Supreme Court of India
RISHI KIRAN LOGISTICS PVT. LTD.versusBOARD OF TRUSTEES OF KANDLA PORT TRUST & ORS.
- Citation
- 2014 INSC 297
- Decided
- 21 April 2014
- Disposal
- Dismissed
- Bench
- S S NIJJAR
Holding
The Court dismissed the appeal, holding that the cancellation was a valid administrative act, the LOI did not constitute a binding contract, and promissory estoppel was inapplicable.
Summary
The Kandla Port Trust cancelled a 2005 tender for lease‑hold plots after a five‑year delay in obtaining Coastal Regulation Zone clearance, prompting the successful bidder, Rishi Kiran Logistics, to claim that a Letter of Intent (LOI) constituted a concluded contract and that the Trust was estopped from cancelling. The Supreme Court held that the Trust’s decision was based on valid public‑interest considerations and was neither arbitrary nor malafide; the LOI was merely an expression of intent conditioned on statutory clearances and did not create a binding contract. Consequently, the doctrine of promissory estoppel was inapplicable, and a writ under Article 226 cannot enforce private contractual rights. The appeal was dismissed with costs.
Issues considered
- Whether the Port Trust’s cancellation of the tender (Resolution No.108) was arbitrary, unreasonable or malafide.
- Whether the Letter of Intent issued to the appellant amounted to acceptance and created a concluded contract.
- Whether the doctrine of promissory estoppel applies to the LOI.
- Whether a writ petition under Article 226 can entertain a private contractual dispute absent a public‑law element.
Legislation cited
- Constitution of Indias. Art.12, s. Art.14, s. Art.226
Subjects
Letter of IntentPromissory EstoppelAdministrative LawPublic TenderContract LawArticle 226ArbitrarinessPublic InterestCRZ clearanceLeaseholdCancellation of TenderContractual DisputeWrit Petition
Judgment
[2014] 5 S.C.R. 411
RISH! KIRAN LOGISTICS PVT. LTD. '· A
v.
BOARD OF TRUSTEES OF KANDLA PORT TRUST &
ORS.
(Civil Appeal No. 4655 of 2014)
B
APRIL 21, 2014
[SURINDER SINGH NIJJAR AND A.K. SIKRI, JJ.]
Contract:
c
Allotment of plots by Port Trust on lease hold basis -
Letters of intent issued to prospective allottee, subject to CRZ
cleara11ce - It took 5 years in getting CRZ clearance - Neither
possession of plots given, nor payments received -
Meanwhile price of property shot up - Port Trust cancelling D
the tender process started 5 years ago - Held: A letter of intent
is not intended to bind either party ultimately to enter into any
contract - The question whether the letter of intent is merely
ah expression of an intention to place an order in future or
whether there is a final acceptance of the offer thereby leading E
to a contract, is a matter that has to be decided with reference
to the terms of the letter - When the LOI is itself hedged with
the condition that final allotment would be made later after
obtaining CRZ and other clearances, it may depict an
intention to enter into contract at a later stage and the process F
had not resulted in a concluded contract.
Constitution of India, 1950:
. Art. 226 - Port Trust - Proposal to allot plots on lease-
hold basis cancelled - Cancellation challenged - Held: By G
way of writ petition under Art. 226 only public/aw remedy can
be,invoked - As far as contractual dispute is concerned that
is outside the power of judicial review under Art. 226 with th~
sole exception in those cases where such a contractual
411 H
412 SUPREME COURT REPORTS [2014] 5 S.C.R ..
A dispute has a public law element - The issue of there being
a concluded contract is raised in a petition filed under Art. 226
and not by way of suit - In such proceedings main aspect
which has to be considered is as to whether impugned
· decision of Port Trust was arbitrary or unreasonable - In the
B . instant case, the impugned decision of the Port Trust was not
arbitrary, unreasonable or malafide, but was based on valid
consideration, as larger public interest demanded fresh
tender process in order to receive maximum amount.
Administrative Law:
c
Public property - Disposal of - Held: In auction of public
property, it has to be ensured that public assets were not
disposed of except for a fair price and in a fair and transparent
manner.
D
Promissory estoppels - Letters of intent (LOI) issued for
allotment of plots on leasehold basis, subject to CRZ
clearance - CRZ clearance received after 5 years - Tender
process started 5 years back cancelled - Held: An LOI merely
E indicates a party's intention to enter into a contract with the
other party in future - It is not intended to bind either party
ultimately to enter into any contract - LOI clearly mentioned
that total premium amount in respect of each of the three plots
(which runs into several crores in each case) was not to be
F paid on the issuance of said LOI, since formal LOI or lease
documents were to be executed only after CRZ clearance -
High Court has, therefore, rightly observed that appellants did
not alter its position to its prejudice pursuant to LOI to such
an extent which could inspire the cowt to take the decision
that holding the promisor to its representation is necessary
G to do justice between the parties - Besides, specific
r:learances on individual basis in this behalf were also to be
obtained-· Doctrine of promissory estoppel has no application
in the fact situation.
H Pursuant to the notice inviting tenders (NIT) dated
RISH! KIRAN LOGISTICS PVT. LTD. v. BOARD OF 413
TRUSTEES OF KANDLA PORT TRUST
12.3.2005, the appellant being one of the successful A
bidders, was issued a letter of intent (LOI) stating that
leasehold rights in respect of plot Nos. 14,15 and 17 were
given for a premium of Rs.3,200/- per sq. mtr., Rs.3, 150/-
per sq. mtr., and Rs.3,120/- per sq. mtr. respectively. The
letter further mentioned that formal letter would be issued B
after receipt of CRZ clearance in general. CRZ clearance
was ultimately received on 16.8.2010. The Board of
trustees of the Port-Trust, on 9.12.2010 decided to cancel
the tender process started in 2005. The appellant and
other tenderers were informed accordingly. Writ petitions c
filed by the tenderers challenging•the decision dated
9.12.2010 of the Port Trust were dismissed.
Dismissing the appeal, the Court
HELD: D
WHETHER DECISION CONTAiNED IN RESOLUTION NO.
108 DATED 9.12.2010 IS ARBITRARY AND MALAFIDE.
1.1. It is a matter of record that for more than 5. years
the CRZ clearance had not been granted and it came to E
be granted only on 16.8.2010. By that time significant
change had> occurred from the date of the issuance of the
NIT in. March, 2005. The prices of the property had taken
quantum jump. Though in the NIT premium was.fixed on
Rs. 612/- per sq. mtr., it was more than Rs. 8,000/- per sq. F
mtr. in'2010. E;ven the quotation of Rs. 3,000/- and odd of
the appellant which were found to be highest, was far
below the marked rate. It is more than obvious that larger
public interest demanded fresh tender process in order
t'o receive maximum amount. Further, even when total G
premium amount to be paid by the appellant was to the
tune of several crores for each plot at which LOI was
issued in the year 2006, the appellant had paid only Rs.
3 lakhs by way of EMO in each case. No further amount
was paid for want of final allotment letter. However, before H
414 SUPREME COURT REPORTS [2014] 5 S.C.R.
A taking a final decision in the matter, the Port Trust sought
legal opinion and based upon the expert legal opinion i.e.
there was no legal impediment in cancellation of the
tender process, the decision was taken by the Port Trust
to cancel the earlier tender process and to start fresh
B process. [Para 16] [427-H; 428-C-F]
1.2. Therefore, it cannot be said that the decision of
the Port Trust is arbitrary. It is based on valid
considerations. In the realm of administrative law, the
contractual aspect of the matter has to be kept aside
C which would be examilled separately while dealing with
the issue as to whether there was a concluded contract
between the parties. [Para 17] [428-G-H]
Kisan Sehkari Chini Mills & Ors. V. Vardan Linkers &
D Ors. 2008 (12) SCC 500 =2008 (6) SCR 528 - relied on.
1.3. When competing claims are private interest v.
public interest, then in the case of disposal of public
property the question would be whether the right of the
E person, who has earned the right to the public property
in a public auction, is to be preferred over the right of the
public in ensuring that valuable public assets were not
disposed of except for a fair price and in a fair and
transparent manner. The decision of the Port Trust, a
F public body, that it need not go further ahead with the
tender process, has not been taken without any reasons
to support it. There are reasons which were analysed by
the High Court and found valid. In matters, particularly,
to the disposal of valuable assets by the State when the
State seeks to explore the possibility of getting higher
G price, the decision cannot be said to be arbitrary. [para
18] [429-B-D]
Meerut Development Authority v. Assn. Of Management
Studies 2009 (6) SCR 663 = 2009 (6) SCC 171; Tata Cellular
H v. Union of India 1994 (2) Suppl. SCR 122 = 1994 (6) SCC
RISH! KIRAN LOGISTICS PVT. LTD. v. BOARD OF 415
TRUSTEES OF KANDLA PORT TRUST
651; Tejas Constructions and lnsfrastructure (P) Ltd. vs. A
Municipal Counci, Sen<jhwa & Anr. 2012 (4 ) SCR 190 =
2012(6) sec 464 - rsil'ied on.
1.4. In so far as argument of malafides is concerned,
apart from bald averment, there are no pleadings and 8
there is not even a suggestion as to how the decision
was actuated with malafides and on whose part. A
concluded contract if terminated in a· bonafide manner,
that may amount to breach of contract and certain
consequences may follow thereupon under the law of C
contract. However, on the touch stone of parameters laid
down in the administrative law it has to be seen that the
decision is found to be bonafide and not actuated with
arbitrariness. [Para 22] [433-F; 434-A-B]
WHETHER DOCTRINE OF PROMISSORY.ESTOPPEL D
APPLIES.
2.1. The impugned decision of the Port Trust was not
arbitrary, unreasonable or malafide. Further, the doctrine
of promissory estoppel has no application in the fact E
situation. [Para 30] [440-B]
Kisan Sehkari Chini Mills & Ors. v. Vardan Linkers &
Ors. 2008 (12) SCC 500 = 2008 (6) SCR 528 - relied on.
2.2. Apart from paying EMO of Rs. 3 lakhs alongwith F
tender documents, the appellant did nothing more and,
in fact, no occasion for the same even occurred in the
instant case. LOI was issued but it clearly mentioned that
the total premium amount in respect of each of the three
plots (which runs into several crores in each case) was G
not to be paid on the issuance of said LOls, since formal
LOI or lease documents were to be executed only after
the CRZ clearance. The High Court has, therefore, rightly
observed that the appellants did not alter its position to
its prejudice pursuant to LOI, to such an extent which H
416 SUPREME COURT REPORTS [2014] 5 S.C.R.
A could inspire the court to take the decision that holding
the promiser to its representation is necessary to do
justice between the parties. [Para 25] [436-C-D, G]
MP Mathur & Ors. V. OIC & Ors. 2006 (9) Suppl.
SCR 519 = 2006 (13) sec 706 - relied on.
8
WHETHER THERE WAS CONCLUDED CONTRACT
BETWEEN THE PARTIES.
3.1. By way of writ petition under Art. 226 of the
c Constitution, only public law remedy can be invoked. As
far as contractual dispute is concerned that is outside the
power of judicial review under Art. 226 with the sole
exception in those cases where such a contractual
dispute has a public law element. [Para 29] [439-H.; 440-A]
D 3.2. In so far as the issue regarding concluded
contract in the instant case is concerned, this falls
squarely in the realm of the contract law, without any hue
or shade of any public law. However, merely because one
of the authorities raises a dispute in regard to the facts,
E it may not be always necessary to relegate the parties to
a suit. [Para 31] [440-C-E]
ABL International Ltd. & Anr. V. Export Credit Guarantee
Corporation of India Ltd. & Ors. JT 2013 (10) SC 300 -
F referred to.
3.3. The plea of the appellant that the issuance of LOI
amounted to acceptance of the offer and, thus, a
concluded contract, cannot be countenanced. It is
G significant to note that CRZ clearance was delayed by a
period of 5 years. Because of that neither any final LOI
could be issued, nor possession of the plots given or the
payments received. It is also to be borne in mind that
apart from general CRZ clearance, specific clearances on
individual basis in this behalf were also to be obtained.
H [Para 33] [441-C-D]
RISH! KIRAN LOGISTICS PVT. LTD. v. BOARD OF 417
TRUSTEES OF KANDLA PORT TRUST
3.4. As per clause 12 of the Rules and Procedure for . A
Allotment of Plots, the Port Trust had reserved with itself
the right of acceptance or rejection of any bid with
specific stipulation that mere payment of EMO and
offering of premium will not confer any right or interest
in favour of the bidder for allotment of land. Such a right B
to reject the bid could be exercised 'at any time without
assigning any reasons thereto'. Clause 13 relates to
'approvals from statutory authorities', with unequivocal
assertion therein that the allottees will have to obtain all
approvals from different authorities and these included c .
approvals from CRZ as well. As per clause 16, the
allotment was to be made subject to the approval of Port
Trust Board/ Competent Authority. [para 34] [441-F-G]
3.5. It has been held by this Court that a letter of
intent merely indicates a party's intention to enter into a D
contract with the other party in future. A letter of intent is
not intended to bind either party ultimately to enter into
any contract. It is no doubt true that a letter of intent may
be construed as a letter of acceptance if such intention
is evident from its terms. It is not uncommon in contracts E
involving detailed procedure, in order to save time, to
issue a letter of intent communicating the acceptance of
the 'offer and asking the contractor to start the work with
a stipulation that a detailed contract would be drawn up
later. If such a letter is issued to the contractor, though it F
may be termed as a letter of intent .it may amount to
acceptance of the offer resulting in a concluded contract
between the parties. But the question whether the letter
of intent is merely an expression of an intention to place.
an order in future or whether there is a final acceptance G
of the offer thereby leading to a contract, is a matter that
has to be decided with reference to the terms of the letter.
When the LOI is itself hedged with the condition that the
final allotment would be made later after obtaining CRZ
and other clearances, it may depict an intention to enter H
418 SUPREME COURT REPORTS [2014] 5 S.C.R.
A into contract at a later stage. Thus, on the facts of the
instant case, LOI was a letter with intention to enter into
a contract which could take place after all other
formalities are completed. However, when the completion
of these formalities had taken undue long time and the
B prices of land, in the interregnum, shot up sharply, the
respondent had a right to cancel the process which had
not resulted in a concluded contract. [Para 34) [442-A-F]
Dresser Rand S.A. v. Mis. Bindal Agro Chem Ltd. & Anr.
C 2006 (1) SCR 308 =AIR 2006 SC 871 - relied on.
3.6. Besides, it is significant to note that the issue of
there being a concluded contract is raised in a petition
filed under Art. 226 of the Constitution and not by way of
suit. The issue whether there was a concluded contract
D and breach thereof become secondary and is examined
by this Court with that limited scope in mind. In such
proceedings main aspect which has to be considered is
as to whether impugned decision of the Port Trust was
arbitrary or unreasonable. It is also important to remark
E that in a given case even if it is held that there was a
concluded contract, whether specific performance can
be ordered or not would be a moot question in writ
proceedings. The appellant took the calculated risk in not
going to the civil court and choosing to ·invoke
F extraordinary jurisdiction of the High Court, which is also
discretionary in nature. [Para 36) [443-C-E]
Case Law Reference:
2008 (6) SCR 528 relied on Para 17
G 2009 (6) SCR 663 relied on ·Para 19
1994 (2) Suppl. SCR 122 relied on Para 20
2012 (4) SCR 190 relied on Para 21
H 2006 (9) Suppl. SCR 519 relied on Para 26
RISHI KIRAN LOGISTICS PVT. LTD. v. BOARD OF 419
TRUSTEES OF KANDLA PORT TRUST
JT 2013 (10) SC 300 referred to Para 31 A
2006 (1) SCR 308 relied on Para 35
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
4655 of 2014.
B
From the Judgment & Order dated 10.02.2011 passed by
the High Court of Gujarat at Ahmedabad in Special Civil
Application No. 1877 of 2011.
Vikas Singh, Nikhil Goel, Marsook Bafaki, Naveen Goel C
for the Appellant.
H.N. Salve, H.P. Raval, Sanjay Kapur, Anmol Chandan,
Priyanka Das, Lekha Vishwanath, Shinam Seth, Anando
Mukherjee, Divya Anand, Aniruddha P. Mayee, Nitin Lonkar for
the Respondents. · D
The Judgment of the Court was delivered by
A.K. SIKRI, J. 1. Leave granted.
'•
2. The factual matrix which needs to be taken note of, for E
the purpose of deciding the present appeal, unfolds as unde(:-
Respondent No. 2 herein, viz., the Board of
Trustees of Kandla Port Trust (hereinafter referred
to as the 'Port Trust') has number of plots, in and
F
around Kandla Port, which are of different sizes.
The Port Trust took a decision, sometime in the year
2005, to allot these plots on leasehold basis for a
periocf'of 30 years for the purpose of enabling the
allottees thereof to put up the construction of liquid G
storage tanks. For this purpose the Kandla Port
Trust issued notice inVlting tenders dated
. 12.3.2005. The annual rent in respect of tflese plots
was fixed at a nominal rate of Re. 1/- per plot.
However, the bidders were requireg to subm.it the
price bid in the form of premium in respect ofthe H .
420 SUPREME COURT REPORTS [2014] 5 S.C.R.
A concerned plots for which they intended to bid. The
basic value of this premium was fixed at Rs. 612/-
per sq. mtr. The bids were to accompany the
earnest money deposit of Rs. 3 lakhs per plot. As
per the prescribed procedure in such matters, the
B Port Trust held pre-bid meeting on 21.4.2005
wherein the terms of NIT of the bldders were
explained and querries answered. The bidders
were also informed that since these plots fall under
Coastal Regulatory Zone (CRZ), requisite
c permission from the competent authority under CRZ
was required which would be obtained by the
Kandla Port Trust. However, at the same time it was
also made clear that any specific clearance like
safety, pollution control etc. was to be obtained by
the individual lessee (s). This was also reiterated
D
vide communication dated 25.5.2005. In this letter
it was also stated that the successful bidder was
required to pay the premium within a period of 3
months from the issuance of formal letter of
allotment or CRZ clearance whichever was earlier.
E One more pre-bid meeting was held on 20.6.2005
and, thereafter the last date of submitting the tender
was also postponed and subsequently fixed as
11.8.2005.
F 3. The appellant submitted its bid in .respect of Plot Nos.
14, 15 and 17. The technical bids of the bidders, including that
of the appellant, were opened on 11.8.2005. Bid of the
appellant was found to be technically qualified. Thereafter, price
bids were opened on 30.8.2005. These bids were scrutinised
G by the Tender Committee of the i::>ort Trust. Recommendations
were placed before the Board of Trustees in its meeting held
on 8.12.2005. It was followed by communication dated
7.1.2006 to the appellant in the form of Letter of Intent (LOI),
inter alia stating that the leasehold rights in respect of Plot Nos.
H 14, 15 and 17 were given for a premium of Rs. 3,200/- per sq.
RISH! KIRAN LOGISTICS PVT. LTD. v. BOARD OF 421
TRUSTEES OF KANDLA PORT TRUST [A.K. SIKRI, J.]
mtrs., 3, 150/- per sq. mtr. and 3, 120 per sq. mtr. respectively.· A
This communication further mentioned that the formal letter wiU
be issued to the appellant after the receipt of CRZ clearance
in general.
4. The letter of allotment to the various successful bidders B
went into limbo thereafter, presumably awaiting CRZ clearance.
The Gandhidham Chamber of Commerce and Industry was
informed about this road block by thePort Trust in response to
, its representation, wherein the Port Trust also requested the
said Chamber of Commerce and Industry to use its good office C
with the Ministry of Environment and Forest, Union of India for
early clearance of CRZ permission.
5. It appears that CRZ clearance was ultimately received
on 16.8.2010. However, this occurred more than 5 years after
the NIT dated 12.3.2005 was floated. This prolonged time lag D
resulted in taking decision by the Board of Trustees on
9.12.2010, in the form of Resolution No. 108, deciding to
cancel the tender process started in the year 2005. This
decision of the Port Trust was conveyed to the appellant vide
letter dated 9.12.2010. Similar letters were written to other E
tenderers as well who were issued similar LOl's.
6. All these affected persons challenged the validity of
Resolution No. 108 ·of the Port Trust by preferring Writ-Petitions
under Article 226 of the Constitution of India in the High Court F
of Gujarat. One such Writ Petition being Special Civil
Application No. 286 of 2011 filed by Mis. Nikhil Adhesives Ltd.
was dismissed by the High Court vide detailed reasoned
judgment dated 4.2.2011. Another SCA NO. 1328 of 2011 filed
by IMC Limited was also dismissed by detailed reasoned order
on 7.2.2011. When the petition of the appellant herein i.e. SCA G
No. 1877 of 2011 came up before the same Bench of the High
Court on 10.2.2011, following the decision in the said two Writ
Petitions the Court dismissed the petition of the appellant as
well with one paragraph order, which reads as follows:-
·H
422 SUPREME COURT REPORTS [2014] 5 S.C.R.
A "Identical petitions for the same purpose and with the same
prayer being Special Civil Application Nos. 2.86 of 2011
and 1328 of 2011 have been decided by this Court by
CAV judgment dated 4.2.2011 and order dated 7.2.2011
respectively. Since no new issue is raised and the
s factual matrix admittedly remains the same, present
petition is summarily dismissed for the reasons
discussed in detail in CAV judgment dated 4.2.2011 in
Special Civil Application No. 286 of 2011."
C 7. Appellant has challenged the aforesaid order in the
present appeal.
8. We may also record at this stage that IMC limited, M/s.
Nikhil Adhesive Ltd. as well as one more similarly situated
person had also filed Special Leave Petitions. All these four
D petitions were listed and were taken together for hearing from
time to time. When these matters came up for hearing
14.3.2014 other three petitioners sought permission to withdraw
their Special Leave Petitions which were accordingly
dismissed as withdrawn on 14.3.2014. Case of the appellant .
· E herein only remain in which we have heard the arguments in
detail.
9. Before we proceed to take note of the submissions of
the learned Counsel for the parties on either side, it would be
F better to glance through the two reasoned judgments rendered
by the High Court which have been followed in the case of the
appellant herein.
10. In Mis. Nikhil Adhesive Limited, after taking note of the
factual background starting from the issuance of tender and
G culminating in cancellation of said tender process by the
impugned Resolution No. 108, the High Court found that the
challenge to the said resolution was predicated on the following
premise:-
I. With the issuance of LOI to the successful highest bidder,
H
I ,
RISHI KIRAN LOGISTICS PVT. LTD. v. BOARD OF 423
TRUSTEES OF KANDLA PORT TRUST (A.K. SIKRI, J.]
a concluded contract was arrived at between the parties and, A
therefore, it was not permissible for the Port Trust to terminate
the tender process thereafter.
II. Doctrine of promissory estoppel was applicable in as
much as by its actions and conduct, the Port Trust had given a B
clear and unequivocal promise, with intention to create legal
· relation to arise in future and the Port Trust i.e. the promissory
was bound by the said promise arid to honour its commitment
and not to back out of its obligation.
Ill. The action of the Port Trust, which was an instrumentality C
of the state being "other authority" under Article 12 of the
Constitution, was arbitrary as it was hot based on any rational
or relevant principle. There amounted to infraction of Article 14
of the Constitution.
D
11. The High Court negated all the aforesaid propositions.
Answering the first argument, the High Court concluded that the
·LOI issued by the Port Trust was just an information that the
addressee (the petitioner therein) had been declared highest
bidder for the plot for which it had submitted its tender. This
E
letter further informed that formal allotment letter shall be issued
after the receipt of CRZ clearance in general by Port Trust for
tank ·forms for handling all hazardous and non-hazardous and
also informing that additional CRZ clearance if required for
installation, safety, pollution control etc. had to be obtained by
the said petitioner, from time to time at its.cost. This letter also F
mentioned that payment will be made by the said petitioner
after obtaining CRZ clearance for the individual premises
allotted to it or within 3 months of issuance of allotment letter
whichever was earlier. In the opinion of the High Court it did
not result in any concluded contract. G
In the process, the High Court' also noted that after the
issuance of LOI on 12.1.2006 till.the passing of Resolution No.
108 dated 22.11.2010, no effective steps were taken by the
said petitioner despite the fact that it was informed by the Port. H
424 SUPREME COURT REPORTS [2014] 5 S.C.R.
A Trw>t on 15.2.2006 that the work of preparation of EIA studies
in respect to allotment of 17 plots for construction of Liquid
Storage Tanks for obtaining CRZ clearance from the
Government of India, Ministry of Environment has already been
entrusted to Mis. NIOT, Chennai along with other project works
B and the said institute had already completed site survey work
for the purpose. The petitioner was also informed that the said
M/s. NIOT, Chennai had suggested to provide following
information for incorporation of the same in EIA Studies:- (I)
Approximate estimation for the activity. (ii) Proposed activity
c (type of Cargos to be stored) (iii) Proposed storage capacity
(approximate quantum of the liquid commodity, size etc.)
The petitioner was specifically informed that the said '
information was urgently required to be furnished to the NIOT
so that the same would enable the said Institute to submit the
D report as early as possible for obtaining CRZ clearance in the
matter. Since these informations were not supplied by the
petitioner, another letter was issued by the respondent Trust on
13.5.2008 reiterating the same request to provide the said
information.
E
However, instead of doing the needful by furnishing the
details it only indulged in worthless correspondence and
ultimately vide letter dated 18.1.2010 sought permission to carry
out construction portion and maintenance of storage tanks in
F the name of one Mis Sanghvi Logistics Pvt. Ltd. instead o its
own name which request was turned down vide letter dated
20.3.2010. Thereafter impugned resolution came to be passed.
This showed that delay was entirely attributed to the said
petitioner. Taking note of aforesaid contracts, the position is
G summed up by the High Court in the following words:-
"ln view of the matter, it cannot be said that there was any
concluded contract between the petitioner and the
respondent Port Trust nor any promise was given by the
respondent Port Trust to allot Plot No. 8 to the petitioner.
H The letter of intent issued by the respondent was merely
RISHI KIRAN LOGISTICS PVT. LTD. v. BOARD OF 425
TRUSTEES OF KA°NDLA PORT TRUST [A.K. SIKRI, J.]
an expression ofintention and imparting an information that A
the petitioner stood highesl tiidder and on receipt of .CRZ
clearance; the formal letter:Of allotment would be issued.
However'.· 1 the petitioner' had not cooperated in the
meantime- for ,,obtaining CRZ clearance and before any
formal letter ·of allotment is issued, the earlier tender B
proce~s stood cancelled .. "
12. In so far as argument based on Article 14 is concerned,
the High Court found that the action on the part of the Port Trust
was neither arbitrary nor malafide. Before taking the decision, C
the Board had sought the opinion· of the Additional Solicitor
General. Further, the Port Trust was within its right to take such
a decision in the year 2010 keeping in mind the larger public
interest. The court noted that the original tender premium in the
year 2005 was fixed on Rs. 612/- per sq. mtr. whereas fresh
tender premium, after the cancellation of the earlier tender D
process was fixed at Rs. 8358 per sq. mtrs.
13. In so far as argument of promissory estoppel is
concerned the same was rejected on the ground that the LOI
did not amount to any promise. Further, the petitioner had paid E
only Rs. 3 lakhs by way of earnest money as against the total
premium amount which was 23.74 crores and was to be paid
only after receipt of the said CRZ clearance, which amount was
never paid.
F
14. The reaaing of the judgment in IMC Limited case would
reveal that the Counsel for the petitioner in that case had
argued that their case was di$tinguishable from the case of
Nikhil Adhesives Limited on facts. Endeavour was made to
demonstrate that in so far as the petitioner in IMC is concerned,
it had supplied all the requisite details promptly and because G
of this reason the Port Trust had not issuea any letters to them
alleging default on their part in furnishing the details. Therefore,
it could not be held responsible for delaying the tender process.
It was, thus, argued that there was a concluded contract in their
H
426 SUPREME COURT REPORTS [2014] 5 S.C.R.
A case and not a contingent one. Further, in any case the only
contingency at the time of issuing LOI was the clearance of CRZ
authorities which also was granted subsequently. In view of
aforesaid argument, the court went into the specific question
as to whether there was already a concluded contract between
B the parties. This issue has been answered against the
petitioner in the said case holding that merely a Letter of Intent
was issued and this expressed an intention of the parties to
enter into a contract but no concluded contract ultimately
fructified nor there was any promise given by the Port Trust. The
c Court reproduced the following discussion from its earlier
judgment in Nikhil Adhesives Limited:
"The letter of intent issued by the respondent Port Trust on
12.1.2006, at best, can be said to be an agreement to
issue the allotment letter and to execute the lease
D document in favour of the petitioner subject to fulfilment of
certain conditions. However, in absence of issuance of
allotment letter, the said letter of intent cannot be enforced
in the court of law. The Apex Court in Dresser Rand S.A.
v. Bindal Agro Chem Limited and others (supra) clearly
E stated that a letter of intent merely indicates a party's
intention to enter into a contract with the other party in future.
Such a letter of intent is not intended to bind either party
ultimately to enter into any contract. Even in Speech &
Software Technologies (India) Pvt. Ltd. v. Neos Interactive
F Limited (Supra), the Apex Court clearly held that an
agreement to enter into an agreement is not enforceable
nor does it confer any right upon the parties."
15. Before us as well, edifice of the case was sought to
G be erected on the same three pillars by Mr. Vikas Singh,
learned Senior Counsel for the appellant. Therefore, we
propose to straightaway go into these three aspects of the case
and while discussing the same, we would take note of the
arguments which were advanced by both the sides on these
propositions.
H
RISHI KIRAN LOGISTICS PVT. LTD. v. BOARD OF 427
TRUSTEES OF KANDLA PORT TRUST [A.K. SIKRI, J.]
WHETHER DECISION CONTAINED IN A
RESOLUTION NO. 108 DATED 9.12.2010 IS
ARBITRARY AND MALAFIDE.
16. Few facts, leading to this impugned Resolution, which
need to be recapitulated are the following:-
B
Tenders for allotment of plots on leasehold basis
were floated on 12.3.2005. After receiving bids
and evaluating technical as well as price bids
respectively, the Tender Committee had
recommended the cases for allotment of plots. In C
so far as the appellant is concerned in respect of
all the three plots bearing No. 14, 15 and 17, LOI
was issued after the Board agreed to accept the
recommendations of the Tender Committee in its
meeting held on 8.12.2005. However, in the LOI it D
was made clear that formal letter of allotment will
be issued after receiving the CRZ clearance in
general and if any further CRZ clearance was
required for installation, safety, pollution etc. the
same was to be obtaii:ied by the appellant. The Port E
Trust applied to the Ministry of Environment,
Government of India for such permission. However,
for one reason or the other, this permission/
clearance was not forthcoming. Even when
Ghandhidham Chamber of Commerce and Industry F
wrote to the Port Trust, on behalf of these allottees
who were issued LOl's and were waiting for formal
letter of allotment, in reply the Port Trust had
requested the said Chamber of Commerce and
Industry to also use its good offices with the Ministry G
of Environment and Forests for early clearance of
CRZ permission. It is a matter of record that for
more than 5 years the clearance had not been
granted and came to be granted only on 16.8.2010.
By that time significant change had occurred from
the date of the issuance of the NIT in March, 2005. H
428 SUPREME COURT REPORTS [2014] 5 S.C.R.
A Th~ prices of the property had taken quantum jump.
Though in the NIT premium was fixed on Rs. 612/-
per sq. mtr., it was more than Rs. 8,000/- per sq.
mtr. in 2010. In this backdrop the Port Trust wanted
to take a decision as to whether it could go for fresh
8 tenders. It is more than obvious that larger public
interest demanded fresh tender process in order to
receive maximum amount as the premium of Rs.
612/- per sq. mtr originally fixed and even the
quotation of Rs. 3,000/- and odd of the appellant
c which were found to be highest, was far below the
marked rate. Further, even when total premium
- amount to be paid by the appellant was to the tune
of several crores for each plot at which LOI was
issued in the year 2006, the appellant had paid only
Rs. 3 lakhs by way of EMO in each case. No further
D
amount was paid for want of final allotment letter.
However before taking a final decision in the matter,
the Port Trust sought legal opinion specifically on
the point as to whether it would be prudent to cancel
2005 tender process and start fresh process so as
E to fetch the realistic marked price in accordance
with present maliket value of the land. Based upon
the expert legal opinion i.e. there was no legal
impediment in cancellation of the tender process,
the decision was taken by the Port Trust to cancel
F the earlier tender process and to start fresh process.
17. On the aforesaid facts there is hardly any scope for
argument that the decision of the Port Trust is arbitrary. It is
based on valid considerations. We have to keep in mind that
G while examining this aspect we are in the realm of
administrative law. The contractual aspect of the matter has to
be kept aside which would be examined separately while
dealing with the issue as to whether there was a concluded
contract between the parties. This distinction is lucidly explained
H in Kisan Sehkari Chini Mills & Ors. v. Vardan Linkers & Ors.;
RISHI KIRAN LOGISTICS PVT. LTD. v. BOARD OF - 429
TRUSTEES OF KANDLA PORT TF~UST [A.K. SIKRI, J.]
(2008) 12 SCC 500. Keeping in mind this distinction between A
' the two~ we are not required to bring in the contractual elements
of the case while dealing with the administrative law aspects.
18. When competing claims are private interest v. public
interest, then in the case of disposal of public property the B
question would be whether the right of the person, who has
earned the right to the public property in a public auction, is to
be preferred over the right of the public in ensuring that valuable
public assets were not disposed of except for a fair price and
in a fair and transparent manner. Whether this court should, in C
judicial review, sit in judgment over the decision of a public body
which is of the view that it need not go further ahead with the
tender process. It is true if such a decision is taken without any
reasons to support it or mere ipsi dixit it would be arbitrary. In
this case there are reasons. The High Court analysed the
reasons and has taken the view that those reasons are valid. D
In our view in matters particularly to the disposal of valuable
assets by the State when the State seeks to explore the
possibility Of getting higher price. '
19. The guiding principles in such cases can be noted from E
the judgments discus.sed hereinafter.
In Meerut Development Authority v. Assn. of
- Management Studies; (2009) 6 SCC 171, the decision related
to disposal of public property by an instrumentality of the State.
In the said context, the Court inter alia held as follows:
F
"26. A tender is an offer. It is something which invites and
is communicated to notify acceptance. Broadly stated it
must be unconditional; must be in the proper form, the
person by whom tender is made must be able to and G
willing to perform his obligations. The terms of the invitation
to tender cannot be open to judicial scrutiny because the
invitation to tender is in the realm of contract. However, a
limited judicial review may be available in cases where it
is established that the terms of the invitation to tender were H
430 SUPREME COURT REPORTS [2014] 5 S.C.R.
A so tailor made to suit the convenience of any particular
person with a view to eliminate all others from participating
in the biding process.
The bidders participating in the tender process have no
other right except the right to equality and fair treatment in
8
the matter of evaluation of competitive bids offered by
interested persons in response to notice inviting tenders
in a transparent manner and free from hidden agenda.
One cannot challenge the terms and conditions of the
tender except on the above stated ground, the reason
c being the terms of the invitation to tender are in the realm
of the contract. No bidder is entitled as a matter of right to
insist the authority inviting tenders to enter into further
negotiations unless the terms and conditions of notice so
provided for such negotiations.
D
It is so well settled in law and needs no restatement at our
hands that disposal of the public property by the State or
its instrumentalities partake the character of a trust. The
methods to be adopted for disposal of public property must
E be fair and transparent providing an opportunity to all the
interested persons to participate in the process.
The authority has the right not to accept the highest bid and
even to prefer a tender other than the highest bidder, if
there exist good and sufficient reason, such as, the highest
F bid not representing the market price but there cannot be
any doubt that the Authority's action in accepting or refusing
the bid must be free from arbitrarinesses or favouritism."
· 20. Lucid enunciation on the scope of judicial review of
G administrative action, that too in tender matters can be found
in Tata Cellular v. Union of India (1994 (6) SCC 651), where
following discussion is worthy of extraction:
"70. It cannot be denied that the principles of judicial review
would apply to the exercise of contractual powers by
H
RISH! KIRAN LOGISTICS PVT. LTD. v. BOARD OF · 431
TRUSTEES OF KANDLA PORT TRUST [A.K. SIKRI, J.]
- Government bodies in order to prevent arbitrariness or A
favouritism. However, it must be clearly stated that there
are inherent limitations in exercise of that power of judicial
review. Government is the guardian of the finances of the
state. It is expected to protect the financial interest of the
State. The right to refuse the lowest or any other tneder is B
always available to the Government. But the principles laid
down in Article 14 of the Constitution have to be kept in
view while accepting or refusing a tender. There can be
no question of infringement of Article 14 if the government
tries to get the best person or the best quotation. The right c
to choose cannot be considered to be an arbitrary power.
Of course, if the said power is exercised for any collateral
purpose the exercise of that power will be struck down.
Judicial review is con_cerned with reviewing not the merits
of the decision in support of which the application for D
judicial review is made, bu the decision making process
itself.
The duty of the court is to confine itself to the question of
legality. Its concern should be: E
·(i) Whether a decision making authority exceeded its
powers?
(ii) Co.mmitted an error of law,
F
(iii) Committed a breach of rules of natural justice,
(iv) reached a decision which no reasonable tribunal
would have reached or,
(v) Abused its powers. G
Therefore, it is not for the court to determine whether a
particular policy or particular decision taken in the fulfilment
of that policy is fair. It is only concerned with the manner
in which those decisions have been taken. Th~ ext~nt of H
432 SUPREME COURT REPORTS [2014] 5 S.C.R.
A the duty to act fairly will vary from case to case. Shortly put,
the grounds upon which an administrative action is subject
to control by judicial review can be classified as under:
(i) Illegality: This means the decision maker must
understand correctly the law that regulates his decision
B
making power and must give effect to it.
(ii) Irrationally, namely Wednesbury unreasonableness.
(iii) Procedural impropriety.
c The above are only the broad grounds but it does not rule
out addition of further grounds in course of time. As a
matter of fact in R.V. Secretary of State for the Home
· Department, ex Brind Lord Diplock (1991) 1AC694, Lord
Diplock refers specifically to one development namely, the
D possible recognition of the principle of proportionality. In
all these cases the test to be adopted is that the court
should "consider whether something has gone wrong of a
nature and degree which requires its intervention."
E Two other facets of irrationality may be mentioned.
(i) It is open to the court to review the decision maker's
evaluation of the facts. The court will intervene where the
facts taken as a whole could not logically warrant the
conclusion of the decision maker. If the weight of facts
F
pointing to one course of action is overwhelming, then a
decision the other way cannot be upheld. Thus, in Emma
Hotels Ltd. v. Secretaf'/ of State for Environment (1980)
41 P&* CR 255; the Secretary of State referred to a
number of factors which led him to the conclusion that a
G non resident's bar in a hotel was operated in such a way
that the bar was not an incident of the hotel use for planning
purposes, but constituted a separate use. The divisional
court analysed the factors which led the Secretary of State
to that conclusion and, having done so, set it aside.
H Donaldson, L.J. Said that he could not see on what basis
RISHI KIRAN LOGISTICS PVT. LTD. v. BOARD OF 433
TRUSTEES OF KANDLA PORT TRUST [A.K. SIKRI, J.]
the Secretary of State had reached his conclusion. A
(ii) A decision would be regarded as unreasonable if it is
impartial and unequal in its operation as between different
classes. On this basis in R.V. Barnet London Borough
·Council, ex. P. Johnson 35 (1989) 88 LGR 73 the condition B
imposed by a local authority prohibiting participation by
those affiliated with political parties at events to be held
in the aut1ority's parks was struck down."
21. In Tejas Constructions and Infrastructure (P) Ltd. v.
Municipal Council, Sendhwa & Anr.; 2012 (6) SCC 464, the C
Court was dealing with.-the case of challenge to the awarding
of contract to the 2nd respondent in the writ petition on the
ground that he had not complied with eligibility requirements
in NIT. Paragraph 17 of that case reads as follows:
D
"In Raunaq lnterna_tional Ltd. v. IV.R. Cons!r4ction Ltd.
(1999) 1 SCC 492, this Court reiterated the principle
governing the process of judicial review and held that the
writ court would not be justified in interfering with
commercial transaction in which the State is one of the E
parties to the same except where there is substantial
public interest involved and in cases where the transaction
is mala fide."
22. In so far as argument of malafides is concerned, apart
from bald averment, there are no pleadings and. there is not F
even a suggestion as to how the aforesaid decision was
actuated with malafides and on whose part. Even at the time
of arguments Mr. Vikas Singh did not even advert to this
aspect. In fact, the entire emphasis of Mr. Vikas Singh was that
since there was a concluded contract between the parties, G
cancellation of such a contract amounted to arbitrariness. As
already pointed out above that can hardly be a ground to test
the validity of a decision in administrative law. For the sake of
argument, even if you presume that there a concluded contract,
mere termination thereof cannot be dubbed as arbitrary. A H
434 SUPREME COURT REPORTS [2014] 5 S.C.R.
A concluded contract if terminated in a bonafide manner, that may
amount to breach of contract and certain consequences may
follow thereupon under the law of contract. However, on the
touch stone of parameters laid down in the administrative law
to adjudge a decision as are arbitrary or not, when such a
s decision is found to be bonafide and not actuated with
arbitrariness, such a contention in administrative law is not
admissible namely how and why a concluded contract is
terminated."'"
. 23. We, therefore, reject this contention of the appellant.
c
II WHETHER DOCTRINE OF PROMISSORY
ESTOPPEL APPLIES.
24. Again, we clarify at the outset that even the principle
0 of PROMISSORY estoppel is in the field of administrative law
and while entertaining the arguments and discussion on this
·issue, the question Has to whether there was a concluded
contract or not as to be kept aside. Precisely this was done in
Kisan Sehkari Chini Mills Case (Supra). The Court dealt with
E the issue of legitimate expectation etc. separating it from the
issue pertaining to conclude contract and made following
pertinent observation in the process:
· "23: If the dispute was considered as purely one relating
•
to existence of an agreement, that is whether there was a
F concluded contract and whether the cancellation and
consequential non-supply amounted to breach of such
contract, the first respondent ought to have approached the
civil court for damages. On the other hand, when a writ
petition was filed in regard to the said contractual dispute,
G the issue was whether the Secretary (Sugar), had acted
arbitrarily or unreasonably in stying the operation of the
allotment letter dated 26.3.2004 or subsequently cancelling
the allotment letter. In a civil suit, the emphasis is on the
contractual right. In a writ petition, the focus shifts to the
H exercise of power by the authority, that is, whether the
RISH! KIRAN LOGISTICS PVT. LTD. v. BOARD OF 435
TRUSTEES OF KANDLA PORT TRUST [AK. SIKRI, J.]
order of cancellation dated 24.4.2004 passed by the A
Secretary (Sugar}, was arbitrary or unreasonable. The
issue whether there was a concluded contract and breach
thereof becomes secondary. In exercising writ jurisdiction,
if the High Court found that the exercise of power in
passing an order of cancellation was not arbitrary and B
unreasonable, it should normally desist 'from giving any
finding on disputed or complicated questions of fact as to
whether there was a contract, and relegate the.petitioner
to the remedy of a civil suit. Even in cases where the High
Court finds that there is a valid contract, if the impugned c
administrative action by which the contract is cancelled, is
not unreasonable or arbitrary, it should still refuse to
interfere with the same, leaving the aggrieved party to work
out his remedies in a civil court. In other words, when there
is a contractual dispute with a public law element, and a
0
party chooses the public law remedy by way of a writ
petition instead of a private law remedy of a suit, he will
not get a full fledged adjudication of his contractual rights,
but only a judicial review of the administrative action. The
requisition whether there was a contract and whether there E
was a breach may, however, be examined incidentally
while considering the reasonableness of the administrative
action. But where the question whether there was a
contract, is seriously disputed, the High Court cannot
assume that therewas a valid-contract and on that basis,
. examine the validity of the administrative action. F
In this case, the question that arose for consideration in
the writ petition was whether the order dated 24.4.2004
passed by the Secretary (Sugar), cancelling the allotment
letter dated 26.3.2004 was arbitrary and irrational or G
violative of any administrative law principles. The question
whether there was a concluded contract or .not, was only
incidental to the question as to whether cancellation order
dated 24.4.2004 by the Secretary (Sugar), was justified.'
As the case involved several disputed questions in regard H
436 SUPREME COURT REPORTS [2014] 5 S.C.R.
A to the existence of the contract itself, the High Court ought
to have referred the first respondent to a civil court. But the
High Court in exercise of its writ jurisdiction, proceeded
as if it was dealing with a pure and simple civil suit relating
to breach of contract."
B
25. Having noted the conceptual aspect of the doctrine of
promissory estoppel, let us consider as to whether the appellant
can successfully invoke this principle in the present case? For
this, let us recapitulate the salient features of this case having
bE~aring on this issue. Apart from paying EMO of Rs. 3 lakhs
C alongwith tender documents, the appellant did nothing more and
in fact, no occasion for the same even occurred in the present
case. As stated above LOI was issued but it clearly mentioned
that the total premium amount in respect of each of the three
plots (which runs into several crores in each case) was not to
D be paid on the issuance of said LO ls. Reason for this was that
formal LOI or leased documents were to be executed only after
the CRZ clearance. For this reason it was specifically
mentioned in the LOI itself that the premium amounts were to
be paid by the appellant only after the receipt of CRZ clearance
E in. general and after issuance of allotment letter as well as
individual CRZ clearance and on execution of these documents.
Before these events could happen, the Port Trust decided to
cancel the entire process. Thus, except making payment of Rs.
3 lakhs by way of earnest money the appellants did not incur
F any other expenses or suffered any liabilities or took any steps
to implement the project of construction and maintenance of the
tanks. The High Court has, therefore, rightly remarked that even
if it is assumed that issuance of LOI tantamounted to a promise
given by the Port Trust, the appellants did not alter its position
G to its prejudice pursuant thereto to such an extent which could
inspire the court to take the decision that holding the promiser
to its representation is necessary to do justice between the
parties.
26. In MP Mathur & Ors. v. OIC & Ors.; 2006 (13) SCC
H
RISHI KIRAN LOGISTICS PVT. LTD. v. BOARD OF 437
TRUSTEES OF KANDLA PORT TRUST (A.K. SIKRI, J.]
706 it is held that once the public interest is accepted as the A
superior equity which can override individual equity, the
principle would be applicable. If there is a supervening public
equity, the Government would be allowed to change its stand
and has the power to withdraw from representation made by it
which induced persons to take certain steps which may have B
gone adverse to the interest of such persons on account of such
withdrawal. Merely because the resolution was announced for
a particular period, it did not mean that the Government could
not amend and change the policy under any circumstances. If
the party claiming application of doctrine acted on the basis of c
a notification, it should have known that such notification was
liable to be amended or. rescinded at any point of time, if the
Government felt that it was necessary to do so in public interest.
This contention of the appellant, therefore, is equally devoid of
any merits. D
Ill WHETHER THERE WAS CONCLUDED
CONTRACT BETWEEN THE PARTIES:-
27. We have already indicated above that the of the
doctrine of fairness as well as promissory estoppal are in the E
realm of administrative law, whereas the issue as to whether a
concluded contract was entered into between the parties and
if so, the question of enforcement of such a contract would be
in the field of law of contract. Bearing in mind this distinction
-becomes more important as the High Court was dealing with F
the petition filed by the appellant under Article 226 of the
Constitution.
28. Before proceeding further in the matter we would again
· like to discuss the judgment of this court in Kisan Sahkari Chini
Mills Ltd. & Ors, (Supra) which has been earlier referred to. G
This case unambiguously explains the approach which the High.
Court will have in such a petition filed under Article 226 of the
. Constitution, dealing with the arguments predicated on
contractual aspects.
H
438 SUPREME COURT REPORTS [2014] 5 S.C.R.
A In that case there were six State controlled sugar mills in
Uttaranchal State which produced molasses. Sale of molasses
by them was controlled by the Molasses Sale Committee
(MSC) constituted by the St~te Government.
A tender notice was published by the appellant sugar mill
8
inviting offers from bona fide consumers for purchase of
molasses from the other five sugar mills. The tenders were to
be submitted to the ACC in accordance with the conditions
specified in the tender notice. The proceedings in regard to the
tenders received culminated in an order from the ACC
C permitting the respondent to lift 85,000 quintals of molasses
from the five sugar mills at a price of Rs. 127 per quintal. Around
that time, the State Government received several reports that
the prevailing price of molasses was much higher. The
Secretary, Cane Development and Sugar Industries (Secretary
D (Sugar)) therefore, stayed the operation of ACC's order.
The respondent then approached the High Court by a writ
petition seeking a direction for continuance of supply of the
entire quantity of 85,000 quintals of molasses to it. By an interim
E order, the High Court directed the State Government to decide
the respondent's claim after hearing t"1e respondent. Pending
such decision, the High Court permitted the respondent to lift
up to 20,000 quintals of molasses. After hearing the
respondent, the Secretary (Sugar) helathat there was no valid
F contract for supply of molasses to the M-st respondent and that,
therefore, the allotment letter issued by the ACC was without
any authority. Consequently he cancelled the same.
Aggrieved by the interim order of the High Court to supply
20,000 quintals of molasses to the respondent, the appellants
G approached the Supreme Court which in turn, set aside that
interim order and permitted the respondent to amend the writ
petition to challenge the order of the Secretary (Sugar).
The respondent amended its writ petition accordingly.
H During the hearing, certain disputed facts cropped up. The High
RISHI KIRAN LOGISTICS PVT. LTD. v. BOARD OF 439
TRUSTEES OF KANDLA PORT TRUST [A.K. SIKRI, J.]
Court called the managers of two of the sugar mills and put A
some questions to them and recorded their statements. The
High Court reached the conclusion that there was a concluded
contract between the five sugar mills and the respondent for
sale of 85,000 quintals of molasses at a price of Rs. 127 per
quintal. Thereafter, it held that having regard to the doctrines B
of part performance; legitimate expectation, estoppel and
acquiescence, the cancellation of the allotment letter issued by
ACC was unsustainable. Therefore, the High Court quashed the
order of the Secretary (Sugar) and directed that the respondent
should be allowed to lift 85,000 quintals of molasses less the c
quantity already lifted. The said judgment of the High Court was
challenged in these appeals.
The question before the Supreme Court were: (I)
Whether the High Court was right in concluding/ assuming that
there was a valid contract? And (ii) Whether the High Court was D
justified in quashing the order of the Secretary (Sugar)?
This court answered the aforesaid questions in the .negative
·and set aside the judgment of the High Court holding that
ordinarily, the remedy available for a party complaining of E
breach cif contract lies for seeking· damages. He would be
entitled to the relief of specific performance, if the contract was
capable of being specifisally enforced in law. The remedies for
a breach of contract being purely in the realm of contract are
dealt with by civil courts. The public law remedy, by way of a F
writ petition under Article 226 of the Constitution, is not available
0
to seek damages for breach of cofttract or specific
performance of contract. However, where the contractual dispute
has a public law element, the power of judicial review under
Article 226 may be invoked. ·
G
It is clear that the aforesaid case is closest to the facts of
the present case.
29. It thus stands crystalised that by way of writ petition
under Article 226 of the Constitution, only public law remedy can H
440 SUPREME COURT REPORTS [2014] 5 S.C.R.
A be invoked. As far as contractual dispute is concerned that is
outside the power of judicial review under Article 226 with the
sole exception in those cases where such a contractual dispute
has a public law element.
30. We have already held that the impugned gecision of
8
the Port Trust was not arbitrary, unreasonable or malafide and
further that the doctrine of promissory estoppel has no
application in the present fact situation.
31. In so far as the issue regarding concluded contract in
C the present case is concerned, this falls squarely in the realm
of the contract law, without any hue or shade of any public law.
In fact, that is not even pleaded or argued. At the same time,
whether there was a concluded contract or not is seriously
disputed by the respondents and, therefore, in the first instance
D it was not even necessary for the High Court to go into this issue
and could have relegated the appellant to ordinary civil remedy.
We are conscious of the position that merely because one of
the authorities raises a dispute in regard to the facts, it may
not be always necessary to relegate the parties to a suit. This
E was so stated in ABL International Ltd. & Anr. v. Export Credit
Guarantee Corporation of India Ltd. & Ors.; JT 2013 (10) SC
300 in the following manner:-
"37. In our opinion, this limited areas of dispute can be
settled by looking into the terms of the contract of insurance
F as well as the export contract, and the same does not
require consideration of any oral evidence or any other
documentary evidence other than what is already on
record. The claim of the contesting parties will stand or fall
on the terms of the contracts, interpretation of which, as
G stated above, does not require any external aid."
32. At the same time, as already noted in Kisan Sahkari
(Supra) this court had taken a view that where the-question
whether there was a contract or not is seriously disputed, the
H court is not to assume that there was a valid contract and on
RISHl-KIRAN LOGISTICS PVT. LTD. v. BOARD OF 441
TRUSTEES OF KANDLA PORT TRUST [A.K. SIKRI, J.]
that basis examined the validity of the administrative action. A
Therefore, keeping in view the aforesaid understanding of the
law, a very limited inquiry on this aspect is permissible.
33. Having considered the matter from this limited angle
in exercise of powers of judicial review, we are of the view that B
on the facts of this case, no interference is required. Case of ,
the appellant is that with the issuance of LOI a concluded
contract was entered into. He had submitted that only CRZ
clearance was required and even if LOI, which amounted to
acceptance of the author given by the appellant in his bid was C
contingent based on CRZ clearance, even that clearance was
granted by the competent authority ultimately. However, what
is lost sight, in the entire process is that the said clearance was
delayed by a period of 5 years. Because of that neither any
final LOI could be issued, nor possession of the plots given or
the payments received. It is also to be borne in mind that ap.art D
from general CRZ clearance, specific clearances on individual
basis in this behalf were also to be obtained.
34. At this juncture, while keeping the aforesaid pertinent
features of the case in mind, we would take note of the 'Rules · E
and Procedure for Allotment of Plots' in question issued by
Kandla Port Trust. As per clause 12 thereof the Port Trust had
reserved with itself right of acceptance or rejection of any bid
with, specific stipulation that mere payment of EMO and offering
of premium will not confer any right or interest in favour of the F
bidder for allotment of land. Such a right to reject the bid could
be exercised 'at any time without assigning any reasons
thereto'. Clause 13 relates to 'approvals from statutory
authorities', with unequivocal assertion therein that the allottees
will have to obtain all approvals from -different authorities and G
these included approvals from CRZ as well. As per clause 16,
the allotment was to be made subject to the approval of Kandla
Port Trust Board/ Competent Authority. In view of this material
on record and factual position noted in earlier paras we are of
the opinion that observations in the case of Dresser Rand S.
H
442 SUPREME .COURT REPORTS [2014] 5 S.C.R.
A A. v. Mis. Bindal Agro Chem. Ltd. & Anr.; AIR 2006 S<O 871,
would be squarely available in the present case, wherein the
court held that a letter of intent merely indicates a parties
intention to enter into a contract with the other party in future. A
letter of intent is not intended to bind either party ultimately to
B enter into any contract. It is no doubt true that a letter of intent
may be construed as a letter of acceptance if such intention is
evident from its terms. It is not uncommon in contracts involving
detailed procedure, in order to save time, to issue a letter of
intent communicating the acceptance of the offer and asking
c the contractor to start the work with a stipulation that a detailed
contract would be drawn up later. If such a letter is issued to
the contractor, though it may be termed as a letter of intent it
may amount to acceptance of the offer resulting in a concluded
contract between the parties. But the question whether the letter
of intent is merely an expression of an intention to place an
0
order in future or whether there is a final acceptance of the offer
thereby leading to a contract, is a matter that has to be decided
with reference to the terms of the letter. When the LOI is itself
hedged with the condition that the final allotment would be made
later after obtaining CRZ and other clearances, it may depict
E an intention to enter into contract at a later stage. Thus, we find
that on the facts of this case it appears that a letter with intention
to enter into a contract which could take place after all other
formalities are completed. However, when the completion of
these formalities had taken undue long time and the prices of
F land, in the interregnum, shot up sharply, the respondent had a
right to cancel the process which had not resulted in a
co11cluded contract.
35. We would also like to record here that Mr. Salve,
G learned Senior Counsel appearing for the respondent had
submitted with vehemence that the case of the appellant herein
was same as that of Nikhil Adhesives Ltd. in as much as even
the appellant was responsible for contributing to the delay in
obtaining the permission. Mr. Vikas Singh had attempted to
H refute this submission. However, we find that even when the
RISH! KIRAN LOGISTICS PVT. LTD. v. BOARD OF 443
TRUSTEES OF KANDLA PORT TRUST [AK. SIKRI, J.]
High Court in the impugned order specifically referred to the A
decision in the case of Nikhil Adhesives Limited and observed
that factual matrix remains the same, there is no pleading or
ground in the SLP to the effect that the said judgment is not
applicable to the case of the appellant as the appellant had
submitted all requisite documents or obtaining the CRZ B
clearance and there was no delay on his part. However, since
we are dismissing the'appeal on merits, it is not necessary to
dwell on this aspect any further.
36. We again emphasise that the issue of the argument C
of their being a concluded contract is raised in a petition filed
under Article 226 of the Constitution and not by way of suit. The
issue whether there was a concluded contract and breach
thereof become secondary and is examined by us with that
limited scope in mind. In such proceedings main aspect which
has to be is as to whether impugned decision of the Port Trust D
was arbitrary or unreasonable. It is also important to remark that
in a given case even if it is held that there was a concluded
contratt, whether specific performance can be ordered or not
would be a moot question in writ proceedings. The appellant
took the calculated risk in not going to the civil court and E
choosing to invoke extraordinary jurisdiction of the High Court,
which is also discretionary in nature.
37 .. The outcome of the aforesaid discussion would be to
hold that there is no merit in this appeal which is accordingly F
dismissed with costs.
Rajendra Prasad Appeal dismissed.
Search Indian case law
Ask in plain English, not just keywords. 25,000 AI words free, no card.
Try "Letter of Intent"Sign in to search