TMI Blog2009 (5) TMI 860X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore the appeals should be accepted. Thus this Court does not find any merit in any of the appeals and both the appeals are liable to be dismissed. - CIVIL APPEAL NO. 3572 OF 2009 - - - Dated:- 14-5-2009 - BALAKRISHNAN, K.G., SATHASIVAM, P AND PANCHAL, J.M., JJ. JUDGEMENT J.M. Panchal, J. Leave granted in both the special leave petitions. 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 dated June 3, 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 Pondicherry to the detailed project report dated November 16, 2005 submitted by the respondent No. 11 and its partner M/s. Om Metals Limited for the development of Pondicherry Port on BOT basis as well as to the concession agreement to be ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 the tenth century A.D. 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 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 for the preparation of a Master Plan and a detailed project report. After 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 preparation of the Master Plan and a detailed project report. The said organization submitted various reports and finally updated its project report in May, 1982. On th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 would be well within the acceptable levels specified as per the Indian standards. In spite of the positive Feasibility Study Report submitted by M/s. RITES India Limited, the project could not be carried forward in view of the paucity of funds. Again, sometime in March 1996 the Government of Pondicherry made further attempt to develop the Port by inviting the officials of M/s. RITES India 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, 1996. In the said meeting the officials of M/s. 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 M/s.RITE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er. The Director of Ports, Government of Pondicherry, by his letter dated June 24, 1997, made a proposal to the Under Secretary (Ports), 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 M/s. RITES India Limited be approached for consultancy services. By the said letter the Director of Ports also proposed that M/s. RITES India Limited be appointed as the consultant for the assignment of selection of suitable entrepreneurs for `additional development facilities of Ariankuppam Port Project' by competitive tenders on BOOST basis. The Director also requested for sanction of 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 M/s. RITES India Limited. The minutes of the meeting recorded that due to resource crunch at the Centre and State level, the Government 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 for pre-qualifications bids in order to ascert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 by M/s. 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 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 M/s. RITES India Limited. 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 of Pondicherry and M/s. RITES India Limited. After necessary changes, the agreement was entered into between the parties on January 10, 2000. 7. Relevant facts The General Manager (Ports) of M/s. RITES India Limited by his letter dated March 16, 2000 informed the Secretary (Ports) Government of Pondicherry that the advertisement seekin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kvaerner Construction International Ltd. - 73 marks out of 100 (This firm had qualified with some conditions). 4. M/s. Durgeshwari Shipping Agency Pvt. Ltd. - 79 marks out of 100 (This Firm had qualified with some conditions). The short listing of four parties and recommendation of M/s. RITES India Limited to invite detailed proposals from the four parties within five months was approved by the Government of 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 15, 2000. In consequence thereof, M/s. Durgeshwari Shipping Agency Pvt. Ltd. had submitted the requisite documents. Therefore M/s. RITES India Limited confirmed the short listing of consortium of M/s. 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) of M/s. RITES India Limited had, by his letter dated September 22, 2000, sought approval of the Government of Pondicherry in relation to (a) final confirmation of short listing of consor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Limited by his letter dated January 27, 2001 informed the 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 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 Pondicherry. On the proposals made by the General Manager, the then Lt. Governor of Pondicherry in her note dated March 8, 2001 expressed her desire to have a meeting with the officials of M/s. RITES India Limited. On March 30, 2001 the then Lt. Governor of Pondicherry convened a meeting with the officials of M/s. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vatization process of the Port under the Chairmanship of 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 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 the said meeting various courses of actions were discussed. One of the issues related to seeking of consent of Government 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 of Shipping and he was informed that no permission to develop a minor port like Pondicherry port was required and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dertake 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. M/s. IPCO-Menang was not able to 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 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, 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., M/s Larsen and Toubro, Chennai. This decision was approved by the Minister of Ports on April 5, 2004. A Letter of Intent dated April ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Apollo 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 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, 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 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 decision was taken to issue an advertisement in various newspaper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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. 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 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. 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 da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Mott Macdonald, Mumbai. 5. Subhash Projects Marketing Limited 6. Consulting Engineering Services India Limited 7. MECON Ltd., Ranchi. 8. Marshall's Power Telecommunication Limited, Bangalore. 9. Larsen and Toubro, Ramboll 10. Mac Knight Infrastructure Private Ltd., Mumbai. 11. Beckett Rankine Partnership, Bombay. 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 of Port and Director of Port, making a 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 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 December 10, 2004 the following firms/ companies made their presentations on December 17, 2004 before the Committee: - 1. Consulting Engineering Services, New De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 from the firms/ companies were examined on the basis of their experience in preparing the Feasibility Report as 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 process of privatization, two companies were short listed and were granted Letters of Intent. Those two companies, i.e., (i) IPCO Menang, Singapore and (ii) M/s. Larsen and Toubro, Chennai, 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 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 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the proposal. The said noting of the Law Department was examined by the 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 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, 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 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, Government of Pondicherry da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ein Royal Haskonin confirmed that they were able to provide consultancy service to La-V-Jay for the purpose of development of Port. The Director of Ports, Government of Pondicherry by his e-mail dated March 1, 2005 informed the consortium led by M/s. 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, M/s. U-Pranav 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 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 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 presenta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18. 2.12.2004 Beckitt Rankine Partnership, Bombay 08.12.2004 17.12.2004 YES 17.12.2004 19. 2.12.2004 Deloitte Touche Tohmatsu India Ltd., Baroda 08.12.2004 YES 8.12.2004 20. 2.12.2004 MECON Ltd., Ranchi 08.12.2004 NO 17.12.2004 21. 2.12.2004 Bicard-JNTU Consortium Poly-engineers Consultants, Hyderabad 08.12.2004 NO 22. 2.12.2004 Marshall's Power Telecom (I) Ltd., Bangalore 08.12.2004 17.12.2004 11.03.2005 NO 23. 2.12.2004 L T Ramboll Consulting YES Engineers Ltd., Chennai 08.12.2004 17.12.2004 7.12.2004 24. 3.12.2004 CRISIL Ltd., Mumbai 07.12.2004 YES 7.12.2004 25. 4.12.2004 Mottmacdonald, Mumbai 06.12.2004 08.12.2004 17.12.2004 NO 26. 4.12.2004 Indian Ports Association, New Delhi 06.12.2004 08.12.2004 17.12.2004 NO 27. 10.12.04 Scott Wilson Kirkpatrick India Pvt. Ltd., New Delhi 07.12.2004 17.12.2004 NO 28. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble 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. In terms of the recommendations of the Committee for Port Privatisation the Government of Pondicherry by order dated August 4, 2005 appointed National 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 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 examined. It was thereafter decided that M/s. 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 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. 8. 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. 9. The Madras High Court has rejected the two petitions giving rise to the instant appeals. 10. We have heard the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry 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 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: - 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 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 over of the matter and requested the Hon'ble Court to list the matter in the second half on the same da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 was no concession as is sought to be made out by the respondents. Having gone through the proceedings before the High Court, this 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 reflected in the note in the form of directions, which are to be 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 circumstances of the case, this Court is of the firm opinion that the appellants had fairly conceded before the High Court that the selection of the respondent No. 11 as Developer of the Pondicherry Port was never canvassed nor the relative merits of the parties were pointed out to the High Court and, therefore, the High Court has not recorde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve 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 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 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 High Court's directions the element of public interest of the 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 Pondicherry through a PIL, which is not permissible. Thus on the ground of locus standi also the appeals should f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the High Court that the selection of the respondent No. 11 as Developer was proper and that the appellants have no locus standi to challenge the contract entered into between the Government of Pondicherry and the respondent No. 11 with its consortium, this Court notices that the appeals were argued at length and on behalf of the respondents also details submissions were made on merit and, therefore, this Court proposes to consider the submissions made by the parties on merits also. 16. The contention that the Government of 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 M/s SPML and 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 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 M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apers. On May 13, 2003, the Government of Pondicherry constituted a Committee to look into the privatisation process of the Pondicherry Port and Secretary (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 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 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 development of Minor Ports was a State subject and therefore no clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erry 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 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 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 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 one year. After making reference to a meeting, which its officials had with the Chief Secretary on December 20, 2004, M/s Larsen Toubro, Chennai, also cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 005 and it was decided that a list of firms, which had expressed their interest to develop the Port 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 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 (I) Ltd. and M.O.H. Group did not give any firm indication about their willingness to develop the Port. DS 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 2005. The record makes it very clear that this was only a list of the firms/companies interested in developing the Port and not ranking. The Digital Hub and Walter Bau AG had also expressed their wil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent 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 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. 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 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 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 the Port, he was transferred by the Gov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t (Law) Member (6) Under Secretary to Government (Finance) Member (7) Under Secretary to Government (Port) Member (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 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 private investment. The Committee, after considering the 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 those two firms. The recommendations of the expert committee were accepted by the Government of Pondicherry and a Letter of Intent was issued on September 9, 2003 in favour of IPCO Menang, Singapore, for feasibility studies and preparation of Detailed Project Report for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondicherry 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 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 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 Agreement for the development of the Port on BOT basis, 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. In the order of appointment issued to respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 resolved that a lease amount of Rs.2000/- per acre, per annum, should be charged from M/s. 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 Government of Pondicherry entered into a Concession Agreement with M/s. SPML along with its consortium partners 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 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 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs or not holding of public auction would not be in all cases be 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 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 the existing port facilities. 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 from a major issue of economic development such as development of a port. The respondent No. 11 is called upon to develop the Pondicherry Port on BOT basis. Thus after development of the Port, the same will have to be retransferred to the Gov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 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 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 are forthcoming and then after considering all offers, decide whether I should get the port developed through you . It would be most unrealistic to insist on such a procedure, particularly, in an area like Pondicherry, which on account of historical, political and other reasons, is not yet industrially developed and where entrepreneurs have to be offered attractive terms in order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 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 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. 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 unfolded and volunteered by the respondent No. 11, subject, of course, to further revisions, modificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Port is not 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 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 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, provides that the Legislative 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 has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nment 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, 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 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 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, 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 provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... French Republic to the Republic of India, which is evident from the Statement of 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 misconceived. 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. 27.The record further shows that M/s. RITES India Limited 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 proposal for consultancy was subsequently limited to the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1996 informed the Chief Secretary, Pondicherry Administration about the need to extend the existing capacity of the Pondicherry Port to meet the growth 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 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 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 Government of Pondicherry could not have taken the decision to privatize the Pondicherry Port without consent/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 Terri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rior 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 clearance must precede the award of the project is 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 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 to examine the 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 project in question is completely prohibited under the CRZ notification. 30.The argument that the Respondent No. 11 is permit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 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 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 should be accepted. 31. For the reasons stated in the judgment, this Court does not find any merit in any of the appeals and both the appeals are liable t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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