TMI Blog2011 (2) TMI 1556X X X X Extracts X X X X X X X X Extracts X X X X ..... bid in August 2005 for allotment of Plot No. 8 for construction of liquid storage tanks at Kandla. The Petitioner was declared the highest bidder for Plot No. 8 by the Respondent on 12.01.2006 on the basis of the recommendation of the Tender Committee constituted in the matter of tender for allotment of plot for construction of liquid storage tanks at Kandla. Allotment of 17 plots to the respective highest bidder for 30 years lease is subject to receipt of CRZ Clearance. The Petitioner thereafter entered into further correspondence with the Respondent between the period from 2006 to 2010. The Petitioner thereafter addressed a letter dated 18.01.2010 informing the Respondent about their subsidiary Company M/s. Sanghavi Logistics Private Limited, incorporated for construction, maintenance and operation of liquid storage tanks at Kandla and asking permission to carry out construction, maintenance and operation of storage tank at Plot No. 8 in the name of M/s. Sanghavi Logistics Private Limited, instead of M/s. Nikhil Adhesives Limited, the Petitioner herein. In response to the said letter, the Petitioner received a reply dated 18.03.2010 from the Respondent stating that the matter of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tending that it would be acted upon by the other party to whom the promise is made and it is in fact so acted upon by the other party, the promise would be binding on the party making it and he would not be entitled to go back upon it. He has, therefore, submitted that the principle of promissory estoppel would certainly estop the Respondent from backing out of its obligation arising from a solemn promise made by it to the Petitioner. In support of this submission, Mr. Thakore relied on the decision of the Apex Court in the case of The Gujarat State Financial Corporation v. Lotus Hotels Private Limited AIR 1983 SC 848, wherein it is held that it is too late in the day to contend that the instrumentality of the State which would be other authority under Article 12 of the Constitution can commit breach of a solemn undertaking on which other side has acted and then contend that the party suffering by the breach of contract may sue for damages but cannot compel specific performance of the contract. It was not disputed that the Gujarat State Financial Corporation which is set up under Section 3 of the State Financial Corporations Act, is an instrumentality of the State and would be o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be allowed to function in such an arbitrary manner as State action must not be arbitrary, must be based on some rational and relevant principle and dealing with the public, whether by giving of jobs or entering into contracts or otherwise, it cannot act arbitrarily and enter into relationship with any person it likes as its sweet will, but its action must be in conformity with some principle which meets the test of reason and relevance. He has, therefore, submitted that the petition deserves to be admitted and the interim relief as prayed for is required to be granted. In support of this submission, Mr. Thakore relied on the decision of the Apex Court in the case of State of Himachal Pradesh and Ors. v. Ganesh Wood Products and Ors. (1995) 6 SCC 363, wherein it is held that the rule of promissory estoppel being an equitable doctrine, has to be moulded to suit the particular situation. It is not a hard and fast rule but an elastic one, the objective of which is to do justice between the parties and to extend an equitable treatment to them. The doctrine of promissory estoppel was evolved to protect a promisee who acts on the faith of a promise/representation made by promisor and al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fair play, natural justice, equality and non-discrimination. 6. Mr. Thakore further relied on the decision of the Apex Court in the case of State of Maharashtra and Ors. v. Atur India Private Limited (1994) 2 SCC 497, wherein the Apex Court was concerned with the leviability of stamp duty under the Bombay Stamp Act on agreement to lease. While pointing out the distinction between the agreement to lease and agreement of lease, the Court has referred to Woodfall on law of Landlord and Tenant wherein it is observed that a contract for lease is an agreement enforceable in law whereby one party agrees to grant and another to take a lease. The expressions 'contract for lease' and 'agreement for lease' is to be preferred as being more definite, agreement frequently means one of many situations in a contract. A contract for a lease is to be distinguished from a lease, because a lease is actually a conveyance of an estate in land, whereas a contract for a lease is merely an agreement that such a conveyance shall be entered into at a future date. In contradistinction to this, in the case of a lease, there must be words of demise. The usual words by which a lease is mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be for a period of six months from the date of opening of tenders, unless the extension is sought for by Kandla Port and is agreed by the bidders. On lapse of six months, there would be no valid bid or offer for which enforcement could be sought. 9. Mr. Vyas further submitted that in a pre-bid meeting, the prospective bidders were persuaded and queried on mandatory government clearances to be taken, including CRZ Clearance. The Respondent by communication dated 25.05.2005 informed the prospective bidders that the Respondent would obtain general clearance for the area for tank farms. However, further clearances were to be obtained by the individual lessee. Since the bid of the Petitioner was highest, the Tender Committee recommended the Board of Trustees for approval, which was approved by the Resolution dated 08.12.2005. In view of prior mandatory clearances required for the Project, it was communicated to the Petitioner vide letter dated 12.01.2006 that it is only after the receipt of CRZ Clearance, the formal letter of allotment will be issued to the Petitioner. He further submitted that the communication dated 12.01.2006 would, at best, be pitched to be a letter of int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioner confirming any urgency or desire to have the proposal of the allotment made by it being accepted by the Respondent. He further submitted that for application for CRZ Clearance, the consultants, namely, National Institute of Ocean Technology, New Delhi was appointed by the Respondent who had called for material particulars which were in turn requested to be supplied by the Petitioner and all other bidders. Vide communication dated 15.02.2006, the Petitioner was called upon to submit the relevant particulars. In absence of details supplied by the Petitioner and other bidders, the same could not be sent for the CRZ Clearance. If details were available and they were sent to the Consultant, he would have in term submitted his advise there upon. It is only after that the CRZ Clearance would be applied to much later. The Respondent had thereafter made repeated reminders to the Ministry of Environment and Forest requesting early clearance for Project. The said permission came to be received by the Trust as late as in February, 2010. 13. Mr. Vyas further submitted that it is a specific term that the allotment would commence from the actual date of handing over the possession ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g application of doctrine acted on the basis of a notification, it should have known that such notification was liable to be amended or rescinded at any point of time, if the Government felt that it was necessary to do so in public interest. In Dresser Rand S. A. v. Bindal Agro Chem. Ltd. and Anr. AIR 2006 SC 871, the Apex Court held that it is now well settled that a letter of intent merely indicates a party's intention to enter into a contract with the other party in future. A letter of intent is not intended to bind either party ultimately to enter into any contract. It is no doubt true that a letter of intent may be construed as a letter of acceptance if such intention is evident from its terms. It is not uncommon in contracts involving detailed procedure, in order to save time, to issue a letter of intent communicating the acceptance of the offer and asking the contractor to start the work with a stipulation that a detailed contract would be drawn up later. If such a letter is issued to the contractor, though it may be termed as a letter of intent it may amount to acceptance of the offer resulting in a concluded contract between the parties. But the question whether t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ken by the Petitioner despite the fact that the Petitioner was informed by the Respondent Kandla Port Trust on 15.02.2006 that the work of preparation of EIA studies in respect of allotment of 17 plots for construction of Liquid Storage Tanks for obtaining CRZ clearance from the Govt. of India, Ministry of Environment has already been entrusted to M/s. NIOT, Chennai along with other project works and the said institute has already completed site survey work for the purpose. The Petitioner was also informed that the said M/s. NIOT, Chennai has suggested to provide following information for incorporation of the same in EIA studies: (i) Approximate estimation for the activity (ii) Proposed activity (type of Cargos to be stored) (iii) Proposed storage capacity (approximate quantum of the liquid commodity, size etc.). 18. The Petitioner was specifically informed that the said information was urgently required to be furnished to the NIOT so that the same would enable the said institute to submit the report as early as possible for obtaining CRZ clearance in the matter. Since these informations were not supplied by the Petitioner, another letter was issued by the Res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Respondent Prot Trust sought an opinion of the Additional Solicitor General who opined that it would be prudent to cancel 2005 tender process and start fresh process so as to fetch the realistic market price in accordance with the present market value of the land. He further opined that there is no legal impediment in cancellation of the tender process of the year 2005 since there is no concluded contract which is in existence. 19. The Respondent is well within its rights to take such a decision in the year 2010 keeping in mind the larger public interest. The figures itself would indicate that the original tender premium was of ₹ 612/- per Sq. Mtr. whereas fresh tender premium is ₹ 8358/- per Sq. Mtr. Thus, the premium amount to be received by the Respondent Port Trust by issuance of fresh tender would come to more than 10 times than the original premium amount. Moreover, the Petitioner had paid only ₹ 3 Lacs by way of earnest money. The total premium amount is of ₹ 23,74,00,442.64 ps. This amount was to be paid by the Petitioner only after receipt of the CRZ clearance in general and after issuance of allotment letter, receipt of individual CRZ cleara ..... X X X X Extracts X X X X X X X X Extracts X X X X
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