the tender the eligibility criteria stipulating technical and financial qualifications causing most of the ground handling agencies ineligible to participate in the tender process, especially those that have been providing GHS at the smaller airports of the country for many years.There was a requirement of an annual turnover of Rs 30 crores (which was later reduced to Rs. 18 crores) in any of the last three preceding financial years. Besides, the RFP also mandated prior experience in providing GHS to scheduled airlines. .The petitioner contended that prescribed technical and financial qualifications did not bear any correlation to the ground handling and that the same have been arbitrarily and whimsically tailored with a view to oust the existing GHS providers..It was argued that the requirement of an annual turnover of INR 30 Crore would be impossible to be met by small enterprises and was thus, exclusionary..With respect to the technical criterion of showing prior experience in providing core GHS to scheduled airlines, the petitioner contended that the same also operated to exclude many local GHAs and, therefore, the criteria appeared to contravene the 2018 Regulations..The AAI on the other hand contended that clustering of airports was aimed at promoting regional connectivity and avoiding the cumbersome administrative task of inviting and dealing with separate tenders for each of the 49 airports under the D-1 category.It was an administrative decision taken for improving the overall functioning of the country’s airports which is a part of the steps being taken by the respondents to strengthen the civil aviation industry in the country, the AAI submitted. .However, the Court rejected this contention by the respondents, noting that the original record does not support the claim made by the respondents - that the 2016 National Civil Aviation Policy was the primary motivation for sub-categorising the 49 airports falling under Category D-1..The Court observed that the actual impact of the differentiation carved out by the respondents did not only make the right to bid illusory for potential, small-time bidders but also made them ineligible, even though their past experience made them far more suitable to render such services..Further, discussing the high annual turnover prescribed by the respondents, the Bench noted that underlying spirit which motivates and propels an entrepreneurial venture forward is the desire for independent function, therefore the idea of a consortium with other small enterprises was not accepted by the Court..“Even though the requirement to show an Annual Turnover amount of INR 30 crore, was reduced to INR 18 crore, it still continued to be a significant and prohibitive sum for any micro and small enterprise, practically impossible for them to meet. This thoughtlessly pursued policy had the effect of strangulating the already-existing narrow margin of opportunities that were available to GHAs at Group D airports. Considering that all of this was done for the sake of ‘decreased workload’, as per the own showing of respondent no.2, we find the decision of the clustering to be arbitrary and unreasonable,” the Court said. .The decisions to cluster the airports and fix an exorbitant and prohibitive annual turnover criterion appeared to have been taken in a complete vacuum, the Court concluded.They were an antithesis to the Atmanirbhar Bharat policy, far removed from a rational nexus with the national civil aviation policy of or any meaningful explanations, it further stated. "The fundamental structure of the tender/RFP in question in respect of Group D-1 airports having been found to be offensive, the entire tender/RFP would fall to the ground, as the offensive parts cannot be culled out for the purpose of saving the rest of the tender/RFP. We, accordingly, quash the tender/RFP in question in respect of Group D-1 airports and permit the respondents to come up with a fresh tender process keeping in view our aforesaid findings," the Court ruled. .[Read Order]