Supreme Court of India
APM TERMINALS B.V.versusUNION OF INDIA & ANR.
- Citation
- 2011 INSC 384
- Decided
- 11 May 2011
- Disposal
- Disposed off
- Bench
- ALTAMAS KABIR
Holding
A policy change by the Central Government to prevent private monopolisation of port facilities is within its powers and can override contractual provisions, provided it is reasonable, non‑arbitrary and serves the public interest.
Summary
APM Terminals BV challenged the Jawaharlal Nehru Port Trust’s (JNPT) decision to exclude it from the Fourth Container Terminal tender, arguing that a licence agreement clause (8.31) barred the exclusion. The Union of India had altered its port policy to prevent private monopolisation, stipulating that operators of one terminal could not bid for the immediate next terminal. The Supreme Court held that the Central Government may change policy to promote competition, and such policy changes can override private contracts if they are reasonable, non‑arbitrary and in the public interest. Consequently, the appellant was entitled to participate in the Fourth Container Terminal tender, and the High Court’s order was set aside. The transferred cases of PSA Sical Terminals were dismissed, leaving the policy change intact.
Issues considered
- The extent to which a unilateral policy change by the Central Government can override contractual rights in licence agreements for port terminals.
- Whether the exclusion of a private operator from successive port terminal tenders, based on policy, is arbitrary, unreasonable or violative of Article 14.
- The applicability of the doctrine of legitimate expectation to the petitioners.
Legislation cited
- Indian Ports Act, 1908
- Major Port Trusts Act, 1963s. 111, s. 42(3)
Subjects
private monopolyport policycontractual rightspublic policyWednesbury reasonablenesslegitimate expectationcompetitionmajor portsgovernment policytenderlicence agreement
Judgment
[2011] 8 S.C.R. 600 •
A APM TERMINALS B.V.
v.
UNION OF INDIA & ANR.
(Civil Appeal No. 4270 of 2011)
MAY 11, 2011
B
[ALTAMAS KABIR AND CYRIAC JOSEPH, JJ.]
Ports - Private monopolisation of port activities -
Prevention of - Power of the Central Government to alter
C its policies for benefit of the public at large - Held: The
Central Government is within its powers to strike a balance
with regard to the control of the port facilities so that the
same does not come to be concentrated in the hands of
one private group or consortium - A change in policy by
o the Government can have an overriding effect over private
treaties between the Government and a private party, if the
same was in the general public interest and provided such
change in policy was guided by reason - The only
qualifying condition is that such change in policy must be
E free from arbitrariness, irrationality, bias and malice and
must be in conformity with the principle of Wednesbury
reasonableness - in the instant case, however, as far as
the appellant is concerned, it is because of certain fortuitous
circumstances that it came to be excluded from the tender
F process for the Fourth Container Terminal - Under the
revised policy, the appellant was entitled to participate in
the alternate bids - The appellant having been excluded
from participating in the bid for the Third Container Terminal
on the basis of an existing policy, could not be debarred
G from participating in the next bid, by taking recourse to a
different yardstick - Such a course of action would be
contrary to public policy - Authorities of the JNPT directed
to allow the appellant to continue to participate in the tender
process for the Fourth Container Terminal.
H 600
• APM TERMINALS B.V. v. UNION OF INDIA AND ANR. 601
The appellant-company (APM Terminals BV) filed A
writ petition challenging the validity and propriety of the
decision taken by the Board of Trustees of Jawaharlal
Nehru Port Trust (JNPT), to exclude the appellant from
participating in the tender process for the development
of the Fourth Container Terminal at the Bombay Port B
through public-private partnership and praying for
quashing of the said decision with leave to the
appellant to participate in the tender process in
accordance with the policy indicated in Circular No.
PD-12013/2/2005-JNPT dated 26th September, 2007, c
issued by the Union of India. The further prayer of the
appellant was to read the provisions of the said Circular
into the Licence Agreement dated 10th August, 2004,
executed by the Board of Trustees, JNPT, in favour of
the appellant, and, consequently, to release the 0
appellant from the restrictions contained in Clause 8.31
of the Licence Agreement (which disqualified the
appellant from participating in the Tender process
relating to the Third Container Terminal) and/or to treat
the same as not binding on the appellant. The E
appellant-company claimed that on account of
subsequent resolutions adopted by the Board of
Trustees of JNPT, which had the effect of altering the
policy with regard to entrustment of operational facilities
at the port to provide competition and to prevent
monopolies, the provisions of Clause 8.31 required F
reconsideration in the light of the changed
circumstances. The writ Petition filed by the appellant
was dismissed by the High Court.
The question which arose for consideration before G
this Court was as to whether despite the contractual
right vested In the appellant as well as in the petitioner
in the connected Transferred cases i.e. PSA Sical
Terminals Ltd. to participate in future tender processes
for developmental work within the port area, such right H
602 SUPREME COURT REPORTS (2011] 8 S.C.R. •
A could be taken away and/or curtailed by a unilateral
policy decision of the Central Government. The further
question in the case of the appellant was whether
having been debarred from participating in the bid for
the Third Container Terminal in JNPT, it could also be
B excluded from the bidding process of the Fourth
Container Terminal.
Allowing the appeal of APM Terminals BV and
dismissing the Transfer Cases of PSA Sical Terminals
C Ltd., the Court
HELD:1.1. The Bombay High Court had found that
the appellants were handling container terminals in
Karachi and Sri Lanka and also at JNP and Chennai,
thereby exercising control over 48% of the container
o traffic in India. The High Court held that the two
existing terminals at JNP and Chennai are the biggest
container terminals in the country and if the appellant
and the petitioner in the Transferred Cases were
permitted to operate the new container terminals also,
E they would have virtual monopoly of the container
traffic in the entire country which would not be in the
public interest. The High Court also took note of the
fact that certain shipping agents and their associates
had expressed concern regarding the increased tariff
F charged by the appellant at its container terminals at
JNP and the possibility of a monopoly being created
by it in the country. The High Court took note of the
fact that port authorities all over the world had woken
up to the possibility of private monopolies controlling
the use of port facilities in such a manner so as to
G benefit their own ships to the detriment of world-wide
shipping as a whole. The High Court took note of the
fact that P&O Ports had been excluded from bidding
for the Third Container Terminal in the Port of
Melbourne on the ground that it would give the said
H operator a position of dominance which was to be
•
APM TERMINALS 8.V. v. UNION OF INDIA AND ANR. 603
avoided in the interest of the shipping industry at large. A
Two other examples of Port Klang in Malaysia and
Bhabange Port in Thailand, were also taken note of by
the Bombay High Court where different independent
operators were appointed to promote competition.
[Paras 55, 56) [633-0-H; 634-A-B] s
1.2. It is precisely for such reason that it had
become necessary for the Central Government to alter
its policy decision regarding entrusting control of the
container terminals in the major ports of India in a
manner so as to eliminate monopolisation and to C
encourage competition. [Para 57] [634-C-O)
Delhi Cloth & General Mills Ltd. vs. Rajasthan State
Electricity Board (1986) 2 SCC 431: 1986 (1) SCR 633;
PTC India Ltd. vs. Central Electricity Regulatory 0
Commission (2010) 4 SCC 603: 2010 (3) SCR 609;
Punjab Communications Ltd. vs. Union of India & Ors.
(1999) 4 SCC 727 and PTC India Limited vs. Central
Electricity Regulatory Commission (2010) 4 SCC 603:
2010 (3) SCR 609 - cited.
E
2. Insofar as the decision taken by the Central
Government to alter its policy regarding the grant of
licence for operating the container terminals in the
Major Ports in India as against the contractual right
embodied in the form of Clause 2.3 in the agreements F
executed or entered into between the Central
Government and the appellant and the petitioner in the
Transferred Cases, is concerned, the said controversy
is no longer valid in regard to the appellant, since such
point had not been taken on its behalf in the writ G
petition before the Bombay High Court. However, the
same has been taken as a specific point on behalf of
the petitioner in the Transferred Cases as far as the
Tenders for the Second Container Terminal at the
Tutlcorin Port are concerned. The said question has to H
604 SUPREME COURT REPORTS (2011] 8 S.C.R. •
A be considered in the light of Article 14 of the
Constitution and the greater public interest as against
the contractual right of the individual. [Para 58] [634-E·
G]
3. In the absence of any arbitrariness in effecting
8 the change in policy to prevent private mobilization and
keeping in mind the larger public interest, this Court is
of the view, that the Central Government was within its
powers to strike a balance with regard to the control
of the port facilities so that the same did not come to
C be concentrated in the hands of one private group or
consortium which would be in a dominant position to
control not only the rights of tariff, but also the entry
of ships, not belonging to such group, into the Major
Ports and thereby give an undue advantage to its own
D ships over other shipping agencies. [Para 59] [635-B·
CJ
4.1. Normally, the Courts do not interfere with
policy decisions of the Government unless they are
E arbitrary or offend any of the provisions of the
Constitution. In the present cases, the adoption of such
a course would be apposite. [Para 60] [635-D]
4.2. It has been the consistent view of this Court
that a change in policy by the Government can have
F an overriding effect over private treaties between the
Government and a private party, if the same was in the
general public interest and provided such change in
policy was guided by reason. In both the cases under
consideration, the same set of entrepreneurs are
G Interested in gaining control over the different container
terminals to the exclusion of other players. The Central
Government in Its Ministry of Shipping and Transport,
therefore, took a decision not to permit licensees who
have been granted a licence for running one of the
H container terminal berths from participating In the bid
• APM TERMINALS B.V. v. UNION OF INDIA AND ANR. 605
process for the immediate next container terminal, with A
the intention of promoting healthy competition for the
benefit of the shipping industry and the ports in India
as well. The decision to alter its policy is based on
sound reasoning .and the Central Government has
taken such decision for the benefit of the consumers B
as a whole. The changed policy would also have the
effect of preventing cartelisation and dominant status,
which could inevitably affect the ultimate pricing of
consumer goods within the country. The Government
was entitled to change its policies with changing C
circumstances and only on grounds of change a policy
does not stand vitiated. [Para 61] [635-E-H; 636-A-C]
Shimnit Utsch India Private Ltd. vs. West Bengal
Transport Infrastructure Development Corporation Limited
and Ors. 201 O (6) SCR 1110 - relied on D
5. The Government has the discretion to adopt a
different policy, alter or change its policy to make it
more effective. The only qualifying condition is that
such change in policy must be free from arbitrariness,
irrationality, bias and malice and must be in conformity E
with the principle of Wednesbury reasonableness.
Although, it has been urged that such change in policy
could be effected only by way of legislation, such a
submission, if accepted, could stultify the powers of the
Central Government to alter its policies with changing F
circumstances for the benefit of the public at large. It
is not as if the right of a licensee to bid for a further
container terminal berth has been excluded for the
entire period of the Licence Agreement but in order to
ensure proper competition and participation by all G
intending tenderers, the said policy has also been
altered to enable such licensees to bid for the next but
one tender as and when Invited. [Para 62] [636-0-G]
6.1. However, as far as the appellant is concerned, • H
606 SUPREME COURT REPORTS [2011] 8 S.C.R. •
A it is because of certain fortuitous circumstances that it
came to be excluded from the tender process for the
Fourth Container Terminal. If the tender process for the
Third Container Terminal had been concluded, the
various complications could have been avoided since
B under the revised policy, the appellant was entitled to
participate in the alternate bids. The appellant having
been excluded from one bid on the basis of an existing
policy, cannot be debarred from participating in the
next bid, by taking recourse to a different yardstick.
c Such a course of action would be contrary to public
policy. Accordingly, the authorities of the JNPT shall
allow the appellant to continue to participate in the
tender process for the Fourth Container Terminal and
the decision to the contrary conveyed to the appellant
on 29th June, 2009, is quashed. [Para 63) [636-H; 637-
0
A-C)
6.2. As far as PSA Sical Terminals Ltd. is
concerned, the submission as to the applicability of the
doctrine of legitimate expectation is at best an
E expectation if there are cogent grounds to deny the
same. The concept of legitimate expectation has no
role to play where State action is based on public
policy and in the public interest, unless the action
taken amounted to an abuse of power. [Para 64) [637-
F D-F]
6.3. The Central Government was within its powers
to adopt a policy to prevent the port facilities from
being concentrated in the hands of one private group
or consortium which could have complete control over
G the use of the facilities of the ports to the detriment of
the shipping industry as a whole. The decision taken
by the Tuticorin Port Trust Authorities to exclude PSA
Sical Terminals Ltd. from bidding for the 8th Berth
Container Terminal cannot, therefore, be said to be
H arbitrary or unreasonable so as to warrant interference.
•
APM TERMINALS B.V. v. UNION OF INDIA AND ANR. 607
In fact, the position of PSA Sical Terminals Ltd. is no A
different from that of A.P.M. Terminals B.V. which had
been excluded from the bid for the Third Container
Terminal at JNPT. [Para 65) [637-G-H; 638-A-B]
6.4. In the aforesaid circumstances, the appeal filed
8
by APM Terminals BV is allowed and the decision of
the Bombay High Court is set aside. However, the
decision of the Madras High Court does not call for
any interference and the Transfer Cases filed by PSA
Sical Terminals Limited are accordingly dismissed. All C
interim orders are vacated. [Para 66) (638-C-D]
Sethi Auto Service Station vs. Delhi Development
Authority (2009) 1 SCC 180: 2008 (14) SCR 598 - relied
on
D
Case Law Reference:
1986 (1) SCR 633 cited Para 41
2010 (3) SCR 609 cited Para 41
1999 (2) SCR 1033 cited Para 49 E
2010 (3) SCR 609 cited Para 52
2010 (6) SCR 1110 relied on Para 61
2008 (14) SCR 598 relied on Para 64 F
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
4270 of 2011.
From the Judgment & Order dated 10.3.2010 of the
High Court of Bombay in W.P. No. 1551 of 2009. G
WITH
T.C. (C) No. 36-37 of 2010
Arunabh Chowdhury, Anupam Lal Das, A.B. Singh, H
608 SUPREME COURT REPORTS [2011] 8 S.C.R.
A Sunita Dutta and Vikas Mehta for the Appellant.
H.P. Raval, ASG, Vikas Singh and Mukul Rohatgi, Ajay
Sharma, A. Kumar, Asha G. Nair, S.S. Rawat, D.S. Mahra
and R. Nedumaran for the Respondents.
B The Judgment of the Court was delivered by
ALTAMAS KABIR, J. 1. Leave granted in
SLP(C)No.13893 of 2010, which is being heard along with
Transferred Case (Civil) Nos.36-37 of 2010. While the appeal
c has been filed by APM Terminals B.V. against the decision
of the High Court, dismissing its writ petition, challenging the
decision of the Board of Trustees for the Jawaharlal Nehru
Port Trust to exclude the appellant from participating in the
tender process for the development of the Fourth Container
D Terminal at the Bombay Port through public-private
partnership, the transfer petitions have been filed by PSA
Sical Terminals Ltd. for transfer of Writ Petition Nos.19851
and 19384 of 2010 pending before the Madras High Court,
to this Court. As the questions involved in the writ petitions
E pending before the Madras High Court were the same as
those raised in the appeal filed by APM Terminals B.V., we
had directed the transfer petitions to be heard along with
SLP(C)No.13893 of 2010, out of which the present appeal
arises.
F 2. In the appeal, the appellant has challenged the validity
and propriety of the decision taken by the Board of Trustees
of the Jawaharlal Nehru Port Trust, hereinafter referred to as
the "JNPT", to exclude the appellant from participating in the
tender process for the Fourth Container Terminal under the
G JNPT, through public-private partnership, and praying for
quashing of the said decision with leave to the appellant to
participate in the tender process in accordance with the
policy indicated in Circular No. PD-12013/2/2005-JNPT
dated 26th September, 2007, issued by the Union of India.
H The further prayer of the appellant was to read the provisions
• APM TERMINALS B.V. v. UNION OF INDIA AND ANR. 609
[ALTAMAS KABIR, J.]
of the said Circular into the Licence Agreement dated 10th A
August, 2004, executed between the appellant and JNPT,
and, consequently, to release the appellant from the
restrictions contained in Clause 8.31 of the Licence
Agreement and/or to treat the same as not binding on the
appellant. Clause 8.31 of the Licence Agreement which was B
executed by the Board of Trustees, JNPT, in favour of the
appellant, provides as follows :
"8.31 The Licensee acknowledges and agrees that it
shall forego the right to bid for either directly or
indirectly, including being a Management Contractor C
through any associate company, whether such company
is registered in India or any other country, or any
company in which the Licensee has a shareholding for
the Additional Facilities or existing facilities during the
term of this Agreement. The Licensee also agrees that D
in the event of it or its parent company taking over/
acquiring/amalgamating/merging with the licensee or the
parent company to whom the Additional Facilities are
awarded it shall be obliged to divest its stake in one
of the two licenses to a third entity not linked to the E
Licensee within 6 months from the date of such change
in control failing which it shall be deemed to be a
Licensee Event of Default. The Licensee also agrees
that in the event of it or its parent company being taken
over/acquired/amalgamated/merged by another licensee F
operating container facilities at JNPT it shall be obliged
to divest the License to a third entity not linked to the
Licensee within 6 months from the date of such change
in control failing which it shall be deemed to be a
Licensee Event of Default. The Licensee acknowledges, G
agrees and. accepts the above as essence of this
Agreement and the Licence granted to the Licensee."
3. Before the High Court, on behalf of the appellant
Company, it was claimed that on account of subsequent H
610 SUPREME COURT REPORTS [2011] 8 S.C.R. •
A resolutions adopted by the Board of Trustees of JNPT, which
had the effect of altering the policy with regard to
entrustment of operational facilities at the port to provide
competition and to prevent monopolies, the provisions of
Clause 8.31 would have to be reconsidered in the light of
B the changed circumstances. Before proceeding any further it
will be worthwhile to briefly indicate the background in which
the present lis has arisen.
4. The Jawaharlal Nehru Port Bulk Terminal was
commissioned on 26th May, 1989, and was designed to
C handle goods imported in bulk, such as fertilizers, fertilizer
raw materials and food grains, with the help of mechanized
bulk-handling facilities. With the passage of time, the Central
Government found it difficult to maintain the Bulk Terminal
and decided to convert the Bulk Terminal into a Container
D Terminal and to remodel the same on a Build, Operate and
Transfer (BOT) Basis on licence for a period of 30 years.
Since 1996, it has been the policy of the Central Government
to permit participation/investment by the private sector in
utilizing the assets of the Port, construction and creation of
E additional assets, lease of equipment, pilotage, cargo
handling, etc. In fact, guidelines had been issued from time
to time by the Ministry of Surface Transport which was to be
followed by the Major Ports for private sector participation.
In pursuance of such policy, the Central Government
F introduced the process_ of privatization, subject however, to
the regulatory role of the JNPT. Within the regulatory frame-
work it was made clear that the Port authorities should
ensure that private investment did not result in the creation
of private monopolies and that private facilities were
G available to all users on equal and competitive terms.
5. The appellant is a Company incorporated under the
laws of the Netherlands. Together with the Container
Corporation of India Limited it formed a Joint Venture
H Company under the name and· style of "Gateway Terminals
• APM TERMINALS B.V. v. UNION OF INDIA AND ANR. 611
[ALTAMAS KABIR, J.]
India Pvt. Ltd." registered under the Companies Act, 1956. A
The said Joint Venture Company, hereinafter referred to as
the "GTI", was the successful bidder in the Tender floated by
JNPT for development of its existing Bulk Terminal into a
Container Terminal. Thereafter, in keeping with the guidelines
issued by the Central Government in 1996, which were B
described as mandatory, the JNPT floated a Tender for the
development of a new 600 meter Quay Length Container
Terminal at Navi Mumbai and Nhava Sheva International
Container Terminal, hereinafter referred to as the "NSICT",
was the successful bidder in respect of the said Tender. The c
licence granted to NSICT to operate the first Container
Terminal at JNPT culminated in a Build, Operate and
Transfer Licence Agreement dated 3rd July, 1997 between
JNPT and NSICT which was to subsist for a period of 30
years from the date of the agreement. Clause 2.3 of the said
0
Licence Agreement provides as follows :
"The License will not bar the Licensee from participating
in any subsequent bids invited by the Licensor for
operation of Container Terminal.·
E
6. Accordingly, NSICT was given liberty to participate in
any subsequent bid for operation of the Container Terminal.
7. In 2002, JNPT floated another Tender for the
development of the Second Contai!ler Terminal at JNPT and
invited Requests for Qualification (RFQ) for the construction F
thereof. In order to prevent monopoly and promote
competition, the JNPT subsequently incorporated Clause 1.3
in the Tender documents for the development of the Second
Container Terminal, which reads as follows :
G
"Clause 1.3 : The port is desirous of entrusting the
Project of redevelopment of the bulk terminal to a
container terminal, on BOT basis, to another licensee
other than the existing Private Terminal Operator
H
612 SUPREME COURT REPORTS (2011] 8 S.C.R.
A (Licensee) at JNPT i.e. Nhava Sheva International
Container Terminal (NSICT) Limited or their associates,
P&O or the associates, interconnected or sister
companies or either of them."
B 8. The net result was that NSICT was precluded from
participating in the Tender for the development of the Second
Container Terminal at JNPT, despite the express provisions
of Clause 2.3 of the Licence Agreement.
9. The said decision of the JNPT was challenged by
C NSICT and its affiliate, P&O Australia Ports Pvt. Ltd., by way
of Writ Petition No.3083 of 2002 in the Bombay High Court.
During the hearing of the said writ petition, the Union of India
and JNPT took the stand that the 1996 Policy and the
guidelines would prevail over Clause 2.3 of the Licence
D Agreement between the said Respondents and the NSICT.
Upholding the decision of the Respondents to exclude P&O
Australia Ports Pvt. Ltd. and NSICT from participating in the
bid for the development of the Second Container Terminal,
the Bombay High Court dismissed the writ petition by its
E order dated 28th January, 2003. The said decision of the
Bombay High Court was challenged before this Court, which
declined to interfere with the order of the Bombay High Court.
However, the Petitioner's Joint Venture Company, GTI Pvt.
Ltd., was permitted to bid in the Tender for the development
F of the Second Container Terminal at JNPT. On completion
of the bidding process, the work of development of the
Second Container Terminal was awarded to GTI for a term
of 30 years from the date of the Licence Agreement which
also contained Clause 8.31, extracted hereinabove. In fact,
G before the Bombay High Court, JNPT had taken a stand that
Clause 8.31 had been subsequently incorporated in the
Licence Agreement in view of the guidelines promulgated in
1996, which were then in force.
10. In the meanwhile, on or about 26th September,
H 2007, a decision was taken by the Union of India to alter
• APM TERMINALS B.V. v. UNION OF INDIA AND ANR. 613
[ALTAMAS KABIR, J.]
the 1996 policy and a Circular No.P0-12013/2/2005-JNPT, A
was issued indicating that the JNPT should proceed to invite
global competitive bidding for an independent "Stand Alone"
Container Terminal to expand the Container towards North of
JNPT by 330 meters, which was designated as the Third
Container Terminal. It also clarified the eligibility of existing B
private container terminal operators at JNPT to compete and
bid for any project. In the said Circular dated 26th
September, 2007, it was, inter alia, indicated as follows :
"In the instant case while JNPT is in the process of
undertaking the bidding for the development of the 330 C
metre extension of container berth towards North of
NSICT project as a stand alone project on BOT basis
(330 metre extension project) there are two different
private BOT operators operating container terminals in
JN Port. As a rational and logical consequence of the D
stand taken earlier it has been decided that the
successful bidder of the previous container terminal on
BOT basis (Maersk A/S - CONCOR Consortium) and/
or their subsidiaries/allied organizations should be
excluded from bidding for the 330 metre extension E
project. This would mean that for the next BOT container
terminal in JN Port in future, the successful bidder of the
330 metre extension project would be excluded and so
on.
F
It has also been decided that the above convention shall
be followed in all Ports in its true spirit with a view to
avoid monopoly and promote competition till such time
a formal Policy is finalized and notified."
11. As a result of the above, neither the appellant nor G
its affiliates and/or subsidiaries/allied organizations were
permitted to participate in the bid for the Stand Alone
Container Terminal. Thereafter, in the year 2000, the JNPT
floated yet another Tender for development of the Third
H
614 SUPREME COURT REPORTS (2011] 8 S.C.R. •
A Container Terminal at JNPT, inviting Requests for
Qualification for selection of a developer for the development
of the said terminal in which it was categorically mentioned
as follows:
"JNPT is desirous of entr.usting this project to a
B
Licensee other than Maersk A/S-Concor Consortium
and/or their subsidiaries/allied organizations including
GTIPL."
12.. The explanation given for the insertion of the said
C clause was to implement the Circular dated 26th September,
2007. GTl's plea to allow it to participate in the bid was
rejected. The appellant was, therefore, subsequently barred
from participating in the Tender process for the development
of the Third Container Terminal at JNPT. NSICT was,
D however, allowed to participate in the said Tender process
for the development of the Third Container Terminal at the
JNPT UN, but such Tender has not yet been finalized.
13. In the meantime, on 2nd Marcl:l, 2009, JNPT floated
E Tender No. PD/N-14th CT/C-60/2009 and issued a global
invitation of a Request for Qualification for development of
the· Fourth Container Terminal at JNPT. The said Tender
contained the following clause.
"The successful bidder/consortium members and/or their
F subsidiaries/allied organiza-tions in the project for the
development of a Stand Alone Container Handling
Facility with a key length of 330 meters towards North
•
at JNPT was to be excluded from the bidding in respect
of Fourth Container Terminal either as a single applicant
G or as a consortium."
14. On a plain understanding of the above mentioned
clause, neither the appellant nor its associate companies/
allied organizations and/or consortium of GTI was precluded
rl from participating in the said Tender for the development of
•
APM TERMINALS B.V. v. UNION OF INDIAAND ANR. 615
[ALTAMAS KABIR, J.]
the Fourth Container Terminal and raising its bid therein. The A
appellant, thereupon, along with its letter dated 5th March,
2009, addressed to the JNPT, forwarded a Demand Draft
for Rs.10,000/- towards purchase of the RFQ document for
participation in· the bidding process for the Fourth Container
Terminal. The appellant was provided with a copy of the RFQ B
documents, wherein, in Clause 2.2.1 (e), it was categorically
stipulated as follows :
"2.2.1 (e) To avoid private monopoly and to promote
competition, the successful bidder/consortium members
and/or their subsidiaries/allied organization in th project C
for the "Development of a stand alone contasiner
handling facility with a quay length of 330-m towards
North at NJPT" shall be excluded from the bidding for
DEVELOPMENT OF FOURTH CONTAINER TERMINAL
either as a single applicant or as a consortium. Further, D
for the next BOT container terminal in JN Port in future,
the successful bidder/consortium members in the
DEVELOMENT OF FOURTH CONTAINER TERMINAL
Project would be excluded and so on."
E
15. Even at this stage, JNPT did not preclude the
appellant from participating in the said tender in respect of
the Fourth Container Terminal at JNPT. The appellant was,
thereafter, invited to participate in the process for grant of
licence for the Fourth Container Terminal. However, to the F
surprise of the appellant, on 29th June, 2009, the appellant
was informed that GTI and/or its associates/allied
organizations had been disqualified from bidding for the
Fourth Container Terminal in view of Clause 8.31 of the
Licence Agreement. As indicated hereinbefore, it was after G
such decision that the appellant, who was worried about the
rights and entitlements arising out of the said Circular, filed
Writ Petition No.1551 of 2008 before the Bombay High
Court on 29th July, 2009. The said Writ Petition was listed
before the Bombay High Court on 25th August, 2009, whic.h
dismissed the same on 10th March, 2010, relying solely on H
616 SUPREME COURT REPORTS [2011] 8 S.C.R.
•
A the provisions of Clause 8.31 of the Licence Agreement,
which disqualified the appellant from participating in the
Tender process relating to the Third Container Terminal.
16. It is the said order of the High Court which has been
B challenged in this appeal.
17. Appearing for the appellant, Mr. F.S. Nariman,
Senior Advocate, submitted that JNPT had awarded NSICT,
owned by P&O Ports, the licence for the development of the
First Container Terminal at JNPT. Pursuant thereto, JNPT
C had entered into a Licence Agreement dated 3rd July, 1997,
with NSICT, wherein Clause 2.3, which provided that the said
licence would not bar the licensee from participating in any
subsequent bids invited by the licensor for operation of the
container terminal, was incorporated. Mr. Nariman submitted
D that despite the 1996 Policy, which aimed at preventing
monopoly and promoting competition, the Licence
Agreement dated 3rd July, 1997, permitted NSICT to
participate in the subsequent bids invited by the JNPT for
operation of the Container Terminal.
E 18. Mr. Nariman submitted that on 26th September,
2007, the Union of India issued Circular No. PD-12013/2/
2005-JNPT to JNPT indicating that it should invite global
competitive bidding for an independent, Stand Alone
Container Terminal involving a 330 meter extension of
F container berth towards the North of JNPT. The said Circular
clarified that existing private Container Terminal Operators in
JNPT would also be entitled to bid for any project but the
JNPT was required to ensure that private investment did not
result in the creation of private monopoly and that private
G facilities were available to all users on equal and competitive
terms. Paragraph 5 of the 2007 Policy clearly provided that
the successful bidder of the previous Container Terminal on
BOT basis and/or their subsidiaries/allied organizations,
should be excluded from bidding for the 330 meter extension
.-J project. The immediate fall-out of the same would mean that
•
.. APM TERMINALS B.V. v UNION OF INDIA AND ANR. 617
[ALTAMAS KABIR, J.]
for the next BOT Container Terminal in JN Port in future, the A
successful bidder of the 330 meter extension project would
be excluded and so on. What was also emphatically stated
in paragraph 6 is that it had also been decided that the
aforesaid guideline should be followed in all Ports in its true
spirit with a view to avoiding monopoly and promoting B
competition, till such time a formal policy was finalized and
notified. The 2007 Policy, therefore, provided that MAERSK
SIT CONCOR Consortium and/or their subsidiary/allied
organizations would be excluded from bidding for the Third
Container Terminal and the successful bidder of the Third c
Container Terminal would be excluded from bidding for the
next project and so on. Hence, a successful bidder would be
ineligible to bid for the next but one subsequent tender after
the immediate one awarded to it.
19. Mr. Nariman submitted that in accordance with the D
guidelines contained in the 2007 Policy, the appellant was
specifically barred from participating in the tender process
for the development of the Third Container Terminal at JNPT.
NSICT who was the successful bidder for the first container
was allowed to participate in the tender process for the E
development of the Third Container Terminal at JNPT, though
the said tender is yet to be finalised.
20. Certain problems arose when on 2nd March, 2009,
JNPT floated Tender No. PPD/M-1/4TH CT/C-60/2009 and F
issued a global invitation for Request for Qualification for
development of the Fourth Container Terminal at JNPT, which
contained a clause to the effect that the successful bidder/
consortium members and/or their subsidiaries/allied
organizations in the project for the development of a "Stand G
Alone Container f:landHng facility with a Quay length of 330
meter towards North at JNPT should be excluded from the
bidding for the development of the Fourth Container Terminal
either as a single applicant or as a Consortium.
H
618 SUPREME COURT REPORTS [2011] 8 S.C.R.
•
A 21. Mr. Nariman submitted that the Request for
Qualification excludes only the successful bidder for the Third
Container Terminal (which is yet to be awarded) from bidding
at the tender for the development of the Fourth Container
Terminal. Consequently, the appellant and/or its Associate
B Company/allied organizations and/or consortium of GTI were
. not precluded from participating in the tender for the
development of the Fourth Container Terminal having been
precluded from bidding for the "Stand Alone" Container
Terminal, in accordance with the 2007 Policy. It was at this
c stage that JNPT wrote to the appellant on 29th June, 2009,
indicating that it has been decided not to allow GTI Pvt. Ltd.
and/or its associates to participate in the bidding for the
Fourth Container Terminal. Mr. Nariman further submitted that
inspite of the decision in NSICT's case, wherein the Union
0 of India had relied on the 1996 Policy, it subsequently
changed its stand on the strength of the 2007 Policy
indicating that having regard to Clause 8.31 of the
Agreement the appellant was barred from bidding for the
Fourth Container Terminal.
E 22. It was submitted that the stand of JNPT was clearly
wrong, arbitrary and discriminatory. It was further submitted
that the apprehension of the JNPT in regard to creation of
monopoly was erroneous and unrealistic since monopoly
means the power to determine one's own prices. In the case
F of Ports, the prices for various Port Services are determined
by the Tariff Authority for the Major Ports (TAMP) and
periodically operators are required to submit their proposed
prices to TAMP and cannot charge more than the TAMP
approved prices for any of their services. It was urged that
G without the power to fix one's own price, the question of
monopoly did not arise.
23. Mr. Nariman submitted that the problem has arisen
on account of the fact that the tender for the Third Container
H Terminal is yet to be finalised, and, in the meantime the
• APM TERMINALS B.V. v. UNION OF INDIA AND ANR. 619
. [ALTAMAS KABIR, J.]
tender for the Fourth Container Terminal was floated. A
Consequently, the Fourth tender was treated by the
concerned Respondents to be the tender for the Third
Container Terminal which meant that the appellant Company
stood disqualified from participating in the said tender also,
since under the 2007 Policy it could only participate in the 8
next but one subsequent tender after the one awarded to it,
thereby suffering double prejudice on account of no fault on
its part. Mr. Nariman submitted that to debar the appellant
Co'Tnpany from participating in both the Third as well as the
Fourth Container Terminals was not justified and it should be C
allowed to participate in the Fourth tender in accordance with
Clause 2.3 of its Licence Agreement. Furthermore, if the
stand taken on behalf of the Respondent was to be accepted,
despite the supersession of the 1996 Policy by the 2007
Policy, the appellant would also be barred from participating
in future tenders for 30 years by virtue of Clause 8.31 of the 0
Licence Agreement, which would only have the effect of
reducing the extent of competition which is, in fact, the object
of the 2007 Policy of the Union of India.
24. Mr. Nariman also contended that Clause 8.31 of the E
Licence Agreement had been imposed upon the appellant
based on the principles of public policy and keeping in mind
the then prevailing Policy of the Government of India, i.e., the
1996 Policy and not out of the free will of the parties. In any
event, Clause 8.31 of the Licence Agreement would have to F
be read with the 2007 Policy and could not be read in
isolation.
25. Mr. Nariman urged that when the tender for the
Second Container Terminal was floated by the Respondent
No.2, it relied heavily on the 1996 Policy to prevent NSICT G
from bidding at the said tender. When NSICT challenged the
said decision by filing a writ petition in the Bombay High
Court, the Respondents successfully urged before the Court
in the said Writ Petition that the 1996 Policy would prevail
H
620 SUPREME COURT REPORTS [2011) 8 S.C.R.
A over Clause 2.3 of the NSICT contract. On the other hand,
•
as stated hereinbefore, in Writ Petition No.1551 of 2009 filed
by the appellant, the Respondents took a contrary stand by
contending that Clause 8.31 of the Licence Agreement
would prevail over the 2007 Policy.
B 26. Mr. Nariman lastly contended that by allowing the
appellant to raise the technical bid and to participate in the
pre-bid meeting for the development of the Fourth Container
Terminal, the Respondents had giveri the appellant cause for
legitimate expectation of being eligible to bid for and be
C awarded the contract. Mr. Nariman submitted that the
Respondents had acted in a manner engineered to preclude
the appellant from participating in the tender for the
development of the Fourth Container Terminal at JNPT.
o 27. Appearing for the Petitioner, PSA Sica! Terminals
Ltd., in Transferred Case Nos.36-37 of 2010, learned Senior
Counsel, Ms. Nalini Chidambaram urged that, although, there
was a good deal of similarity in the issues raised in the
Special Leave Petition filed by APM Terminals B.V. and the
E Transferred Cases filed by PSA Sica! Terminals Ltd., the
substantial question in the Transferred cases was whether a
contractual right could be superseded by a general policy
decision under Section 111 of the Major Port Trusts Act,
1963, without any legislation. In other words, ir:i the facts of
F this case, could the Petitioner with whom a Licence
Agreement had been signed on 15th July, 1998, by the
Respondent No.2, Tuticorin Port Trust, with the previous
sanction of the Central ·Government under Section 42(3) of
the Major Port Trusts Act, 1963, be prevented from
participating in the tender for additional facilities in the
G Tuticorin Port, by virtue of a policy decision taken in the teeth
of the provisions of the Licence Agreement which vested the
Licensee with the right to participate in future tenders.
28. Ms. Chidambaram urged that after the policy of
H liberalization adopted by the Central Government, the Port
•
APM TERMINALS B.V. v. UNION OF INDIA AND ANR. 621
[ALTAMAS KABIR, J.]
Trusts permitted private operators to operate Container A
Terminals on a Build, Operate and Transfer basis, through a
process of tender. PSA Sical participated in the Tender
invited by the Tuticorin Port Trust in 1997 for operating the
Seventh Berth at Tuticorin, which was the First Container
Terminal and was granted licence to operate the said Berth B
for 30 years. During the subsistence of the guidelines issued
by the Government of India on 28th October, 1996, the
Tuticorin Port Trust entered into a Licence Agreement with
the Petitioner on 15th July, 1998, to operate the Seventh
berth and specifically granting a right to the Petitioner to c
participate in any subsequent bids invited by the said Trust
for operation of additional facilities in the same port under
Clauses 2.3 and 6.2.3 of the Licence Agreement. For the
sake of convenience, the said two clauses in the Licence
Agreement are reproduced hereinbelow : D
"2.3 License Period
The Licence Period shall be for the period of 30 years
(including the time taken for the erection of container
handling equipments at the Container Terminal) E
commencing from the Date of Award of License.
The license will not bar the licensee from participating
in any subsequent bids invited by the licensor for
development, designing, engineering, constructing, F
equipping, maintaining and operating any berth or
related facility at the port".
"6.2.3
The Licensor agrees that it shall not commission G
additional berths for handling containers until the traffic
potential does not appear to exceed 90% of the
maximum volume 1, 25,000 TEUs. Provided however
that the Licensor shall always consider future expansions
of the container berths to reasonably match the market H
622 SUPREME COURT REPORTS (2011) 8 S.C.R. •
A demands and allow the Licensee to participate in its
operation without any discrimination. This condition shall
be applicable only within the port limits of the Licensor
as notified under Indian Ports Act, 1908 and Major Port
Trusts Act, 1963."
B
29. Ms. Chidambaram submitted that it would, therefore,
be evident from the above clauses that notwithstanding the
1996 guidelines, while executing the Licence Agreement, the
Tuticorin Port Trust consciously granted the Petitioner a
C specific right to bid in Tenders for future development in the
same port and did not consider that the same would result
in the creation of a private monopoly.
30. It was submitted that at about the same time, the
issue relating to the disqualification of Nhava Sheva
D International Container Terminal (NSICT), which was operating
the Container Terminal at the JNPT and its Associate or
interconnected or sister companies, including P&O Ports,
from participating in the bid for the re-development of the
Bulk Terminal into a Container Terminal at JNPT was taken
E up for consideration by the Bombay High Court. In the said
matter, the JNPT took the stand that since P&O Ports was
controlling 48% of the Container traffic in India and was
op_erating the existing private Container Terminals at
Jawaharlal Nehru Port Trust and Chennai, a policy decision
· F had been taken by the Port Trusts of the JNPT to debar an
existing operator from bidding for the next Container Terminal
with the object of avoiding concentration of control in one
party and to increase competition and efficiency in the public
interest. The said proposal was forwarded to the Central
G Government which approved the same vide its letter dated
11th November, 2002.
31. Ms. Chidambaram submitted that since P&O Ports
and its associates were controlling 48% of the Container
business in India, the Bombay High Court upheld the policy
:-1 of the Central Government aimed at preventing
• APM TERMINALS B.V. v. UNION OF INDIA AND ANR. 623
[ALTAMAS KABIR, J.]
monopolisation of the container business in India by a private A
party. Ms. Chidambaram submitted that the appeal filed by
P&O Ports b&fore this Court was also dismissed, with this
Court upholding the comprehensive guidelines that were
issued by the Government of India, Ministry of Surface
Transport on 26th October, 1996. Ms. Chidambaram, B
however, urged that the P&O Ports' case was decided on
facts which were specific to P&O Ports and could not,
therefore, be treated as a precedent for the Petitioner's case.
However, the question as to whether a policy decision could
supersede the contractual right was not considered by the c
Bombay High Court or by this Court.
32. Ms. Chidambaram submitted that on 31st May,
2005, the Tuticorin Port Trust invited Tenders for development
of Berth No.8 into a Container Terminal and permitted the
Petitioner to participate in the tender process. The tender D
process remained incomplete for over four years and in
.2007 a draft policy was formulated to promote inter port and
intra port competition in which it was stipulated as follows :-
"Wherever the second terminal is to be set up at the E
same major port, or first terminal in an adjacent major
port e.g. JN Port and Mumbai, Chennai and Ennore
Ports, the existing terminal operator would be excluded
to ensure competition. If there are a minimum of two
private operators in any major port, no restriction would F
be placed on the existing operators to bid for the
subsequent terminal, subject to the condition that a
single private operator will not be allowed to operate
more than two terminals at the same Major Port
including terminals at adjacent major port." d
33. Further to the aforesaid approved policy, the
Government of India wrote to the Tuticorin Port Trust that it
had been decided to debar the existing operator, the
Petitioner herein, who was operating the first Private
Terminal, from the bidding process for the second Container H
624 SUPREME COURT REPORTS (2011] 8 S.C.R. •
A Terminal at Tuticorin Port in line with the aforesaid policy
decision. The Petitioner was, therefore, denied permission
from further participation in the tender for the 8th Berth on
account of the aforesaid policy, notwithstanding the specific
provision in the Licence Agreement permitting the Petitioner
B to participate in subsequent Tenders.
34. The Petitioner challenged the aforesaid decision
denying permission to the Petitioner from participating in the
bid for the 8th Berth in Writ Petition No.9746 of 2009. The
C learned Single Judge dismissed the Writ Petition relying on
the decision in the P&O Ports case. In the Writ Appeal
No.996 of 2009 filed by the Petitioner against the decision
of the learned Single Judge of the Madras High Court, it was
submitted on behalf of the Union of India that the need for
having a second Private Container Terminal had been
D reassessed and that it had been decided to scrap the
project at the RFP stage itself. The Petitioner's writ appeal
was, therefore, dismissed as infructuous.
35. Subsequently, the Union of India issued a new policy
E guideline under Section 111 of the Major Port Trusts Act,
1963, on 2nd August, 2010, and immediately thereafter on
4th August, 2010, the Tuticorin Port Trust floated re-tender
for the 8th Berth and restrained the Petitioner from
participating therein in keeping with the new policy
F guidelines. Ms. Chidambaram submitted that the 2010 Policy
provided that if there was one private Container/Berth
Operator in a Port for a specific cargo, the Operator of that
Berth or his Associates would not be allowed to bid for the
next Terminal/Berth for handling the same cargo in the same
G Port. Ms. Chidambaram submitted that the Petitioner was
informed of the said decision of the Tuticorin Port Trust by
its letter dated 21st August, 2010.
36. Aggrieved by the aforesaid decision to debar the
Petitioner from participating in the bidding process for the
H 8th Berth/Container Terminal, the Petitioner filed Writ Petition
• APM TERMINALS B.V. v. UNION OF INDIA AND ANR. 625
[ALTAMAS KABIR, J.]
Nos.19384 of 201 O and 19851 of 2010, inter alia, for a A
direction upon the Respondents to permit the Petitioner to
participate in the bid process for the development of the 8th
Berth at Tuticorin Port as a Container Terminal and for a
further direction upon the authorities of the Tuticorin Port
Trust to provide the Request for Qualification documents and B
to quash the decision not to provide the same.
37. In the background of the aforesaid facts, Ms.
Chidambaram contended that a right given to a contractor
could be nullified only by a legislation specifically indicating C
that the agreement stood nullified and not by a general policy
decision. Ms. Chidambaram submitted that while the 1996
Policy categorically indicated that the Port should ensure that
private investment did not result in the creation of private
monopolies, in the Licence Agreement with the petitioner
Clauses 2.3 and 6.2.3 were included giving the Petitioner a D
right to participate in the bid for additional Container
Terminals in the same Port.
38. Ms. Chidambaram submitted that a draft Policy was
prepared by the Central Government on 10th February, 2005, E
to promote inter port and intra port competition, but the said
Policy was never notified and remained a draft. However,
based on the draft Policy, the Tuticorin Port Trust invited
tenders for the 8th Berth/Container Terminal at Tuticorin and
allowed the Petitioner to participate in the tender process for F
about 3 years until it suddenly took a unilateral decision to
debar the Petitioner from the bidding process on the strength
of a communication received from the Deputy Secretary,
Ministry of Shipping, dated 22nd May, 2009. Ms.
Chidambaram submitted that in between the aforesaid G
decision by which the Petitioner was debarred from
participating in the bidding for the 8th Berth/Container
Terminal at Tuticorin, the Vizag Port on 5th June, 2008, took
a decision to shortlist the existing BOT Operators while
recording that the same should not be taken as a precedent H
626 SUPREME COURT REPORTS [2011] 8 S.C.R. •
A 39. Ms. Chidambaram submitted that it was
unreasonable on the part of the Respondents to debar the
Petitioner from participating in the 8th Berth/Container
Terminal without formalising a formal policy with regard to the
intention of promoting competition and avoiding monopoly. It
B was also urged that P&O Ports, w~ich had earlier been
debarred from participating in the bidding for the Second
Container Terminal at the JNPT, was allowed to participate
in the bid for the Third Container Terminal; although the P&O
Ports and its Associi#tes were controlling 48% of the
c Container Terminal business in India and by allowing it to
participate in the Third Tender, the Central Government was,
in fact, going back on its desire to eliminate monopoly by
private Operators within the Indian Ports.
40. Ms. Chidambaram urged that it would be apparent
D from the changing policies adopted by the Central
Government that they were made to suit a particular situation
and possibly a particular tenderer. It was submitted that even
though the First Respondent was entitled to change its
policies from time to time, such changes had to be informed
E by reason, which was absent in the instant case. Ms.
Chidambaram added that the decision in the P&O Ports'
case could not be taken to be a precedent as far as the
Petitioner, PSA Sical Terminals Ltd., was concerned, since
P&O Ports was not a party to the Licence Agreement at JNP
F and had no contractual right to bid for the Second Container
Terminal there. Although, NSICT had such a right in view of
Clause 2.3 of its Licence Agreement to bid for Container
Terminal No.7, it did not assert its right and the same was
not also considered in the judgment delivered by the High
G Court.
41. In support of her submissions, Ms. Chidambaram
first referred to the decision of this Court in Delhi Cloth &
General Mills Ltd. Vs. Rajasthan State Electricity Board
H [(1986) 2 SCC 431), wherein the High Court had quashed
••
APM TERMINALS B.V. v. UNION OF INDIA AND ANR. 627
[ALTAMAS KABIR, J.]
the decision of the Rajasthan Electricity Board to charge A
uniform tariff despite the prevailing concessional rates
granted to a consumer under an agreement, upon holding
that only a legislative amendment could override a contractual
right by specifically overriding the contractual terms. Ms.
Chidambaram also referred to the decision of this Court in B
PTC India Ltd. Vs. Central Electricity Regulatory
Commission ((2010} 4 SCC 603], wherein, in the context of
determination of tariff under the Electricity Act, 2003, this
Court held that the making of a Regulation under Section 178
of the Act became necessary because a Regulation made c
under Section 178 had the effect of interfering with and
overriding the existing contractual relationship between the
regulated entities. This Court held that a Regulation under
Section 178 is in the nature of subordinate legislation which
could even override the existing contracts, including Power
0
Purchase Agreements, which had to be aligned with a
Regulation under Section 178 and could not have been done
only on the basis of an order of the Central Commission.
42. Ms. Chidambaram reiterated that while the Central
Government was entitled to alter its policies regarding E
participation of candidates in the bid process for the Second
Container Terminal at the Tuticorin Port, such· alteration would
have to be informed by reason and not on the whims of the
authorities, which is so apparent in the facts of the present
case. Accordingly, in the absence of a formal policy regarding f
the participation of candidates in the bid process for the
Second Container Terminal of the Tuticorin .Port Trust and,
in particular. the Petitioner, which was covered by Clause 2.3
of the Licence Agreement, the Petitioner could not have been
barred from participating in the tender process for being G
awarded the contract for the Second Container Terminal at
Tuticorin Port. Ms. Chidambaram submitted that the decision
of the Tuticorin Port Trust Authorities to debar the Petitioner
from participating in the tender process suffered from the
view of Waqnesbury unreasonableness and was liable to be H
628 SUPREME COURT REPORTS (2011] 8 S.C.R.
•
A quashed.
43. The learned Solicitor General, Mr. Gopal
Subramaniam, appearing.for the Union of India in both the
matters, submitted that the case of the appellant, APM
Terminals B.V., and that of the Petitioner, PSA Sical
8
Terminals Ltd., stand on a similar footing, despite Ms.
Chidambaram's efforts to prove otherwise. The learned
Solicitor General submitted that the same policy decisions
taken by the Central Government in regard to private
C participation in the development and operation of Container
Terminals in the Major Indian Ports governed both the cases,
though at different ports. The learned Solicitor General
submitted that on 26th October, 1996, the Union of India
issued guidelines for all Major Port Trusts regarding private
sector participation in the major ports. In the preamble of the
D said guidelines it was indicated that in order to improve
efficiency, productivity and quality of service, as well as to
bring in competitiveness in port service, it had been decided
to throw open the port sector to private sector participation.
It was, however, made clear in Clause 4 of the policy
E statement that ports would have to ensure that private
investment did not result in the creation of private monopolies
and that private facilities were available to all users on equal
and competitive terms.
F 44. Pursuant to the said policy decision, the JNPT
decided to convert the Bulk Terminal which had been
commissioned on 26th May, 1989, and had been designed
to handle imported fertilizers, fertilizer raw materials and food
grains through mechanized bulk handling facilities, into a
Container Terminal on Build, Operate and Transfer (Bon
3
basis on licence for a period of 30 years. Tenders were
invited and, ultimately, NSICT proved successful and was
granted such licence by the JNPT for the First Container
Terminal. The learned Solicitor General submitted that at the
said point of time, Clause 2.3 was included in the Licence
:-I Agreement which provided that the Licence Agreement to
•
APM TERMINALS B.V. v. UNION OF INDIA AND ANR. 629
[ALTAMAS KABIR, J.]
NSICT would not prevent it from participating in any A
subsequent bid invited by JNPT for operation of Container
Terminals. However, in order to give effect to its policy
decision to prevent private monopolisation, the JNPT floated
another Tender on 28th October, 2002, for construction of a
Second Container Terminal in which Clause 1.3 of the Tender B
documents provided that JNPT was desirous of entrusting the
project to another Licensee other than the existing Licensee
at JNPT or its associates and interconnected or sister
companies. The learned Solicitor General submitted that in
the said process, GTI, a Joint Venture Company of APM c
Terminals and CONCOR proved to be the successful bidder.
45. Mr. Subramaniam also indicated that Clause 1.3,
referred to hereinabove, was challenged by NSICT in Writ
Petition No.3083 of 2002, before the Bombay High Court
which dismissed the same and upheld the decision to D
exclude NSICT. The said decision of the Bombay High Court
was also upheld by this Court.
46. The learned SolicitOr General S\,lbmitted that in the
agreement entered into with GTI it was specifically E
mentioned in Clause 8.3 that the Licensee would forego the
right to bid for, either directly or indirectly, the addition~I
facilities or existing facilities, during the term of the
agreement. It was submitted that certain other conditions
were also stipulated in the said clause which were aimed F
at preventing private monopolisation of the facilities of the
port.
47. The learned Solicitor General submitted that in
keeping with its aforesaid policy decision, while allowing the
JNPT to invite Global Tenders for a "Stand Alone" project, G
the Central Government reminded JNPT of the Government
policy formulated in October, 1996, to ensure that private
investment did not create private monopolies. It was also
clarified that the policy adopted to exclude the existing
container operator from the tender for the next container, H
630 SUPREME COURT REPORTS .[2011) 8 S.C.R.
..
A would continue till such time a formal policy was finalised and
notified. It was submitted that in the light of such decision,
a Global invitation was issued by JNPT on 2nd March, 2009,
for·development of the Fourth Container Terminal at JNPT,
and those who had been permitted to participate for the
B Third Container Berths were excluded. The learned Solicitor
General submitted that it was only a question of fortuitous
circumstances which resulted in the tender for the Third
Container Terminal remaining unfinalised. Since GTI had
been granted licence for the Second Container Terminal, it
c was only in keeping with the policy decision of the
Respondents that the. appellant, APM Terminals B.V., was
barred from participating in the Tender for the Third Container
Terminal and was allowed to participate in the bid for the
Fourth Container Terminal. If the Tender process for the Third
0 Container Terminal had been concluded, the present situation
would not have arisen. It is only because of the fact that the
Tender for the Third. Container Terminal could not be
concluded that the Tender for the Fcurth Container Terminal
was treated to be the Tender for the Third Container Terminal
E and as a result, the appellant stood disqualified.
48. The learned Solicitor General submitted that the
Central Government was only following its decision to ensure
healthy competition and to prevent the concentration of
control of the Major Port Trusts in the hands of the private
F sector which could result in unintended discrimination, since
the private operators had been given the right to give priority
berthing to their own ships and other ships could be serviced
on a 'First come First served' basis.
49. Countering the submi_ssions made by Mr. Nariman
G and Ms. Chidambaram regarding the doctrine of legitimate
expectation and the right of the Government to alter its policy,
the learned Solicitor General referred to the decision of this
Court in Punjab Communications Ltd. Vs. Union of India
& Ors. [(1999) 4 SCC 727), wherein, it was held that a
H change in policy could defeat a substantive legitimate
•
APM TERMINALS B.'I. v. UNION OF INDIA AND ANR. 631
[ALTAMAS KABIR, J.]
expectation if it could be justified on Wednesbury A
reasonableness. The learned Solicitor General, therefore,
submitted that the decision taken by the Government to
prevent private monopoly in the handling of port activities was
fully justified and could have an overriding effect over
contractual terms arrived at by the Government with a private B
party.
50. On behalf of the JNPT, it was submitted by Mr. Vikas
Singh, learned Senior Advocate, that the challenge thrown to
the order passed by the Bombay High Court, upholding the
decision of JNPT to exclude the appellant from participating C
in any Tender for development of the port facilities for a
period of 30 years from the date of signing of the
agreement, was fully justified. Mr. Vikas Singh submitted that
in view of Clause 8.3.1 of the Agreement entered into
between JNPT and the appellant, it was not open to the D
appellant to resile from the same. Furthermore, global
tenders had been invited .for the construction of the Fourth
Container facility on 2nd March, 2009 and as per the said
agreement, the appellant remained ineligible to participate in
the said Tender also. Mr. Vikas Singh submittei:I that it is no E
doubt true that originally the appellant was provided with RFQ
documents, but subsequently it was informed that in view of
Clause 8.3.1 in its Agreement dated 10th August, 2004, it
was not entitled to participate in the tender process for the
Fourth Container facility. F
51. While adopting the submissions made by the
learned Solicitor General, Mr. Vikas Singh also submitted
that since the Tender for the Third Container facility had not
been proceeded with, the Tender for the Fourth Container G
Terminal would be treated to be the Tender for the Third
Container Terminal from which the appellant and its
associates stood excluded on account of the existing policy
dated 26th September, 2007.
52. Mr. Vikas Singh submitted that while deciding the H
632 SUPREME COURT REPORTS [2011] 8 S.C.R. •
A Writ Petition filed by NSICT, neither the Bombay High Court
nor this Court had the benefit of the subsequent Constitution
Bench decision of this Court in PTC India Limited Vs.
Central Electricity Regulatory Commission ((2010) 4 SCC
603], in which this court had held that "regulatory intervention
B into the existing contracts across-the-board could have been
done only by making Regulations under Section 178 and not
by passing an Order under Section 79(1)0) of the 2003 Act".
Mr. Vikas Singh submitted that the appeal filed by APM
Terminals B.V. was without merit and was liable to be
C dismissed.
· 53. We have carefully considered the submissions made
on behalf of the respective parties and are ad idem with the
learned Solicito~ General that the appeals and the
Transferred Cases raise the same issue and the only
D difference between the two is that the appellant had not
referred to or sought the benefit of Clause 2.3 of its
agreement, which permitted it to participate in future tenders
in relation to development work within the port area, while
in the petitio!ler's case the same formed the main plank of
E its claim. In substance, the question that we are faced with
is whether despite the contractual right vested in the
appellant as well as in the petitioner in the Transferred cases
to participate in future tender processes for developmental
work within the port area, such right could be taken away
F and/or curtailed by a unilateral policy decision of the Central
Government. The further question in the case of the appellant
is whether having been debarred from participating in the
bid for the Third Container Terminal in JNPT, it could also
be excluded from the bidding process of the Fourth
G Container Terminal.
54. Both the Bombay High Court as well as this Court
have held that in public interest it was open to _the
Government to alter its policies in order to subserve the
common good and that contractual rights would have to give
H way to the greater public interest, which in this case was to
• APM TERMINALS B.V. v. UNION OF INDIA AND ANR. 633
[ALTAMAS KABIR, J.]
prevent the creation of private monopolies in the A
management of port facilities in the Major Ports in the
country, as this could have far-reaching and disastrous
consequences as far as shipping in such ports was
concerned. As already indicated hereinabove, the policy
decision of 26th October, 1996, made provision for B
privatisation and also gave private operators the right to give
priority berthing to their own ships. The said decision had
the potential of substantially disrupting the schedule of other
ships intending to use the port facilities and could discourage
foreign ships from coming to Indian Ports and thereby disturb c
the very pattern of the shipping trade in India.
55. While disposing of Writ Petition No.8083 of 2002,
filed by P&O Australia Ports Pty. Limited against the Board
of Trustees of JNPT, the Division Bench of the Bombay High
Court examined the question raised herein at length. It found D
that the appellants were handling container terminals in
Karachi and Sri Lanka and also at JNP and Chennai,
thereby exercising control over 48% of the container traffic
in India. Th~ High Court held that the two existing terminals
at JNP and Chennai are the biggest container terminals in E
the country and if the appellant and the petitioner in the
Transferred Cases were permitted to operate the new
container terminals also, they would have virtual monopoly of
the container traffic in the entire country which would not be
in the public interest. F
56. The High Court also took note of the fact that certain
shipping agents and their associates had expressed concern
regarding the increased tariff charged by the appellant at its
container terminals at JNP and the possibility of a monopoly
being created by it in the country. The High Court took note G
of the fact that port authorities all over the world had woken
up to the possibility of private monopolies controlling the use
of port facilities in such a manner so as to benefit their own
ships to the detriment of world-wide shipping as a whole.
The High Court took note of the fact that P&O Ports itself H
634 SUPREME COURT REPORTS [2011) 8 S.C.R.
•
A had been excluded from bidding for the Third Container
Terminal in the Port of Melbourne on the ground that it would
give the said operator a position of dominance which was
to be avoided in the interest of the shipping industry at large.
Two other examples of Port Klang in Malaysia and Bhabange
B Port in Thailand, were also taken note of by the Bombay
High Court where different independent operators were
appointed to promote competition.
57. It is precisely for such reason that it had become
necessary for the Central Government to alter its policy
C decision regarding entrusting control of the container
terminals in the major ports of India in a manner so as to
eliminate monopolisation and to encourage competition. The
decision of the High Court was duly endorsed by this Court
in SLP(C)No.7488 of 2003 and it was observed that the High
D Court had rightly dismissed the writ petition.
58. Insofar as the decision taken by the Central
Government to alter its policy regarding the grant of licence
for operating the container terminals in the Major Ports in
E India as against the contractual right embodied· in the form
of Clause 2.3 in the agreements executed or entered into
between the Central Government and the appellant and the
petitioner in the Transferred Cases, is concerned, the said
controversy is no longer valid in regard to the appellant, since
such point had not been taken on its behalf in the writ petition
F before the Bombay High Court. However, the same has
been taken as a specific point on behalf of the petitioner in
the Transferred Cases as far as the Tenders for the Second
Container Terminal at the Tuticorin P.ort are concerned. The
said question has to be considered in the light of Article 14
G of the Constitution and the greater public interest as against
the contractual right of the individual.
59. The provisions of Clause 2.3 in the Agreements
signed between the Tuticorin Port Trust and PSA Sical cannot
H be read in isolation of the other provisions in the agreement
• APM TERMINALS B.V. v. UNION OF INDIA AND ANR. 635
[ALTAMAS KABIR, J.]
which prevented the Licensee from bidding for other work A
within the port area during the period of the licence. In fact,
in our view, the change in policy to prevent private
mobilization has been held to be justified ,by the Bombay
High Court as well as this Court. In the absence of any
arbitrariness in effecting such change in policy and keeping B
in mind the larger public interest, we are of the view, that
the Central Government was within its powers to strike a
balance with regard to the control of the port facilities so that
the same did not come to be concentrated in the hands of
one private group or consortium which would be in a c
dominant position to control not only the rights of tariff, but
also the entry of ships, not belonging to such group, into the
Major Ports and thereby give an undue advantage to its own
ships over other shipping agencies.
60. Normally, the Courts do not interfere with policy D
decisions of the Government unless they are arbitrary or
offend any of the provisions of the Constitution. In the present
cases, the adoption of such a course would, in our view, be
apposite.
61. It has been the consistent view of this Court that a E
change in policy by the Government can have an overriding
effect over private treaties between the Government and a
private party, if the same was in the general public interest
and provided such change in policy was guided by reason.
Several decisions have been cited by the parties in this F
regard in the context of preventing private manopolisation of
port activities to an extent where such private player would
assume .a dominant position which would enable them to
control not only the berthing of ships but the tariff for use of
the port. facilities. In b.oth the cases under consideration, the G
same set of entrepreneurs are interested in gaining control
over the different container terminals to the exclusion of other
players. The Central Government in its Ministry of Shipping
and Transport, therefore, took a decision not to permit
licensees who have been granted a licence for running one H
636 SUPREME COURT REPORTS [2011] 8 S.C.R. •
A of the container terminal berths from participating in the bid
process for the immediate next container terminal, with the
intention of promoting healthy competition for the benefit of
the shipping industry and the ports in India as well. The
decision to alter its policy is based on sound reasoning and
. B the Central Government has taken such decision for the
benefit of the consumers as a whole. The changed policy
would also have the effect of preventing cartelisation and
dominant status, which could inevitably affect the ultimate
pricing of consumer goods within the country. As was held
C in Shimnit Utsch India Private Ltd. Vs. West Bengal
Transport Infrastructure Development Corporation Limited
and Ors. [(201 O) 6 sec 303], the Government was entitled
to change its policies with changing circumstances and only
on grounds of change a policy does not stand vitiated.
D 62. It was further held that Government has the discretion
to adopt a different policy, alter or change its policy to make
it more effective. The only qualifying condition is that such
change in policy must be free from arbitrariness, irrationality,
bias and malice and must be in conformity with the principle
E of Wednesbury reasonableness. Although, it has been urged
by Ms. Chidambaram that such change in policy could· be
effected only by way of legislation, such a submission, if
accepted, could stultify the powers of the Central Government
to alter its policies with changing circumstances for the
F benefit of the public at large. It is not as if the right of a
licensee to bid for a further container terminal berth has been
excluded for the entire period of the Licence Agreement but
in order to ensure proper competition and participation by
all intending tenderers, the said policy has also been altered
G to enable such licensees to bid for the next but one tender
as and when invited.
63. However, as far as the appellant is concerned, it is
because of certain fortuitous circumstances that it came to
be excluded from the tender process for the Fourth Container
H
•APM TERMINALS B.V. v. UNION OF INDIA AND ANR. 637
[ALTAMAS KABIR, J.]
Terminal. If the tender process for the Third Container A
. T(rminal had been concluded, the various complications
ci>u1d have been avoided since under the revised policy, the
appellant was entitled to participate in the alternate bids. The
appellant having been excluded from one bid on the basis
of an existing policy, cannot be debarred from participating B
in the next bid, by taking recourse to a different yardstick.
Such a course of action would be contrary to public policy.
Accordingly, the authorities of the JNPT sh~ll allow the
appellant to continue to participate in the tender process for
the Fourth Container Terminal and the decision to the contrary c
conveyed to the appellant on 29th June, 2009, is quashed.
64. As far as PSA Sical Terminals Ltd. is concerned,
Ms. Chidambaram's submission as to the applicability of the
doctrine of legitimate expectation is at best an expectation
if there are cogent grounds to deny the same. The said D
doctrine has been explained by this Court in Sethi Auto
Service Station Vs. Delhi Development Authority [(2009) 1
sec 180), and it was held that the appellant in the said case
had certain expectations which were duly considered and
favourable recommendations had also been made, but the E
final decision-making authority considered the matter when
the policy had undergone a change and the cases of the
appellants therein did not meet the new criteria for allotment
laid down in the new policy. It was also observed that the
concept of legitimate expectation has no role to play where F
State action· is based on public policy and in the public
interest, unless the action taken amounted to an abuse of
power.
65. As we have indicated earlier, the Central
Government was within its powers to adopt a policy to G
prevent the port facilities from being concentrated in the
hands of one private group or consortium which could have
complete control over the use of the facilities of the ports to
the detriment of the shipping industry as a whole. The
decision taken by the Tuticorin Port Trust Authorities to H
638 SUPREME COURT REPORTS [2011] 8 S.C.R. •
A exclude PSA Sical Tetminals Ltd. from bidding for the 8th
Berth Container Terminal cannot, therefore, be said to be
arbitrary or unreasonable so as to warrant interference. In
fact, the position of PSA Sical Terminals Ltd. is no different
from that of A.P.M. Terminals B.V. which had been excluded
B from the bid for the Third Container Terminal at JNPT.
66. In the aforesaid circumstances, the appeal filed by
APM Terminals BV is allowed and the decision of the
Bombay High Court is set aside. However, we are also of
the view .that the decision of the Madras High Court does
C ·not call for any interference and the Transfer Cases filed by
PSA Sical Terminals Limited are accordingly dismissed, but
without any order as to costs.
66. All interim orders are vacated.
D B.B.B. Matters disposed· of.
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