2009 Supreme(SC) 1091

Supreme Court of India
THE HONOURABLE CHIEF JUSTICE MR. K.G. BALAKRISHNAN, THE HONOURABLE MR. JUSTICE P. SATHASIVAM & THE HONOURABLE MR. JUSTICE J.M. PANCHAL
Villianur Iyarkkai Padukappu Maiyam
Versus
Union of India & Others
Civil Appeal No. 3572 of 2009 (Arising out of SLP (C) No. 6977 of 2007)
Decided on : 14-05-2009

IMPORTANT POINTS
A point conceded before High court cannot be agitated before Supreme Court.
Award of Contract cannot be challenged in a PIL.
SLP must comply with Order XVI, Rule 4(1), clause (b) of the Supreme Court Rules, 1960.
Allegation of arbitrariness and mala fides has to be substantiated.
Scope of judicial review in policy decision and economic tests is very limited. Court cannot strike down a policy by examining relative merits of different economic policies and holding that another policy would have been fairer and better.
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.

Headnote:(a) Constitution of India – Article 136 – Selection of Developers for Pondicherry port – Appellants conceding before High Court that selection of Respondent no. 11 as Developers was correct – Appellant cannot challenge the same before Supreme Court. (Para 12)

       (b) Government contract – Selection of Developers – Locus to challenge – None of the losing parties challenging selection of respondent no. 11 – Appellant not being in the race of developers, not an aggrieved party – Award of Contract in favour of the respondent No. 11 cannot be challenged in a PIL – Writ petition filed by appellant, held, not maintainable – Constitution of India – Article 226 – PIL. (Para 13)

       (2002) 2 SCC 333 – Relied upon

       (c) Supreme Court Rules, 1960 – Order XVI, Rule 4(1), clause (b) – List of dates and synopsis – Appellants filing incomplete list of dates and synopsis – Misleading – Disapproved. (Para 14)

       (d) Government contract – Appellant challenging selection of respondent no. 11 as being arbitrary and with oblique motives – Appellant not able to specify any member of the Committee or the Government as being interested in issue of letter of intent to respondent no. 11 – Procedure adopted for identifying the respondent No. 11 found to be crystalline, distinct, forthright, manifest and unambiguous – Appellants understanding of the issue, held, absolutely baseless and not only incorrect but also contrary to the records of the case – Selection of the respondent No. 11 as developer cannot be regarded as capricious, despotic, fanciful or personal – Appellant’s contention rejected. (Para 20)

       (e) Government contract – Procedure – Switching from tender process to personal selection – Auction or tender required when Government land is proposed to be transferred – Instant matter relates to development of existing Pondicherry port on Build, Operate and Transfer basis; not creating a new port – Cannot be equated to sale or auction – Appellant’s contention rejected. (Para 21)

       (f) Administration of Justice – Judicial Review – Scope of judicial review in policy decision and economic tests – Very limited – Court cannot strike down a policy by examining relative merits of different economic policies and holding that another policy would have been fairer and better – A policy can be successfully challenged only if it is shown that it is wanting in reasonableness or is not informed with public interest – Appellant’s contention rejected. (Para 21)

       (g) Constitution of India – Article 239 and 239A and Sections 46, 50, Government of Union Territories Act, 1963 r/w Rule 5, Rules of Business of the Government of Pondicherry, 1963 – Challenge to issue of letter of intent to respondent no. 11 – These provisions and guidelines apply to major ports – Pondicherry is minor port – These guidelines do not apply – Indian Ports Act, 1908 permits the State Government to develop the minor ports – Entry 31 of Concurrent List providing for ports other than major ports – Therefore State Government has legislative power in case of minor ports and in terms of Article 162 also executive power which is co-terminus with legislative power. (Para 23)

       (h) Pondicherry (Laws) Regulation, 1963 – Regulation 6(b) – Reference to the State Government shall be construed as a reference to the Central Government, and, reference to the State Government shall be construed as reference to the Chief Commissioner – Appellants relying only first part of the Regulation – Reading Regulation 6(b) with Regulation 2(b) reference to State Government would mean reference to Chief Commissioner or Administrator (now Lt. Governor) – Pondicherry port necessarily vests in the State Government and not Central Government. (Para 23)

       (i) Rules of Business of the Government of Pondicherry, 1963 – Rule 5(2) r/w Rule 21, Delegation of Financial Rules – 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 – Contention rejected. (Para 23)

       (j) Pondicherry Administration Regulation Act, 1962 – Section 3 and 5 – Section 3 making all Central Acts applicable to Pondicherry – Akin to adaptation Act – Thus Indian Ports Act, 1908 made applicable – However 1908 Act being applicable only to major ports, will not apply to Pondicherry port – Section 5 vesting French properties of Pondicherry in Government of India – Can have no bearing on powers of State Government of Pondicherry to dispose of land in accordance with Constitutional provisions – Permission of Central Government not required for privatization of Pondicherry port. (Para 25, 27)

       (k) Environmental law – Environment impact assessment and Environmental clearance – Project cost being over 50 crores, Environmental clearance has to be given by Ministry of Environment and Forest Union of India – Contention that clearance should have been obtained prior to issuing letter of intent is misplaced because application for clearance has to be made by the entity which has been entrusted with the project – High Court already given appropriate directions – Contention based on environmental issues rejected. (Para 29)

       (l) Infrastructure law – Development of Pondicherry port – Concession agreement – Not a real estate contract – Government not spending any amount – Finance to be arranged by developers-respondents no. 11 and 12 – So no question of State Government favouring developers – Development of port necessarily requiring some infrastructure for accommodation etc. of staff and officers during construction and thereafter for visiting clients etc. – Moreover, respondents 11 and 12 cannot start construction before their detailed plan is approved and sanctioned – Appellant’s contention that respondents 11 and 12 are developing real estate in the garb of port rejected. (Para 30)

       Facts of the case:

       This case relates to development of Pondicherry port.

       After discussions and on the basis of the presentations four firms were short listed in the following preferences: -

       1. M/s. Subhash Projects and Marketing Limited

       2. M/s. D.S. Constructions

       3. M/s. Apollo Infrastructure Projects Finance Company Limited

       4. M/s. Larsen and Toubro, Chennai

       The Under Secretary (Ports), Government of Pondicherry issued a Letter of Intent dated June 3, 2005 in favour of M/s. SPML. It was stated in the said letter that it was proposed to engage the said company for the development of Pondicherry Port on BOT basis and the Letter of Intent was subject to the condition that Detailed Project Report was approved by the 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 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.50 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 on June 18, 2005. The company, along with its letter dated July 18, 2005, submitted a Detailed Project Report to the Government of Pondicherry.

       The Government of Pondicherry appointed National Institute of Port Management, Chennai as a Consultant for the development of the Port.

       The Under Secretary (Port), Government of Pondicherry forwarded a Detailed Project Report submitted by M/s. SPML to NIPM with a request to make a detailed analysis and evaluation of technical, financial, environmental and legal aspects on the Detailed Project Report.

       The Second Revised Detailed Project Report was accepted by the Government as Approved Detailed Project Report. The Government of Pondicherry thereafter constituted a Committee to draft the Concession Agreement to be entered into between the Government of Pondicherry and M/s. SPML.

       The Concession Agreement was thereafter drafted on the basis of the Approved Detailed Project Report. The Council of Ministers 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 charged from SPML.

       On January 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, 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.

       The Letter of Intent dated June 3, 2005, granted to 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 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 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.

       The Madras High Court has rejected the two petitions.

       Finding of the Court:

       All contentions of the appellants are misconceived.

       Result:

       Appeals dismissed.