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TMI Blog2017 (8) TMI 580X X X X Extracts X X X X X X X X Extracts X X X X ..... t to and from the Jawaharlal Nehru Port Trust (for short, "JNPT") Port. 4 On 23 March 2017, Bid/Tender Notice issued by Respondent No.2JNPT for "selection of transporter for providing transport solution for various identified routes for direct port delivery ISO freight containers from the four terminals of JNPT", whereby the JNPT under the Direct Port Delivery (DPD) Model intends to select a panel of transporters with respect to five regions as earmarked by them through the tender process. All the containers which are required to be cleared before 48 hours under the DPD model shall be diverted only to the selected five transporters. On 1 September 2008, the Chief Commissioners of Customs, NhavaSheva issued a facility Notice No. 63 of 2008 ("FN 63/2008") as per which DPD facility was introduced for the first time as a facility to accredited importers, i.e. the importers who fulfilled certain criteria as per the aforesaid facility notice, as per which on payment of duty, containers were allowed to be removed directly from the port itself without any examination as required under the Customs Act, 1962 (for short, "the Customs Act"). On 10 March 2008, Petitioner No.1 issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of introduction of DPD a.k.a. DPD facility, the Import General Manifest also indicates where a container is meant for DPD. An Import Advance List ("IAL") is filed by the shipping line with the terminal prior the berthing of the vessel. The importers who fulfilled certain criterion on the basis on their tract record and reputation, with minimum compliance under the Customs Act, as part of the Risk Management System ("RMS") and on the basis of selfassessment were allowed to take their goods directly to their factory premises from the port terminal without it being diverted to Container Freight Station (for short, "CFS"). Even as per FN No. 161/2016, it was provided that if the DPD containers which are not cleared by the importer within 48 hours of the arrival of the container, then such container will be automatically transferred to the designated CFS, speedy CFS. However, due to sudden increase in the number of DPD importers from 50 to 681 i.e. from 3% to 17%, the port became all the more congested. Hence this Petition. 7 Both the Petitioners have challenged tender/notice of JNPT, Traffic Department dated 23 March 2017, "for selection of transporter for providing transpor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itions and the eligibility criteria and set aside the High Court order "29 In Reliance Telecom Ltd. and another v. Union of India and another, the Court referred to the authority in Asia Foundation & Construction Ltd. v. Trafalgar House Construction (I) Ltd. and others wherein it has been observed that though the principle of judicial review cannot be denied so far as exercise of contractual powers of Government bodies are concerned, but it is intended to prevent arbitrariness or favouritism and it is exercised in the larger public interest or if it is brought to the notice of the court that in the matter of award of a contract power has been exercised for any collateral purpose." 11 The Supreme Court, while dealing with the requirement of the State to take any new policy decision and/or in related administrative action, has recorded in the judgment of Ekta Shakti Foundation Vs. Government of NCT of Delhi (2006) 10 SCC 337 that: 11. "5 While exercising the power of judicial review of administrative action, the Court is not the appellate authority and '[the Constitution does not permit the Court to direct or advise the executive in matter of policy or to se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the objects sought to be achieved. Further, it does not allow any kind of arbitrariness and ensures fairness and equality of treatment. It is the fonjuris of our Constitution, the fountainhead of justice. Differential treatment does not per se amount to violation of Article 14 of the Constitution and it violates Article 14 only when there is no reasonable basis and there are several tests to decide whether a classification is reasonable or not and one of the tests will be as to whether it is conducive to the functioning of modern society." 13 The position of law with regard to the tender, contract and/or such policy decision has been settled through various judgments, specifically when it comes to taking administrative and/or executive decision to bring in and/or make policy. In JSW Infrastructure Limited & Anr. (supra), the Apex Court held that "9. We may also add that the law is well settled that superior courts while exercising their power of judicial review must act with restraint while dealing with contractual matters. A Three Judge Bench of this Court in Tata Cellular vs. Union of India held that (i) there should be judicial restraint in review of administrative acti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transhipping passengers and goods between vessels in the port and the wharves, piers, quays or docks belonging to or in the possession of the Board; (b) receiving, removing, shifting, transporting, storing or delivering goods brought within the Board's premises;" "[(3A) Without prejudice to the provisions of subsection (3), a Board may, with the previous approval of the Central Government, enter into any agreement or other arrangement (whether by way of partnership, joint venture or in any other manner) with, any body corporate or any other person to perform any of the services and functions assigned to the Board under this Act on such terms and conditions as may be agreed upon.]" 16 The Customs Act, provides that 2. Definitions ..... "(12)"customs port" means any port appointed under clause (a) of section 7 to be a customs port, [and includes a place appointed under clause (aa) of that section to be an inland container depot];" "(13)"customs station" means any customs port, [customs airport, international courier terminal, foreign post office] or land customs station;" "(23) "import", with its grammatical variations and cognate expressions, means bringing into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in India the transportation sector is highly unorganized and the number of trucks available with a transporter is much less as compared to other developed countries. Also, the level of automation, standardization and use of technology is much different in India and hence, a suitable example for replication was not found. To address this issue an "Outofbox" solution was found which would be "firstofitskind" in India. The model was worked out considering the two requirement 1) The number of stacks has to be minimum and 2) It should be designed on the "bestpick model" keeping the number of shifting to the minimum. The detailed background and the transportation solution is explained further in this section." 19 This was after various studies and information collected by Port of Customs, Ministry of Shipping and with intent to identify measures to reduce the transaction cost and time, and the reasons so reflected and keeping in line "Ease of Doing Business" and "Make in India". The Government of India has proposed DPD Model, which envisages the significant reduction in transaction cost and time. 20 DPD concept and its benefits have also been ela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... selected through the bidding process and their rates and the importers shall need to enter into commercial arrangement with the transporter. vi. Importer will need to clear the documentation of the container immediately and ensure that the selected transporter clears the cargo from the port within a total time of 48 hours, failing which the container cargo will be transferred to the designated CFS. In such cases, the importer shall be required to clear the documentation and the transporter of the concerned CFS shall transport the containers from the CFS to Importer premises. vii. JNPT, NSICT, NSIGT, GTI, DG Shipping, Indian Ports Association and Customs together shall form a grievance redressal committee that will address the issues of the stakeholders related to the transport solution. viii. JNPT shall not enter into any direct commercial arrangement with the transporter. ix. Importers will need to hire the selected transporters for taking the DPD import delivery. The importers shall enter into commercial arrangement with the selected transporters and shall share the necessary documentation with the transporter based on which the terminal operators will give delivery to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tract and arrangement. Clause 6.16.12 deals with the dispute between JNPT and the Contractor. The decision of the Chairman of JNPT made will be final and binding on both the parties, with provision in case, the contractor is not satisfied the law of land shall prevail. The jurisdiction of Mumbai High Court shall prevail, so also any dispute relating to the tender is subject to the jurisdiction of Court at Mumbai only. 25 The Petitioners have crystallized the concept of DPD and CFS and requirement of 48 hours evacuation on the arrival of the goods. Those are as under: CFS MODEL: The CFS, which is nothing but an extension of the port, was introduced in the year 1989 by the Customs Department to help clear the congestion of the ports in India. In this model, imported goods are immediately shifted after the arrival from the port to CFS, where all the activities related to clearance of goods for home consumption, warehousing, temporary admissions, reexport, temporary storage for onward transit and outright export and transshipments take place thereby reducing port congestion. The Petitioners further states that, since inception on 1989, even the Respondent No. 2 port in orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 2008. That notice, inter alia, provided for DPD facility (i.e. for importers to take delivery directly from the port terminal) to ACP importers (as per Public Notice No. 64 of 2005) and to 100% Export Oriented Units (EOUs) for FCL containers covered by the RMS or where no examination is required. The petitioners state that under the DPD facility, delivery of the containers would be done at the port itself and therefore, such containers would not travel to a CFS for completion of the Customs formalities. Facility Notice No. 63 of 2008 provided for importers, who satisfy the aforesaid criteria, to apply for DPD facility to respondent No. 3 in the prescribed form. It also provided for the procedure that would be followed under the DPD facility." "20. The petitioners state that on account of Public Notice No. 161 of 2016, there has been a rise in the volume of DPD container traffic. As a result of this, the business of CFSs, including the petitioners, was significantly impacted since a significant number of containers, which would otherwise hitherto have passed through CFSs such as the petitioners, would no longer come to the petitioners on account of being earmarked as DPD i.e. d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ute. In the interest of general public, the law may impose restrictions on the freedom of the citizen to start or carry out his business. Such a law cannot be, therefore, struck down as violative of the mandate of Article 19(1)(g) of the Constitution of India. A business loss to a particular person or diminution in profits cannot be, therefore, the ground on which any action, which is in public interest, can be interfered with. Therefore, at the instance of the petitioners, the present public notices cannot be quashed and set aside." "67. In the first notice of 2017 (Public Notice No. 8 of 2017 dated 16th January, 2017), the office of the Commissioner of Customs refers to the representations by various stakeholders/members from trade and then states that as a measure of trade facilitation and ease of doing business, the points raised by these persons have been examined and pointwise clarification/procedural requirements are set out in this public notice. In Public Notice No. 9 of 2017, there is a reference made to meetings with the CFSs within the jurisdiction of JNCH, at which, their views were solicited in order to find a solution to logistic arrangements. It was discussed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest of general public. Insofar as Writ Petition (L) No. 1626 of 2017 i) Power and the jurisdiction of the Respondents. ii) Fundamental right to do business under Article 19(1)(g) of the Constitution of India. iii) Minutes of the meeting can never amount to "policy decision of the Government". iv) The transportation policy will be optional and not compulsory. v) The tender is an extension of the DPD policy and even supported by Customs. vi) Tender creates monopoly. vii) The tender does not deal with the delivery of the goods. Policy decision by any mechanism 28 The concept of "policy decision" may include Executive instructions/instructions also. The effect and use of it only enlightend its utility and usefulness. Any challenge to policy decision, without factual document/material is premature. Any policy decision cannot be challenged on presumption and assumption. The policy decision can be changed and modified, subject to its practice, utility and its use. It is ultimately the State/expert's/ executive decision, keeping in mind the interest of people at large, rather than private individual or associations' rights of doing business. Judicial re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... moved in the sequence in which the same are stacked, without shifting them for the purposes of giving delivery of a specific container to the transporter. It has therefore, been decided, based on the data received by Respondent No. 2 from the Customs Authorities to identify five routes. This would enable the stacking of containers to be done regionwise, thereby making stacking simpler and avoiding shifting of containers since irrespective of the order in which the containers are stacked, it would be stacked for the same route in the same region, and the transporter can pick any of them for delivery to the consignee (importer). This is to ensue that the dwell time and the costs of delivery of the container would be reduced. 32 The JNPT, published the tender with various conditions, including eligibility criteria of two models which provides the opportunity to wider the number of truck clauses, truck operators and other transportation business persons. This includes, the Consortia Joint Venture or the operational contract basis even for the period of 9 months.. The manner of evaluation of bids is provided. The High Level Committee is constituted to select more than one tenderer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itiatives. The Respondents' decision to rerationalise and streamline the implementation of the DPD model at its port is well within the scheme. The DPD model is introduced to bring in a change in the existing clearance framework to meet contemporary needs. The tender, is with view to implement the policy decision to promote the manufacturing industry and streamline the processes for import of goods. 35 The process relating to transport of containers is further clarified as under (i) JNPT is one of the twelve major Ports in India and the biggest container port in the country. (ii) The dispatch logistics of transport of imported cargo from ports conventionally works in two ways -CFS Model and DPD Model. The DPD Model was introduced in the Port in 2008 to streamline the dispatch of imported cargo that lands at the port. The two models are briefly described below. (iii) In the CFS Model, there are broadly five participants involved, viz. (i) the Port, (ii) the Container Freight Station, (iii) Customs authority, (iv) the Importer and (v) transporters. The containers offloaded at the port are aggregated at as heaps for each CFS at JNPT's Container Yard at the outset and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... increase in the number of importers using the DPD Model, it was realized that segregating containers on to large number of heaps and in the absence of a suitable / tailored transport solution, evacuation difficulty will increase manifold. Anticipating the chaos and confusion likely to occur with the increase in traffic congestion, the Petitioner decided to rationalize and streamline the implementation of the DPD Model at its Port. viii) The policy decision by the JNPT was to select transporters for five different highvolume routes, by way of a transparent tendering process. The criteria for selection of transporters were broadly premised on: (a) fleet size and capability of transporter, (b) experience in the field, (c) financial capability of transporter, (d) technological capability to cater to logistical requirements. The selected transporters were to operate for a period of three years, extendable by two years upon mutual consent. ix) JNPT's decision to so rationalize the transportation under the DPD Model is with the wideranging object of streamlining the traffic movement to and from the Container yard and to ensure reliable and good quality service to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions. The Petitioners have right to take the delivery of goods through the one transporters that itself does not mean such transporters and/or importers can bring in or out their own transports at their will and wish, even at port/customs area. The smooth transportation of goods and/or delivery of goods from port/customs area to respective market places and/or viceversa, required to be streamlined to avoid congestion and delay. All departments and stakeholders are required to work in coordination and in the interest of people at large for providing the goods at the destiny, at the earliest point of time. This is in the background that ultimately, the department/the officials in the port area and/or customs area are required to handle and/or deal specifically in bulk imported and/or exported goods. The requisite number of containers are required to be stalked in or arranged for proper delivery of the goods of the respective importers and/or persons. The proper documentation of the goods and the procedure so followed, is in the interest of all. The goods must be reached and delivered to its owners/importers/transporters, at the earliest. The importers are free to have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate selection of transporters and right to continue to do business with them by the importers association, members and/or right of transporters to do business, only with the particular private importers even by long standing, in no way can be stated to be violative of Article 19(1)(g) of the Constitution of India. The internal contract, even if any, required to be arranged as per the policy and/or regulation fixed by the authorities with whom they want to and/or intend to do such business. To say that for this existing contracts the Respondents should not change and/or bring a new policy, is unacceptable situation. The Respondents have been regulating the affairs of such transportation and/or delivery of goods from time to time in the port/customs area, keeping in mind the demand and supply of such goods and the requirement of importers and transporters. It is a matter of record that how the transporters/ importers and respective vehicle numbers have been changed now up to 450/750. The Respondents cannot be silent spectators and not to take any decision to bring in the mechanism, in the interest of people at large. The Petitioners contentions therefore, are unacceptable. They are a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondents have issued the tender to implement the public notice dated 28 November 2016 issued by the Chief Commissioner of Customs, under Section 141(1) of the Customs Act, which was issued for implementation which includes the DPD policy in the JNPT. About 681 importers have been identified from DPD from the JNPT port. As noted, the Petitioners and others have already welcomed the DPD policy in JNPT. This also is to promote the Government of India's "make an India" and "Ease of doing business initiative". 43 The Respondents' mechanism to select the transporters, keeping in mind, to clear the transport congestion at the port, therefore, cannot be halted with. This is in the background that the increase in the DPD containers, created the containers stake, the containers DPD Wise, due to the congestion of the yard area. To stake the containers routewise and by selecting the transporters for the route, through the tender process to make the evaluation smooth without any congestion, therefore, at this stage, cannot be stated to be unjust, arbitrary and/or without any aims and objects. This assists in clearing the containers within 48 hours to avoid compulsory designated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ewise selection and internal to have a few importers incharge with their respective numbers of trucks/transport containers, cannot be stated to be a creation of monopoly. The freedom of business, jointly, singly and/or collectively, based upon the policy and/or regulations. The requirements in the respective fields is always a matter of commercial wisdom and arrangement. Therefore, the contentions of the Petitioners are unacceptable. The reliance on the Mahesh Verma Vs. State of Maharashtra 2008 (4) Mh. L.J. 657 is of no assistance on the facts itself. There is a force in the contentions that the DPD containers only 28% of the import cargoes (which ratio of import and export cargo is 50:50). The transporters are free to do their remaining business of transportation, even at the JNPT port, apart from about 14% of entire transportation. There are various mechanism provided for transporters to do business jointly, individually or through the joint venture and/or through 9 months contract mechanism. 46 We are of the view that the Respondents required to allow to proceed with the tender and to implement the same. In case of difficulties and/or issues various mechanisms have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnected part of JNPT regulation and so the Commissioners, customs regulations. The preamble of tender itself makes position clear that all the concerned departments are interested and involved for free and smooth transportation of the goods of the importers, through the transporters from the JNPT and/or by customs area. Power to change or modify the policy decision in the public interest 50 The individual Petitioners' instance to do the business, through the contractors of their choice is not fundamental rights and/or legal rights/ which should prevail over the authority of Respondents, to change the policy and/or implementing the new transportation policy. Such Petitioners/importers/ manufacturers are free to do business and/or transportation, but according to the policy and the regulations so fixed by the Respondents. Such streamline of transportation, in no way takes away and/or infringe such manufacturers fundamental rights to do business. Tender stakes, therefore, cannot be decided at the instance of one such singular manufacturer. The right to chose the transporter, in view of above, cannot be stated to be fundamental to prevail over the power and authority of Resp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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