Back
2022 Supreme(Mad) 3918
IN THE HIGH COURT OF JUDICATURE AT MADRAS
ABDUL QUDDHOSE, J.
M/s. A1 Khaleija Aggregates FZE, Disponent Owner (Vessel Owner), Rep. by its signatory authority, Mathan Udhyakumar - Petitioner
Versus
Director General of Shipping, Mumbai and Ors. – Respondents
W.P.Nos.19888 & 16985 of 2022 & W.M.P.Nos.19195, 16269 & 16271 of 2022
Decided On : 02-09-2022
Mr. ARL. Sundaresan for Mr. Karthik Sundaram; Mr. J. Ravindran, AAG Assisted by Mr. L. Jai Venkatesh; Mr. Prasad Vijayakumar; Mr. M. Karthikeyan; Mr. Yashodh Varadhan for Mr. S. Harshavardhan.
The main legal principle established was the importance of adhering to the specified evaluation criteria and the DGS circular in awarding contracts, ensuring fairness and compliance with the ROFR provisions.
Headnote:
Right of First Refusal - Coastal Trade Time Charter Permission - DGS Circular No.02/2021 - The court discussed the applicability of the ROFR clause in the tender and the evaluation criteria based on cost per tonne basis. The judgment highlighted the interpretation of the DGS circular, the evaluation criteria, and the impact on the award of the time charter.
Fact of the Case:
The case involved a dispute between a Foreign ship owner and an Indian ship owner competing for a time charter from TANGEDCO to transport coal. The Indian ship owner sought to exercise its Right of First Refusal (ROFR) based on the DGS circular, but TANGEDCO awarded the time charter to the Foreign ship owner.
Finding of the Court:
The court found that the evaluation of the tender by TANGEDCO was done on a charter hire per day basis, contrary to the specified evaluation criteria of cost per tonne basis. The court also noted that the Indian ship owner was eligible to exercise its ROFR as per the DGS circular.
Issues: The key issues included the interpretation of the evaluation criteria, the applicability of the ROFR clause, and the compliance with the DGS circular in awarding the time charter.
Ratio Decidendi: The court held that the evaluation had to be based on cost per tonne as per the tender conditions and the DGS circular. It emphasized that TANGEDCO's award of the time charter to the Foreign ship owner was arbitrary and illegal, violating the DGS circular.
Final Decision: The court allowed the Indian ship owner's writ petition, quashing the award of the time charter to the Foreign ship owner and directing TANGEDCO to accept the Indian ship owner's matching offer in exercise of its ROFR.
ORDER :
(Prayer: Writ petition filed under section 226 of Constitution of India for Writ of Mandamus directing the first respondent to process and grant coastal trade time charter permission cum license to the petitioner pursuant to the letter of the second respondent in Ref. No.STSL/DGS/CT-SPL/MV KHALEJIA ANA3/2022-23/dated 06.07.2022 as expeditiously as possible within the time frame to be fixed by this Court.)
(Prayer: Writ Petition filed under Article 226 of the Constitution of India praying for Certiorarified Mandamus calling for the records of the impugned Fixture Note dated June 22, 2022 awarded to Respondent No.3 by the Respondent No.3 by the Respondent No.1 and quash the same and direct the Respondent No.1 to accept the matching offer of Rs.515.32 per Metric Tonne (INR/MT) made by the petitioner in exercise of its Right of First Refusal in terms of the Petitioner's communication dated 5th June, 2022 and consequently, award the tender in respect of item-2 of the Tender dated May 10, 2022 to the petitioner.)
The tussle in these writ petitions are between a Foreign ship owner and an Indian ship owner. Both of them are competing for a time charter from TANGEDCO for their respective vessels to transport coal for TANGEDCO. M/s.Al Khaleija Aggregates FZE, the Foreign ship owner who is the third respondent in W.P.No.16985 of 2022 and the petitioner in W.P.No.19888 of 2022 has been declared as the successful bidder by TANGEDCO and has been awarded a time charter to operate their vessel for transporting coal for TANGEDCO.
2. M/s.Al Khaleija Aggregates FZE, the Foreign Ship owner shall hereinafter be referred to as “the Foreign ship owner”. Apeejay Shipping Limited, the Indian shipping company shall hereinafter be referred to as “The Indian ship owner”. Both the Foreign ship owner and the Indian ship owner participated in the tender called for by TANGEDCO and after becoming technically qualified, the Foreign ship owner was declared as the L1 bidder and the Indian ship owner was declared as L2, based on their respective price bids submitted by them. After the Foreign ship owner was declared as a successful bidder, they have also been awarded a contract by the execution of the Time charter party. However, the license is yet to be issued by the Directorate General of Shipping to the Foreign ship owner for operating its vessel in India to transport the coal belonging to TANGEDCO, as per time charter, due to the present dispute.
3. In the tender called for by TANGEDCO, there is an ROFR clause (Right of First Refusal Clause). The ROFR clause became mandatory pursuant to the Make in India Policy of the Indian Government. The ROFR clause in the tender has been incorporated as a tender condition pursuant to the Directorate General of Shipping circular No.2 of 2021 dated 14.01.2021. There was a need felt to review the licensing conditions keeping in view, (a) the Government of India's policy of promoting the Make in India initiative, (b) the Ministry's existing policy to promote flagging of ships in India (c) the Public Procurement and Make in India orders dated 15.6.2017, 28.05.2018 and 04.06.2020 issued by DIPP, (d) the need to give a long term strategic boost to the domestic shipping and ship building industry, (e) the need to encourage the domestic shipping industry to support the domestic ship building industry and (f) the need to develop self- reliance and a strong synergy among these vital industries for the overall long term development and economic growth of the country.
4. With the aforesaid objectives in mind, DGS Circular No.02 of 2021 was issued making it mandatory to incorporate the right of first refusal (ROFR) clause in tenders to benefit Indian ship owners. The relevant clauses in DGS circular No.02/2021 dated 14.01.2021 are extracted hereunder:
“21. Right of First Refusal: "Right of first refusal" is a right which accrues to a b
