VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. UNION OF INDIA AND OTHERS

VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 275 UNION OF INDIA AND ORS. [J.M. PANCHAL, J.] ' ,,, ~ The Under Secretary (Ports), Government of Pondicherry A issued a Letter of Intent dated June 3, 2005 in favour of Mis. .... SPML. It was stated in the said letter that it was proposed to engage the said company for the development of Pondicherry -1; Port on BOT basis and the Letter of Intent was subject to the condition that Detailed Project Report was approved by the B 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 c 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.SO 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 D _;. 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 E 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 F 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 G _..., examined. It was thereafter decided that Mis. 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, Mis. SPML by its letter dated September 23, H

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A 2005 submitted the First Revised Detailed Project Report to ~............. \ the Director of Ports. The meeting was held on September 24, 2005 and it was agreed that NIPM would examine the First _ ,... Revised Detailed Project Report and submit a report. The reports submiUed were examined. M/s. SPML submitted the > B Second Revised Detailed Project Report along with its· letter dated October 5, 2005, after which a meeting was held on November 12, 2005. In the said meeting officials of Mis. SPML, .+- the officials of M/s. NIPM and the officials of the Government of Pondicherry were present and the minutes were drawn and c noted. In pursuance thereof NIPM submitted its final report on December 1, 2005. The issues raised by all the parties concerned were resolved and, therefore, the Second Revised Detailed Project Report was accepted by the Government as Approved Detailed Project Report Thi! ~evernment of Pondicherry thereafter constituted a Committee to draft the D Concession Agreement to be entered into between the >- "" Governmen~ of Pondicherry and Mis. SPML. The Committee examined various model Concession Agresmertt of various States and more specifically of Gujarat State. the said Concession Agreement was thereafter drafted on the basis of E the Approved Detailed Project Report. The said draft agreement was examined and approved by various r departments of the Government of Pondicherry. The draft }- agreement was placed before the Council of Ministers for its approval. The Council of Ministers in a meeting dated January F 20, 2006 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 G charged from SPML. The order dated January 21, 2006 issued by the Government of Pondicherry indicates that approval of 1-- the Lt. Governor of Pondicherry was obtained to the Detailed Project Repo;i as revised on November 16, 2005 for the development of Port on BOT basis. The Government Order also H

VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 277 UNION OF INDIA AND ORS. [J.M. PANCHAL, J.] . ' _, A mentions that approval was also granted to the Concession . A Agreement to be entered into between the Government of Pondicherry and SPML along with its consortium partners. On Jan~~ry 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, B 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 c 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 _.., D 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 learned counsel for the parties at length and in great detail and considered the documents forming part of the two appeals. G -~r

11. Mr. G.E. Vahanvati, learned Solicitor General of India, spelt out three preliminary objections, namely, (1) the appellants had fairly conceded before the High Court that the selection of the Developer was correctly done and, therefore, the argument H

278 SUPREME COURT REPORTS [2009] 9 S.C.R.

.J.. A advanced by the learned counsel for the appellants, assailing ' I

the selection of the respondent No. 11 as Developer of Pondicherry Port, should not be considered by this Court at all and this Court should confine itself to exam.ination of environmental impact that the project may have, which was B emphasized before the High Court; (2) the appellants had no locus standi to file the writ petition challenging the Award of Contract for the development of the Pondicherry Port to the .+-- respondent No. 11, which is purely commercial in nature; and (3) the list of events and dates submitted by the appellants is c not only misleading but a calculated attempt made by the appellants to prejudice the Court by suppressing and omitting to make reference to relevant materials and events and, therefore, the appeals should be dismissed.

12. Dealing with the first preliminary objection, raised on behalf of the respondents, this Court finds that in paragraph 19 ,;...."'· of the impugned judgment the High Court has observed as under: -

"19. It is at this juncture, the learned counsel for the petitioners fairly conceded that his clients' concern was more on the environmental impact that the project may have and he was not canvassing the relative merits of the parties, who had submitted offer to the Government of ~-- Pondicherry. He requested the Court to safeguard the interest of the general public and future development of the Union Territory of Pondicherry with reference to the development of the Pondicherry Port."

A fair and reasonable reading.of the above quoted paragraph makes it very clear that the appellants had fairly conceded before the High Court that they were not assailing the selection of the respondent No. 11 as Developer for the Pondicherry Port, but were more concerned with the environmental impact that the project may have and, therefore, the learned counsel for the appellants had requested the Court to safeguard the H

VILLIANUR IYARKKAl.PADUKAPPU MAIYAM v. 279 UNION OF INDIA AND ORS. [J.M. PANCHAL, J.] interest of general public and future development of the Union A Territory of Pondicherry 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 B 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: - c "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 day i.e. at 2.15 -~ p.m. This was to enable the Counsel for the present Petitioner to get his instructions. I also say that in the afternoon, the Counsel for the Petitioner pointed out to the F Hon'ble Court that he could not get in touch with his Clients and therefore sought an adjournment on the said date to seek instructions from his client. That on the next date the counsel for the Petitioner informed the Hon'ble Court that his client had instructed him to concede on the issue of G _., the selection of the Developer. However, he pointed out that his client seeks certain safeguards relating to the issue of environmental impact. In this regard, the Petitioner's counsel also handed over a note containing the desired · directions from the Hon'ble High Court." H

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A Though the appellants were duly served with a copy of the -'- counter affidavit filed by the respondent Nos. 2 to 9, they have failed to traverse the assertions and averments made in paragraphs 5 to 6 of the counter affidavit reproduced above. From the above quoted untraversed paragraphs of the reply " j

B affidavit, it is evident that during the course of the arguments and after examining the documents, the High Court had expressed its view that the selection of the Developer was ~

correctly made and, therefore, in those circumstances, the High \

Court had ascertained from the appellants as to whether they f.- c would like to concede on the issue of selection of the Developer and agitate its concern in relation to the environmental impact of the project. The above quoted paragraphs further make it - clear beyond pale of doubt that the learned counsel for the appellants had sought for a pass over of the matter and ' requested the Court to take up the matter in the second half -" D !-- on the same day at 2.15 P.M. to enable him to get instructions I from the appellants. It is also evident that the learned counsel f9r the appellants pointed out to the court that he was not able to get in touch with his clients and, therefore, sought an adjournment to seek instructions from the appellants. What is relevant to notice is that on the next date of hearing the learned counsel for the appellants had informed the High Court that his clients had instructed him to concede on the issue of selection ).-- of the Developer, but had pointed out that his clients were .... seeking certain safeguards relating to the issue of environmental impact of the project and had handed over 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 )IL. ~~

respondents; Having gone through the proceedings before the High Court, t.his 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 H

VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 281 UNION OF INDIA AND ORS. [J.M. PANCHAL, J.] ).. -" 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 ~ircumstances of the case, this Court is of the firm opinion that th~ appellants had fairly conceded before the High Court that --t the selection of the respondent No. 11 as Developer of the Pondicherry Port was n{3ver canvassed nor the relative merits of the parties were pointed out to the High Court and, therefore, the High Court has not recorded any finding as to whether c selection of the Respondent No. 11 as Developer was correct or not. In view of the concession made by the appellants, the appellants are not entitled to canvass before this Court that the selection of the respondent No. 11 as Developer of the ,,.. ...._ Pondicherry Port was not correctly made. D

13. As far as second preliminary objection regarding locus standi of the appellant to challenge the Award of the Contract for the development of the Pondicherry Port to the respondent No. 11 is concerned, this Court finds that the contract assailed in the writ petitions is purely commercial in nature. Neither the parties, which had participated in the process of selection of the consultanVDeveloper nor one of those, who had expressed -·-'\ desire to develop the Pondicherry Port but was not selected, has come forward to challenge the selection procedure adopted by the Government of Pondicherry or the selection of the respondent No. 11 as Developer of the Pondicherry Port. The question of locus standi in the matter of awarding the contract has been considered by this Court in BALCO Employees' Union (Regd.) vs. Union of India ((2002) 2 SCC 333]. This Court, after review of law on the point, has made following observations in paragraph 88 of the judgment: -

"88. It will be seen that whenever the Court has interfered and given directions while entertaining PIL it has mainly H

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A. .... ~ A been where there has been an element of violation of Article 21 or of human rights or where the litigation has been initiated for the benefit of the poor and the ·, underprivileged who are unable to come to court due to some disadvantage. In those cases also it is the legal· rights ., B which are secured by the courts. We may, however, add t- that public interest litigation was not meant to be a weapon to challenge the financial or economic decisions which are +- taken by the Government in exercise of their administrative power. No doubt a person personally aggrieved by any c such decision, which he regards as illegal, can impugn the I

same in a court of law, but, a public interest litigation at the behest of a stranger ought not to be entertained. Such a litigation cannot per se be on behalf of the poor and the ...,. downtrodden, unless the court is satisfied that there has been violation of Article 21 and the persons adversely ... D .>'"· affected are unable to approach t'.1e court."

From the passage quoted above 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 E 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 F 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 G High Court's directions the element of public interest of the t-... 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 ·l"'l H

.. > } VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. UNION OF INDIA AND ORS. [J.M. PANCHAL, J.J Pondicherry through a PIL, which is not permissible. Thus on 283

A the ground of locus standi also the appeals should fail.

14. As far as the list of events and dates, submitted on behalf of the appellants, is concerned, this Court finds that the appellants have omitted to state events, which have been B narrated in the earlier part of this judgment. The list of dates submitted by the appellants straightaway refers to the -~ advertisement dated October 18, 2004, published in the Economic Times, but omits to mention that even prior to October 18, 2004, on October 5, 2004 the Apollo Infrastructure Projects Finance Company Limited had a meeting with the c , Minister of Ports, Government of Pondicherry and had sought _... time to make a presentation for the development of Pondicherry Port and such an opportunity was given to the said

. ..._ firm. Significant events, which took place during January 12, 2005 to January 20, 2005, are not mentioned in the list of dates 0 at all. To enable the Court to know the factual background, in the absence of records, clause (b) of Rule 4(1) of Order XVI of the Supreme Court Rules, 1960 requires a list of dates in chronological order with relevant material facts or events pertaining to each of the dates to be furnished along with the special leave petition. In practice, the list of dates is prefaced by a brief synopsis of facts to give a complete and coherent ~4

- picture of the facts but in the instant case this Court finds that in the special leave petitions, the synopsis/list of dates filed suffers from the defect of filing of a list of dates without relevant material facts/events or synopsis and from the defect of filing of inaccurate and incomplete synopsis/list of dates. The above defects have resulted in defeating the very purpose of requiring the filing of synopsis/list of dates. The filing of inaccurate and incomplete list of dates has caused confusion necessitating detailed reference to the facts carved out from the pleadings ', . - J of the parties before the High Court and this Court. But for the filing of list of events on behalf of the respondents, the list of events filed on behalf of the appellants would have resulted into ,.., H

284 SUPREME COURT REPORTS [2009) 9 S.C.R.

A unintended miscarriage of justice. To say the least. the list of events submitted on behalf of the appellants cannot be termed ,J., "-. - as accurate and such a practice of filing of incomplete/ inaccurate list of events is not approved by this Court at all.

15. Having held that the appeals should fail because qf B concession made by the appellants before t~e M!9~ Qg~q t~C!t the selection of the respondent No. 11 ~§ p~vel0p.~r W?~ gr-Qpf3r +- and that the appel!~nts have no lqcus ~t~ngi to challenge the contract eri!er~d into between the Government of Pondicherry ~nd the respondent No. 11 with its consortium, th!$ Cqurt c notices tnat the appeals were argued at length and on behalf qf the respo~dents also det~ils ~ub1T1issions were made on merit and. therefore, this Court pn;1p9~es tg COflSider the .. _ submissions made by tne parties on merits also. til D 16,. The conteAticn that the Government 9f 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 Mis SPML and E 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 ~··

F 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 Master Plan and detailed project for development of Pondicherry Port, were invited. The project was awarded to M/ s Consulting Engineering Services (India) Private Limited for G preparation of the Master Plan and a Detailed Project Report. ~~~-'. .The said firm submitted its report in M~y 1982. The report was :-..~~·

approved by the then Government of Pondicherry and therefore an agreement with the said firm was entered into on June 26, 1984 for development of certain facilities. In the year 1989, a. .... , H

VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 285 UNION OF INDIA AND ORS. [J.M. PANCHAL, J.]

proposal was made to create additional development facilities for commercial-Cum-fishing vessels. Later on, it was found that M/s Consulting Engineering Services (India) Private Limited had no expertise to develop certain facilities at Pondicherry Port. Therefore, Mis RITES India Limited, a Government of India undertaking, was appointed to conduct a study on the technical feasibili~y and economic viability of the facilities to be developed. M/s RITES India Limited submitted its Feasibility: Study Report. The Techno-Economic Feasibility Report submitted by M/s RITES India Limited pertained to additional facilities. In spite of positive Feasibility Study Report submitted c by RITES India Limited, the project could not be carried forward in view of.paucity of funds. In 1996, it was suggested by M/s RITES India Limited to adopt Build, Own, Share and Transfer mode of privatisation. The record of the case makes it clear that between 1996 and 2000 various proposals for privatisation i o of Pondicherry Port including that of one Megah Venture Lines (M) SON BHD were received and considered.

, It is necessary to notice that in response to advertisement issued seeking interest of the parties for development of Pondicherry Port through private investment, 48 parties initially indicated their interest in the project. However, only 5 parties/ consortiums submitted their proposals. Ultimately, after a long! process of deliberations/discussions, only two parties were short listed but none of them submitted requisite Bank Guarantees within time specified and therefore the process initiated by issuing advertisement seeking interest of parties for development of Pondicherry Port through private investment, was called off.

From March 16, 2003 to March 18, 2003, Advertisement G titled "Invitation of Expression of Interest for the Development of Pondicherry Port by Private Investment" was published in various newspapers. On May 13, 2003, the Government of-/ Pondicherry constituted a Committee to look into the· privatisation process of the Pondicherry Port and Secretary H

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' ).~, A (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 B 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 c 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 .... D >- development of Minor Ports was a State subject and therefore no clearance from the Central Government was required. The Chief Secretary therefore recommended that further steps for privatisation of the Port be taken. One of the steps recommended by the Chief Secretary was to re-engage M/s E RITES India Limited as a Consultant to the entire process. The notings prepared by the Minister of Ports on July 18, 2003 indicate that he accepted the proposals of the Chief Secretary ,~·- but noted that instead of engaging M/s RITES India Limited straightaway, it would be appropriate to issue a notice inviting F firms or Consultants in general. This proposal of Minister of Porfs was approved by the Chief Minister. Accordingly, notice inviting firms or Consultants was issued. In all, 13 parties submitted Expression of Interest but only 6 parties made presentation before the Committee on August 20, 2003. Only G 2 Consultants namely IPCO-Menang, Singapore and Mis Larsen & Toubro, Chennai had the requisite experience. Therefore, those two firms were short listed. A Letter of Intent was issued ~ ' ..... .... in favour of IPCO-Menang, Singapore. The said Consultant was asked to prepare a Detailed Project Report by November 5, H

VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 287 UNION OF INDIA AND ORS. [J.M. PANCHAL, J.]

2003. However, the said consultant could not submit Detailed A Project Report within stipulated period. Therefore, the Letter of Intent was issued in favour of Mis Larsen & Toubro, Chennai on April 30, 2004. Mis Larsen & Toubro, Chennai, also failed to respond to the Letter of Intent. '

The events leading to the award of the Letter of Intent in favour of Respondent No. 11 indicate that on October 5, 2004, Apollo Infrastructure Projects Finance Limited had a meeting with the then Minister of Ports and had sought time to make a presentation for the development of Pondicherry Port. The record also indicates that the said firm was given an opportunity to do so before the Minister on October 17, 2004. Similarly, the Respondent No. 11 had also shown interest in the development of the Port by addressing a letter dated October 6, 2004 which was received in the office of Chief Secretary on October 28,

2004. By another letter dated November 4, 2004, Respondent D No. 11 had indicated that it had identified a partner who would be associated with the work of development of the Port. In the meanwhile, on October 18, 2004, advertisement was issued seeking Expression of Interest from Consultants for preparation \ of Feasibility Study Report for the development of Pondicherry E 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 F 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 G - I 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 H

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...__ A 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 ohe year. B After making reference to a meeting, which its officials had with the Chief Secretary on December 20, 2004, Mis Larsen & Toubro, Chennai, also claimed on December" 22, 2004 that f-- it was willing to develop the Pondicherry Port.

c The Apollo Infrastructure Projects Finance Company · Limited by its letter dated December 23, 2004 once again reiterated that it was willing to develop the Pondicherry Port on DBOOT basis. This letter was received by the Committee on .,.._;·

December 31, 2004. D I The IPCO Menang, Singapore and Mis Larsen & Toubro; ... >- Chennai, had participated in the Port privatisation process in the year 2003 but had not responded, though they were chosen. However, they had expressed their intent to develop the Pondicherry Port by communications dated December 15, E 2004 and December 22, 2004 as mentioned above. In view of .l these letters, the Director of Ports by his letter dated January 7, 2005 sought a decision from the Under Secretary (Port) ~~. regarding the future course of action to be taken in the matter. The Under Secretary (Port) made a noting dated January 19, F 2005 recounting the facts and circumstances relating to IPCO Menang, Singapore and M/s Larsen & Toubro, Chennai. The Chief Secretary expressed his view on this noting and recommended that M/s Larsen & Toubro, Chennai, be called as third party in addition to Apollo construction and Mis OS G Constructions. The Deputy_ Secretary (Law) was requested to examine the issue. It was for this reason that the Inter- ~ --... ...... Departmental Note dated January 21, 2005 was submitted to the Law Department. On January 23, 2005, one Walter-Bau- > AG sent a communication informing the Chief Secretary about H • .>

VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 289 UNION OF INDIA AND ORS. [J.M. PANCHAL, J.] ). its desire to participate in the Deep Sea Project on DBOOT A ~ basis and submitted its profile. A letter was also written by Digital Hub, Malaysia, stating that it wanted to participate in the Deep Sea Project on DBOOT basis. What is important to note is that the moment firm offers for development of the Port came before the Government of Pondicherry, the choice before the B Government was very clear. The Government had been trying -~\ to develop the Port since 1973. As concrete proposals for the ~ developm~nt of the Port were available, the Government felt that proper course was to move the proceeding forward to select a developer. It is relevant to notice that certain parties had c sought permission to participate in the process of development of the Port itself and not just prepare a Feasibility Report. The records indicate that the Chief Secretary met the Lieutenant Governor on February 2, 2005 and it was decided that a list of )' firms, which had expressed their interest to develop the Port D ..... 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 E 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 F (I) Ltd. and M.O.H. Group did not give any firm indication about their willingness to develop the Port. OS 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, G

2005. The record makes it very clear that this was only a list of, - ·J the firms/companies interested in developing the Port and not ranking. The Digital Hub and Walter Bau AG had also, expressed their willingness to develop the Port in January 2005 itself. The respondent No. 11 addressed a letter dated February H

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A 4, 2005 reiterating its desire to develop the Port. It was clearly pointed out by the Respondent No. 11 th;;it it was desirous of developing the Port and was not interested in acting as a Consultant.

Around this time, the Apollo Infrastructure again reiterated B its interest in the development of the Port by addressing letter dated February 8, 2005 wherein it was also mentioned that it , ,. -1- I / ~ had tied up with Larsen & Toubro, Ramboll, Chennai.

Another firm, LA-V-JAY Associates Pvt. Ltd. by its letter t c dated February 14, 2005 mentioned that it was part of consortium comprising Royal Haskoning a·nd Ashoka Buildcon. By the said letter; the said firm also expressed its desire to develop the Pondicherry Port.

D The Director_(Ports) referred to the ,note dated February '(

3:2005 .and stated that out of the 11 · firms/ companies ~

r- mentiqned in, the note, 7 firms and companies had already made presentations before the Committee but 4 firms had not made.presentation. It is relevant to notice that OS Constructions and Apollo Infrastructure were part of the 7 firms who had already made presentations. In these circumstances, it was decided on February 25, 2005, that the remaining 4 firms namely, -the respondent No. 11, Digital Hub, Walter-Bau-AG ~ and Marshall Power should be called for giving presentation before the Committee on March 11, 2005. Accordingly, E-mails were sent to those parties on March 8, 2005 asking them to give presentation on March 11, 2005. The E-mails were sent · to the 4 firms listed in the note dated February 25, 2005. Well before March 11, 2005, Digital Hub expressed its inability to attend the meeting and indicated that it would give the presentation on another date. But even, later on also, the said firm failed to make any presentation before the Committee. 1- ' Though U Pranav Consultancy acting on behalf of LA-V-JAY & Associates - Royal Haskoning - Ashoka Buildcon consortium I- confirmed by E-mail dated March 8, 2005 that the presentation ~ H

VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 291 UNION OF INDIA AND ORS. [J.M. PANCHAL, J.]

-- .I, would be made in the meeting dated March 11, 2005, Royal Haskoning by its communication sought for deferment of date A

for making presentation. What is most important to notice is that in the meeting held on March 11, 2005 only Respondent No. 11 was present. During the presentation made by the Respondent No. 11, it was found that Respondent No. 11 had B 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 c 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 D 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 E 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 F the Port, he was transferred by the Government. The hote dated April 5, 2005 was considered and the Under Secretary (Port) made a detailed note with reference thereto on April 8, 2005 dealing with every aspect, point-wise. The Chief Secretary prepared a detailed note pointing out that the matter had been G 'V f considerably delayed and that the Port Privatisation Committee had recommended that a Letter of Intent be issued to SPML. The Chief Secretary sent a note dated May 26, 2005 which was put-up before the Minister of Ports for orders. The Minister of H

292 SUPREME COURT REPORTS [2009) 9 S.C.R.

A Ports approved the note on June 1, 2005 recommending that suitable clauses be· incorporated to bind the party down to ensure that the project did not get delayed. The Chief Minister approved the proposal on June 3, 2005 and thereafter the proposal was approved by the Lieutenant Governor on June 3, B 2005.

17. The different documents produced on record of the case read with averments made in counter affidavits clearly show that on the basis of the reports submitted by M/s. C Consulting Engineers Services (India) Private Limited, The Ministry of Shipping and Transportation (Ports Wing), Government of India had approved the project for creation of certain facilities at the Pondicherry Port and sanctioned the cost of the project by letter dated June 26, 1984. Further, M/s. RITES India Limit~d had submitted Techno-Economic 0 Feasibility Study Reeort on June 10, 1991, pertaining to development of additional facilities to be provided at Ariankuppam Port Project and in spite of said positive Feasibility Study Report, the project could not be carried forward because of paucity of funds. The record shows that after revival of the process for development of the port in the year 2003, the Government of Pondicherry had decided to issue an advertisement calling for Expression of Interest from the private parties and vide G.O.Ms. dated May 13, 2003 constituted a Port Privatisation Committee to go into the entire gamut of the privatisation process of the Port of Pondicherry through private investment. The Committee so constituted was consisting of the following Government officials and no politician was appointed on the said Committee at all: -

G ( 1) Secretary to Government (Port) Chairman (2) Joint Secretary to Government (Revenue) Member t -r

(3) The Director of Ports Member

H (4) The Director of Science, Technology

VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 293 UNION OF INDIA AND ORS. [J.M.· PANCHAL, J.] .... and Environment Member A (5) Deputy Secretary to Government (Law) Member

(6) Under Secretary to Government (Finance) Member (

(7) Under Secretary to Government (Port) Member 8 _._, (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 C 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 ~ -i.. 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 - r of Intent was issued on September 9, 2003 in favour of IPCO Menang, Singapore, for feasibility studies and preparation of Detailed Project Report for the development of the Port. F , However, the said firm did not submit the Report despite extension of time nor deposited the required performance guarantee amount of Rs.50 lacs. Therefore, the second short listed firm, i.e., M/s. Larsen and Toubro, Chennai, was issued . Letter of Intent, but this firm also did not respond to the said G -. ·~ Letter for more than eight months.

18. Under such circumstances, the Government of Pondicherry decided to make one more attempt to attract private investment for development of the Port and call for H 1

294 SUPREME COURT REPORTS [2009] 9 S.C.R.

.. ·- A Expression of Interest for undertaking feasibility studies for development of the port. Accordingly, advertisement dated October 18, 2004 was issued in the leading newspapers, pursuant to which, 27 firms had responded. However, out of 27 firms, only 15 firms had given presentations before the expert B committee during December, 2004 in the presence of Minister of Ports., Thereafter, it was decided by the Committee, after having meeting with the then Lt. Governor of Pondicherry, that out of 27 firms which had responded to the advertisement, number of firms who were willing to undertake the feasibility c studies should be ascertained. Accordingly such exercise was undertaken by the expert committee and the expert committee found that only 11 firms had shown the willingness to undertake feasibility studies. Seven out of those 11 firms had already made presentations before the Committee and, therefore, remaining four firms were ca lied upon to make presentation before the Committee.

19. The record further shows that the expert committee, after approval of the Minister (Port), the Hon'ble Chief Minister and the Lt Governor, decided to short list the under mentioned fou.r firms in order of preference, out of the firms which had expressed interest in development of the Port by undertaking the feasibility studies and Detailed Project Report: - t-.

1. Mis. Subhash Projects and Marketing Ltd., New F Delhi;

2. Mis. D.S. Constructions, New Delhi;

3. · Mis. Apollo Infrastructure Project Finance Company Ltd.; and G

4. Mis. Larsen & Toubro, Chennai.

The order of preference was prepared by the Committee keeping in mind the credentials and the presentations made by the firms as well as on the basis of recommendations and H

VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 295 UNION OF INDIA AND ORS. [J.M. PANCHAL, J.] ....... approval given by the Minister (Port), the then Chief Minister A and the Lt. Governor. Thereafter a decision was taken by the Government of Pondicherry 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 B 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 c 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 "' J. Agreement for the development of the Port on BOT basis, D 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. E In the order of appointment issued to respondent No. 14, it was mentioned that a Letter of Intent was issued to the respondent - .. No. 11 for preparation of DPR. The record further establishes that the DPR was sJbmitted by the respondent No. 11 to the Government which was forwarded to the respondent No. 14 for offering comments/views along with an advance payment of Rs.2 lacs. Thereafter, a number of meetings were held between the officers of respondent No. 11, respondent No. 14 and the officials of Government of Pondicherry to discuss the DPR. During the meetings certain shortcomings in the DPR prepared by the respondent No. 11 were pointed out and, therefore, the . "' -~ respondent No. 11 was called upon to revise the DPR. Accordingly 2nd and final revised DPR was submitted by the respondent No. 11 on November 16, 2005. The 2nd revised DPR was also sent to the respondent No. 14. After H

296 SUPREME COURT REPORTS [2009] 9 S.C.R. ·,

A assessment, analysis and evaluation of the 2nd revised DPR, the respondent No. 14 gave independent analysis and evaluation of the various· aspects of the final DPR. In the independent analysis made by the respondent No. 14 it was stated that though the project was technically viable, it was not B financially viable. However the respondent No. 11 and its associates had come forward to undertake the project with their own investment, whereas the Government.of Pondicherry was f-- not expecting to invest any money. Further, the Port Development Project is/was to result in direct and indirect c employment to a large number of persons as well as other economic and infrastructure development catering to the needs of the shipping industry and development of allied industries in the immediate hinter land and, therefore, the Government of Pondicherry had decided to proceed further in the matter. D Accordingly the Government of Pondicherry constitut~d a Committee to draft the Concession Agreement to be entered into between the Government of Pondicherry and Mis. SPML. The Committee so constituted examined various model concession agreements of different states and more particularly of Gujarat State. After undertaking such study, Concession Agreement was drafted on the basis of approved DPR. The said draft agreement was examined and approved by various departments of the Government of Pondic~erry. Thereafter, the draft agreement was placed before the Council of Ministers for its appr9val. The Council of Ministers in meeting dated January 20, 2006, approved 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 Mis. 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 H Government of Pondicherry entered into a Concession

-' VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 297 UNION OF INDIA AND ORS. [J.M. PANCHAL, J.] ...I. ,(

Agreement with Mis. 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 c Intent to respondent No. 11 for oblique motives. The record shows that the Government of Pondicherry had advertised three times calling for Expression of Interest from the interested firms "" _.. and had identified respondent No. 11 for development of the Port after adopting transparent procedure. The procedure adopted for identifying the respondent No. 11 is crystalline, distinct, forthright, manifest and unambiguous. To say the least the appellants' understanding of the issue is absolutely baseless and not only incorrect but also contrary to the records of the case. The selection of the respondent No. 11 as developer cannot be regarded as capricious, despotic, fanciful '-k or personal as is sought to be made out by the appellants. It is ' rightly pointed out in the counter reply that the objective of the --- entire exercise was to get prepared a feasibility study report so that a private investor might not be required to conduct the study prior to deciding whether he would be required to invest or not. It was the understanding of the Government of Pondicherry that in such an event the possibility of attracting private investment in the development of the Port would ~ / substantially i_ncrease, which cannot be termed as impractical or not warranted in the facts of the case, more particularly, where earlier attempts made since the year 1973 to develop - the Port had failed. The Government of Pondicherry could not ~ have risked loosing offers for privatisation of the Port by -:>" insisting upon the process of selection of developer merely on H

298 SUPREME COURT REPORTS [2009] 9 S.C.R.

lit--

> ..... A the ground that the advertisement was only for the selection of consultant and not for the selection of developer. On the facts and in the circumstances of the ease, thi$ Court i$ of the firm ..,.. opinion that the events leading to the award of Letter of Intent to the respondent No. 11 in June, 2005 do not indicate, in any a manner, that the GQvernment had acted arbitrarily or that the Letter of Intent was issued to favour the respondent No. 11 with oblique motives and, therefore, the contention of the appellants +- in this regard is rejected.

21. The plea raised by the learned counsel for the c appellants that the Government of Pondicherry was arbitrary a.nd unreasonable in switching the whole public tender process into a system of personal selection and, therefore, the appeals ....... should Pe accepted, is ctevoid of merits. It is well settled that non-floatinf;I of tenders or not holding of public auction would D n.Qt t>e in al! ca~e~ !:>e deemec;I 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 ~la.rgesse decided to be conferred, resort should be had to public auction or transfer by way of inviting tenders from the E 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 j- _,, of developing an existing port to meet rapid changes in transport technology and to improve the existing port facilities. ....,.. F 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 G from a major issue of economic development such as ··development of a po.rt. The respondent No. 11 is called upon t ~

to develop the Pondicherry Port on BOT basis. Thus after development of the Port, the same will have to be retransferred to the Government of Pondicherry. In the matter of policy H ..;,.

- .... "' VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. UNION OF INDIA AND ORS. [J.M. PANCHAL, J.] 299

decision and economic tests the scope of judicial review is very A < limited. Unless the decision is shown to be contrary to any statutory provision or the Constitution, the Court would not interfere with an economic decision taken by the State. The court cannot examine the relative merits of different economic policies and cannot strike down the same merely on ground B that another policy would have been fairer and better. In a -~ democracy, it is the prerogative of each elected Government to follow its own policy. Often a change in Government may result in the shift in focus or change in economic policies. Any such change may result in adversely affecting some vested c interests. Unless any illegality is committed in the execution of ~ the policy or the same is contrary to law or malafide, a decision ·~ bringing about change cannot per se be interfered with by th~ .,,, court. It is neither within the domain of the co1,1rts nor the scop~ -" of judicial review to embark upon an enquiry as to whether ~ D particular public policy is wise or whether better public policy can be evolved. Nor are the courts inclined to strike down a policy at the behest of a petitioner merely because it has been urged that a different policy would have been fairer or wiser or more scientific or more logical. Wisdom and advisability of E economic policy are ordinarily not amenable to judicial review. In matters relating to economic issues the Government has,

. ~ ... k while taking a decision, right to "trial and error" as long as both trial and error are bona fide and within the limits of the authority. For testing the correctness of a policy, the appropriate forum F. is Parliament and not the courts. Normally, there is always a presumption that the Governmental action is reasonable and . in public interest and it is for the party challenging its validity to show that it is wanting in reasonableness or is not informed with public interest. This burden is a heavy one and it has to be G ~ discharged to the satisfaction of the court by proper and ; adequate material. The court cannot lightly assume that the action taken by the Government is unreasonable or against public interest because there are large number of

-. considerations, which necessarily weigh with the Government H

300 SUPREME COURT REPORTS [2009] 9 S.C.R.

A in taking an action. In a case like this where the State is allocating resources such as water, power, raw materials, 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 B 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 c 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 devel0ped through you". It would be most unrealistic to insist on such a procedure, particularly, in an area like Pondicherry, which on account of historical, ~plitical and other reasons, is not yet industrially developed and where entrepreneurs have to be offered attractive terms in order to persuade them to set up industries. The State must be free in such a case to negotiate with a private entrepreneur with a view to inducing him to develop the port and if the State enters into a contract with such an entrepreneur for providing resources and other facilities for developing the port, the contract cannot be assailed as invalid because the State has acted bona fide, reasonably and in public interest. The terms and conditions of the contract entered into with the respondent No. 11 as well as the surrounding circumstances show that the State has acted bona fide and not out of improper or corrupt motive or in order to promote the private interest of the respondent No. 11 at the cost of the State. Therefore, it is difficult to interfere and strike down the State action as arbitrary, unreasonable or contrary to public interest. It is true that one of the methods of securing the public interest, when it is considered necessary to dispose of H

=i VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 301 UNION OF INDIA AND ORS. [J.M. PANCHAL, J.] __,, ,t. a property, is to sell the property by public auction or by inviting tenders. But as noted earlier, this is not a case of sale of property by the State. 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. There may be situations where there are compelling reasons necessitating departure from the rule, the reasons indicated in --~ this case for the departure are shown to be rational and are ' not suggestive of discrimination. The Government is entitled to make pragmatic decisions and policy decisions which may be, necessary or called for under the prevalent peculiar, c circumstances. The issue of privatisation of the Port had been . ., engaging the attention of the Government of Pondicherry since

1973. The said issue had been delayed for a long time. Therefore, no fault can be found with the expert Committee, with ,.,, the various officers of the Government including the Chief D _.. Secretary, the Ministers, the Chief Minister and the Lt. Governor for deciding to develop the Port with the assistance of the respondent No. 11 and not just restricting the process to -4,. appoint a consultant. The sole purpose behind the said exercise was to ensure development of the Port in a proper manner and E as expeditiously as possible. It is necessary to mention that the

-- -i ~ ..\-- Government of Pondicherry was trying to develop the Port and was looking for an 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 F

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 G or the authority, as the case may b~. has acted fairly and has ... J 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 H

302 SUPREME COURT REPORTS '

A 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 B unfolded and volunteered by the respondent No. 11, subject, of course, to further revisions, modifications and suggestions in the best interest of the State Government A careful and dispassionate assessment and consideration of the materials placed on record does not leave any reasonable impression, c on the peculiar facts and circumstances of this case, that anything obnoxious which requires either public criticism or condemnation by courts of law had taken place. The objective of the Government of Pondicherry to develop the Port was admitted to be fulfilled at the initial stage by short listing a o consultant itself. However, the Government did not wish to continue the process of selection of the consultant and risk losing the chance of privatisation of the Port again. As firms/ companies had offered to develop the Port directly, the Government of Pondicherry could not have asked the firms/ E companies to first participate in the process of selection of a, consultant, prepare a project report and require them to participate in the process for selection of the developer all over again. The Government of Pondicherry adopted a pragmatic approach and proceeded to short list the developer directly and in doing so the Government has acted in the best interest of the State to overcome the failed attempts in the past to secure a developer to develop the Pondicherry Port. Under the circumstances, this Court, which is a constitutional Court, is not expected to presume the alleged irregularities, illegalities or unconstitutionality nor this Court would be justified in substituting its opinion for the bona fide opinion of the State Government. . Therefore, the plea raised on behalf of the appellants that the. Governmer.t of Pondicherry had acted in arbitrary and .. unreasonable manner in switching the whole public tender process into a system of personal selection, is rejected.

VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 303 UNION OF INDIA AND ORS. [J.M. PANCHAL, J.] ....

22. The contention that a conjoint reading of Article 239 A and 239A of the Constitution and Sections 46, 50 cf the Government of Union Territories Act read with Rule 5 of the Rules of Business of the Government of Pondicherry, 1963, would show that the Government of Pondicherry has to take prior approval of the Central Government before awarding the 8 contract to any private party and, therefore, the Letter of Intent .. 'I' issued in favour of the respondent No. 11 should be regarded beyond jurisdiction of the Government of Pondicherry, is misplaced and has no substance.

23. It is admitted position that the Pondicherry Port is not c 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 _. D 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 E 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, proviaes that the Legislative Assembly F 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 not been declared as a major port, the G -,/'' .... 1 Legislative Assembly of Pondicherry has absolute power to make laws in relation to the Pondicherry Port. Article 162 of the Constitution provides that the executive power of a State mi is co-extensive with its legislative powers. Therefore, there is

304 SUPREME COURT REPORTS [2009] 9 S.C.R.

A no manner of doubt that the Government of Pondicherry has complete jurisdiction in relation to Pondicherry Port, which is a minor port. The reliance placed upon Section 3(9) of the Indian .., Ports Ac~. 1908 read with Regulation 6(b) of the Pondicherry ' (Laws) Regulation, 1963 is totally misconceived. Section 3(9) B of the said Act provides that the jurisdiction of ports other than major ports vests in the State Government. The learned counsel for the appellants have contended that reference to State i .. Government, appearing in Section 3(9) of the Indian Ports Act, should be construed to be a reference to the Central c Government and, therefore, only the Central Government will have jurisdiction over the ports in Pondicherry. Having considered the different provisions of the Constitution and Statutes, referred to by the learned counsel for the appellants, this Court finds that there is fundamental fallacy in the argument o and it is that they rely upon Regulation 6(b) only in part. Though the said Regulation provides that reference to the State Government shall be construed as a reference to the Central Government, it also provides that reference to the .State Government shall be construed as reference to the Chief E Commissioner. The learned counsel for the appellants have failed to take note of the words "and also as reference to the Chief Commissioner". This phrase must be read with the definition of "Chief Commissioner" provided under Regulation 2(b), which specifies that the Chief Commissioner means the F Administrator of Pondicherry (now the Lt. Governor of Pondicherry). A conjoint and ·meaningful reading of the provisions of the Constitution read with Regulation 6(b) of the Pondicherry (Laws) Regulation, 1963 leaves no doubt that the - power in respect of Pondicherry Port necessarily vests in the G Government of Pondicherry and not in the Central Government. The reliance placed on Rule 5(2) of the Rules of Business of the Government of Pondicherry read with Rule 21 of the Delegation of Financial Rules to contend that prior approval of the Central Government was required to be taken by the H Government of Pondicherry before entering into the Concession

VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 305 UNION OF INDIA AND ORS. [J.M. PANCHAL, J.J _, ;.. A 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 B 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 c 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, D '"'I . 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 proviso to Article 240, inter alia, provides that when any body is created under Article 239A E to function as a Legislature for the Union Territory of Puducherry [substituted by Section 4 of the Pondicherry (Alteration of name) ... -~ Act, 2006 for Pondicherry], the President shall not make any _., regulation for the peace, progress and good Government of that Union Territory with effect from the date appointed for the first F ... meeting of the Legislature. Therefore, the Pondicherry ,. Administration Regulation Act, 1963 will have to be regarded as a Transitional tegislation. Moreover, the primary reason for enacting Section 3 of the Pondicherry Administration

..- Regulation Act, 1963 was to extend all the laws enacted by the Union of India under the Union List to the Pondicherry. It is only an Act akin to adaptation Act by which the laws of Union of India were extended to this Union Territory, which was G •.

incorporated with India after partition. The extension of laws of - H

306 SUPREME COURT REPORTS [2009] 9 S.CR.

A Union of India shall only mean that those laws would be ).. .... applicable as they are applicable to any other State of India. As noticed earlier, the Port in question is admittedly a minor port and, therefore, not covered by the provisions of Indian Major Ports Act, 1908. The extension of law to Indian Major B Ports Act, 1908 would only mean that a particular law is prevalent but its applicability would be dependant upon as to whether facts and circumstances warrant its invocation. Had the Port in question been a major port, Indian Ports Act, 1908 would Y- 1

. have applied. Inthis case as the Port in question is a minor c port, the Indian Major Ports Act, 1908 would not,apply.

25. This Court finds that Section 5 _is the provision by which all properties and assets; which earlier vested in the French Republic, stood transferred to the Union, i.e., Union of States (India). In other words, Section 5 was enacted for the purpose D of transfer of properties from one sovereign State to another "\~'

... sovereign State. It has no power on the right of Government of i

Pondicherry over the properties and assets in Pondicherry. The I vesting of land from French Republic to the Republic of India can have no bearing on the powers of Government 9f .. ·E Pondicherry to dispose of land in accordance with the . . provisions of the Constitution. further. it is to be ~noticed that the entire Pondicherry Administration Act, 1962 was a Transitional Act for transfer of power from the French Republic i- " l::. to the Republic of India. which is evident from the Statement of 1- F 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 mi.sconceived. l .

G 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. H I

VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 307 UNION OF INDIA AND ORS. [J.M. PANCHAL, J.] .J,

27. The record further shows that Mis. RITES India Limited A 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 B proposal for consultancy was subsequently limited to the t ~ 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 about the need to expand the existing capacity of the Pondicherry Port c to meet the growth requirement of traffic handled by various major ports. In the said letter it was mentioned that a decision was taken to invite capital participation by private sector and

- ... from non-maritime land-locked states. Further, ·by Government Order dated April 30, 2003 the Ministry of Shipping, D Government of India, had nominated Mr. P.C. Dhiman as a Member of the Committee. 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 E 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 the consent of Government of India for the privatisation of the port. It was also decided to seek the clarifications from the Ministry of Shipping, Government of India, F in this regard. The Chief Secretary, Government of Pondicherry in his noting dated June 25, 2003 mentioned that he had discussed the issue with former Secretary, Ministry of Shipping and he had informed the Chief Secretary that no permission was required for a minor port like Pondicherry and that the G .- f guidelines issued_ by the Government of India on private sector participation in the Port sector only applied to major ports. The Chief Secretary further noted that he had also asked the Assistant Liaison Commissioner, Government of Pondicherry in New Delhi to meet personally the officials of the Ministry of H

308 Sl..JPREME COURT REPORTS [2009] 9 S.C.R.

A Shipping and report. The Assistant Liaison Commissioner, Government of Pondicherry in New Delhi, by his .ln_ter- Departmental Report dated June 25, 2003, informed that the : · management and development of ports _was a State subject and, therefore, no clearance from the Central Government was B required. Under these circumstances the Chief Secretary recommended that further steps for privatisation of the port be taken. These facts indicate that the Government of Pondicherry had full jurisdiction to deal with the minor port situated in the Union Territory and it was not necessary for the Government of c Pondicherry to take prior approval of the Central Government before awarding the contract. However, as noticed earlier, the Joint Secretary, Ministry of Surface Transport, Governm~nt of India by letter dated March 22, 1996 informed the Chief Secretary, Pondicherry Administration about the need to D extend the existing capacity of the Pondicherry Port to meet the gro\lvth 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 E- 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 1 as approval/consent of the Central Government to the project for the development of I . ~

F 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/ G 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 Territory of Pondicherry in total violation of the Precautionary H and Trusteeship principles and is also prohibited under the CRZ

) VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 309 UNION OF INDIA AND ORS. [J.M. PANCHAL, J.]

" notification as the same is a real-estate activity in the garb of A port development, has no substance worth the name.

29. The record of the case indicates that concession agreement is already entered into between the Government of Pondicherry on one hand and the 11th and 12th respondents 8 on the other, on January 21, 2006. Those respondents in terms ,.. ~ of the concession agreement have incorporated a Special Purpose Vehicle (SPV) company known as Pondicherry Port Limited for implementation of the Port Development Project. An Assignment agreement to this effect in favour of Pondicherry Port Limited is executed by the Respondent Nos. 11 and 12 c and confirmed by the Government of Pondicherry. In terms of ~ ... the Concession agreement, the Government of Pondicherry has entered into Lease and Possession agreement with the Special Purpose Vehicle Company on February 4, 2006. The Lease- ~

. hold occupancy is given to the Pondicherry Port Limited subject to pbtaining necessary clearance including environmental clearance from the Government of India. There is no manner of dC?ubt that no one can be permitted to carry on construction activity which is prohibited by the CRZ. However, this being a ~ project exceeding Rs.SO crores necessary environmental clearance has to be obtained from the Ministry of Environment

. and Forest Union of India. Before such consent is granted/ obtained, a full Environmental Impact Assessment has to be done. During that exercise, public hearing would be conducted as a matter of rule and all the concerns expressed by the public will have to be taken due note of, by the authorities concerned. The specific objections raised by the appellants will also have to be considered and they would be entitled to hearing by the competent authority. Mere submission of DPR is not the end

... f of any decision making process. The implementation of the project as per DPR is solely dependent on the clearance to be given by the Ministry of Environment and Forest Union of India. There is no manner of doubt that the Government has every power to stop the project if it violates environmental safeguards. H

310 SUPREME COURT REPORTS [2009] 9. S.C.R. (

-~ A The consideration of CRZ regulations would also be part of the said exercise. Further, the notificatjon issueg und~r the Environment Protection Act clearly requires a prior consent and provides for an appeal to be filed before the tribunal cc;>nstituted for the said purpose by an aggrieved part¥. The plea that the B environmental clearance must precede the ;:iward Qf the project is wholly rnisq:mc~jyed ami !$ incgrr~gt, The appliQP.tion form fgr opt9.in!nQ environmerit cle~n:mq~ under the notification of f- ..... 2006 makes· it very clear that the application has to be made by the entity which has been entrw;ted with the project In the G judgment, impugned in the appeals, appropriate· directions \,.

addressing all the issues raised on bellalf 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 ,,., D of the developer and follow due procedure before granting ~ approval. Therefore, the judgme: 1t 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 th_at the E project in question i~ completely prohibited unde_r the CRZ notification. ,.

30. Th'e argument that the Responcjerit Nq, 11 is permitted ·-- to carry on Real-Estate business by construction of five-star hotels, a trade centre as well as a beach resort in the garb of .,,, '>· .. F development of Pondicherry Port and therefore, the project should be grounded, cannot be accepted. It can hardly be disputed by anyone that the main objective of the project is the 'development of Pondicherry Port. The Government of Pondicherry has not entered into Concession agreement with G the Respondent No. 11 to permit the said respondent to run a ........ Real-estate business. While developing the port, it is necessary to provide certain infrastructural facilities for passengers, shipping crew, port staff and other personnel associated with ' ·~

'H the port, as part of the port development activity. The ...

VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. 311 UNION'OF INDIA AND ORS. [J.M. PANCHAL, J.]

..... '4 Respondent No. 11 as developer of the Port has not yet submitted necessary pla!ls for scrutiny of Ministry of Environment and Forest, Government of India, seeking clearance to the project. As and when, the plans are submitted for clearanc9, the competent authority can always decide upon the desirability of making of constructions which do not fall within the development of port. The ancillary activities to be undertaken while developing a port cannot be stopped by merely naming ~ them as Real-estate business. The affidavit in reply filed on behalf of the Respondent Nos. 11 and 12 before the Madras High Court would indicate that the Government of Pondicherry c is not going to make investment in the project at all. Therefore, the question of Government of Pondicherry favouring the Respondent No. 11 does not arise. The affidavit filed by the ~ Respondent Nos. 11 and 12 makes it clear that they have taken up .the project after conducting detailed study and have decided D I" to m'i!ke investment in the project. The Respondent Nos. 11 and ' 12 are permitted to develop the Port only on Build, Operate and Transfer (BOT) basis. No material was placed by the appellants before the High Court to substantiate the claim that the Respondent Nos. 11 and 12 are the Real-estate agents. The E development of Port of Pondicherry on BOT basis makes it evident that, in effect and substance, the Government of Pondicherry would get back the assets built by the Respondent Nos. 11 and 12 after the expiry of period mentioned in the Concession agreement. Grant of Letter of Intent or execution F of Concession agreement in favour of Respondent No. 11 to permit it to develop the Port on BOT basis 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 G 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 H

312 SUPREME COURT REPORTS [2009] ~ S.C.R.

A 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 bf passengers, crew of ships, staff etc. On the facts and,in the circumstances of the B 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. /Ii'

31Copy pinpoint31. For the reasons stated in the judgment, this Court does not find any merit in any of the appeals and bot~ the appeals are liable to be dismissed. Therefore, both the appeals fail and are dismissed. Having regard to the factS of the case, there shall be no orders as to cost.

D G.N. Appeals dismissed.