Supreme Court of India
VILLIANUR IYARKKAI PADUKAPPU MAIYAMversusUNION OF INDIA AND OTHERS
- Citation
- 2009 INSC 810
- Decided
- 14 May 2009
- Disposal
- Dismissed
- Bench
- K G BALAKRISHNAN
Holding
The Government of Pondicherry validly exercised its jurisdiction over the minor Pondicherry Port, the concession to SPML was not arbitrary, and the appellants lacked standing, leading to dismissal of the appeals.
Summary
The Government of Pondicherry entered into a Build‑Operate‑Transfer concession with Subhash Projects & Marketing Ltd (SPML) for the development of the minor Pondicherry Port, issuing a Letter of Intent and a concession agreement without prior Central Government approval. The appellants challenged the award on grounds of alleged arbitrariness, lack of jurisdiction, violation of environmental principles and claimed they had public‑interest standing to protect the environment. The Supreme Court held that the Pondicherry Port is a minor port, the Union Territory’s legislature and executive have full jurisdiction over its development, and the award to SPML was a bona‑fide policy decision, not a gifting of public largesse. The Court further ruled that the appellants lacked locus standi for a PIL on the environmental issue after the High Court’s directions and that the list of dates filed was inaccurate and misleading. Consequently, the appeals were dismissed and the concessions upheld.
Issues considered
- The jurisdiction of the Government of Pondicherry to develop and privatise the Pondicherry Port, a minor port, without Central Government consent.
- Whether the award of the Letter of Intent and concession agreement to SPML was arbitrary, illegal or contrary to statutory provisions.
- The locus standi of the appellants to file a public‑interest litigation concerning environmental impact of the port project.
- Whether the environmental clearance requirements under the Precautionary and Trusteeship principles and CRZ regulations were complied with before awarding the contract.
- The adequacy and accuracy of the list of dates and events submitted by the appellants under Supreme Court Rules Order XVI.
- The characterization of the concession as a gift of public largesse or a real‑estate venture.
Legislation cited
- Constitution of Indias. Article 162, s. Article 239, s. Article 239A, s. Article 240
- Environment (Protection) Act, 1986s. 2006 Notification (as referenced)
- Government of Union Territories Act, 1963s. Section 18
- Indian Ports Act, 1908s. Section 3(9)
Subjects
minor port jurisdictionBOT (Build‑Operate‑Transfer)public‑interest litigationenvironmental clearancejudicial review of policyconcession agreementgovernment of union territorypublic procurementprecautionary principletrusteeship principleCoastal Regulation Zone
Judgment
[2009] 9 S.C.R. 225
VILLIANUR IYARKKAI PADUKAPPU MAIYAM A
v.
UNION OF INDIA AND OTHERS
(Civil Appeal No. 3572 of 2009)
MAY 14, 2009
B
[K.G. BALAKRISHNAN, CJI., P. SATHASIVAM AND J.M.
PANCHAL, JJ.]
DEVELOPMENT OF PORTS:
c
Pondicherry Port - Development of - Government of
Pondicherry entering into a concession agreement with a
developer - The Development Project was on Build Operat(!J
and Transfer (BOT) basis. - Issue of Government
Memorandum by which existing movable/immovable assets·· 0
of the port were to be handed over to the developer - '
Challenged in High Court by way of Writ Petitions -
Dismissed by the High Court - On appeal, Held: Port of
Pondicherry being a minor port, Government of Pondicherry
has the necessary jurisdiction and control to develop the port E
- On the facts and circumstances of the case it cannot be said
that the Government of Pondicherry had acted arbitrarily or
that the Letter of Intent was issued in favour of the developer
with oblique motives - The Government adopted a pragmatic
approach and proceeded to shortlist the developer directly F
and acted in the best interests of the State to overcome the
failed attempts in the past to develop the Pondicherry Port -
Thus the Supreme Court being a constitutional court not
expected to presume alleged irregularities, illegalities or
unconstitutionality- Nor would it be justified in substituting its
opinion for the bonafide opinion of the State Government - It G
cannot be said that the project was cleared without the
environmental aspects in total violation of Precautionary and
Trusteeship Principles - In fact it was done - Plea that the ·
Government of Pondicherry could not have taken the decision
225 H
·-·
226 SUPREME COURT REPORTS [2009] 9 S.C.R.
A to privatize the Pondicherry Port without consent/approval of
the Central Government is rejected as misconceived - Grant
of Letter of Intent or execution of Concession Agreement in
favour of the developer for development of the Port on BOT
basis cannot be regarded as gifting public largesse - Any
B ancillary development cannot be characterized as real estate
business - Issue of Public Tender - In view of the facts, there
was no requirement - Constitution of India, Articles 162, 239,
239A - Government of Union Territories Act, 1963, Section
18 - Pondicherry (Laws) Regulation, 1963, Regulation 6(b)
c - Rules of Business of the Government of Pondicherry, Rule
5(2), Delegation of Financial Rules, Rule 21 - Pondicherry
Administrative Act, 1962, Section 5 - Pondicherry
Administration Regulation Act, 1963, Section 3 - Indian Potts
Act, 1908, Section 3(9).
D PUBLIC INTEREST LJTiGA T/ON:
Locus standi - Challenging policy decision of the
Government in Pl(... is impermissible - Policy decision of
Government - Interference with.
E ' \_
·PRACTICE & PROCEDURE:
Concession made before Court - Submission before the
Court that only environmental impacts of the Project and not _...._. --
· selection of the Developer, were raised - Recorded by the
F High Court - Certainly a concession - No application was
filed before the High Court making a grievance that
concession was never made and /or was wrongly recorded by
the Court - Hence, it is a concession and binding on the
appellants - Now, they cannot canvass for challenging the
G selection of the developer.
t
SUPREME COURT RULES, 1960: . I
Order XVI Rule 4(b) - List of dates in chronological order
with relevant material facts or events pertaining to each of the
H dates - Furnishing of """' Filing of inaccurate and incomplete
-{
VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 227
UNION OF INDIA AND ORS.
list of dates causing confusion and waste of time of the Court A
f;
- Such practice of filing incomplete/inaccurate list of dates
and events deprecated - Practice & Procedure.
JUDICIAL REVIEW·
It is neither within the domain of the courts nor the scope B
of judicial review to embark upon an enquiry as to whether a
particular policy is wise or whether better public policy can be
evolved - Nor are the courts inclined to strike down a policy
merely because a different policy would have been fairer or
wiser or more scientific or more logical - Wisdom and c
advisability of economic policy are not ordinarily amenable
to judicial review.
LEGAL PRINCIPLES/DOCTRINE:
Precautionary principle - Trusteeship principle· - D
..i
Applicability of
For the development of Pondicherry Port, the
Government of Pondicherry entered into a Concession
Agreement with Respondent No.11 SPML along with its E
partners after following a detailed- consortium procedure.
The Development Project was on Build Operate and
Transfer (BOT) basis. Government of Pondicherry also
-(
issued an Office Memorandum by which all the existing
movable/immovable assets of the Port were to be F
handed over to the developer as per the Concession
Agreement. This was challenged by the appellants by
filing writ petitions in the High Court. The writ petitions
were dismissed by the High Court. Hence the appeals.
Dismissing the appeals, the Court G
HELD: 1.1. A fair and reasonable reading of
paragraph 19 of the impugned judgment makes it very
clear that the appellants had fairly conceded before the
High Court that they were not assailing the selection of H
228 SUPREME COURT REPORTS [2009] 9 S.C.R.
.:._A the respondent No. 11 as Developer for the Pondicherry
Port, but were more concerned with the environmental
impact that the project may have and, therefore, the
counsel for the appellants had requested the Court to
safeguard the interest of general public and future
s development of the Union Territory of Pondicherry with
,~eference to the development of the Pondicherry Port. It
is relevant to notice that in the grounds of memorandum
of the Special Leave Petitions it is not contended by the
appellants that no concession was made by the counsel
c before the High Court or the concession made was
different and· was not correctly recorded by the High
Court. [Para 12] [278-G-H; 279-A-B]
1.2. It is evident that during the course of the
arguments and after examining the documents, the High
D Court had expressed its view that the selection of the
Developer was correctly made and, therefore, in those
circumstances, the High Court had ascertained from the
appellants as to whether they would like to .concede on
the issue of selection of the Developer and. agitate its ·.
E concern in relation to the environmental Jmpact of the
project. It is ~lso seen from .ttt~ hnpugnedjudgment that
the counse' for the appellants had sought for a pass over
of the matter and; r~quested ~h·~,Co.urt to take up the
matter inth~:sec.Q_nd·tialf.on the same day at 2.15 P.M. to
F ·.·enable him :t(?;.9et instructions from the appellants. It is
also evident that the counsel for the appellants pointed
out to ttie court that he was not able to get in touch with·
his clients and, therefore, sought an adjournment to seek
instructions from the appellants. What is relevant to
G notice is that on the next date of hearing the counsel for
the appellants had informed the High Court that his
clients had instructed him to concede on the issue of
selection of the Developer, but had pointed out -that his
clients were seeking certain safeguards relating to the
H
230 SUPREME COURT REPORTS [2009] 9 S.C.R.
A was not selected, has come forward to challenge the
selection procedure adopted by the Gover~ment of
Pondicherry or the selection of the respondent No. 11 as
Developer of the Pondicherry Port. [Para 13] (281-E-F]
2.2. The only ground on which a person can maintain
8
a PIL is where there has been an element of violation of
Article 21 or human rights or where the litigation has been
initiated for the benefit of the poor and the
underprivileged who are unable to come fo the court due
to some disadvantage. On the facts and in the
C circumstances
I
of the case, this Court is of the view that
the only ground on which the appellants could have
maintained a PIL before the High Court was to seek
protection of the interest of the people of Pondicherry by
safeguarding the environment. This issue was raised by
D the appellants before the High Court and the High. Court
has issued directions regarding the same, which are to
be found in paragraph 24 of the impugned judgment.
After the High-Court's directions the element of public
interest of the appellants' case no longer survives. The
E appellants cannot, therefore, proceed to challenge the
Award of the Contract in favour of the respondent No. 11
on other grounds as this would amount to challenging )-
the policy decision of the Government of Pondicherry
through a PIL, which is not permissible. Thus on the
F ground of locus standi also the appeals should fail. [Para
13] (282-F-H; 283-A]
3. The list of dates submitted by the appellants
straightaway refers to the advertisement dated October
G 18, 2004, published in the Economic Times, but omits to
mention that even prior to October 18, 2004, on October
5, 2004 the Apollo Infrastructure Projects Finance
Company Limited had a meeting with the Minister of
Ports, Government of Pondicherry and had sought time
to make a presentation for the development of
H
VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 231
UNION OF INDIA AND ORS.
Pondicherry Port and such an opportunity was given to A
the said firm. Significant events, which took place during
January 12, 2005 to JaRuary 20, 2005, are not mentioned
in the list of dates at all. To enable the Court to know the
factual background, in the absence of records, clause (b)
of Rule 4(1) of Order XVI of the Supreme Court Rules, B
1960 requires a list of dates in chronological order with
relevant material facts or events pertaining to each of the
dates to be furnished along with the special leave
petition. In practice, the list of dates is prefaced by a brief
.synopsis of facts to give a complete and coherent picture c
of the facts but in the instant case this Court finds that
in the special leave petitions, the synopsis/list of dates
filed suffers from the defect of filing of a list of dates
without relevant material facts/events or synopsis and
from the defect of filing of inaccurate and incomplete
0
synopsis/list of dates. The above defects have resulted
in defeating the very purpose of requiring the filing of
synopsis/list of dates. The filing of inaccurate and
incomplete list of dates has caused confusion
necessitating detailed reference to the facts carved out
from the pleadings of the parties before the High Court E
and this Court. But for the filing of list of events on behalf
of the respondents, the list of events filed on behalf of the
appellants would have resulted into unintended
miscarriage of justice. To say the least, the list of events
submitted on behalf of the appellants cannot be termed F
as accurate and such a practice of filing of incomplete/
inaccurate list of events is not approved by this Court at
all. [Para 14) [283-B-H; 284-A]
4. The contention that the Government of G ..
~ Pondicherry having taken a conscious decision on the
basis of available guidelines to get a Feasibility Report
before taking up development of Pondicherry Port could
not have given it up in an arbitrary manner, all of a
sudden, to benefit Mis SPML and therefore grant of Letter H
232 SUPREME COURT REPORTS (2009] 9 S.C.R.
A of Intent dated June 3, 2005 to the Respondent No.11
should be voided, has no factual basis. [Para 16] (284-D-
E]
5.1. What is most important to notice is that in the
meeting held on March 11, 2005 only Respondent No.11
8
was present. During the presentation made by the
Respondent. No. 11, it was found that Respondent No. 11
had entered into consortium with Halcrow, a very
prominent company in the field of Port development
projects. The background of the said firm is set out in the
C Minutes of the proceedings held on March 11, 2005. The
said firm is described as a company which has been in
India for more than 30 years and its expertise is in the
development of multi purpose ports. (Para 16] (291-A-C]
D 5.2. The petitioners have not made any reference to '
the proceedings of March 11, 2005 or the Minutes of the
said Meeting. Instead, they have straightaway referred to
the.note prepared on April 5, 2005 to suggest that Mr. S.D.
Sunderesan, Director (Ports) was opposed to the
E development of the Port and for that reason he was
transferred by the Government. The affidavit in reply
makes it very clear that this allegation of the petitioner is
factually wrong. Mr. Sunderesan was recommended for
promotion to higher grade by Departmental Promotion
F Committee in March 2005 itself and his posting as a
Deputy Secretary was effected in May 2005. Thus, it is
wrong on the part of the petitioners to allege/suggest that
merely because he was opposed to the development of
the Port, he was transferred by the Government. The note
dated April 5, 2005 was considered and the Under
G Sec.retary (Port) made a detailed note with reference
thereto on April 8; 2005 dealing with every aspect, point-
wise. The Chief Secretary prepared a detailed note
pointing out that the matter had been considera~ly
delayed and that the Port Privatisation Committee had
H
111111(
VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 233
UNION OF INDIA AND ORS.
}!. recommended that a Letter of Intent be issued to SPML. A
The Chief Secretary sent a note dated May 26, 2005 which
mr- was put-up before the Minister of Ports for orders. The
Minister of Ports approved the note on June 1, 2005
recommending that suitable clauses be incorporated to
bind the party down to ensure that the project did not get 8
delayed. The Chief Minister approved the proposal on
~
June 3, 2005 and thereafter the proposal was approved
by the Lieutenant Governor on June 3, 2005. [Para 16]
[291-0-H; 292-A-B]
6. On the facts and in the circumstances of the case,
c
this Court is of the firm opinion that the events leading
.._ to the award of Letter of Intent to the respondent No.11
In June, 2005 do not indicate~ Jn any manner, that the
Government had acted arbitrarily or that the Letter of
D
.. )
Intent was issued to favour· the respondent No.11 with
oblique motives and, tht.refore, the contention of the
appellants in this regard is rejected. [Para 20) [298-A-B]
7.1. It is well settled that non-floating of tenders or not
holding of public auction would not be in all cases be E
deemed to be the result of the exercise of the executive
power in an arbitrary manner. Generally, when any State
--'... land is intended to be transferred or the State largesse
...... decided to be conferred, resort should be had to public
auction or transfer by way of inviting tenders from the F
people. However, what is important to notice is that the
old Pondicherry Port is very much in existence. This is
not a case of establishment of new port at Pondicherry
but this is a case of developing an existing port to meet
rapid changes in transport technology and to improve
G'
the existing port facilities. The development of an existing
...- -1 port on Build, Operate and Transfer basis can never be
equated with intended sale of Government land or
. transfer of State largesse. This is not a case where a
- State asset is sought to be sold or the State is out to
H
)-
234 SUPREME COURT REPORTS [2009] 9 S.C.R.
~.
A purchase goods. Such cases stand on a different footing
from a major issue of economic development sµcfl as ,.._\
development of a port. The respond~nt No.11 is called
upon to develqp tt~e Pondicherry Port on BOT ba.sis.
Thus after deveiopment of the Port, the same will have
B to be retransferred to the Government of Poodicherry. In
the matter of policy decision and econornic tests the
scope of judicial review is very limited. Unless the ,..
decision is shown to be contrary to any statutory
provision or the Constjtution, the Court would not
c interfere with an economic decision taken by the State.
[Para 21] [298-0-H; 299-A]
7.2. The court cannot examine the relative merits of ,__.;;,
different economic policies and cannot strike down the
same merely on ground that another policy would have (
D been fairer and better. In a democracy, it is the prerogative ).
of each elected Government to follow its own policy ..
Often a change in Government may result in the shift in
focus or change in economic policies. Any such change
may result in adversely affecting some vested interests.
E Uniess any illegality is committed in the execution of the
policy or the same is contrary to law or malafide, a
decision bringing about change cannot per se be
interfered with by the court. It is neither within the ctomain >--
of the courts nor the scope of judicial review to embark
..._
F upon an enquiry as to whether. a particular public policy
is wise or whether better public policy can be evolved.
Nor are the courts inclined to strike down a policy at the
behest of a petitioner merely because it has been urged
that a different policy would have been fairer or wiser or
G more scientific or more logical. Wisdom and advisability
of economic policy are _ordinarily not amenable to judicial )-
........
review. In matters relating to economic issues the -
Government has, while taking a decision, right to "trial
and error" as long as both trial and error are bona fide and
H -
-i
VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 235
UNION OF INDIA AND ORS.
:l'
within the limits of the authority. For testing the A
correctness Qf a policy,
. -
the appropriate forum is
Parliament and not tfle courts. [Para 21] [299-A-F]
7.3. Normally, there is always a presumption th~t ttte
Governmental action i~ rea§onable and in public interest B
and it is for the party challenging its validity to show that
Ji it is wanting in reasonableness or is not informed with
public interest. This burden is a heavy one and it has to
be discharged to the satisfaction of the court by proper
and adequate material. The court cannot Jightly assume
that the action taken by the Government is unreasonable c
or against public interest because there are large number
of considerations, which necessarily weigh with the
Government in taking an action. In a case like this where
.. the State is allocating resources such as water, power,
D
raw materials, etc. for the purpose of encouraging
development of the port, this Court does not think that
the State is bound to advertise and tell the people that it
wants development of the Port in a particular manner and
invite those interested to come up with proposals for the
purpose. The State may choose to do so if it thinks fit and E
in a given situation it may turn out to be advantageous
for the State to do so, but if any private party comes
~
.. before the State and offers to develop the port, the State
would not be committing breach of any constitutional
obligation if it negotiates with such a party and agrees F
to provide resources and other facilities for the purpose
of development of the port. The State is not obliged to tell
the respondent No.11 to wait without certainty. It would
be most unrealistic to insist on such a procedure,
particularly, in an area like Pondicherry, which on G
--
'
-J account of historical, political and other reasons, is not
_yet industrially developed and where entrepreneurs have
to be offered attractive terms in order to persuade them
to set up industries. The State must be free in such a
H
236 SUPREME COURT REPORTS [2009] 9 S.C.R.
>'.!.
A case to negotiate with a private entrepreneur with a view
to inducing him to develop the port and if the State enters
into a contract with such an .entrepreneur for providing
resources and other facilities for developing the port, the
contract cannot be assailed as invalid because the State
B has acted bonc:t fide, reasonably and in public interest.
The terms and conditions of the contract entered into with
the respondent No. 11 as well as the surrounding
circum$tances show that the State has acted bona fide
and not out of improper or corrupt motive or in order to
C promote the private interest of the respondent No. 11 at
the cost of the State. Therefore, it is difficult to interfere
and strike down the State action as arbitrary,
unreasonable or contrary to public interest. [Para 21]
[299-F-H; 300-A-H]
D 7.4. It is true that one of the methods of securing the
public interest, when it i& considered necessary to
dispose of a property, is to sell the property by public·
auction or by inviting tenders. This is not a case of sale
of property by the State. Though public auction or
E inviting of tenders is the ordinary rule in case where the
State Government proposes to dispose of a property, it
is not an invariable rule. There may be situations where
\
there are compelling reasons necessitating departure
from the rule, the reasons indicated in·:this case for the
F departure are shown to be rational and are not
suggestive of discrimination. The Government is entitled
to make pragmatic decisions and policy decisions which
may be necessary or called for under the prevalent
peculiar circumstances. The issue of privatisation of the
G Port had been engaging the attention of the Government
of Pondicherry since 1973. The said issue had been
delayed for a long time. Therefore, no fault can be found
with the expert Committee, with the various officers of the
-
Government including the Chief Secretary, the Ministers,
H the Chief Minister and the Lt. Governor for deciding to
VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 237
UNION OF INDIA AND ORS.
develop the Port with the assistance of the respondent A
No. 11 and not just restricting the process to appoint a
consultant. The sole purpose behind the said exercise
was to ensure development of the Port in a proper
manner and as expeditiously as possible. It is necessary
to mention that the Government of Pondicherry was B
trying to develop the Port and was looking for an
appropriate partner. It must be remembered that
technology for development of the Port would not be
available for the mere asking of it. All the leading firms/
companies were not found suitable to develop the Port c
and none of them has made grievance either before the
High Court or before this Court regarding selection of
respondent No. 11 as Developer of the Port. It is ultimately
a matter of bargain. In such cases, all that needs to be
assured is that the Government or the authority, as the 0 .
case may be, has acted fairly and has arrived at the best
available arrangement in the circumstances. The
materials on record substantiated the absolute need and
necessity to undertake the development of the Port by
the Government of Pondicherry in furtherance of great
public interest and for larger public and common good. E
The admitted dire financial position of the State
Government and its inability to undertake such a project
at the cost of Government coupled with the fact that the
venture was long overdue apparently made the State
Government and its authorities to avail of the project as F
unfolded and volunteered by the respondent No. 11,
subject, of course, to further revisions, modifications and
suggestions in the best interest of the State Government.
A careful and dispassionate assessment and
consideration of the materials placed on record does not G
leave any reasonable impression, on the peculiar facts
and circumstances of this case, that anything obnoxious
which requires either public criticism or condemnation by
courts of law had taken place. The objective of the
H
238 SUPREME COURT REPORTS [2009] 9 S.G.R.
A Government of Pondicherry to develop the Port was
admitted to be fulfilled at the initial stage by short listing
a consultant itself. However, the Government did not wish -·
to continue the process of selection of the consultant and
risk losing the chance of privatisation of the Port again.
B As firms/companies had offered to develop the Port
directly, the Government of Pondicherry could not have
asked the firms/companies to first participate in the
process of selection of a consultant, prepare a project
report and require them to participate in the process for
c selection of the developer all over again. The
Government of Pondicherry adopted a pragmatic
approach and proceeded to short list the developer
directly and in doing so the Government has acted in the
best interest of the State to overcome the failed attempts
in the past to secure a developer to develop the
0
Pondicherry Port. Under the circumstances, this Court,
which is a constitutional Court, is not expected to
presume. the alleged irregularities, illegalities or
unconstitutionality nor this Court would be justified in
E substituting its opinion for the bona fide opinion of the
State Government. Therefore, the plea raised on behalf
of the appellants thaf the Government of Pondicherry
had acted in arbitrary and unreasonable manner in
switching the whole public tender process into a system
of personal selection, is rejected. [Para 21] [300-H; 302-
F A-H]
8. It is admitted position that the Pondicherry Port is
not a "major port" and as such jurisdiction and control
to develop the said port vests in the Government of
G. Pondicherry. There is no manner of doubt. that
development and privatisation of minor ports can be
undertaken by the respective State Government after ~ ·-~
formulating its own guidelines and modalities. The Indian
Ports Act, 1908 permits the State Government to develop
H the minor ports. By virtue of power vested in the
VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 239
UNION OF INDIA AND ORS.
-a. ; Parliament by Article 239A of the Constitution, the A
Government of Union Territories Act, 1963 was enacted
and Pondicherry was provided with a Legislative
Assembly. The extent of the legislative power of the State
Legislative Assembly is laid down in Section 18 of the Act
of 1963, which, inter alia, provides that the Legislative B
Assembly is empowered to make laws in respect of any
matters In the State List or the Concurrent List. Entry 31
of the Concurrent List provides for "Ports other than
those declared by or under law made by Parliament or
existing law to be major ports". As the Pondicherry Port c
has not been declared as a major port, the Legislative
Assembly of Pondicherry has absolute power to make
laws in relation to the Pondicherry Port. Article 162 of the
,
. Constitution provides that the executive power of a State
~
is co-extensive with its legislative powers. Therefore,
D
•
~
there is no manner of doubt that the Government of
Pondicherry has complete jur~sdiction in relation to
Pondicherry Port, which is a minor port. The reliance
placed upon Section 3(9) of the Indian Ports Act, 1908
read with Regulation 6(b) of the Pondicherry (Laws)
Regulation, 1963 is totally misconceived. Section 3(9) of E
the said Act provides that the jurisdiction of ports other
than major ports vests in the State Government. Having
- ~ considered the different provisions of the Constitution
and Statutes, referred to by the counsel for the appellants,
this Court finds that there is fundamentarfallacy in the F
argument and it is that they rely upon Regulation G(b) only
in part. Though the said Regula_tion provides that
reference to the State Government shall be construed as
a reference to the Central Government, it also provides
that reference to the State Government shall be G
construed as reference to the Chief Commissioner. A
~
~- conjoint and meaningful reading of the provisions of the
Constitution read with Regulation G(b) of the Pondicherry
(Laws) Regulation, 1963 leaves no doubt that the power
H
240 SUPREME COURT REPORTS [2009] 9 S.C.R.
A in respect of Pondicherry Port necessarily vests in the
Government of Pondicherry and not in the Central
Government. The reliance placed on Rule 5(2) of the
Rules of Business of the Government of Pondicherry
read with Rule 21 of the Delegation of Financial Rules to
B contend that prior approval of the Central Government
was required to be taken by the Government of
Pondicherry before entering into the Concession
Agreement with the respondent No.· 11 as it was beyond
the financial powers of the Government of Pondicherry,
C is devoid of merits. Rule 21 relates to the power to
sanction expenditure in relation to contracts. Execution
of Concession Agreement or grant of Letter of Intent
does· not entail any expenditure to be incurred by the
Government of pondicherry. [Para 23] (303-C; 305-B] - (
:::> 9.1. It is relevant to notice that the Union Territory of
Pondicherry gained its freedom in the year 1962.
Therefore, several laws were passed by the Parliament
for its integration with the Union of India. One such law
was Pondicherry Administration Regulations Act, 1963.
E Article 240 of the Constitution deals with power of
President to make regulations for certain Union
Territories. The first proviso to Article 240, inter alia,
provides that when any body is created under Article
239A to function as a Legislature for the Union Territory
F of Puducherry (substituted by Section 4 of the
Pondicherry (Alteration of name) Act, 2006 for
Pondicherry], the Pre~·ident shall not make any regulation
for the peace, progress and good Government of that
Union Territory with effect from the date appointed for the
G first meeting of· the Legislature. Therefore, the
Pondicherry Administration Regulation Act, 1963 will
have to be regarded as a Transitional Legislation.
Moreover, the primary reason for enacting Section 3 of
the Pondicherry Administr~tion Regulation Act, 1963 was
H ~ .
VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 241
UNION OF INDIA AND ORS.
to extend all the laws enacted by the Union of India under A
the Union List to the Pondicherry. It is only an Act akin
to adaptation Act by which the laws of Union of India
were extended to this Union Territory, which was
incorporated with India after partition. The extension of
laws of Union of India shall only mean that those laws B
would be applicable as they are applicable to any other
State of India. As noticed earlier, the Port in question is
admittedly a minor port and, therefore, not covered by the
provisions of Indian Major Ports Act, 1908. The extension
of law to Indian Major Ports Act, 1908 would only mean c
that a particular law is prevalent but its applicability would
. be dependant upon as to whether facts and
· .. circumstances warrant its invocation. Had the Port in
questio.n been a major port, Indian Ports Act, 1908 would
have applied. In this case as the Port in question is a 0
minor port, the Indian Major Ports Act, 1908 would not
apply. [Para 24] [305-0-H; 306-A-C)
9.2. This Court finds that Section 5 of the Pondicherry
Administration Act, 1962 is the provision by which all
properties and assets, which earlier vested in the French E
· Republic, stood transferred to the Union, i~e., Union of
States {India). In other words, Section 5 was enacted for
the purpose of transfer of properties from one sovereign
State to another sovereign State. It has no power on the
right of Government of Pondicherry over the properties F
and assets in Pondicherry. The vesting of land from
French Republic to the Republic of India can have no
bearing on the powers of Government of Pondicherry to
dispose of land in accordance with the provisions of the
Constitution. Further, it is to be noticed that the entire G
Pondicherry Administration Act, 1962 was a Transitional
Act for transfer of power from the French Republic to the
Republic of India, which is evident from the Statement of
Objects and Reasons to the said Act. Therefore, the plea
H
242 SUPREME COURT REPORTS [2009] 9 S.C.R.
A that the Government of Pondicherry could not have taken
the decision to privatize the Pondicherry Port without 0
consent/approval of the Central Government is totally
misconceived. [Para 25] (306-D-F]
8 9.3. The letter dated March 22, 1996 addressed by the
\-
Joint Secretary of India to the Chief Secretary of •
Pondicherry Administration read with decision taken by
the Committee of which Director (Port Development),
Ministry of Shipping, New Delhi, was one of the Member,
C to privatize the Port will have to be construed as
approval/consent of the Central Government to the
project for the development of Pondicherry Port by
privatisation and it was not necessary for the Government
of Pondicherry to seek further approval at every stage of
development of the Port. Therefore, the plea that the
D Government of Pondicherry could not have tak~n the
decision to privatize the Pondicherry Port without
cpnsent/approval of the Central Government is found to
.be misconceived and is rejected hereby. [Para 27] [3080-
G]
E
10.1. The argument that the project in question is .
"
cleared without examining the environmental aspects by_
the Union Territory of Pondicherry in total violation of the
Precautionary and Trusteeship principles and is also
F prohibited under the CRZ notification as the same is a
real-estate activity in the garb of port development, has
no substance worth the name. [Para 28] [308-H; 309-A]
10.2. The record of the case indicates that concession 'j-
agreement is already entered into between the l
G Government of Pondicherry on one hand and the 11th
and 12th respondents on the other, on January 21, 2006.
Those respondents in terms of the concession
agreement have incorporated a Special Purpose Vehicle
(SPV) company known as Pondicherry Port Limited for
H implementation of the Port Development Project. An
VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 243
UNION OF INDIA AND ORS.
Assignment agreement to this effect in favour of A
Pondicherry Port Limited is executed by the Respondent
Nos. 11 and 12 and confirmed by the Government of
Pondicherry. In terms of the Concession agreement, the
Government of Pondicherry has entered into Lease and
Possession agreement with the Special Purpose Vehicle B
Company on February 4, 2006. The Lease-hold
occupancy is given to the Pondicherry Port Limited
subject to obtaining necessary clearance including
environmental clearance from the Government of India.
There is n.o manner of doubt that no one can be permitted c
to carry on construction activity which is prohibited by
the CRZ. However, this being a project exceeding Rs.50
crores necessary environmental clearance has to be
obtained from the Ministry of Environment and Forest
Union of India. Before such consent is granted/obtained,
0
a full Environmental Impact Assessment has to be done.
During that exercise, public hearing would be conducted
as a matter of rule and all the concerns expressed by the
public will have to be taken due note of, by the authorities
concerned. The specific objections raised by the E
appellants will also have to be considered and they
would be entitled to hearing by the competent authority.
Mere submission of DPR is not the end of any decision
-t.
making process. The implementation of the project as per
DPR is solely dependent on the clearance to be given by
the Ministry of Environment and Forest, Union of India. F
There is no manner of doubt that the Government has
every power to stop the project if it violates environmental
safeguards. The consideration of CRZ regulations would
also be part of the said exercise. Further, the notification
issued under the Environment Protection Act clearly G
-..+ requires a prior consent and provides for an appeal to be
filed before the tribunal constituted for the said purpose
by an aggrieved party. The plea that the environmental
cl1earance must precede the award of the project is
H
244 SUPREME COURT REPORTS [2009] 9 S.C.R.
A wholly misconceived and is incorrect. The application
form for obtaining environment clearance under the
notification of 2006 makes it very clear that the
-
"
application has to be made by the entity which has been
entrusted with the project. In the judgment, impugned in
B the appeals, appropriate directions addressing all the
issues raised on behalf of the appellants relating to .the
environment have been issued by the High Court. In
addition, the Ministry of Environment and Forest which
has to given clearance for the project has t.o examine the
c proposals of the developer and follow due procedure
before granting approval. Therefore; the judgment
impugned is not liable to be set aside on the ground that
environmental aspects were not examined by the Union
Territory of Pondicherry in total violation of the
Precautionary and Trusteeship principles or that the
0
project in question is completely prohibited under the
CRZ notification. [Para 29] (309-D; 310..A-E]
11. It can hardly be disputed by anyone that the main
objective of the project is the development of
E Pondicherry Port. The Government of Pondicherry has
not entered into Concession agreement with the
Respondent No. 11 to permit the said respondent to run
a Real-estate business. While developing the port, it is
necessary to provide certain infrastructural facilities for
F passengers, shipping crew, port staff and other
personnel associated with the port, as part of the port .
development activity. Respondent No. 11 as developer of
the Port has not yet submitted necessary plans for
scrutiny of Ministry of Environment and Forest,
G Government of India, seeking clearance to the project. As
and when, the plans are submitted for clearance, the
competent authority can always decide upon the
desirability of making of constructions which do not fall
within the development of port. The ancillary activities to
H
VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 245
UNION OF INDIA AND ORS.
be undertaken while developing a port cannot be A
stopped by merely naming them as Real-estate business.
The affidavit in reply filed on behalf of Respondent Nos.
11 and 12 before the Madras High Court would indicate
that the Government of Pondicherry is not going to make
investment in the project at all. Therefore, the question B
of Government of Pondicherry favouring the Respondent
No. 11 does not arise. The affidavit filed by the
Respondent Nos. 11 and 12 makes it clear that they have
taken up the project after conducting detailed study and
have decided to make investment in the project. The c
Respondent Nos. 11 and 12 are permitted to develop the
Port only on Build, Operate and Transfer (BOT) basis. No
material was placed by the appellants before the High
Court to substantiate the claim that the Respondent Nos.
11 and 12 are the Real-estate agents. The development 0
of Port of Pondicherry on BOT basis makes it evident
that,· in effect· and substance, the Government of
Pon.dicherry would get back the assets built by the
Respondent Nos. 11 and 12 after the expiry of period
, mention.ed in the Concession agreement. Grant of Letter
.· of lnten.t or execution of Concession agreement in favour, E
of Respondent No. 11 to permit it to develop the Port on
13-0T basis cannot be regarded as gifting public largesse.
The appellants have failed to bring on record any material
to substantiate the allegation that there is a conspiracy
to grab the land belonging to the Government of F
Pondicherry for the purpose of Real-estate of
Respondent No.11 by permitting it to construct five-star
hotel, commercial mall, etc. The reply affidavit filed by the
Respondent before the High Court, on the contrary,
shows that the feasibility report prepared by it indicated G
- that the Port was to be developed in composite manner
,\ and therefore project should be commercially viable and
therefore considering the enormous cost involved in the
development of the Port, certain activities are sought to
be undertaken for the benefit of passengers, crew of H
246 SUPREME COURT REPORTS [2009] 9 S.C.R.
A ships, staff etc. On the facts and in the circumstances of ~
the case, this court is of the opinion that the appellants
have failed to make out the case that the Pondicherry
Government has permitted the Respondent No. 11 to
carry on Real-estate business and therefore the appeals
B should be accepted. [Para 30] [310.;F; 312-B]
CIVIL APPELLATE JURISDICTION : Civil Appeal No. '
1-
3572 of 2009.
"
From the Judgement/Order dated 10.8.2006 of the High
c Court of Judicature at Madras in W.P. No. 12337 of 2006.
Dr. Rajeev Dhavan, Nikhil Nayyar, T.V.S. Raghavendra
Sreyas, Ambuj Agarwal, Pallavi Mohan, Sanjay Parikh for the
Appellant.
D G.E. Vahanvati, S.G.I, Dandapani, C.A. Sundaram, V.G.
Pr~gasam, Chinmoy Pradeep Sharma, S.J. Aristotle, Prabu
"
,I.-
I
Ramasubramanian, A.K. De, Debasis Misra, Rohini Musa,
Abhishek Gupta, Zafar lnayat, Anandh Kannan {for P.V.
Yogeswaran) for the Respondents.
E
The Judgment of the Court was delivered by
J.M. PANCHAL, J. 1. Leave granted in both the special -;f-·
leave petitions.
F 2. Appeal arising from Special Leave Petition (C) No.
9988 of 2007 is directed against judgment dated August 10,
2006, rendered by the Division Bench of Judicature at Madras,
in Writ Petition No. 3304 of 2006 by which three prayers made
by the appellant to quash (1) the Letter of Intent dateGil June 3,
G 2005 granted by the Government of Pondicherry to the
respondent No. 11 herein, i.e., M/s. Subhash Project and
Marketing Limited, for development of port in Pondicherry on
Build Operate and Transfer ('BOT for short) basis, (2) approval
dated January 21, 2006 accorded by the Lt. Governor of
H Pondicherry to the detailed project report dated November 16,
VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 247
UNION OF INDIA AND ORS. [J.M. PANCHAL, J.]
,,.f.
2005 submitted by the respondent No. 11 and its partner Mis. A
Om Meta!s Limited for the development of Pondicherry Port on
BOT basis as well as to the concession agreement to be
entered into between the Government of Pondicherry and the
respondent No. 11 with its consortium/partner Mis. Om Metals
Limited and with their affiliates for the development of the 8
Pondicherry Port and all related and ancillary/other activities
and (3) direction dated January 24, 2006, issued by the Director
of Ports, Government of Pondicherry, Port Department, to the
officers concerned, to prepare a list of all the existing moveable/
immoveable assets of the Pondicherry Port for handing over c
to the respondent No. 11 by January 30, 2006, consequent
upon the decision taken by the Government of Pondicherry for
the development of Pondicherry Port on BOT basis, are
rejected .
•
.... 3. Appeal arising from Special Leave Petition (C) No . D
6977 of 2007 is also directed against judgment dated August
10, 2006, mentioned above, rendered in Writ Petition No.
12337 of 2006, by which two prayers made by the appellant to
quash (1) the approval dated January 21, 2006 accorded by
the Lt. Governor of Pondicherry to the detailed project report E
dated November 16, 2005, submitted by the respondent No.
11 and its partner M/s. Om Metals Limited, for the development
-t.
of Pondicherry Port on BOT basis as well as to the concession
agreement to be entered into between the Government of
Pondicherry and the respondent No. 11 with its consortium/ F
partner Mis. Om Metals Limited and with their affiliates for the
development of Pondicherry Port and all related and ancillary/
other activities and (2) the direction dated January 24, 2006,
issued by the Director of Ports, Government of Pondicherry,
Port Department, to the officers concerned to prepare a list of G
all the existing moveable/immoveable assets of the Pondicherry
Port for handing over the same to the respondent No. 11 by
January 30, 2006 pursuant to the decision taken by the
Government of Pondicherry for the development of Pondicherry
Port on BOT basis, are rejected. H
I
248 SUPREME COURT REPORTS [2009] 9 S.C.R.
A 4. As both the appeals arise from the common judgment
delivered by the Madras High Court on August 10, 2006 and
common question of facts and law arise for consideration of
this Court, it is proposed to dispose them of by this common
judgment.
B
5. In order to trace the development of events leading to
filing of these appeals, it is necessary to notice certain basic
facts.
6. Background
c
The existing Port of Pondicherry is situated in the East
Coast of India between two Major Ports of India, i.e., Madras
and Tuticorin. It is located at the Ariankuppam River Mouth in
Pondicherry. The history of the Pondicherry Port dates back to
D the tenth century A.O. The Pondicherry Port flourished as a
centre for international trade and commerce. However, it could
not maintain the pace of augmentation in improving the port
facilities with respect to the rapid changes in transport
technology. Therefore, the port facilities became obsolete and
E the Port lost much of its importance.
With the objective of developing the port facilities, offers
.from various Marine Technical Consultancy Firms were invited
by the Government of Pondicherry in the year 1973 fat the
preparation of a Master Plan and a detailed project report. After
F examining the offers received from various firms, the Port
Department of Government of Pondicherry recommended that
the project be awarded to M/s. Consulting Engineers Services
(India) Pvt. Ltd. By Government order dated September 27,
1973 the said organization was entrusted with the work of
G preparation of the Master Plan and a detailed project report.
The said organization submitted various rep0rts and finally
updated its project _report in May, 1982 .. On the basis of the
reports, the Ministry of Shipping and Transportation (Ports
Wing), Government of India approved the project for the
H creation of certain facilities at the Pondicherry Port and
. '- VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 249
UNION OF INDIA AND ORS. [J.M. PANCHAL, J.. ]
;.
~
sanctioned the cost of the project by letter dated June 26, 1984. A
..,. The Government of Pondicherry entered into an agreement with
Mis. Consulting Engineering Services (India) Private Limited
on January 22, 1985 for development of the facilities in terms
of the approval and sanction granted by the Government of
India. During the construction of the facilities, there was a B
proposal to create additional development facilities for
Commercial-cum-Fishing Vessels.
The creation of these additional facilities was discussed
in a meeting held on March 22, 1989 pursuant to which the
Director (Ports), Port Department, Government of Pondicherry
c
vide letter dated March 23, 1989 informed the Development
- Commissioner, Government of Pondicherry that creation of
such additional facilities would require a feasibility report. In the
said letter it was also stated that since the Port Department
1 lacked competent personnel in this regard, the same should be D
got prepared by a body having the requisite expertise. It was
also mentioned in the letter that M/s. Consulting Engineering
Services (India) Private Limited·had no requisite expertise and
recommended the appointment of Mis. Rail India Technical and
Economic Services India Limited, a Government of India E
undertaking under the Ministry of Railways ("Mis. RITES India
Limited" for short) to conduct the study on the technical
' -t feasibility and economic viability of the proposed development
~
facilities. This proposal was examined and approved by various
officials including the then Chief Minister of Pondicherry on F
March 27, 1989 and the then Lt. Governor, Pondicherry on
March 28, 1989. In terms of those decisions, a Government
order dated May 29, 1989 was issued by the Government of
Pondicherry sanctioning a techno-economic survey to be
conducted by Mis. RITES India Limited. G
~~
On June 10, 1991, Mis. RITES India Limited submitted its
Techno-Economic Feasibility Study Report pertaining to the
Development of the additional facilities at Ariankuppam Port
- Project. The said report noticed that the proposed developme_nt
H
250 SUPREME COURT REPORTS [2009] 9 S.C.R. -:
~,
A was not only necessary for bridging the gap of technological
changes in the sea transport, but was also necessary from the ....
socio-economic point of view. In the report it was mentioned
that the investments in the proposed project was justified. By
the said report a study to be done on the ways and means of
8 raising the funds for the project was recommended. The report
also pointed out that Environmental Impact Assessment for the
proposed development indicated that the effect on the ~
environment was not significant and woy!d be well within the
acceptable levels specified as per the Indian standards.
c In spite of the positive Feasibility Study Report submitted
by Mis. RITES India Limited, the project could not be carried
forward in view of the paucity of funds. .,....;...
Again, some time in March 1996 the Government of
D Pondicherry made further attempt to develop the Port by inviting
the officials of Mis. RITES Ind.a Limited to examine and provide
consultancy services by privatization of the ports at Pondicherry,
Karaikal and Mahe. Accordingly, a meeting was held between
the officials of Government and the Company on March 12,
E 1996. In the said meeting the officials of Mis. RITES India
Limited suggested that appropriate approach was to adopt the
Build, Own, Share and Transfer mode of privatization. In terms
of the said meeting Mis.RITES India Limited, through a letter :+--
dated March 12, 1996, submitted a 'Terms of Reference' for 1
F offering consultancy assignment for privatization of
aforementioned ports. The total consultancy fee for the
assignments was initially put as Rs.30 lakhs, which was
reduced to Rs.20 lakhs as the proposal for consultancy was
subsequently limited to the Pondicherry Port only. The Joint
Secretary, Ministry of Surface Transport, Government of India,
G
vide letter dated March 22, 1996 informed the Chief Secretary,
t-~
Pondicherry Administration about the need to expand the
existing capacity of the Pondicherry Port to meet the growth
requirement of traffic handled by various major ports. In the said
, letter it was mentioned that a decision was taken to invite capital
H
-i
VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 251
UNION OF !NOIA AND ORS. [J.M. PANCHAL, J.]
/
~
participation by private sector and from non-maritime land- A
locked states. In response to the said letter the Director of Ports,
.....
Government of Pondicherry addressed a letter dated April 18,
1996 enclosing therein the material for inviting capital
participation by the private sector and non-maritime land-locked
-I
states . B'
• ~
One company, i.e., Megah Ve:--ture Lines (M) SON BHD
vide letter dated March 28, 1996 addressed to the Secretary
(Health & Welfare and Port), Government of Pondicherry,
referred to the discussion it had on March 28, 1996 and made
a proposal to conduct a Feasibility Study relating to the
c
modernization/privatization of the Pondicherry Port. The said
...... company wanted permission to conduct the said Feasibility
Study. The said proposal was examined by the Director (Ports),
Government of Pondicherry and by letter dated April 19, 1996,
1 the Director (Ports), Government of Pondi'cherry, recommended" D
that.as the entire piivatizat.on of port was being examined by
Mis. RITES India Limited, the study sought to be conducted by
Mis. Megah Ventures Lines should be permitted only after
tenders for privatization were invited by M/s. RITES India
Limited. E
The Managing Director of M/s. Mega Ventures Lines along
~
with letter dated January 25, 1997, addressed the then Chief
Minister, Pondicherry, enclosed a draft of MOU pursuant to the
meeting which had taken place between the then Chief Minister F
and the officials of Mis. Megah Ventures Lines on January 23,
1997 and claimed that the same was in accordance with the
economic policy of the Government of India. The benefits, which
were to accrue, were also mentioned in the said letter. The
Director of Ports, Government of Pondicherry, by his letter dated
G
June 24, 1997, made a proposal to the Under Secretary (Ports),
....- -1 Pondicherry to examine the issue as to whether it would be
preferable to call for competitive tenders. It was also mentioned
in the said letter that in the meanwhile Mis. RITES India Limited
be approached for consultancy services. By the said letter the
H
t )
252 SUPREME COURT REPORTS [2009] 9 S.C.R.
~
A Director of Ports also proposed that Mis. RITES India Limited '
be appointed as the consultant for the assignment of selection
~
of suitable entrepreneurs for 'additional development facilitie$
of Ariankuppam Port Project' by competitive tenders 011
BOOST basis. The Director also requested for sanction of
B Rs.14 lakhs as expenditure. On September 19, 1997 a meeting
was held between the senior officials of the Government of ')-
Pondicherry and the Group General Manager of Mis. RITES
-f
India Limited. The minutes of the meeting recorded that due to
resource cn.rnc:h c;:1t the G~ntr~ ~nd St~te level, the Government
c of Pondicherry had decided to invite private participation for
the development of Pondicherry Port. The minutes also reflected
that a decision was taken to call fQr pre-qu?lifications bids in
order to ascertain the technical capacity and financial
soundness of the entreprene~rs. The mim1tes also indicated that
a decision was taken that in orper to invite the best parties,·the
D
Government of Ponqioherry should grant concessions at par
with other maritime States. On November 4, 1997 a meeting
·was held. between the officials of the Government of Pondicherry
including the then Lt. Governor and the Group General Manager
of Mis. RITES India Limited. At the said meeting the officials
E of Mis. RITES India Limited gave a detailed presentation
relating to various aspects of competitive bidding process. At
the said meeting a decision was taken to adopt a transparent
open competitive bidding procedure in preference to the MOU + _,
Route. The minutes of the said meeting also reflected that a ~
F decision relating to the appointment of Mis. RITES India Limited
as a consultant for this purpose was also taken. The minutes
further recorded that the Pondicherry Port was a minor Port
and, therefore, the provisions of Major Ports Trust Act were not
applicable. The draft minutes were, thereafter, approved and
G signed by the officials of the Government of Pondicherry.
:r· -....
On November 6, 1997, a Government Order was issued
appointing Mis. RITES India Limited as a consultant. The
Consultancy Service Agreement between the Government of
Pondicherry and Mis. RITES India Limited was signed on
H
. VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 253
UNION OF INDIA AND ORS. [J.M. PANCHAL, J.]
_, .j..
December 10, 1997. The Group General Manager (Ports) by A
....... letter dated December 22, 1997 forwarded draft advertisement
titled "Invitation for Private Investment in Pondicherry Port", a
Draft Invitation Document for "Initial Proposals" and the Draft
Agreement to be entered into between the Government of
Pondicherry and Mis. RITES India Limited. These draft B
documents and the draft advertisement were forwarded for the
~
purpose of approval by the competent authority. The draft
advertisement and the draft initial proposal were examined by
various departments of the Government of Pondicherry. The
Secretary (Finance), Government of Pondicherry in his noting c
dated May 18, 1998 noted that there were long term
implications of the Draft Advertisement. He, therefore,
. ~ ,., recommended that the draft initial proposal and the Draft
Agreement be placed before the Council of Ministers. These
r recommendations were approved by the Chief Secretary,
D
~
Pondicherry on August 3, 1998 and by the then Chief Minister
on August 13, 1998. Accordingly, a Cabinet meeting was
convened on January 19, 1999 wherein the agenda of the
meeting was to discuss and decide amongst other items, the
proposal for privatization of Port and calling for advertisements
E
by Mis. RITES India Limited. The Cabinet in the said meeting
resolved to defer the discussion on this item till the next
meeting. The said agenda was again circulated to the Ministers
4:-
of the Cabinet on April 7, 1999 and all the Ministers of the
Cabinet approved the proposal for privatization of the Port as
well as calling for advertisement by Mis. RITES India Limited. F
The proposals were finally approved by the Cabinet on October
13, 1999. The then Lt. Governor accorded his approval on
October 15, 1999. After the said approval, various
departments of the Government of Pondicherry examined the
Draft Agreement to be entered into between the Government G
-; of Pondicherry and Mis. RITES India Limited. After necessary
changes, the agreement was entered into between the parties
on January 10, 2000.
. H
254 SUPREME COURT REPORTS [2009] 9 S.C.R. -::
.,
~-
A 7. Relevant facts
,,,..,
The General Manager (Ports) of Mis. RITES India Limited
by his letter dated March 16, 2000 informed the Secretary
(Ports) Government of Pondicherry that the advertisement
seeking interest of the parties for development of Pondicherry
B
Port through private investment had appeared in the Daily
Hindustan Times on March 16, 2000 and the same
:f
advertisement would appear in editions of the Economic Times,
Times of India (Bombay edition), Hindu (Chennai and Delhi
editions) and Statesman (Calcutta edition) between 17th to 21st
c March, 2000. By this advertisement, the Government of
Pondicherry sought involvement of the private sector in the
development and operation of the Pondicherry Port on BOST ~--
basis from reputed and financially sound Indian and/or
international parties. The last date for submissions of proposal _,
D for pre-qualification of the above project was May 20, 2000. ~
However, the General Manager (Ports) of M/s. RITES India
Limited by his letter dated May 9, 2000 sought permission from
the Government of Pondicherry for extension of last date by one
month, i.e., June 20, 2000, which was approved on May 19,
E 2000. The General Manager (Ports) of M/s. RITES India Limited
by his letter dated June 29, 2000 informed the Principal
Secretary (Power), Government of Pondicherry about the
developments of private investment in the Pondicherry Port. In :+-
the said letter it was mentioned that in response to the ..
F advertisement, 48 parties had initially indicated interest in the
project and that certain firms were short listed. It was mentioned
that the document seeking initial proposals from short listed
parties was issued to all interested parties and they were
requested to submit their initial proposals by May 20, 2000.
G However, by the last date for submission of initial proposals,
only five parties/ consortiums had submitted their proposals. It ~
r
was also mentioned in the said letter that the evaluation of the
proposals by M/s. RITES India Limited would be submitted on
H
or before July 15, 2000. M/s. RITES India Limited submitted
its report on evaluation of [nitial proposals as well as invitation .
VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 255
UNION OF INDIA AND ORS. [J.M. PANCHAL, J.J
,,,t- documents for detailed proposals. The said report indicated A
that Mis. RITES India Limited had rejected the proposal of one
...-. party, i.e., Mis. Rockers (India) Pvt. Ltd. In the report preference
regarding remaining four parties was shown as under: -
1. Mis. Ashok Leyland of India - 81 marks out of 100
B
(This firm had unconditionally qualified).
2. Mis. Seaways Shipping Limited of India - 92 marks
out of 100 (This firm had qualified with some
conditions).
c
3. Mis. Kvaerner Construction International Ltd. - 13
marks out of 100 (This firm had qualified with some
conditions).
4. Mis. Durgeshwari Shipping Agency Pvt. Ltd. - 79
marks out of 100 (This Firm had qualified with D
~.
some conditions) .
. The short listing of four parties and recommendation of Mis.
RITES India Limited to invite detailed proposals from the four
parties within five months was approved by the Government of E
\,
Pondicherry on July 21, 2000. The parties which were short
listed subject to certain conditions were asked to provide
documentary proof in support of their claims before September
-t:
·15, 2000. In consequence thereof, Mis. Durgeshwari Shipping
Agency Pvt. Ltd. had submitted the requisite documents. F
Therefore Mis. RITES India Limited confirmed the short listing
of consortium of Mis. Durgeshwari Shipping Agency Pvt. Ltd.
whereas the other two short listed parties had sought extension
of time by about two months for furnishing the required
documentary proof. Accordingly the General Manager (Ports) G
of Mis. RITES India Limited had, by his letter dated September
.~. -1 22, 2000, sought approval of the Gov~rnment of Pondicherry
in relation to (a) final confirmation of short listing of consortium
of Mfs. Durgeshwari Shipping Agency Pvt. Ltd. and (b) allowing
time up to November 15, 2000 for the parties mentioned at
H
;.
'
256 SUPREME COURT REPORTS [2009] 9 8.C.R.
A serial numbers 1 and 2 for submitting proof in respect of +'
conditions mentioned by them. The Government of Pondicherry
by its communication dated October 8, 2000 informed Mis. ,..,.
RITES India Limited that a decision ih this regard would be
made afte,r hearing the representations of the consortium
B parties in the pre bid meeting to be held on October 12, 2000.
A pre bid meeting for the development and operation of
Pondicherry Port on the basis of the clarifications sought by the
~
short listed parties was held in Delhi on October 13, 2000. This
meeting was to clarify all the doubts of the parties in relation to
c the project prior to the submission of a detailed proposal. The
meeting was attended by the Principal Secretary (Power and
. ,
Ports), Government of Pondicherry, and only three parties/
consortiums, i.e., (i) Mis. Ashok Leyland of India, (ii) M/s . .-- .._
.,.,,.
Seaways Shipping Limited of India and (iii) Mis. Durgeshwari
Shipping Agency Pvt. Ltd. After the said pre bid meeting, only
D
two parties/consortiums submitted their detailed proposals, i.e., ,~
Mis. Ashok Leyland of India and Mis. Durgeshwari Shipping
Agency Pvt. Ltd. M/s. Durgeshwari Shipping Agency Pvt. Ltd.
sought an extension of time till January 15, 2001 to submit their
detailed proposals, which was granted. The General Manager
E (Ports) of M/s. RITES India Limited by his letter dated January (
15, 2001 informed the Principal Secretary (Power and Ports)
Government of Pondicherry that till the last date of submission
of detailed proposals it had received proposals from two :t--
parties, namely, (i) consortium with M/s. Ashok Leyland of India .,,,
F and (ii) consortium with M/s. Durgeshwari Shipping Agency Pvt.
Ltd. In the said letter it was mentioned that both the parties had
not submitted valid Bank Guarantee as bid securities and,
therefore, both the proposals should be rejected straightaway.
As only two proposals were received and both were found to
G be deficient with regard to the bid security deposit, it was
recommended that both the parties should be given time of
seven to ten working days ·to enable them to submit valid Bank r ··~
r
Guarantees. The Government accordingly extended the time up
to January 25, 2001 to enable both the parties to submit valid
H Bank Guarantees. The General Manager (Ports) of M/s. RITES
VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 257
UNION OF INDIA AND ORS. [J.M. PANCHAL, J.J
India Limited by his letter dated January 27, 2001 informed the A
Principal Secretary (Power and Ports), Government of
Pondicherry that even within the extended time limit, the parties
mentioned had not submitted valid Bank Guarantees. In the said
letter it was stated that the attitude of both the parties had shown
utter lack of conviction and commitment to the project. It was B
further mentioned that the privatization process was not
successful. By the said letter the General Manager
recommended two other alternative schemes for the
development of Pondicherry Port. Those recommendations
were examined by various officials of Government of c
Pondicherry. On the proposals made by the General Manager,
the then Lt. Governor of Pondicherry in her note dated March
a, 2001 expressed her desire to have a meeting with the
officials of Mis. RITES India Limited. On March 30, 2001 the
then Lt. Governor of Pondicherry convened a meeting with the D
officials of Mis. RITES India Limited. At the said meeting
various alternative methods were suggested for the
development of the Pondicherry Port. At the said meeting it was
decided that a Corporation on the line of Pondicherry Power
Corporation be established and a proposal be made to the
Planning Commission for the purpose of grant of funds to E
undertake the- development of the Pondicherry Port. This is how
the first attempt made by the State Government to develop the
Port failed.
Again on February 6, 2003, a meeting was held in the F
Chamber of the then Chief Minister of Pondicherry regarding
the development of Pondicherry Port. The meeting was
attended by the Chief Secretary, Secretary (Port), the Director
(Port) and a private party. In the said meeting it was decided
that an "Expression of Interest" calling for private investment be G
floated. The Chief Secretary, in his notings dated February 27,
-Y 2003, proposed various steps to be undertaken for the
development of the Port. One of the steps proposed by him was
to immediately issue an Expression of Interest from private
· parties. He also recommended that the Director (Port) should H
258 SUPREME COURT REPORTS [2009] 9 S.C.R.
A propose the constitution of a committee of officials to look into +
the entire gamut of the privatization process as was done in '
- relation to the power sector. The recommendations of the Chief
Secretary were approved by the then Chief Minister of
Pondicherry on March 6, 2003. In terms of the said decision,
B an advertisement titled as "Invitation of Expression of Interest
for the Development of Pondicherry Port by Private Investment"
was published in various newspapers. The advertisement
sought private participation of the parties in the development
and operation of the project on Build, Own, Operate, Share and
c Transfer basis. The advertisement also stated that the interested
parties should communicate their Expression of Interest within
21 days. In terms of the recommendations made by the Chief
Secretary in his letter dated February 27, 2003 a decision was
taken by the Government of Pondicherry, which was noted by
D the Director (Port) in his noting dated March 25, 2003
recommending constitution of a committee to look into all the
matters relating to the privatization process. This
recommendation was approved by various Government officials
including the then Chief Minister of Pondicherry on April 30,
2003 and by'the then Lt. Governor of Pondicherry on May 8,
E 2003. It was further decided that the issue of re-engaging of
Mis. RITES India Limited as Consultant should be taken later
on. The Government of Pondicherry vide Government Order
dated May 13, 2003 constituted a Committee to look into the
privatization process of the Port under the Chairmanship of
F Secretary to Government (Port). After the constitution of the
Committee it was decided by the Government to co-opt a
representative of the Ministry of Shipping, Government of India.
By Government Order dated April 30, 2003, the Ministry of
Shipping, Government of India, nominated Mr. P.C. Dhiman as
G a Member of the Committee. Accordingly, Mr. Dhiman was
appointed as a Member of the Committee by the Government
of Pondicherry vide Government Order dated August 20, 2003.
The first meeting of the Committee was held on June 2, 2003,
which was attended by all the Members of the Committee. In
H the said meeting various courses of actions were discussed.
VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 259
UNION OF INDIA AND ORS. [J.M. PANCHAL, J.]
f-
/
One of the issues related to seeking of consent of Government A
of India for the privatization of the Port. It was also decided to
seek clarifications from the Ministry of Shipping, Government
of India in this regard. The Chief Secretary, Government of
Pondicherry in his notings dated June 25, 2003 mentioned that
he had discussed the issue with the former Secretary, Ministry B
of Shipping and he was informed that no permission to develop
->I a minor port like Pondicherry port was required and that the
guidelines issued by the Government of India on private sector
participation in the Port sector were applicable only to major
ports. The Chief Secretary further noted that he had also asked c
the Assistant Liaison Commissioner, Government of
Pondicherry in New Delhi to meet personally the officials of the
Ministry of Shipping and report. The Assistant Liaison
Commissioner, Government of Pondicherry in New Delhi by his
Inter Departmental Report dated June 25, 2003, informed that
f' D
-' the management and development of ports was a State subject
and, therefore, no clearance from the Central Government was
required. Therefore, the Chief Secretary recommended that
further steps for privatization of the Port be taken. One of the
steps recommended by him was to re-engage M/s. RITES India
Limited as a Consultant to the entire process. The then Minister E
of Ports by his notings dated July 18, 2003 accepted the
proposals of the Chief Secretary but noted that instead of
-+ engaging Mis. RITES India Limited straightaway, it would be
appropriate to issue notice inviting firms or consultants in
general. This proposal was approved by the then Chief Minister F
of Pondicherry. Therefore necessary advertisements were
issued by the Government of Pondicherry. In response to the
advertisements, 13 parties submitted Expression of Interest for
the development of Pondicherry Port. These parties were asked
to give detailed presentation to the Pondicherry Port G
Privatisation Committee. Out of these 13 parties only six parties
-f
made their presentation before the Committee on August 20,
2003. lt was noticed that out of six parties only IPCO-Menang,
Singapore and Larsen and Toubro, Chennai had experience
internationally and nationally in port development and were also H
260 SUPREME COURT REPORTS [2009] 9 S.C.R.
A the only parties who had requisite technical know-how as well
as ability to mobilize funds. The minutes of the meeting dated
August 20, 2003 indicated that M/s. Larsen and Toubro had put
certain conditions and wanted certain work to be done by the
Port Department. The Committee noticed that the conditions
B were contrary to the expectation of the Government of
Pondicherry and accordingly the Committee proposed to grant
Letter of Intent to M/s. IPCO-Menang, Singapore. In terms of
the recommendations of the Privatization Committee, the
Government of Pondicherry, on_September 2, 2003, issued a
c Letter of Intent to Mis. IPCO-Menang to undertake the
preparation of a Detailed Project Report and Feasibility Study
for the development of Pondicherry Port. The Detailed Project
Report as well as Feasibility Study Report were to be submitted
by November 5, 2003. Mis. IPCO-Menang was not able to
D submit the above mentioned Reports by November 5; -2003. In
fact the said company through its communication dated
November 19, 2003 had requested the Director of Ports to
extend the time to submit the report till December 31, 2003. In
response thereof, the Director of Port, by his letter dated
November 19, 2003, informed the said company that the
E request for extension of time limit up to December 31, 2003
could be considered only on the condition that the company
deposited an amount of Rs.50 lakhs to show its seriousness
and commitment towards implementation of the project. The
said company neither submitted the Reports by December 31,
F 2003 nor deposited the amount. In these circumstances, the
Government of Pondicherry decided to grant Letter of Intent to
/ the other party, which was short listed, i.e., Mis Larsen and
Toubro, Chennai. This decision was approved by the Minister
of Ports on April 5, 2004. A Letter of Intent dated April 30, 2004
G was issued to M/s. Larsen and Toubro, Chennai. The said
company did not respond to the issuance of Letter of Intent. In
such circumstances, the second attempt for getting private
investments for development of Pondicherry Port also resulted
into a failure.
H
VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 261
UNION OF INDIA AND ORS. [J.M. PANCHAL, J.]
Sometimes in September 2004, the Chief Secretary, A
Government of Pondicherry had a meeting with the officials of
Ministry of Shipping, Government of India, relating to the
development of Pondicherry Port. In the said meeting the Joint
Secretary, Ministry of Shipping had informed that it would be
possible to provide an amount of Rs.20 lakhs for the purpose '8
of preparing a Feasibility Study Report and the rest of the
expenditure should be born by the State Government. The Chief
Secretary, Government of Pondicherry by his letter dated
September 6, 2004 requested the Secretary, Ministry of
Shipping, Government of India to provide an amount of Rs.50 C
lakhs for the purpose of making the Feasibility Study Report.
A copy of the letter was sent to the Director of Ports with a
request to issue a press release in the newspapers calling!
proposals from the interested parties for preparation off
Feasibility Study Report. The objective of the entire exercise
0
was to get prepared a Feasibility Study Report so that a private
investor might not be required to conduct the study prior to
decide whether the private investor would be required to invest
or not. It was the understanding of the Government of
Pondicherry that in such an event the possibility of attracting
private investments in the development of Port would E
substantially increase.
In terms of letter dated September 6, 2004 the Director
(Ports) submitted a proposal for issuing an advertisement in
various newspapers thereby calling for the interested parties F
to prepare the Feasibility Study Report. This proposal was
approved by the Secretary (Ports)/Chief Secretary. In response
to the letter dated September 6, 2004 the Ministry of Shipping,
Government of India by its letter dated September 30, 2004
...r informed the Chief Secretary, Government of Pondicherry that G
-i in terms of the guidelines framed by the Ministry, the Central
__ assistance would be restricted to 50% of the expenditure to be
incurred by the State Government and the annual ceiling fixed
was Rs.20 lakhs for a State in a year on reimbursement basis.
On October 5, 2004, the officials of one company, i.e., Apollo
H
262 SUPREME COURT REPORTS [2009] 9 S.C.R.
A Infrastructure Projects Finance Company Limited, had a
meeting with the Minister of Port, Government of Pondicherry
regarding the development of the Port. The company sought
time from the Minister to make a technical and financial
presentation in this regard. The said company also, by its letter
8 dated November 22, 2004, requested for an opportunity to
submit a technical report. Another company, i.e., Subhash
Project and Marketing Limited -respondent No. 11 herein -
('SPML' for short), by its letter dated October 6, 2004,
submitted an Expression of Interest for development of ports,
C which is a Special Economic Zone in Pondicherry. The
company, by its letter dated November 4, 2004, intimated the
Principal Secretary (Port) that they had identified their partner
who would be associated in the work and requested for an
appointment to make a presentation to the Principal Secretary.
The Director (Ports) submitted a proposal for issuing an
D advertisement seeking "Expression of Interest" from the
consultants for the preparation of Feasibility Study Report for
the development of Pondicherry Port. Based on this proposal
a de~ision was taken to issue an advertisement in various
newspapers in this regard. Accordingly, an advertisement was
E published in various newspapers. In terms of the said
advertisement the consultants, interested in undertaking a
Feasibility Study for the Pondicherry Port Development, were
required to submit their Expression of Interest to the Director
of Ports within 21 days from the date of publication of the
F advertisement In pursuance of the advertisement, 33 firms/
companies had responded and submitted their Expression of
Interest. Out of these 33 firms/companies, 27 firms/companies
had responded within the time limit specified in the
advertisement. One of such consortium (i.e. MOH Group)
G submitted their Expression of Interest vide letter dated
November 21, 2004. The Director of Ports in his proposal dated r-
November 24, 2004 recommended that the remaining six firms/
companies, which had not responded within the time stipulated
in the advertisement, should also be considered for the purpose
H of obtaining a Feasibility Study Report to ensure maximum
VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 263
UNION OF INDIA AND ORS. [J.M. PANCHAL, J.]
/
·r
benefit from the advertisement. The Director of Ports also A
recommended that the Port Privatisation Committee, including
the Member co-opted from the Ministry of Sl1ipping,
Government of India, constituted in the earlier round, should
examine the proposals made by the firms/ companies. The
proposal was examined and approved by various officials of B
the Government of Pondicherry and it was decided that the
firms/companies should be called upon to make their
presentation before the Committee from December 6, 2004 to
December 8, 2004. In relation to the remaining six firms/
companies, who had submitted their Expression of Interest after
the time limit, it was recommended by the Under Secretary
c
(Port) in his noting dated December 3, 2004 that they should
not be considered in view of previous experience and the
General Financial Rules, 1963. This recommendation was
, accepted by the Secretary (Port)/Chief Secretary, Government
-;., D
of Pondicherry, which is quite evident from his noting dated
December 6, 2004. Under the circumstances, it was decided
to exclude those six firms/companies from the exercise
undertaken for obtaining the Feasibility Study Report. On
various dates the Port Department, Government of Pondicherry,
issued e-mails to the 27 firms/companies to make a E
presentation on the Expression of Interest for the preparation
of the Feasibility Study Report. These e-mails were sent
-t·
between December 2, 2004 and December 4, 2004. Out of
these 27 firms/companies, 10 firms/companies made their
presentation on December 6, 2004. However, due to certain F
other pre-occupations, the date for presentation was shifted to
December 8, 2004. The other 10 firms/ companies were
requested to make their presentation on December 7, 2004,
whereas the remaining 7 other firms/ companies were
requested to make their presentation on December 8, 2004. G
-i Thus in all, 27 firms/companies were invited to make their
presentation before the Committee.
On December 3, 2004 the Vice President of Marshall
·.Power & Consultancy Services informed the Director of Ports
H
264 SUPREME COURT REPORTS [2009] 9 S.C.R. -
-1--,
A by e-mail that the officials of the company were busy on 7th and
8th of December, 2004 and, therefore, meeting dated
December 11, 2004 be postponed. Similarly, the Advisor to
Scott-Wilson Kirkpatrick (P) Ltd. by e-mail dated December 3,
2004 sought for an alternative date of December 10, 2004.
B Another company, i.e., WAPCOS, through its e-mail dated
December 3, 2004, informed the Director of Ports that its
officials would not be able to reach for presentation and sent
necessary materials by courier. STUP Consultants P. Ltd. vide
its e-mail dated December 6, 2004 informed the Director of
Ports that it be allowed to make the presentation on December
c 9, 2004. Mac Knight Infrastructure P. Ltd., by its e-mail dated
December 6, 2004, informed the Director of Ports that due to
prior and conflicting commitments, its official would not be able
to appear and requested for an alternative date. The Director
and Chief Operating Officer, OS Constructions vide letter dCiJted .
D December 7, 2004 informed the i;:>irector of Ports that officials ,.\-
of the Company wanted to make presentation on development
and construction of the Pondlcherry Port. The Vice President
of SPML through its e-mail dated December 7, 2004, informed
the Director of Ports that they were going to develop and
E operate the ports and would like to work more as an operator
and a developer. By the said e-mail the said company
requested for an opportunity to enable it to make a presentation. i-
On December 7, 2004 and December 8, 2004 various firms/
companies made presentations before the Committee. The
F parties, who made their presentations, were as under:-
1. Hauer Associates, Chennai, made the presentation
on December 7, 2004.
2. D.S. Constructions made the presentation on ~
G December 7, 2004. ~~
3. Howe India made the presentation on December
7, 2004.
4. Price Water House Corpus, Chennai, made the
H
-j
,' Vl!,.LIANUR IYARKKAI PADL)KAPPV MAIYAM v. 26{?
UNION OF INPIA AND ORS. [J.M. PANCHAL, J.]
-t-
/
present~tion on December 7, 2004. A
... _
5. Royal Haskoning, Delhi, made the presentation on
December 7, 2004.
6. CRISIL made the presentation on December 7,
2004. 8
~ 7. Mahindra Acres Consulting, Chennai, made the
presentation on December 7, 2004.
8. National Institute of Port Management, Chennai, c
made the presentation on December 8, 2004.
- ~
9. Cullen Grummit & Roe, Bombay, made the
presentation on December 8, 2004.
,. 10. Deloitte, Chennai, made the presentation on
..,_, D
December 8, 2004.
1-1. AF. Ferguson, Chennai, made the presentation on
~ December 8, 2004.
'
Certain parties were unable to make their presentations on the E
above mentioned dates and, therefore, the Director of Ports,
Government of Pondicherry, by his e-mails dated December
-+ 10, 2004, requested the following parties again to make a
...._
presentation on the preparation of the Feasibility Report, on
December 17, 2004. The parties, to whom the said e-mails F
were dispatched, were as under: -
1. Scott Wilson Kirkpatrick India Pvt. Ltd.
2. Indian Ports Association, New Delhi.
G
;-·J 3. Sree Eikon Constructions, Chennai.
4. Mott Macdonald, Mumbai.
5. Subhash Projects & Marketing Limited
H
266 SUPREME COURT REPORTS [2009] 9 S.C.R.
-1--...._
A 6. Consulting Engineering Services India Limited
7. MECON Ltd., Ranchi.
8. Marshall's Power & Telecommunication Limited,
Bangalore.
B \-
9. Larsen and Toubro, Ramboll
)r
10. Mac Knight Infrastructure Private Ltd., Mumbai.
11. Beckett Rankine Partnership, Bombay.
c
12. National Institute of Oceanography.
,.
In the meantime one company named Menang Amalgamated '~
Sdn Bhd vide its fax message dated December 15, 2004
addressed a communication, to the Minister of Port, Secretary "
D >-
of Port and Director of Port, making i:J reference to the letter
dated December 30, 2003 and stated that the company was
in the process of finalizing the Detailed Project Report as well
as the Feasibility Study Report and that the company was keen
on exploring ways to move forward after depositing the earnest
E money of Rs.50 lakhs. It may be stated that the letter was sent
after more than a year from the date the company was
supposed to submit its report. In terms of the e-mails dated t-
F
December 10, 2004 the following firms/ companies made their
presentations on December 17, 2004 before the Committee:- -
1. Consulting Engineering Services, New Delhi
2. Beckett Rankine, Mumbai
3. STUP Consultants, Mumbai
G
4. L & T Ramboll, Chennai. .. - ........
.
The minutes of the meetings dated December 7, 2004,
December 8, 2004 and December 17, 2004 indicate the nature
of presentations, made by various parties. The presentations
H
mt VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 267
UNION OF INDIA AND ORS. [J.M. PANCHAL, J.]
,,, .....
included modes of development, etc. The minutes of the A
-.. meetings show that the Chief Secretary/ Secretary (Port),
Government of Pondicherry while going through the
presentations of every party had asked them whether they would
be able to develop the Pondicherry Port and would able to bring
in investors for the purpose of developing the Port. The minutes B
further reflect that ··certain parties, like Hauer Associates,
-,l Haskoning India Private Limitd, CRISIL Infrastructure Advisory;
Consulting Engineering Services India Limited, Beckett
Rankine Partnership, informed the Committee that they might,
be able to get a private investor only at a later stage or after
seeking certain clarifications. These firms/companies were,
c
however, not willing to develop and operate the Pondicherry
Port. The minutes also reflected that only two companies, i.e.,
M/s. Apollo Infrastructure and Mis. D.S. Constructions stated
.;. that they would be able to develop the Pondicherry Port on their
-I, D
own.
The General Manager (Ports) of Mis. Larsen and Toubro,
Chennai, by his letter dated December 22, 2004, informed the
Chief Secretary/Secretary (Port), Government of Pondicherry
' / that the company was willing to develop the Pondicherry Port. E
The said letter also referred to a meeting held on December
20, 2004 with the Chief Secretary and stated that the company
-i be allowed to enter into MOU with the Government of
·- Pondicherry for the development of Pondicherry Port. This letter
was received by Directorate of Ports on December 27, 2004. F
Mis. Apollo Infrastructure Projects Finance Company Limited,
by its letter dated December 23, 2004, informed the Minister
of Ports, Government of Pondicherry that it was willing to
develop Pondicherry Port on DBOOT basis and proposed
certain Development Phases. This letter was received on G
December 31, 2004. In the said letter a reference was made
,,,- - 'f
to the presentation made by the company on December 17,
2004. These letters as well as minutes of the meetings of the
Port Privatisation Committee clearly show that certain firms/
companies were keen to develop and operate the Port. The
H
268 SUPREME COURT REPORTS [2009) 9 S.C.R.
A Director of Ports by his letter dated January 12, 2005 forwarded
a short note on the proposals submitted by 27 firms/
companies. It is clear from the said note that the proposals
received frorn the firms/ companies were examined on the
b;:;i$iS of their experience in preparing the Feasibility Report as
8 well as in conducting the consultancy services in Port Sector
in India and abroad. This short note was prepared from the view
point of selecting a consultant to prepare a Feasibility Study
Report and not from the view point of selecting a developer/
operator for the purpose of operating the Port. In the earlier
C process of privatization, two companies were short listed and
were granted Letters of Intent. Those two companies, i.e., (i)
IPCQ Memmg, $ingap9re and (ii) Mis. Larsen and Toubro,
Cnennai, did not submit the requisite reports and, therefore,
their claim lapsed. These two companies by letters dated
December 15, 2004 and December 22, 2004 respectively
D again expressed their interest in developing the Pondicherry
Port. In view of these letters, the Director of Ports by his letter
dated January 7, 2005 sought a decision from the Under
Secretary (Port) about the future course of action to be adopted.
The Under Secretary (Port) in his note dated January 19, 2005
E recounted the facts and circumstances in which the Letters of
Intent were issued as well as the conduct of the parties. The
file was thereafter submitted to the Secretary (Port)/Chief
Secretary for necessary orders. The Chief Secretary, who was
also Chairman of the Port Privatisation Committee, by his note
F dated January 19, 2005, noticed that the Port Privatisation
Committee in its meeting had short listed two parties and
recommended that the Government should consider short-
listing Mis. Larsen and Toubro, Chennai as the third party. It
was mentioned in the note that this was subject to the approval
G of the Government. He also recommended that the legal
position with regard to the first two parties, who had desired ·-
to prepare Feasibility Report, should be examined and
thereafter the project should be allotted. An Inter Departmental
Note dated January 20, 2005 was prepared. In the said note
H the Under Secretary (Ports) referred to the notings made by the
- /'
_Jr
VILLIANUR IYARKKAI PADUKAPPU MAIYAM v.
UNION OF INDIAAND ORS. [J.M. PANCHAL, J.]
269
Chief Secretary on January 19, 2005 and directed the Director A
of Ports to send a proposal to the Law Department for getting
'"
"' confirmation. In terms of the said note a proposal dated January
25, 2005 was made by the Director of Ports, who is also a
Member of the Port Privatisation Committee. In his proposal,
he pointed out the recommendation made by the Chief' B
Secretary in his notings and stated that the two parties
-.,!.
mentioned in the notings, i.e., (1) Mis. D.S. Construction, which
had applied for the preparation of the Feasibility Study Report
and was willing to take development of the Port and (2) M/s.
Apollo Infrastructure Projects Finance Company Limited, could c
be considered. The other party, which was recommended for
short listing, was Mis. Larsen and Toubro, Chennai. It was
pointed out that the three parties were short listed since they
had shown interest in developing the Port by Private Investment.
In response to the proposal for the Inter Departmental Note D
~
...( dated January 25, 2005, the Law Department, Government of
Pondicherry, by its noting dated February 17, 2005, stated that
any consultancy firm, who was entrusted the work of preparing
the Feasibility Study Report, should only select the promoter
and cite example whether it was so done. The Law Department
E
further pointed out that clearance from the Government should
be taken in respect of various issues involved in the proposal.
The said noting of the Law Department was examined by the
-f Chief Secretary. The Chief Secretary in his noting dated
February 24, 2005 noted that the issue of seeking clearance
from the Government of India had already been clarified by his F
predecessor-in-Office vide noting dated June 25, 2003 and,
therefore, the said issue should not delay the consideration of
the matter. During this period certain parties expressed their
interest in developing the Pondicherry Port. One company, i.e.,
Water-Bau-AG, through its communication dated January 23, G
-., 2005, informed the Chief Secretary, Government of Pondicherry
about its desire to participate in a Deep Sea Project on BOT
basis and submitted its profile. This letter was received by the
Directorate of Ports on February 2, 2005. Similarly, another
company, i.e., Digital Hub Sdn Bhd through its letter informed H
270 SUPREME COURT REPORTS [2009] 9 S.C.R.
......
A the then Chief Minister of Pondicherry that they wanted to -+......._
participate in a Deep Sea Project on BOT basis and submitted ,,
its analysis. In the meantime on February 2, 2005, the Chief
Secretary had a meeting with Lt. Governor of Pondicherry. The
noting of the Executive Engineer, Directorate of Ports,
B Government of Pondicherry dated February 2, 2005 indicate
that after the meeting, the Chief Secretary directed that a list
of all the firms, which had e);(:pressed their interest to develop
Jr
the Port through Private Investment, be forwarded to him. In
terms of the said direction the Director of Ports by his letter
c dated February 3, 2005 gave the list of 11 firms and
companies, which had expressed desire to develop the Port
through Private Investment. It was also mentioned therein that
out of 11 firms/companies, seven firms/companies had already
made their presentation before the Port Privatisation
Committee on different dates. The note was examined by
D
various Government officials and it was decided that the ,· >-""
· remaining four firms/corporations should be again invited for
making a presentation before the Committee. The Director of
Ports through e-mails dated February 25, 2005 invited above
mentioned four firms/companies to make their presentations on
E March 11, 2005. The firms/companies were (1) Subhash
Projects and Marketing Limited, New Delhi, (2) Marshall Power
& Telecom (I) Ltd., Bangalore, (3) Digital Hub SON BHD, ··
Malaysia and (4) Walter Bau AG, Germany. Mis. SPML, through ;-
its letter dated February 4, 2005, informed the Principal
F Secretary (Port), Government of Pondicherry that earlier it had
not taken interest in the project, but the said company
expressed its desire for development of the Port, Beaches, etc.
Similarly, the General Manager (Tech.), Ashoka Buildcon
Limited by his letter dated February 7, 2005, informed the then
G Chief Minister of Pondicherry that they had joined hands with
an overseas Port Developer and, therefore, would like to offer I-
services for the Port Project in Pondicherry on BDOOT basis.
M/s. Apollo Infrastructure Projects Finance Company Limited
by its letter dated February 8, 2005 informed the Minister of
H Ports, Government of Pondicherry that it had entered into a
r
==
VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 271
:
" UNION OF INDIA AND ORS. [J.M. PANCHAL, J.]
,. __>. joint venture agreement with L& T Rom boll, Chennai. Similarly, A
LA-V-JAY and Associates Pvt. Ltd. through its letter dated
~- February 14, 2005 informed the then Chief Minister of
Pondicherry that the said company was part of a consortium
comprising of Royal Hoskoning and Ashoka Buildcon. The said
company also pointed out that it would like to develop B
Pondicherry Port in a unique manner. The said consortium also
forwarded one letter from the Director Operations, Royal
--}.
Haskonin to La".'V-Jay and Associates wherein Royal Haskonin
confirmed that they were able to provide consultancy service
to La-V-Jay for the purpose of development of Port. The c
Director of Ports, Government of Pondicherry by his e-mail
dated March 1, 2005 informed the consortium led by Mis. LA-
V-JAY and Associates that if they were interested in developing
the Pondicherry Port, they were free to make presentation on
March 11, 2005. In response thereto, Mis. U-Pranav
,._ D
__..._ Consultancy, who was acting on behalf of the consortium vide
its e-mail dated March 8, 2005, confirmed that they would be
able to make the presentation on March 11, 2005. The Director
(Operations) of M/s. Royal Haskoning by his letter dated March
11, 2003 apologised to the then Chief Minister of Pondicherry
. for absence of its officials on March 11, 2005 and requested E
•'
that an opportunity be provided to enable it to make
presentation on March 14, 2005.
__.
M/s. Digital Hub vide its e-mail dated March 7, 2005
informed the Deputy Director of Ports, Government of F
Pondicherry that they would not be able to get their investor
from Germany. The Chief Executive Officer of M/s. SPML vide
letter dated March 7, 2005 informed the Director of Ports that
it would make a presentation on March 11, 2005. The following
statement indicates that on March 11, 2005 following firms/ G
companies had made presentations before the Port
- 'f Privatisation Committee: -
H
i,
272 SUPREME COURT REPORTS (2009] 9 S.G.R.
-- -
A S. Date of Name of the Firm/ Proposed Presetit-
No. e-mail sent Company/Authority date of ation
presen- and given
. ----.
tatlon date
01. 2.12.2004 Sree Eikon Construction 06.12.2004 NO
B 08.12.2004
17.12.2004
02. 2.12.2004 National Institute of 06.12.2004 NO
Oceanography, Goa 08.12.2004
17.12.2004
c 03. 2.12.2004 National Institute of Port 06.12.2004 YES
Management, Chennai 08.12.2004 08.12.2004
·-
04. 2.12.2004 STUP Consultants (P) 06.12.2004 YES
Ltd., Mumbai 08.12.2004 17.12.2004
- -- .-
D
05. 2.12.2004 A.F. Ferguson & Co., 06.12.2004 YES
Chennai 08.12.2004 8.1-2.2004
- --
06. 2.12.2004 Hauer Associates, I 06.12.2004 YES
Chennai 08.12.2004 7.12.2004
07. 2.12.2004 Subhash Projects & 06.12.2004 YES
E Marketing Ltd., 08.12.2004 11.3.2005
New Delhi 17.12.2004
11.03.2005
08. 2.12.2004 Cullen Grumnit & Roe, 06.12.2004 YES
i-
Mumbai 08.12.2004 8.12.2004 (
F 09. 2.12.2004 D.S. Constructions, 07.12.2004 YES
New Delhi 07.12.2004
10. 2.12.2004 KVR Rail Infra 7.12.2004 NO
Consultancy Services,
Secundrabad ..
G 11. 2.12.2004 Consulting Engineering 07.12.2004 YES
Services (I) Pvt. Ltd., 17.12.2004
New Delhi
12. 2.12.2004 Howe India Pvt. Ltd., 07.12.2004 YES
New Delhi 7.12.2004
H '
VILLIANUR. IYARKKAI PADUKAPPU MAIYAM v. 273
UNION OF INDIA AND ORS. [J.M. PANCHAL, ~-]
13. 2.12.2004 Macknight Infrastructure 07.12.2004 NO A
Pvt. Ltd., Mumbai 17.12.2004
14. 2.12.2004 Price Waterhouse Coopers 07.12.2004 YES
Pvt. Ltd., Chennai 7.12.2004
15. 2.12.2004 Royal Haskoning India 07.12.2004 YES
Ltd., New Delhi 7.12.2004 B
16. 2.12.2004 Mahindra Acres Consulting 07.12.2004 YES
Engineers Ltd., Chennai 7.12.2004
17. 2.12.2004 (WAPCOS) Water & 08.12.2004 NO
Power Consulting Services
c
(I) Ltd., New Delhi
18. 2.12.2004 Beckitt Rankine 08.12.2004 YES
Partnership, Bombay 17.12.2004 17.12.2004
19. 2.12.2004 Deloitte Touche Tohmatsu 08.12.2004 YES
India Ltd., Baroda 8.12.2004 D
20. 2.12.2004 MECON Ltd., Ranchi 08.12.2004 NO
17.12.2004
21. 2.12.2004 Bicard-JNTU 08.12.2004 NO
Consortium Poly-
engineers & Consultants, E
Hyderabad
22. 2.12.2004 Marshall's Power & 08.12.2004 NO
Telecom (I) Ltd., 17.12.2004
Bangalore 11.03.2005
23. 2.12.2004 L&T Ramboll Consulting 08.12.2004 YES F
Engineers Ltd., Chennai 17.12.2004 1-.12.2004
24. 3.12.2004 CRISIL Ltd., Mumbai 07.12.2004 YES
7.12.2004
25. 4.12.2004 Mottmacdonald, Mumbai 06.12.2004 NO
08.12.2004
G
- ! 17.12.2004
26. 4.12.2004 Indian Ports Association, 06.12.2004 NO
New Delhi 08.12.2004 '
17.12.2004
H
274 SUPREME COURT REPORTS [2009] 9 S.C.R. ~ ..
A
27. 10.12.04 Scott Wilson Kirkpatrick 07.12.2004 NO
India Pvt. Ltd., 17.12.2004
New Delhi
i
28. 25.2.2005 Digital Hub Group, 11.03.2005 NO
Malaysia
r
B
29. 25.2.2005 Water Bau, Germany 11.03.2005 NO
30. 01.3.2005 LA-V-JAY and Associates 11.03.2005 NO
Ahmedabad, Gujarat
c On March 11, 2005 a consortium led by M/s. SPML made
its presentation. The minutes of the meetings of the Committee
held on December 7, 2004, December 8, 2004, December 17,
2004 and March 11, 2005 show that the advertisement dated
October 18, 2004 was only for the purpose of conducting the
D Feasibility Study. The minutes further indicate that certain other "· l
firms had also come forward with offers for the development >-
of the Port. The minutes of the meetings clearly show that after
discussions and on the basis of the presentations four firms F
were short listed in the following preferences: - r
E '...
1. Mis. Subhash Projects and Marketing Limited
'
2. Mis. D.S. Constructions
3. M/s. Apollo Infrastructure Projects Finance
->-
F Company Limited
(
4. M/s. Larsen and Toubro, Chennai
The Committee, therefore, recommended that the Letter of t
Intent be issued to Mis. SPML. The Committee also felt that
G the development of Pondicherry Port was of considerable l
importance and, therefore, the company rightly recommended
to the Government that Government should appoint the National
,. -
Institute of Port Management, Chennai (NIPM) as a Consultant
to the Government of Pondicherry for the eventual development
H of the Port.
VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 275
UNION OF INDIA AND ORS. [J.M. PANCHAL, J.]
' ,,, ~
The Under Secretary (Ports), Government of Pondicherry A
issued a Letter of Intent dated June 3, 2005 in favour of Mis.
.... SPML. It was stated in the said letter that it was proposed to
engage the said company for the development of Pondicherry
-1; Port on BOT basis and the Letter of Intent was subject to the
condition that Detailed Project Report was approved by the B
Competent Authority. It was mentioned in the said letter that the
--+ said company would have to undertake the preparation of a
Detailed Project Report and Feasibility Study at its own cost.
It was also mentioned therein that the Detailed Project Report
should be submitted within 45 days from the date of issue of c
the letter and if the company agreed upon the conditions
stipulated in Letter of Intent then the company should deposit
a Bank Guarantee of Rs.SO lakhs within a period of 15 days.
In terms of the aforesaid Letter of Intent, the company made
,,. available a Bank Guarantee to the Government of Pondicherry D
_;.
on June 18, 2005. The company, along with its letter dated~July
18, 2005, submitted a Detailed Project Report to the
Government of Pondicherry. In terms of the recommendations
of the Committee for Port Privatisation the Government of
Pondicherry by order dated August 4, 2005 appointed National
E
Institute of Port Management, Chennai as a Consultant for the
development of the Port. The Under Secretary (Port),
-··~ Government of Pondicherry, by his letter dated August 4, 2005,
forwarded a Detailed Project Report submitted by M/s. SPML
to NIPM with a request to make a detailed analysis and
F
evaluation of technical, financial, environmental and legal
aspects on the Detailed Project Report. The Detailed Project
Report was examined in a meeting held on August 31, 2005
and various draw-backs such as traffic forecast, detailing of the
plans, etc. emerging from the Detailed Project Report were
G
_..., examined. It was thereafter decided that Mis. SPML should
have a re-look on the issues raised and revise the Detailed
Project Report suitably. The NIPM submitted its draft report on
September 13, 2005. In terms of the discussions held on
August 31, 2005, Mis. SPML by its letter dated September 23,
H
276 SUPREME COURT REPORTS . [2009] 9 S.C.R.
A 2005 submitted the First Revised Detailed Project Report to ~............. \
the Director of Ports. The meeting was held on September 24,
2005 and it was agreed that NIPM would examine the First _ ,...
Revised Detailed Project Report and submit a report. The
reports submiUed were examined. M/s. SPML submitted the
>
B Second Revised Detailed Project Report along with its· letter
dated October 5, 2005, after which a meeting was held on
November 12, 2005. In the said meeting officials of Mis. SPML,
.+-
the officials of M/s. NIPM and the officials of the Government
of Pondicherry were present and the minutes were drawn and
c noted. In pursuance thereof NIPM submitted its final report on
December 1, 2005. The issues raised by all the parties
concerned were resolved and, therefore, the Second Revised
Detailed Project Report was accepted by the Government as
Approved Detailed Project Report Thi! ~evernment of
Pondicherry thereafter constituted a Committee to draft the
D
Concession Agreement to be entered into between the >- ""
Governmen~ of Pondicherry and Mis. SPML. The Committee
examined various model Concession Agresmertt of various
States and more specifically of Gujarat State. the said
Concession Agreement was thereafter drafted on the basis of
E
the Approved Detailed Project Report. The said draft
agreement was examined and approved by various r
departments of the Government of Pondicherry. The draft
}-
agreement was placed before the Council of Ministers for its
approval. The Council of Ministers in a meeting dated January
F
20, 2006 approved the same and resolved that the existing Port
Land of 153 acres be handed over for Port development
whereas remaining 107 acres should be acquired and handed
over within 180 days to SPML. It was further resolved that a
lease amount of Rs.2,000/- per acre per annum should be
G charged from SPML. The order dated January 21, 2006 issued
by the Government of Pondicherry indicates that approval of 1--
the Lt. Governor of Pondicherry was obtained to the Detailed
Project Repo;i as revised on November 16, 2005 for the
development of Port on BOT basis. The Government Order also
H
VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 277
UNION OF INDIA AND ORS. [J.M. PANCHAL, J.]
. _,
'
A
mentions that approval was also granted to the Concession . A
Agreement to be entered into between the Government of
Pondicherry and SPML along with its consortium partners. On
Jan~~ry 21, 2006 the Government of Pondicherry entered into
a Concession Agreement with SPML along with its consortium
partners. On January 24, 2006 the Director of Ports, B
Government of Pondicherry issued an Office Memorandum in
_. favour of SPML. By the said Memorandum all the existing
moveable/immoveable assets of the Port were to be handed
over to the developer as per the Concession Agreement.
8. The Letter of Intent dated June 3, 2005, granted to
c
SPML - Respondent No. 11 - as well as approval dated
January 2, 2006 accorded by the Lt. Governor of Pondicherry
to the Detailed Project Report dated November 16, 2005
> submitted by respondent No. 11 on BOT basis and to the
_.., D
Concession Agreement to be entered into between the
Government of Pondicherry and the respondent No. 11 as well
as direction dated January 24, 2006 issued by the Director of
Ports to the officers concerned to prepare list-of all the existing
moveable and immoveable assets of the Pondicherry Port for
handing over the same to respondent No. 11 were challenged E
by the appellants by filing Writ Petition No. 3304 of 2006 and
Writ Petition 12337 of 2006 before the Madras High Court on
-~
several grounds.
9. The Madras High Court has rejected the two petitions F
giving rise to the instant appeals.
10. We have heard the learned counsel for the parties at
length and in great detail and considered the documents
forming part of the two appeals.
G
-~r
11. Mr. G.E. Vahanvati, learned Solicitor General of India,
spelt out three preliminary objections, namely, (1) the appellants
had fairly conceded before the High Court that the selection of
the Developer was correctly done and, therefore, the argument
H
278 SUPREME COURT REPORTS [2009] 9 S.C.R.
.J..
A advanced by the learned counsel for the appellants, assailing ' I
the selection of the respondent No. 11 as Developer of
Pondicherry Port, should not be considered by this Court at all
and this Court should confine itself to exam.ination of
environmental impact that the project may have, which was
B emphasized before the High Court; (2) the appellants had no
locus standi to file the writ petition challenging the Award of
Contract for the development of the Pondicherry Port to the .+--
respondent No. 11, which is purely commercial in nature; and
(3) the list of events and dates submitted by the appellants is
c not only misleading but a calculated attempt made by the
appellants to prejudice the Court by suppressing and omitting
to make reference to relevant materials and events and,
therefore, the appeals should be dismissed.
12. Dealing with the first preliminary objection, raised on
D behalf of the respondents, this Court finds that in paragraph 19 ,;...."'·
of the impugned judgment the High Court has observed as
under: -
"19. It is at this juncture, the learned counsel for the
E petitioners fairly conceded that his clients' concern was
more on the environmental impact that the project may
have and he was not canvassing the relative merits of the
parties, who had submitted offer to the Government of ~--
Pondicherry. He requested the Court to safeguard the
F interest of the general public and future development of the
Union Territory of Pondicherry with reference to the
development of the Pondicherry Port."
A fair and reasonable reading.of the above quoted paragraph
makes it very clear that the appellants had fairly conceded
G
before the High Court that they were not assailing the selection
of the respondent No. 11 as Developer for the Pondicherry
Port, but were more concerned with the environmental impact
that the project may have and, therefore, the learned counsel
for the appellants had requested the Court to safeguard the
H
VILLIANUR IYARKKAl.PADUKAPPU MAIYAM v. 279
UNION OF INDIA AND ORS. [J.M. PANCHAL, J.]
interest of general public and future development of the Union A
Territory of Pondicherry with reference to the development of
the Pondicherry Port. It is relevant to notice that in the grounds
of memorandum of the Special Leave Petitions it is not
contended by the appellants that no concession was made by
the learned counsel before the High Court or the concession B
made was different and was not correctly recorded by the High
Court; The respondent Nos. 2 to 9 have filed counter affidavit
to the Special Leave Petitions filed by the appellants. The
respondents, in paragraphs 6 and 7 of the counter affidavit filed
before this Court, have stated as under: - c
"6. I also say that the Hon'ble High Court, during the course
of the arguments and after examining the documents, had
expressed its view that the selection of the Developer was
. ..... • correctly done. In these circumstances, the Hon'ble High
Court ascertained from the petitioner herein whether it
D
would like to concede on the issue of selection of the
Developer and agitate its concerns in relation to the
Environmental Impact of the project.
7. I say that the Counsel for the Petitioner sought for a pass E
over of the matter and requested the Hon'ble Court to list
the matter in the second half on the same day i.e. at 2.15
-~ p.m. This was to enable the Counsel for the present
Petitioner to get his instructions. I also say that in the
afternoon, the Counsel for the Petitioner pointed out to the F
Hon'ble Court that he could not get in touch with his Clients
and therefore sought an adjournment on the said date to
seek instructions from his client. That on the next date the
counsel for the Petitioner informed the Hon'ble Court that
his client had instructed him to concede on the issue of G
_., the selection of the Developer. However, he pointed out
that his client seeks certain safeguards relating to the issue
of environmental impact. In this regard, the Petitioner's
counsel also handed over a note containing the desired ·
directions from the Hon'ble High Court." H
-
280 SUPREME COURT REPORTS [2009] 9 S.C.R.
·'
A Though the appellants were duly served with a copy of the -'-
counter affidavit filed by the respondent Nos. 2 to 9, they have
failed to traverse the assertions and averments made in
paragraphs 5 to 6 of the counter affidavit reproduced above.
From the above quoted untraversed paragraphs of the reply " j
B affidavit, it is evident that during the course of the arguments
and after examining the documents, the High Court had
expressed its view that the selection of the Developer was ~
correctly made and, therefore, in those circumstances, the High \
Court had ascertained from the appellants as to whether they f.-
c would like to concede on the issue of selection of the Developer
and agitate its concern in relation to the environmental impact
of the project. The above quoted paragraphs further make it -
clear beyond pale of doubt that the learned counsel for the
appellants had sought for a pass over of the matter and
'
requested the Court to take up the matter in the second half -"
D !--
on the same day at 2.15 P.M. to enable him to get instructions I
from the appellants. It is also evident that the learned counsel
f9r the appellants pointed out to the court that he was not able
to get in touch with his clients and, therefore, sought an
E adjournment to seek instructions from the appellants. What is
relevant to notice is that on the next date of hearing the learned
counsel for the appellants had informed the High Court that his
clients had instructed him to concede on the issue of selection ).--
of the Developer, but had pointed out that his clients were ....
seeking certain safeguards relating to the issue of
F
environmental impact of the project and had handed over a note
containing the desired directions from the High Court. The fact
that the learned counsel for the appellants had handed over the
note to the High Court is admitted but it is alleged that since
the conditions mentioned in the note were not accepted, there
G
was no concession as is sought to be made out by the )IL.
~~
respondents; Having gone through the proceedings before the
High Court, t.his Court finds that the assertion made on behalf
of the appellants is factually wrong. The judgment, impugned
in the appeals, incorporates the concerns of the appellants as
H
VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 281
UNION OF INDIA AND ORS. [J.M. PANCHAL, J.]
)..
-"
reflected in the note in the form of directions, which are to be A
found in paragraph 24 of the impugned judgment. No
application was filed by the appellants before the High Court
making a grievance that concession was never made and/or
was wrongly recorded by the court. On the facts and in the
~ircumstances of the case, this Court is of the firm opinion that B
th~ appellants had fairly conceded before the High Court that
--t the selection of the respondent No. 11 as Developer of the
Pondicherry Port was n{3ver canvassed nor the relative merits
of the parties were pointed out to the High Court and, therefore,
the High Court has not recorded any finding as to whether c
selection of the Respondent No. 11 as Developer was correct
or not. In view of the concession made by the appellants, the
appellants are not entitled to canvass before this Court that the
selection of the respondent No. 11 as Developer of the
,,..
...._
Pondicherry Port was not correctly made. D
13. As far as second preliminary objection regarding locus
standi of the appellant to challenge the Award of the Contract
for the development of the Pondicherry Port to the respondent
No. 11 is concerned, this Court finds that the contract assailed
in the writ petitions is purely commercial in nature. Neither the E
parties, which had participated in the process of selection of
the consultanVDeveloper nor one of those, who had expressed
-·-'\
desire to develop the Pondicherry Port but was not selected,
has come forward to challenge the selection procedure adopted
by the Government of Pondicherry or the selection of the F
respondent No. 11 as Developer of the Pondicherry Port. The
question of locus standi in the matter of awarding the contract
has been considered by this Court in BALCO Employees'
Union (Regd.) vs. Union of India ((2002) 2 SCC 333]. This
Court, after review of law on the point, has made following G
observations in paragraph 88 of the judgment: -
"88. It will be seen that whenever the Court has interfered
and given directions while entertaining PIL it has mainly
H
282 SUPREME COURT REPORTS (2009] 9 S.C.R.
A. .... ~
A been where there has been an element of violation of
Article 21 or of human rights or where the litigation has
been initiated for the benefit of the poor and the
·,
underprivileged who are unable to come to court due to
some disadvantage. In those cases also it is the legal· rights .,
B which are secured by the courts. We may, however, add
t-
that public interest litigation was not meant to be a weapon
to challenge the financial or economic decisions which are +-
taken by the Government in exercise of their administrative
power. No doubt a person personally aggrieved by any
c such decision, which he regards as illegal, can impugn the I
same in a court of law, but, a public interest litigation at
the behest of a stranger ought not to be entertained. Such
a litigation cannot per se be on behalf of the poor and the
...,.
downtrodden, unless the court is satisfied that there has
been violation of Article 21 and the persons adversely
...
D .>'"·
affected are unable to approach t'.1e court."
From the passage quoted above it is clear that the only ground
on which a person can maintain a PIL is where there has been
an element of violation of Article 21 or human rights or where
E the litigation has been initiated for the benefit of the poor and
the underprivileged who are unable to come to the court due to
some disadvantage. On the facts and in the circumstances of ~--
the case, this Court is of the view that the only ground on which
the appellants could have maintained a PIL before the High
F Court was to seek protection of the interest of the people of
Pondicherry by safeguarding the environment. This issue was
raised by the appellants before the High Court and the High
Court has issued directions regarding the same, which are to
be found in paragraph 24 of the impugned judgment. After the
G High Court's directions the element of public interest of the
t-...
appellants' case no longer survives. The appellants cannot, ' '
therefore, proceed to challenge the Award of the Contract in
favour of the respondent No. 11 on other grounds as this would
amount to challenging the policy decision of the Government of
·l"'l
H
.. >
}
VILLIANUR IYARKKAI PADUKAPPU MAIYAM v.
UNION OF INDIA AND ORS. [J.M. PANCHAL, J.J
Pondicherry through a PIL, which is not permissible. Thus on
283
A
the ground of locus standi also the appeals should fail.
14. As far as the list of events and dates, submitted on
behalf of the appellants, is concerned, this Court finds that the
appellants have omitted to state events, which have been
B
narrated in the earlier part of this judgment. The list of dates
submitted by the appellants straightaway refers to the
-~
advertisement dated October 18, 2004, published in the
Economic Times, but omits to mention that even prior to
October 18, 2004, on October 5, 2004 the Apollo Infrastructure
Projects Finance Company Limited had a meeting with the
c
, Minister of Ports, Government of Pondicherry and had sought
_... time to make a presentation for the development of
Pondicherry Port and such an opportunity was given to the said
. ..._
firm. Significant events, which took place during January 12,
2005 to January 20, 2005, are not mentioned in the list of dates
0
at all. To enable the Court to know the factual background, in
the absence of records, clause (b) of Rule 4(1) of Order XVI of
the Supreme Court Rules, 1960 requires a list of dates in
chronological order with relevant material facts or events
pertaining to each of the dates to be furnished along with the E
special leave petition. In practice, the list of dates is prefaced
by a brief synopsis of facts to give a complete and coherent
~4
- picture of the facts but in the instant case this Court finds that
in the special leave petitions, the synopsis/list of dates filed
suffers from the defect of filing of a list of dates without relevant F
material facts/events or synopsis and from the defect of filing
of inaccurate and incomplete synopsis/list of dates. The above
defects have resulted in defeating the very purpose of requiring
the filing of synopsis/list of dates. The filing of inaccurate and
incomplete list of dates has caused confusion necessitating G
detailed reference to the facts carved out from the pleadings
', . - J
of the parties before the High Court and this Court. But for the
filing of list of events on behalf of the respondents, the list of
events filed on behalf of the appellants would have resulted into
,.., H
284 SUPREME COURT REPORTS [2009) 9 S.C.R.
A unintended miscarriage of justice. To say the least. the list of
events submitted on behalf of the appellants cannot be termed
,J.,
"-.
-
as accurate and such a practice of filing of incomplete/
inaccurate list of events is not approved by this Court at all.
15. Having held that the appeals should fail because qf
B
concession made by the appellants before t~e M!9~ Qg~q t~C!t
the selection of the respondent No. 11 ~§ p~vel0p.~r W?~ gr-Qpf3r +-
and that the appel!~nts have no lqcus ~t~ngi to challenge the
contract eri!er~d into between the Government of Pondicherry
~nd the respondent No. 11 with its consortium, th!$ Cqurt
c notices tnat the appeals were argued at length and on behalf
qf the respo~dents also det~ils ~ub1T1issions were made on
merit and. therefore, this Court pn;1p9~es tg COflSider the .. _
submissions made by tne parties on merits also.
til
D 16,. The conteAticn that the Government 9f Pondicherry ~
having taken a conscious decision on the basis of available
guidelines to get a Feasibility Report before taking up
development of Pondicherry Port could not have given it up in
an arbitrary manner, all of a sudden, to benefit Mis SPML and
E therefore grant of Letter of Intent dated June 3, 2005 to the
Respondent No. 11 should be voided, has no factual basis.
The record clinchingly establishes that right from the year ~··
F
1973, successive Governments of the Union Territory of
Pondicherry were concerned for development of the
Pondicherry Port. The first attempt to privatize the Pondicherry
--
Port was made in the year· 1973 when offers for preparation of
a Master Plan and detailed project for development of
Pondicherry Port, were invited. The project was awarded to M/
s Consulting Engineering Services (India) Private Limited for
G
preparation of the Master Plan and a Detailed Project Report.
~~~-'.
.The said firm submitted its report in M~y 1982. The report was
:-..~~·
approved by the then Government of Pondicherry and therefore
an agreement with the said firm was entered into on June 26,
1984 for development of certain facilities. In the year 1989, a. ....
,
H
VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 285
UNION OF INDIA AND ORS. [J.M. PANCHAL, J.]
proposal was made to create additional development facilities A
for commercial-Cum-fishing vessels. Later on, it was found that
M/s Consulting Engineering Services (India) Private Limited had
no expertise to develop certain facilities at Pondicherry Port.
Therefore, Mis RITES India Limited, a Government of India
undertaking, was appointed to conduct a study on the technical B
feasibili~y and economic viability of the facilities to be
developed. M/s RITES India Limited submitted its Feasibility:
Study Report. The Techno-Economic Feasibility Report
submitted by M/s RITES India Limited pertained to additional
facilities. In spite of positive Feasibility Study Report submitted c
by RITES India Limited, the project could not be carried forward
in view of.paucity of funds. In 1996, it was suggested by M/s
RITES India Limited to adopt Build, Own, Share and Transfer
mode of privatisation. The record of the case makes it clear
that between 1996 and 2000 various proposals for privatisation i o
of Pondicherry Port including that of one Megah Venture Lines
(M) SON BHD were received and considered.
, It is necessary to notice that in response to advertisement
issued seeking interest of the parties for development of
Pondicherry Port through private investment, 48 parties initially E
indicated their interest in the project. However, only 5 parties/
consortiums submitted their proposals. Ultimately, after a long!
process of deliberations/discussions, only two parties were
short listed but none of them submitted requisite Bank
Guarantees within time specified and therefore the process F
initiated by issuing advertisement seeking interest of parties for
development of Pondicherry Port through private investment,
was called off.
From March 16, 2003 to March 18, 2003, Advertisement G
titled "Invitation of Expression of Interest for the Development
of Pondicherry Port by Private Investment" was published in
various newspapers. On May 13, 2003, the Government of-/
Pondicherry constituted a Committee to look into the·
privatisation process of the Pondicherry Port and Secretary H
286 SUPREME COURT REPORTS [2009] 9 S.C.R.
'
).~,
A (Port) as its Chairman. What is evident from the record is that
the Chief Secretary, Government of Pondicherry, in his notings
dated June 25, 2003 indicated that he had discussion about
-
the issue with the former Secretary, Ministry of Shipping, who
had informed him that it was not obligatory to obtain permission
B from Central Government for development of a minor Port like
Pondicherry and that the guidelines issued by the Government
of India on Private Sector Participation in the Port Sector only +-
applied to Major Ports. It was also noted by the Chief Secretary
in his notings that he had asked Assistant Liaison
c Commissioner, Government of Pondicherry in New Delhi to
meet personally the officials of the Ministry of Shipping and
report to him. The Assistant Liaison Commissioner, Government
of Pondicherry in New Delhi in his Inter-Departmental Report
dated June 25, 2003 mentioned that the officials of the Ministry
-
of Shipping had informed him that the management and ....
D >-
development of Minor Ports was a State subject and therefore
no clearance from the Central Government was required. The
Chief Secretary therefore recommended that further steps for
privatisation of the Port be taken. One of the steps
recommended by the Chief Secretary was to re-engage M/s
E
RITES India Limited as a Consultant to the entire process. The
notings prepared by the Minister of Ports on July 18, 2003
indicate that he accepted the proposals of the Chief Secretary ,~·-
but noted that instead of engaging M/s RITES India Limited
straightaway, it would be appropriate to issue a notice inviting
F
firms or Consultants in general. This proposal of Minister of
Porfs was approved by the Chief Minister. Accordingly, notice
inviting firms or Consultants was issued. In all, 13 parties
submitted Expression of Interest but only 6 parties made
presentation before the Committee on August 20, 2003. Only
G 2 Consultants namely IPCO-Menang, Singapore and Mis Larsen
& Toubro, Chennai had the requisite experience. Therefore,
those two firms were short listed. A Letter of Intent was issued
~
'
..... ....
in favour of IPCO-Menang, Singapore. The said Consultant was
asked to prepare a Detailed Project Report by November 5,
H
VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 287
UNION OF INDIA AND ORS. [J.M. PANCHAL, J.]
2003. However, the said consultant could not submit Detailed A
Project Report within stipulated period. Therefore, the Letter of
Intent was issued in favour of Mis Larsen & Toubro, Chennai
on April 30, 2004. Mis Larsen & Toubro, Chennai, also failed
to respond to the Letter of Intent. '
The events leading to the award of the Letter of Intent in B
favour of Respondent No. 11 indicate that on October 5, 2004,
Apollo Infrastructure Projects Finance Limited had a meeting
with the then Minister of Ports and had sought time to make a
presentation for the development of Pondicherry Port. The
record also indicates that the said firm was given an opportunity C
to do so before the Minister on October 17, 2004. Similarly, the
Respondent No. 11 had also shown interest in the development
of the Port by addressing a letter dated October 6, 2004 which
was received in the office of Chief Secretary on October 28,
2004. By another letter dated November 4, 2004, Respondent D
No. 11 had indicated that it had identified a partner who would
be associated with the work of development of the Port. In the
meanwhile, on October 18, 2004, advertisement was issued
seeking Expression of Interest from Consultants for preparation
\ of Feasibility Study Report for the development of Pondicherry E
Port. The record shows that 27 firms were called to make a
presentation on December 6 and December 7, 2004. But on
representation of some of the firms, the former date was shifted
to December 8, 2004. The Minutes of the Meeting of the
Committee dated December 7, 2004, December 8, 2004 and F
December 17, 2004 showed that the Chief Secretary had
asked each and every firm as to whether it was in a position to
develop the Pondicherry Port and whether it would be able to
bring investors for this purpose. The Minutes indicate that some
firms informed the Committee that they would get a private G
- I
investor at a later stage but two companies namely Apollo
, Infrastructure and DS Construction stated that they would be
able to develop the Pondicherry Port on their own.
Meanwhile, on December 15, 2004, Menang H
I
288 SUPREME COURT REPORTS (2009] 9 S.C.R.
·•
}
...__
A Amalgamated Sdn Bhd sent a fax message stating that it was ~--
in the process of finalizing a Detailed Project Report as well
as Feasibility Study Report. It may be mentioned that the
:
aforesaid communication was received after more than ohe
year.
B
After making reference to a meeting, which its officials had
with the Chief Secretary on December 20, 2004, Mis Larsen
& Toubro, Chennai, also claimed on December" 22, 2004 that f--
it was willing to develop the Pondicherry Port.
c The Apollo Infrastructure Projects Finance Company
· Limited by its letter dated December 23, 2004 once again
reiterated that it was willing to develop the Pondicherry Port on
DBOOT basis. This letter was received by the Committee on .,.._;·
December 31, 2004.
D I
The IPCO Menang, Singapore and Mis Larsen & Toubro;
...
>-
Chennai, had participated in the Port privatisation process in
the year 2003 but had not responded, though they were chosen.
However, they had expressed their intent to develop the
Pondicherry Port by communications dated December 15,
E
2004 and December 22, 2004 as mentioned above. In view of .l
these letters, the Director of Ports by his letter dated January
7, 2005 sought a decision from the Under Secretary (Port)
~~.
regarding the future course of action to be taken in the matter.
The Under Secretary (Port) made a noting dated January 19,
F
2005 recounting the facts and circumstances relating to IPCO
Menang, Singapore and M/s Larsen & Toubro, Chennai. The
Chief Secretary expressed his view on this noting and
recommended that M/s Larsen & Toubro, Chennai, be called
as third party in addition to Apollo construction and Mis OS
G Constructions. The Deputy_ Secretary (Law) was requested to
examine the issue. It was for this reason that the Inter- ~ --...
......
Departmental Note dated January 21, 2005 was submitted to
the Law Department. On January 23, 2005, one Walter-Bau- >
AG sent a communication informing the Chief Secretary about
H • .>
VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 289
UNION OF INDIA AND ORS. [J.M. PANCHAL, J.]
).
its desire to participate in the Deep Sea Project on DBOOT A
~
basis and submitted its profile. A letter was also written by
Digital Hub, Malaysia, stating that it wanted to participate in the
Deep Sea Project on DBOOT basis. What is important to note
is that the moment firm offers for development of the Port came
before the Government of Pondicherry, the choice before the B
Government was very clear. The Government had been trying
-~\
to develop the Port since 1973. As concrete proposals for the
~ developm~nt of the Port were available, the Government felt that
proper course was to move the proceeding forward to select
a developer. It is relevant to notice that certain parties had c
sought permission to participate in the process of development
of the Port itself and not just prepare a Feasibility Report. The
records indicate that the Chief Secretary met the Lieutenant
Governor on February 2, 2005 and it was decided that a list of
)' firms, which had expressed their interest to develop the Port D
..... through private investment, should be prepared. This is clearly
reflected in the note of the Executive Director of Port to the
Government of Pondicherry dated February 2, 2005. In terms
of the said direction, the Director (Ports) in his note dated
February 3, 2005 gave a list of 11 firms/ companies which had E
expressed their desire to develop the Port through private
investment. Out of the 11 parties, whose names were
mentioned, IPCO Menang and Larsen & Toubro were already
-~
short listed in the year 2003. Hauer Associates, Mahindra
Acres Consulting Engineers Ltd., Marshals Power and Telecom F
(I) Ltd. and M.O.H. Group did not give any firm indication about
their willingness to develop the Port. OS Constructions,
Subhash Projects & Marketing Ltd. and Apollo Infrastructure,
Projects and Finance Co. Ltd. expressed willingness to develop
the Port. The Digital Hub and Walter Bau AG came in the year,
G
2005. The record makes it very clear that this was only a list of,
- ·J the firms/companies interested in developing the Port and not
ranking. The Digital Hub and Walter Bau AG had also,
expressed their willingness to develop the Port in January 2005
itself. The respondent No. 11 addressed a letter dated February
H
290 SUPREME COURT REPORTS [2009] 9 S.C.R.
A 4, 2005 reiterating its desire to develop the Port. It was clearly
pointed out by the Respondent No. 11 th;;it it was desirous of
developing the Port and was not interested in acting as a
Consultant.
Around this time, the Apollo Infrastructure again reiterated
B
its interest in the development of the Port by addressing letter
dated February 8, 2005 wherein it was also mentioned that it ,
,.
-1- I
/ ~
had tied up with Larsen & Toubro, Ramboll, Chennai.
Another firm, LA-V-JAY Associates Pvt. Ltd. by its letter
t
c dated February 14, 2005 mentioned that it was part of
consortium comprising Royal Haskoning a·nd Ashoka Buildcon.
By the said letter; the said firm also expressed its desire to
develop the Pondicherry Port.
D The Director_(Ports) referred to the ,note dated February '(
3:2005 .and stated that out of the 11 · firms/ companies
~
r-
mentiqned in, the note, 7 firms and companies had already
made presentations before the Committee but 4 firms had not
made.presentation. It is relevant to notice that OS Constructions
and Apollo Infrastructure were part of the 7 firms who had
E
already made presentations. In these circumstances, it was
decided on February 25, 2005, that the remaining 4 firms
namely, -the respondent No. 11, Digital Hub, Walter-Bau-AG ~
and Marshall Power should be called for giving presentation
before the Committee on March 11, 2005. Accordingly, E-mails
F
were sent to those parties on March 8, 2005 asking them to
give presentation on March 11, 2005. The E-mails were sent ·
to the 4 firms listed in the note dated February 25, 2005. Well
before March 11, 2005, Digital Hub expressed its inability to
attend the meeting and indicated that it would give the
G
presentation on another date. But even, later on also, the said
firm failed to make any presentation before the Committee. 1- '
Though U Pranav Consultancy acting on behalf of LA-V-JAY &
Associates - Royal Haskoning - Ashoka Buildcon consortium
I-
confirmed by E-mail dated March 8, 2005 that the presentation ~
H
VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 291
UNION OF INDIA AND ORS. [J.M. PANCHAL, J.]
-- .I,
would be made in the meeting dated March 11, 2005, Royal
Haskoning by its communication sought for deferment of date
A
for making presentation. What is most important to notice is
that in the meeting held on March 11, 2005 only Respondent
No. 11 was present. During the presentation made by the
Respondent No. 11, it was found that Respondent No. 11 had B
entered into consortium with Halcrow, a very prominent
__ _,, company in the field of Port development projects. The
background of the said firm is set out in the Minutes of the
proceedings held on March 11, 2005. The said firm is
described as a company which has been in India for more than c
30 years and its expertise is in the development of multi
purpose ports.
It may be mentioned that the petitioners have not made any
,, _.. reference to the proceedings of March 11, 2005 or the Minutes
of the said Meeting. Instead, they have straightaway referred D
to the note prepared on April 5, 2005 to suggest that Mr. S.D.
Sunderesan, Director (Ports) was opposed to the development
of the Port and for that reason he was transferred by the
Government. The affidavit in reply makes it very clear that this
allegation of the petitioner is factually wrong. Mr. Sunderesan E
was recommended for promotion to higher grade by
Departmental Promotion Committee in March 2005 itself and
~-+ his posting as a Deputy Secretary was effected in_May 2005.
Thus, it is wrong on the part of the petitioners to allege/suggest
that merely because he was opposed to the development of F
the Port, he was transferred by the Government. The hote dated
April 5, 2005 was considered and the Under Secretary (Port)
made a detailed note with reference thereto on April 8, 2005
dealing with every aspect, point-wise. The Chief Secretary
prepared a detailed note pointing out that the matter had been G
'V f considerably delayed and that the Port Privatisation Committee
had recommended that a Letter of Intent be issued to SPML.
The Chief Secretary sent a note dated May 26, 2005 which was
put-up before the Minister of Ports for orders. The Minister of
H
\-
292 SUPREME COURT REPORTS [2009) 9 S.C.R.
A Ports approved the note on June 1, 2005 recommending that
suitable clauses be· incorporated to bind the party down to
ensure that the project did not get delayed. The Chief Minister
approved the proposal on June 3, 2005 and thereafter the
proposal was approved by the Lieutenant Governor on June 3,
B 2005.
17. The different documents produced on record of the
case read with averments made in counter affidavits clearly
show that on the basis of the reports submitted by M/s.
C Consulting Engineers Services (India) Private Limited, The
Ministry of Shipping and Transportation (Ports Wing),
Government of India had approved the project for creation of
certain facilities at the Pondicherry Port and sanctioned the
cost of the project by letter dated June 26, 1984. Further, M/s.
RITES India Limit~d had submitted Techno-Economic
0 Feasibility Study Reeort on June 10, 1991, pertaining to
development of additional facilities to be provided at
Ariankuppam Port Project and in spite of said positive
Feasibility Study Report, the project could not be carried
forward because of paucity of funds. The record shows that after
E revival of the process for development of the port in the year
2003, the Government of Pondicherry had decided to issue an
advertisement calling for Expression of Interest from the private
parties and vide G.O.Ms. dated May 13, 2003 constituted a
Port Privatisation Committee to go into the entire gamut of the
F privatisation process of the Port of Pondicherry through private
investment. The Committee so constituted was consisting of the
following Government officials and no politician was appointed
on the said Committee at all: -
G ( 1) Secretary to Government (Port) Chairman
(2) Joint Secretary to Government (Revenue) Member t -r
(3) The Director of Ports Member
H (4) The Director of Science, Technology
VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 293
UNION OF INDIA AND ORS. [J.M.· PANCHAL, J.]
....
and Environment Member A
(5) Deputy Secretary to Government (Law) Member
(6) Under Secretary to Government (Finance) Member
(
(7) Under Secretary to Government (Port) Member 8
_._, (8) Executive Engineer (Port) Member Secretary
Subsequently, Mr. P.C. Dhiman, Director (Port Development),
- Ministry of Shipping (Port Wing), New Delhi, was also
nominated as Co-opted Member of the above mentioned C
Committee, Pursuant to advertisement dated February 3, 2003,
13 parties had responded and out of them, only 6 parties had
made presentations before the expert committee, expressing
interest for the development of the Pondicherry Port through
~
-i.. private investment. The Committee, after considering the D
presentations made by six firms, in its meeting held on August
28, '2003, came to the conclusion that only two firms, namely,
(1) IPCO Menang, Singapore and (2) Larsen and Toubro,
Chennai had necessary experience in port development and
technical knowhow for the same and, therefore, short listed E
those two firms. The recommendations of the expert committee
were accepted by the Government of Pondicherry and a Letter
- r of Intent was issued on September 9, 2003 in favour of IPCO
Menang, Singapore, for feasibility studies and preparation of
Detailed Project Report for the development of the Port. F ,
However, the said firm did not submit the Report despite
extension of time nor deposited the required performance
guarantee amount of Rs.50 lacs. Therefore, the second short
listed firm, i.e., M/s. Larsen and Toubro, Chennai, was issued
. Letter of Intent, but this firm also did not respond to the said G
-. ·~ Letter for more than eight months.
18. Under such circumstances, the Government of
Pondicherry decided to make one more attempt to attract
private investment for development of the Port and call for H
1
294 SUPREME COURT REPORTS [2009] 9 S.C.R.
.. ·-
A Expression of Interest for undertaking feasibility studies for
development of the port. Accordingly, advertisement dated
October 18, 2004 was issued in the leading newspapers,
pursuant to which, 27 firms had responded. However, out of 27
firms, only 15 firms had given presentations before the expert
B committee during December, 2004 in the presence of Minister
of Ports., Thereafter, it was decided by the Committee, after
having meeting with the then Lt. Governor of Pondicherry, that
out of 27 firms which had responded to the advertisement,
number of firms who were willing to undertake the feasibility
c studies should be ascertained. Accordingly such exercise was
undertaken by the expert committee and the expert committee
found that only 11 firms had shown the willingness to undertake
feasibility studies. Seven out of those 11 firms had already
made presentations before the Committee and, therefore,
D remaining four firms were ca lied upon to make presentation
before the Committee.
19. The record further shows that the expert committee,
after approval of the Minister (Port), the Hon'ble Chief Minister
and the Lt Governor, decided to short list the under mentioned
E fou.r firms in order of preference, out of the firms which had
expressed interest in development of the Port by undertaking
the feasibility studies and Detailed Project Report: - t-.
1. Mis. Subhash Projects and Marketing Ltd., New
F Delhi;
2. Mis. D.S. Constructions, New Delhi;
3. · Mis. Apollo Infrastructure Project Finance Company
Ltd.; and
G
4. Mis. Larsen & Toubro, Chennai.
The order of preference was prepared by the Committee
keeping in mind the credentials and the presentations made
by the firms as well as on the basis of recommendations and
H
VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 295
UNION OF INDIA AND ORS. [J.M. PANCHAL, J.]
....... approval given by the Minister (Port), the then Chief Minister A
and the Lt. Governor. Thereafter a decision was taken by the
Government of Pondicherry to issue a Letter of Intent to the
respondent No. 11 as its name appeared first in the order of
preference. Another decision was also simultaneously taken to
appoint National Institute of Port Management, a Government B
of India Undertaking, as the consultant for the Government of
-~ Pondicherry and accordingly the appointment order was issued
•
to the respondent No. 14 for carrying out a detailed analysis
and evaluation of the Detailed Project Report ('DPR' for short)
from all angles and for submission of comprehensive report, as c
well as finalization of DPR which would form the basic document
for the Port development. The respondent No. 14 was also to
advise and assist the Government of Pondicherry in obtaining
all the statutory clearance, preparation of Draft Concession
"' J. Agreement for the development of the Port on BOT basis, D
assist the Government in negotiation and finalization of final
Agreement as well as to monitor, supervise and other related
work. It is necessary to mention that pursuant to advertisement,
which had appeared in The Hindu dated October 18, 2004, the
respondent No. 14 had offered to prepare a feasibility report. E
In the order of appointment issued to respondent No. 14, it was
mentioned that a Letter of Intent was issued to the respondent
- .. No. 11 for preparation of DPR. The record further establishes
that the DPR was sJbmitted by the respondent No. 11 to the
Government which was forwarded to the respondent No. 14 for F
offering comments/views along with an advance payment of
Rs.2 lacs. Thereafter, a number of meetings were held between
the officers of respondent No. 11, respondent No. 14 and the
officials of Government of Pondicherry to discuss the DPR.
During the meetings certain shortcomings in the DPR prepared
G
by the respondent No. 11 were pointed out and, therefore, the
. "' -~ respondent No. 11 was called upon to revise the DPR.
Accordingly 2nd and final revised DPR was submitted by the
respondent No. 11 on November 16, 2005. The 2nd revised
DPR was also sent to the respondent No. 14. After
H
296 SUPREME COURT REPORTS [2009] 9 S.C.R. ·,
A assessment, analysis and evaluation of the 2nd revised DPR,
the respondent No. 14 gave independent analysis and
evaluation of the various· aspects of the final DPR. In the
independent analysis made by the respondent No. 14 it was
stated that though the project was technically viable, it was not
B financially viable. However the respondent No. 11 and its
associates had come forward to undertake the project with their
own investment, whereas the Government.of Pondicherry was f--
not expecting to invest any money. Further, the Port
Development Project is/was to result in direct and indirect
c employment to a large number of persons as well as other
economic and infrastructure development catering to the needs
of the shipping industry and development of allied industries in
the immediate hinter land and, therefore, the Government of
Pondicherry had decided to proceed further in the matter.
D Accordingly the Government of Pondicherry constitut~d a
Committee to draft the Concession Agreement to be entered
into between the Government of Pondicherry and Mis. SPML.
The Committee so constituted examined various model
concession agreements of different states and more particularly
E of Gujarat State. After undertaking such study, Concession
Agreement was drafted on the basis of approved DPR. The
said draft agreement was examined and approved by various
departments of the Government of Pondic~erry. Thereafter, the
draft agreement was placed before the Council of Ministers for
F its appr9val. The Council of Ministers in meeting dated January
20, 2006, approved the same and resolved that the existing port
land measuring 153 acres be handed over for port
development, whereas remaining 107 acres should be
acquired to be handed over to M/s. SPML. It was further
G resolved that a lease amount of Rs.2000/- per acre, per annum,
should be charged from Mis. SPML. The order dated January
21, 2006, issued by the Government of Pondicherry, indicate
that approval of the Lt. Governor was obtained to the revised
DPR as well as to the Concession Agreement after which the
H Government of Pondicherry entered into a Concession
-' VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 297
UNION OF INDIA AND ORS. [J.M. PANCHAL, J.]
...I. ,(
Agreement with Mis. SPML along with its consortium partners A
on January 21, 2006.
'
20. It would be absurd on the part of the appellants to
attribute motives to all by stating that_ the Letter of Intent was
-~
amended to the respondent No. 11 for oblique motives in order
B
to favour respondent No. 11 arbitrarily. The appellants could not
specify either in the petitions filed before the High Court or in
the memorandum of appeals as to which member of the expert
committee or which official of the Government of Pondicherry
or which Minister of the Council of Ministers or which Chief
Minister or Lt. Governor was interested in awarding Letter of
c
Intent to respondent No. 11 for oblique motives. The record
shows that the Government of Pondicherry had advertised three
times calling for Expression of Interest from the interested firms
"" _.. and had identified respondent No. 11 for development of the
Port after adopting transparent procedure. The procedure D
adopted for identifying the respondent No. 11 is crystalline,
distinct, forthright, manifest and unambiguous. To say the least
the appellants' understanding of the issue is absolutely
baseless and not only incorrect but also contrary to the records
of the case. The selection of the respondent No. 11 as E
developer cannot be regarded as capricious, despotic, fanciful
'-k or personal as is sought to be made out by the appellants. It is
' rightly pointed out in the counter reply that the objective of the
--- entire exercise was to get prepared a feasibility study report
so that a private investor might not be required to conduct the F
study prior to deciding whether he would be required to invest
or not. It was the understanding of the Government of
Pondicherry that in such an event the possibility of attracting
private investment in the development of the Port would
~
/
substantially i_ncrease, which cannot be termed as impractical G
or not warranted in the facts of the case, more particularly,
where earlier attempts made since the year 1973 to develop
-
the Port had failed. The Government of Pondicherry could not
~
have risked loosing offers for privatisation of the Port by
-:>"
insisting upon the process of selection of developer merely on H
298 SUPREME COURT REPORTS [2009] 9 S.C.R.
lit--
> .....
A the ground that the advertisement was only for the selection of
consultant and not for the selection of developer. On the facts
and in the circumstances of the ease, thi$ Court i$ of the firm
..,..
opinion that the events leading to the award of Letter of Intent
to the respondent No. 11 in June, 2005 do not indicate, in any
a manner, that the GQvernment had acted arbitrarily or that the
Letter of Intent was issued to favour the respondent No. 11 with
oblique motives and, therefore, the contention of the appellants +-
in this regard is rejected.
21. The plea raised by the learned counsel for the
c appellants that the Government of Pondicherry was arbitrary a.nd
unreasonable in switching the whole public tender process into
a system of personal selection and, therefore, the appeals .......
should Pe accepted, is ctevoid of merits. It is well settled that
non-floatinf;I of tenders or not holding of public auction would
D n.Qt t>e in al! ca~e~ !:>e deemec;I to be the result of the exercise ).
of the executive power in an arbitrary manner. Generally, when
any State land is intended to be transferred or the State
~la.rgesse decided to be conferred, resort should be had to
public auction or transfer by way of inviting tenders from the
E people. However, what is important to notice is that the old
Pondicherry Port is very much in existence. This is not a case
of establishment of new port at Pondicherry but this is a case j- _,,
of developing an existing port to meet rapid changes in
transport technology and to improve the existing port facilities.
....,..
F The development of an existing port on Build, Operate and
Transfer basis can never be equated with intended sale of
Government land or transfer of State largesse. This is not a
case. where a State asset is sought to be sold or the State is
out to purchase goods. Such cases stand on a different footing
G from a major issue of economic development such as
··development of a po.rt. The respondent No. 11 is called upon t ~
to develop the Pondicherry Port on BOT basis. Thus after
development of the Port, the same will have to be retransferred
to the Government of Pondicherry. In the matter of policy
H ..;,.
- "' ....
VILLIANUR IYARKKAI PADUKAPPU MAIYAM v.
UNION OF INDIA AND ORS. [J.M. PANCHAL, J.]
299
decision and economic tests the scope of judicial review is very A
<
limited. Unless the decision is shown to be contrary to any
statutory provision or the Constitution, the Court would not
interfere with an economic decision taken by the State. The
court cannot examine the relative merits of different economic
policies and cannot strike down the same merely on ground B
that another policy would have been fairer and better. In a
-~ democracy, it is the prerogative of each elected Government
to follow its own policy. Often a change in Government may
result in the shift in focus or change in economic policies. Any
such change may result in adversely affecting some vested c
interests. Unless any illegality is committed in the execution of
~
the policy or the same is contrary to law or malafide, a decision
·~
bringing about change cannot per se be interfered with by th~
.,,, court. It is neither within the domain of the co1,1rts nor the scop~
-"
of judicial review to embark upon an enquiry as to whether ~ D
particular public policy is wise or whether better public policy
can be evolved. Nor are the courts inclined to strike down a
policy at the behest of a petitioner merely because it has been
urged that a different policy would have been fairer or wiser or
more scientific or more logical. Wisdom and advisability of E
economic policy are ordinarily not amenable to judicial review.
In matters relating to economic issues the Government has,
. ~
... k while taking a decision, right to "trial and error" as long as both
trial and error are bona fide and within the limits of the authority.
For testing the correctness of a policy, the appropriate forum
F.
is Parliament and not the courts. Normally, there is always a
presumption that the Governmental action is reasonable and .
in public interest and it is for the party challenging its validity to
show that it is wanting in reasonableness or is not informed with
public interest. This burden is a heavy one and it has to be
G
~
discharged to the satisfaction of the court by proper and
;
adequate material. The court cannot lightly assume that the
action taken by the Government is unreasonable or against
public interest because there are large number of
-.
considerations, which necessarily weigh with the Government
H
300 SUPREME COURT REPORTS [2009] 9 S.C.R.
A in taking an action. In a case like this where the State is
allocating resources such as water, power, raw materials, etc.
for the purpose of encouraging development of the port, this
Court does not think that the State is bound to advertise and
tell the people that it wants development of the Port in a
B particular manner and invite those interested to come up with
proposals for the purpose. The State may choose to do so if it
thinks fit and in a given situation it may turn out to be
advantageous for the State to do so, but if any private party
comes before the State and offers to develop the port, the State
c would not be committing breach of any constitutional obligation
if it negotiates with such a party and agrees to provide
resources and other facilities for the purpose of development
of the port. The State is not obliged to tell the respondent No.
11 "please wait I will first advertise, see whether any other offers
D are forthcoming and then after considering all offers, decide
whether I should get the port devel0ped through you". It would
be most unrealistic to insist on such a procedure, particularly,
in an area like Pondicherry, which on account of historical,
~plitical and other reasons, is not yet industrially developed and
E where entrepreneurs have to be offered attractive terms in order
to persuade them to set up industries. The State must be free
in such a case to negotiate with a private entrepreneur with a
view to inducing him to develop the port and if the State enters
into a contract with such an entrepreneur for providing resources
F and other facilities for developing the port, the contract cannot
be assailed as invalid because the State has acted bona fide,
reasonably and in public interest. The terms and conditions of
the contract entered into with the respondent No. 11 as well as
the surrounding circumstances show that the State has acted
G bona fide and not out of improper or corrupt motive or in order
to promote the private interest of the respondent No. 11 at the
cost of the State. Therefore, it is difficult to interfere and strike
down the State action as arbitrary, unreasonable or contrary to
public interest. It is true that one of the methods of securing the
public interest, when it is considered necessary to dispose of
H
=i VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 301
UNION OF INDIA AND ORS. [J.M. PANCHAL, J.]
__,, ,t.
a property, is to sell the property by public auction or by inviting A
tenders. But as noted earlier, this is not a case of sale of
property by the State. Though public auction or inviting of
tenders is the ordinary rule in case where the State Government
proposes to dispose of a property, it is not an invariable rule.
There may be situations where there are compelling reasons B
necessitating departure from the rule, the reasons indicated in
--~
this case for the departure are shown to be rational and are
' not suggestive of discrimination. The Government is entitled to
make pragmatic decisions and policy decisions which may be,
necessary or called for under the prevalent peculiar, c
circumstances. The issue of privatisation of the Port had been .
., engaging the attention of the Government of Pondicherry since
1973. The said issue had been delayed for a long time.
Therefore, no fault can be found with the expert Committee, with
,.,, the various officers of the Government including the Chief D
_..
Secretary, the Ministers, the Chief Minister and the Lt. Governor
for deciding to develop the Port with the assistance of the
respondent No. 11 and not just restricting the process to
-4,.
appoint a consultant. The sole purpose behind the said exercise
was to ensure development of the Port in a proper manner and E
as expeditiously as possible. It is necessary to mention that the
--
-i
~ ..\--
Government of Pondicherry was trying to develop the Port and
was looking for an appropriate partner. It must be remembered
- that technology for development of the Port would not be
available for the mere asking of it. All the leading firms/ F
companies were not found suitable to develop the Port and
none of them has made grievance either before the High Court
or before this Court regarding selection of respondent No. 11
as Developer of the Port. It is ultimately a matter of bargain. In
such cases, all that needs to be assured is that the Government
G
or the authority, as the case may b~. has acted fairly and has
... J arrived at the best available arrangement in the circumstances .
"- The materials on record substantiated the absolute need and
necessity to undertake the development of the Port by the
Government of Pondicherry in furtherance of great public interest
H
)----
302 SUPREME COURT REPORTS '
A and for larger public and common good. The admitted dire
financial position of the State Government and its inability to
. ;-
undertake such a project at the cost of Government coupled with
the fact that the venture was long overdue apparently made the
State Government and its authorities to avail of the project as
B unfolded and volunteered by the respondent No. 11, subject,
of course, to further revisions, modifications and suggestions
in the best interest of the State Government A careful and
dispassionate assessment and consideration of the materials
placed on record does not leave any reasonable impression,
c on the peculiar facts and circumstances of this case, that
anything obnoxious which requires either public criticism or
condemnation by courts of law had taken place. The objective
of the Government of Pondicherry to develop the Port was
admitted to be fulfilled at the initial stage by short listing a
o consultant itself. However, the Government did not wish to
continue the process of selection of the consultant and risk
losing the chance of privatisation of the Port again. As firms/
companies had offered to develop the Port directly, the
Government of Pondicherry could not have asked the firms/
E companies to first participate in the process of selection of a,
consultant, prepare a project report and require them to
participate in the process for selection of the developer all over
again. The Government of Pondicherry adopted a pragmatic
approach and proceeded to short list the developer directly and
F in doing so the Government has acted in the best interest of
the State to overcome the failed attempts in the past to secure
a developer to develop the Pondicherry Port. Under the
circumstances, this Court, which is a constitutional Court, is not
expected to presume the alleged irregularities, illegalities or
G unconstitutionality nor this Court would be justified in substituting
its opinion for the bona fide opinion of the State Government. .
Therefore, the plea raised on behalf of the appellants that the.
Governmer.t of Pondicherry had acted in arbitrary and ..
unreasonable manner in switching the whole public tender
H process into a system of personal selection, is rejected.
VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 303
UNION OF INDIA AND ORS. [J.M. PANCHAL, J.]
....
22. The contention that a conjoint reading of Article 239 A
and 239A of the Constitution and Sections 46, 50 cf the
Government of Union Territories Act read with Rule 5 of the
Rules of Business of the Government of Pondicherry, 1963,
would show that the Government of Pondicherry has to take
prior approval of the Central Government before awarding the 8
contract to any private party and, therefore, the Letter of Intent
.. 'I' issued in favour of the respondent No. 11 should be regarded
beyond jurisdiction of the Government of Pondicherry, is
misplaced and has no substance.
23. It is admitted position that the Pondicherry Port is not
c
a "major port" and as such jurisdiction and control to develop
..... the said port vests in the Government of Pondicherry. The
guidelines relied upon by the learned counsel for the appellants
..... relate to privatisation of "major port". Those guidelines do not
_. D
apply to minor ports. There is no manner of doubt that
development and privatisation of minor ports can be undertaken
by the respective State Government after formulating its own
guidelines and modalities. The Indian Ports Act, 1908 permits
the State Government to develop the minor ports. By virtue of
power vested in the Parliament by Article 239A of the E
Constitution, the Government of Union Territories Act, 1963 was
enacted and Pondicherry was provided with a Legislative
-- ~ Assembly. The extent of the legislative power of the State
Legislative Assembly is laid down in Section 18 of the Act of
·1963, which, inter alia, proviaes that the Legislative Assembly F
is empowered to make laws in respect of any matters in the
State List or the Concurrent List. Entry 31 of the Concurrent List
provides for "Ports other than those declared by or under law
made by Parliament or existing law to be major ports". As the
Pondicherry Port has not been declared as a major port, the G
-,/''
.... 1 Legislative Assembly of Pondicherry has absolute power to
make laws in relation to the Pondicherry Port. Article 162 of
the Constitution provides that the executive power of a State
mi is co-extensive with its legislative powers. Therefore, there is
• H
304 SUPREME COURT REPORTS [2009] 9 S.C.R.
A no manner of doubt that the Government of Pondicherry has
complete jurisdiction in relation to Pondicherry Port, which is a
minor port. The reliance placed upon Section 3(9) of the Indian ..,
Ports Ac~. 1908 read with Regulation 6(b) of the Pondicherry '
(Laws) Regulation, 1963 is totally misconceived. Section 3(9)
B of the said Act provides that the jurisdiction of ports other than
major ports vests in the State Government. The learned counsel
for the appellants have contended that reference to State i ..
Government, appearing in Section 3(9) of the Indian Ports Act,
should be construed to be a reference to the Central
c Government and, therefore, only the Central Government will
have jurisdiction over the ports in Pondicherry. Having
considered the different provisions of the Constitution and
Statutes, referred to by the learned counsel for the appellants,
this Court finds that there is fundamental fallacy in the argument
o and it is that they rely upon Regulation 6(b) only in part. Though
the said Regulation provides that reference to the State
Government shall be construed as a reference to the Central
Government, it also provides that reference to the .State
Government shall be construed as reference to the Chief
E Commissioner. The learned counsel for the appellants have
failed to take note of the words "and also as reference to the
Chief Commissioner". This phrase must be read with the
definition of "Chief Commissioner" provided under Regulation
2(b), which specifies that the Chief Commissioner means the
F Administrator of Pondicherry (now the Lt. Governor of
Pondicherry). A conjoint and ·meaningful reading of the
provisions of the Constitution read with Regulation 6(b) of the
Pondicherry (Laws) Regulation, 1963 leaves no doubt that the
- power in respect of Pondicherry Port necessarily vests in the
G Government of Pondicherry and not in the Central Government.
The reliance placed on Rule 5(2) of the Rules of Business of
the Government of Pondicherry read with Rule 21 of the
Delegation of Financial Rules to contend that prior approval of
the Central Government was required to be taken by the
H Government of Pondicherry before entering into the Concession
VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 305
UNION OF INDIA AND ORS. [J.M. PANCHAL, J.J
_, ;.. A
Agreement with the respondent No. 11 as it was beyond the
financial powers of the Government of Pondicherry, is devoid
of merits. Rule 21 relates to the power to sanction expenditure
in relation to contracts. Execution of Concession Agreement or
grant of Letter of Intent does not entail any expenditure to be
"""" incurred by the Government of Pondicherry and as such the B
learned counsel for the appellants are not justified in pressing
. ~
into service those provisions. An attempt was made to
.demonstrate that in terms of Section 5 of the. Pondicherry
(Administration) Act, 1962 all properties and assets in the State
of Pondicherry vest with the Union and, therefore, the c
Government of Pondicherry has no right to deal with the same
in any manner.
24. It is relevant to notice that the Union Territory of
Pondicherry gained its freedom in the year 1962. Therefore,
D
'"'I
. several laws were passed by the Parliament for its integration
with the Union of India. One such law was Pondicherry
Administration Regulations Act, 1963. Article 240 of the
Constitution deals with power of President to make regulations
for certain Union Territories. The first proviso to Article 240, inter
alia, provides that when any body is created under Article 239A E
to function as a Legislature for the Union Territory of Puducherry
[substituted by Section 4 of the Pondicherry (Alteration of name)
... -~ Act, 2006 for Pondicherry], the President shall not make any
_.,
regulation for the peace, progress and good Government of that
Union Territory with effect from the date appointed for the first F
... meeting of the Legislature. Therefore, the Pondicherry
,. Administration Regulation Act, 1963 will have to be regarded
as a Transitional tegislation. Moreover, the primary reason for
enacting Section 3 of the Pondicherry Administration
..- Regulation Act, 1963 was to extend all the laws enacted by the
Union of India under the Union List to the Pondicherry. It is only
an Act akin to adaptation Act by which the laws of Union of
India were extended to this Union Territory, which was
G •.
incorporated with India after partition. The extension of laws of
- H
306 SUPREME COURT REPORTS [2009] 9 S.CR.
A Union of India shall only mean that those laws would be ).. ....
applicable as they are applicable to any other State of India.
As noticed earlier, the Port in question is admittedly a minor
port and, therefore, not covered by the provisions of Indian
Major Ports Act, 1908. The extension of law to Indian Major
B Ports Act, 1908 would only mean that a particular law is
prevalent but its applicability would be dependant upon as to
whether facts and circumstances warrant its invocation. Had the
Port in question been a major port, Indian Ports Act, 1908 would Y- 1
. have applied. Inthis case as the Port in question is a minor
c port, the Indian Major Ports Act, 1908 would not,apply.
25. This Court finds that Section 5 _is the provision by which
all properties and assets; which earlier vested in the French
Republic, stood transferred to the Union, i.e., Union of States
(India). In other words, Section 5 was enacted for the purpose
D
of transfer of properties from one sovereign State to another "\~'
...
sovereign State. It has no power on the right of Government of i
Pondicherry over the properties and assets in Pondicherry. The I
vesting of land from French Republic to the Republic of India
can have no bearing on the powers of Government 9f ..
·E Pondicherry to dispose of land in accordance with the
. .
provisions of the Constitution. further. it is to be ~noticed that
the entire Pondicherry Administration Act, 1962 was a
Transitional Act for transfer of power from the French Republic i- " l::.
to the Republic of India. which is evident from the Statement of 1-
F Objects and Reasons to the said Act. Therefore, the plea that ..
the ·Government of Pondicherry could not have taken the
~
decision to privatize the Pondicherry Port without consent/
approval of the Central Government is totally mi.sconceived. l
.
G 26. Further, the Ministry of Shipping filed an affidavit before ,;
the High Court expressly endorsing the stand taken by the
Government of Pondicherry that Pondicherry Port is not a major ....._
port and as such its jurisdiction and control vest with the
'
Government of Pondicherry.
H I
,,-
VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 307
UNION OF INDIA AND ORS. [J.M. PANCHAL, J.]
.J,
27. The record further shows that Mis. RITES India Limited A
through a letter dated March 12, 1996 submitted 'Terms of
Reference' for offering consultancy assignment for privatisation
of three major ports situated at Pondicherry, Karaikal and
Mahe. The total consultancy fee for the assignments was initially
put at Rs.30 lakhs, which was reduced to Rs.20 lakhs as the B
proposal for consultancy was subsequently limited to the
t ~
Pondicherry Port only. The Joint Secretary, Ministry of Surface
Transport, Government of India vide letter dated March 22, 1996
informed the Chief Secretary, Pondicherry Administration about
the need to expand the existing capacity of the Pondicherry Port c
to meet the growth requirement of traffic handled by various
major ports. In the said letter it was mentioned that a decision
was taken to invite capital participation by private sector and
- ...
from non-maritime land-locked states. Further, ·by Government
Order dated April 30, 2003 the Ministry of Shipping, D
Government of India, had nominated Mr. P.C. Dhiman as a
Member of the Committee. Mr. Dhiman was appointed as a
Member of the Committee by the Government of Pondicherry
vide 'Government Order dated August 20, 2003. The first
meeting of the Committee was held on June 2, 2003, which was E
attended by all the members of the Committee. In the said
meeting various courses of actions were discussed. One of the
~ ~ issues related to seeking the consent of Government of India
for the privatisation of the port. It was also decided to seek the
clarifications from the Ministry of Shipping, Government of India,
F
in this regard. The Chief Secretary, Government of Pondicherry
in his noting dated June 25, 2003 mentioned that he had
discussed the issue with former Secretary, Ministry of Shipping
and he had informed the Chief Secretary that no permission
was required for a minor port like Pondicherry and that the
G
.- f guidelines issued_ by the Government of India on private sector
participation in the Port sector only applied to major ports. The
Chief Secretary further noted that he had also asked the
Assistant Liaison Commissioner, Government of Pondicherry
in New Delhi to meet personally the officials of the Ministry of
H
308 Sl..JPREME COURT REPORTS [2009] 9 S.C.R.
A Shipping and report. The Assistant Liaison Commissioner,
Government of Pondicherry in New Delhi, by his .ln_ter-
Departmental Report dated June 25, 2003, informed that the : ·
management and development of ports _was a State subject
and, therefore, no clearance from the Central Government was
B required. Under these circumstances the Chief Secretary
recommended that further steps for privatisation of the port be
taken. These facts indicate that the Government of Pondicherry
had full jurisdiction to deal with the minor port situated in the
Union Territory and it was not necessary for the Government of
c Pondicherry to take prior approval of the Central Government
before awarding the contract. However, as noticed earlier, the
Joint Secretary, Ministry of Surface Transport, Governm~nt of
India by letter dated March 22, 1996 informed the Chief
Secretary, Pondicherry Administration about the need to
D extend the existing capacity of the Pondicherry Port to meet the
gro\lvth requirement of traffic handled by various ports and to
invite capital participation by private sector and from non-
maritime land-locked states. The letter dated March 22, 1996
addressed by the Joint Secretary of India to the Chief Secretary
E- of Pondicherry Administration read with decision taken· by the
Committee of which Director (Port Development),'"'Ministry of
Shipping, New Delhi, was one of the Member, to privatize the
Port will have to be construed 1 as approval/consent of the
Central Government to the project for the development of I
.
~
F Pondicherry Port by privatisation and it was not necessary for -
the Government of Pondicherry to seek further approval at
every stage of development of the Port. Therefore, the plea that
the Government of Pondicherry could not have taken the
decision to privatize the Pondicherry Port without consent/
G approval of the Central -Government is found to be
misconceived and is rejected hereby.
28. The argument that the project in question is cleared
without examining the environmental aspects by the Union
Territory of Pondicherry in total violation of the Precautionary
H and Trusteeship principles and is also prohibited under the CRZ
)
VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 309
UNION OF INDIA AND ORS. [J.M. PANCHAL, J.]
" notification as the same is a real-estate activity in the garb of A
port development, has no substance worth the name.
29. The record of the case indicates that concession
agreement is already entered into between the Government of
Pondicherry on one hand and the 11th and 12th respondents
8
on the other, on January 21, 2006. Those respondents in terms
,.. ~
of the concession agreement have incorporated a Special
Purpose Vehicle (SPV) company known as Pondicherry Port
Limited for implementation of the Port Development Project. An
Assignment agreement to this effect in favour of Pondicherry
Port Limited is executed by the Respondent Nos. 11 and 12
c
and confirmed by the Government of Pondicherry. In terms of
~ ... the Concession agreement, the Government of Pondicherry has
entered into Lease and Possession agreement with the Special
Purpose Vehicle Company on February 4, 2006. The Lease-
~
. hold occupancy is given to the Pondicherry Port Limited subject
D
to pbtaining necessary clearance including environmental
clearance from the Government of India. There is no manner
of dC?ubt that no one can be permitted to carry on construction
activity which is prohibited by the CRZ. However, this being a
~ project exceeding Rs.SO crores necessary environmental E
clearance has to be obtained from the Ministry of Environment
. and Forest Union of India. Before such consent is granted/
obtained, a full Environmental Impact Assessment has to be
done. During that exercise, public hearing would be conducted
as a matter of rule and all the concerns expressed by the public F
will have to be taken due note of, by the authorities concerned.
The specific objections raised by the appellants will also have
to be considered and they would be entitled to hearing by the
competent authority. Mere submission of DPR is not the end
... f
of any decision making process. The implementation of the G
project as per DPR is solely dependent on the clearance to be
given by the Ministry of Environment and Forest Union of India.
There is no manner of doubt that the Government has every
power to stop the project if it violates environmental safeguards.
H
310 SUPREME COURT REPORTS [2009] 9. S.C.R. (
-~
A The consideration of CRZ regulations would also be part of the
said exercise. Further, the notificatjon issueg und~r the
Environment Protection Act clearly requires a prior consent and
provides for an appeal to be filed before the tribunal cc;>nstituted
for the said purpose by an aggrieved part¥. The plea that the
B environmental clearance must precede the ;:iward Qf the project
is wholly rnisq:mc~jyed ami !$ incgrr~gt, The appliQP.tion form
fgr opt9.in!nQ environmerit cle~n:mq~ under the notification of f- .....
2006 makes· it very clear that the application has to be made
by the entity which has been entrw;ted with the project In the
G judgment, impugned in the appeals, appropriate· directions \,.
addressing all the issues raised on bellalf of the appellants
relating to the environment have been issued by the High Court.
In addition, the Ministry of Environment and Forest which has
~ ...
to given clearance for the project has to examine the proposals
,,.,
D of the developer and follow due procedure before granting ~
approval. Therefore, the judgme: 1t impugned is not liable-to be
set aside on the ground that environmental aspects were not
examined by the Union Territory of Pondicherry in total violation
of the Precautionary and Trusteeship principles or th_at the
E project in question i~ completely prohibited unde_r the CRZ
notification. ,.
30. Th'e argument that the Responcjerit Nq, 11 is permitted
·--
to carry on Real-Estate business by construction of five-star
hotels, a trade centre as well as a beach resort in the garb of .,,,
'>·
..
F development of Pondicherry Port and therefore, the project
should be grounded, cannot be accepted. It can hardly be
disputed by anyone that the main objective of the project is the
'development of Pondicherry Port. The Government of
Pondicherry has not entered into Concession agreement with
G the Respondent No. 11 to permit the said respondent to run a
........
Real-estate business. While developing the port, it is necessary
to provide certain infrastructural facilities for passengers,
shipping crew, port staff and other personnel associated with
' ·~
'H
the port, as part of the port development activity. The
...
VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 311
UNION'OF INDIA AND ORS. [J.M. PANCHAL, J.]
..... '4 Respondent No. 11 as developer of the Port has not yet A
submitted necessary pla!ls for scrutiny of Ministry of
Environment and Forest, Government of India, seeking
clearance to the project. As and when, the plans are submitted
for clearanc9, the competent authority can always decide upon
the desirability of making of constructions which do not fall within B
the development of port. The ancillary activities to be undertaken
while developing a port cannot be stopped by merely naming
~ them as Real-estate business. The affidavit in reply filed on
behalf of the Respondent Nos. 11 and 12 before the Madras
High Court would indicate that the Government of Pondicherry c
is not going to make investment in the project at all. Therefore,
the question of Government of Pondicherry favouring the
Respondent No. 11 does not arise. The affidavit filed by the
~
Respondent Nos. 11 and 12 makes it clear that they have taken
up .the project after conducting detailed study and have decided D
I"
to m'i!ke investment in the project. The Respondent Nos. 11 and
' 12 are permitted to develop the Port only on Build, Operate and
Transfer (BOT) basis. No material was placed by the appellants
before the High Court to substantiate the claim that the
Respondent Nos. 11 and 12 are the Real-estate agents. The E
development of Port of Pondicherry on BOT basis makes it
evident that, in effect and substance, the Government of
Pondicherry would get back the assets built by the Respondent
Nos. 11 and 12 after the expiry of period mentioned in the
Concession agreement. Grant of Letter of Intent or execution
F
of Concession agreement in favour of Respondent No. 11 to
permit it to develop the Port on BOT basis cannot be regarded
as gifting public largesse. The appellants have failed to bring
on record any material to substantiate the allegation that there
is a conspiracy to grab the land belonging to the Government
G
of Pondicherry for the purpose of Real-estate of Respondent
"":' No. 11 by permitting it to construct five-star hotel, commercial
" mall, etc. The reply affidavit filed by the Respondent before the
High Court, on the contrary, shows that the feasibility report
prepared by it indicated that the Port was to be developed in
H
312 SUPREME COURT REPORTS [2009] ~ S.C.R.
A composite manner and therefore project should be ·~
commercially viable and therefore considering the enormous
cost involved in the development of the· Port, certain activities
are sought to be undertaken for the benefit bf passengers, crew
of ships, staff etc. On the facts and,in the circumstances of the
B case, this court is of the opinion that the appellants have failed
to make out the case that the Pondicherry Government has
permitted the Respondent No. 11 to carry on Real-estate
business and therefore the appeals should be accepted. /Ii'
C 31. For the reasons stated in the judgment, this Court does
not find any merit in any of the appeals and bot~ the appeals
are liable to be dismissed. Therefore, both the appeals fail and
are dismissed. Having regard to the factS of the case, there
shall be no orders as to cost.
D G.N. Appeals dismissed.
Search Indian case law
Ask in plain English, not just keywords. 25,000 AI words free, no card.
Try "minor port jurisdiction"Sign in to search