-1- IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 1618 OF 2008 SKS Logistics (I) Limited ) a Company incorporated under the provisions ) of the Companies Act, 1956, having its registered ) office at 404, Abhay Steel House, Baroda Street, ) Mumbai-400 009 )...Petitioners versus 1. Mumbai Port Trust, a statutory body constituted ) under the Major Port Trusts Act, having its ) office at Vijay Deep, Ballad Pier, ) Mumbai-400 001 ) 2. Indira Container Terminal Private Limited, ) a Company incorporated under the provisions ) of the Companies Act, 1956, having its registered ) office at Gammon House, Veer Savarkar Marg, ) Prabhadevi, Mumbai-400 025 ) 3. Union of India, Ayakar Bhavan, ) Marine Lines, Mumbai-400 020 )..Respondents Mr. C.U. Singh, Senior Advocate, with Mr. A.S. Daver and Mr. S. Khedekar, instructed by M /s. Thakore Jariwala & Associates, for the petitioners. Mr. E.P. Bharucha, Senior Advocate, with Mr. Umesh Shetty, instructed by M/s. Mulla & Mulla & Cragie Blunt and Caroe, for respondent No.1. Mr. D.D. Madon, Senior Advocate, with Mr. Vikram Nankani and Mr. Sushanth Murthy, instructed by Mr. Madhur R. Baya, for respondent No.2. Mr. Mandar Goswami for respondent No.3. -2- CORAM: P.B. MAJMUDAR & A.A. SAYED, JJ. Judgment reserved on: 26 th September, 2008 Judgment pronounced on: 1 st October,2008 ORAL JUDGMENT (Per P.B. Majmudar, J.) Rule. Learned counsel appearing for respective respondents waive service of Rule. With the consent of the learned counsel appearing for the parties, the matter is taken up for final hearing at the admission stage itself. 2. By filing this petition, the petitioners have challenged the decision of respondent No.1 by which respondent No.2 has been granted license to handle container traffic at the Ballard Pier Station Container Terminal (BPS) at the Port of Mumbai to the exclusion of others for a period of five years from the date of the license agreement or two years from the date of commissioning of Offshore Container Terminal (OCT) whichever is earlier. According to the petitioners, the said action of respondent No.1 amounts to conferring a monopoly upon respondent No.2. It is also prayed that a direction may be issued to the respondents to forthwith cease and desist from in any manner preventing the petitioners from carrying on their business -3- of using the Berth 14 VD or any other suitable available berth in accordance with law with a further direction that the petitioners be provided with necessary logistical support such as transport etc. by respondent No.1 for handling the containers. The petitioners also prayed for an appropriate writ, order or direction for setting aside the letter dated 28th March, 2008, issued by respondent No.1 by which it was clarified that respondent No.2 would handle all containers discharged/shipped from/to the petitioners gearless barges at BPS berth. 3. The petitioners are a Company, incorporated under the provisions of the Companies Act, 1956. The respondent No.1 is in charge of all operations conducted at the Mumbai Port Trust and respondent No.2 Company is carrying on business as BOT Operator for offshore container terminal with whom respondent No.1 has entered into a license agreement. The case of the petitioners is that it is carrying on business of container transportation between the Mumbai Port Trust (hereinafter for brevity sake referred to as “MPT”) and Jawaharlal Nehru Port Trust (hereinafter for brevity sake referred to as “JNPT”) and in the course of its business, the petitioners carry on business of carrying the containers to and from JNPT to MPT for the last several years. According to the petitioners, these operations are trans-shipping of containers, whereby the containers unloaded from large container ships at one Port, are transhipped in small lots as per the shippers -4- requirements to another terminal which is not too distant. It is the case of the petitioners that the operations at the MPT is being carried out by the petitioners at Berth 14 at the Victoria Dock and for the said purpose, the petitioners use barges and shore-based crane for loading and unloading the containers. It is the case of the petitioners that they are using its own small barges which do not have their own onboard cranes, which are known as Gearless Container Vessels. According to the petitioners, the petitioners are the sole and the largest shippers transporting the containers between MPT and JNPT and for the purpose of carrying on their business, the petitioners are using the logistical support from MPT by way of transport and other infrastructure. It is also the case of the petitioners that the petitioners perform an important public service by helping to decongest the Ports and Bombay Harbour and by economically transshipping small container loads from one Port to the neighbouring Port. 4. The Respondent No.1 had floated a tender for the purpose of construction of offshore container berth and development of Container Terminal at Mumbai Port and tenders were invited by way of public notice. It is the say of the petitioners that the tenders were invited with a view to create and manage an offshore container terminal facility. As per the averments in the petition, the petitioners have made an application under the Right to Information Act for the copy of the tender and the contract. However, only -5- tender copy was made available to the petitioners. 5. The respondent No.2 was ultimately declared as successful tenderer and pursuant to the same, license agreement was executed between respondent No.1 and respondent No.2 for building, operating and managing an Offshore Container Terminal (OCT). In paragraph 11 of the petition, it is averred by the petitioners that the said license agreement was signed on 3rd December, 2007. The said agreement envisages building, operation and management of one offshore container terminal in the Bombay Harbour and in the interregnum till the offshore container terminal is ready for operations, the licensee i.e. Respondent No.2 was permitted to carry out developments, modifications and augmentation of the facilities of the existing Ballard Pier Station in order to give the licensee an opportunity to build up their clientele. The grievance projected by the petitioners is that as per clause 8.50 of the said agreement, there is a provision for grant of rights to handle container traffic and by the said clause, rights have been given to respondent No. 2 to handle all container traffic in the Ballard Pier Station (BPS) to the exclusion of all others which may confer monopoly upon respondent No. 2. According to the petitioners, the entire container operations at MPT would be handled by respondent No.2 pursuant to the aforesaid license agreement. The petitioners by their letter dated 4th December, 2007, sought a clarification on the use of Ballard Pier Station Berth and also sought a clarification whether they would be allowed to -6- continue to operate at other berths and/or docks which would be available so that the petitioners may not be dependent on respondent No.2 for the purpose of handling their containers which was hitherto being done independently for the last so many years. The petitioners also addressed a letter to the Chairman of MPT for seeking clarification on this aspect. The petitioners thereafter received a reply from respondent No.1 on 17th January, 2008, stating that respondent No.2 is likely to take over the container operations from April, 2008 and by the impugned letter dated 28th March, 2008, the petitioners were informed by respondent No.1 in reply to the letter of petitioners dated 10th March, 2008 that all container vessels in Mumbai Port would be required to be handled at Ballard Pier Station berth and respondent No.2 would be handling all containers discharged from the said berth. According to the petitioners, such an action on the part of respondent No.1 is nothing but creating a monopoly in favour of respondent No.2. The petitioners thereafter wrote a letter dated 2nd May, 2008, by way of representation to the first respondent to reconsider the said position. According to the petitioners, under the license agreement, respondent No.1 granted rights to commence the work and the petitioner would not be permitted to avail of any facility at the MPT or at any of the Docks/Berths for the purpose of carrying on business save and except at the Ballard Pier Station with the permission of respondent No.2. Being aggrieved by the said action of the first respondent, the petitioners have filed the present petition -7- seeking reliefs as stated above. 6. The petition has been resisted by respondent No.1-MPT by filing reply. As per the averments in the reply, under the provisions of Section 42 o the Major Port Trusts Act, 1963 (hereinafter referred to as “the Act”), as amended, the Board of Trustees of respondent No.1 is authorised to undertake services in respect of landing goods between vessels in the Ports and wharves, piers, quays or docks belonging to or in the possession of respondent No.1 and to receive, remove, shift, transport, store or deliver goods brought within the premises of respondent No.1. It is averred in the reply that as per Section Section 42 (3) and 3 (a) of the said Act, respondent No.1 with the previous sanction of the Central Government, can authorize any person to perform any of the services mentioned in sub-section (1) on such terms and conditions as may be agreed upon and also to enter into any agreement or other arrangement, whether by way of partnership, joint venture or in any other manner with any body, corporate or any other person to perform any of the services and functions assigned to respondent No.1 under the said Act on such terms and conditions as may be agreed upon. According to respondent No.1, under the provisions of Section 34 of the Act, respondent No.1 is entitled to enter into contracts as provided thereunder. In paragraph 11 of the reply of first respondent, it is averred that as per the guidelines issued by the Central Government and in exercise of the statutory -8- powers and duties vested/enjoined upon respondent No.1 for the purpose of expansion of port infrastructure and with an objective of efficient handling of sea borne traffic and particularly container traffic on account of increasing foreign and coastal trade and also for the purpose of improving the efficiency, productivity, quality of service and competency in port services, in or about August, 2004, a conscientious decision was taken to reinvite tenders for participation of private sector for construction of offshore container berth and development of container terminal on built, operate and transfer basis in Mumbai Harbour and also for operation of Ballard Pier Station container terminal. Accordingly, the grant of license for operations of the Ballard Pier Station to the eligible bidders was for a period of five years from the date of signing of the license agreement or two years from the date of commissioning of the terminal whichever is earlier thereafter the said Ballard Pier Station Terminal would be transferred back to respondent No.1. As per the reply, various bidders submitted their bids and ultimately the contract was awarded to respondent No.2 who was the successful bidder. Subsequently, a full-fledged license agreement was entered into on 3rd December, 2007, between respondent No.1 and respondent No.2. As per clause 8.50 of the agreement, during the period when respondent No.2 is in possession of the said terminal, in the case of gearless container vessels, full exclusivity to handle container traffic at the Port of Mumbai is granted in favour of respondent No.2 for a maximum period of 5 years from the date of -9- award of license or 2 years from the date of commissioning of offshore container berth whichever is earlier. In paragraph 16 of the reply, it is averred that under Article 8 and clause 8.1 and sub-clause (vii) of the license agreement, respondent No.2 is bound and liable to take charge of the goods and/or containers discharged from the vessels and give necessary receipts for the same under Section 42 of the Act and respondent No.1 is bound and liable to manage and operate the project facilities and services on a common user basis open to any and all shipping lines, importers, exporters, shippers, consignees and receivers and refrain from indulging in any unfair and discriminatory tactics against any user or potential user thereof provided that the said restriction would not prevent respondent No.2 from engaging the selective tariff discounting or rebating in order to optimise respondent No.2's sustainable profitability in accordance with sound business practices. It is mandatory on the part of respondent No.2 as per Article 8 clause 8.1, sub-clause (xiii) of the license agreement to obtain approval of Tariff Authority in the matter of Tariff Fixation. It is also the say of respondent No.1 in the reply that by letters dated 17th January, 2008 and 28th March, 2008, respondent No. 1 clarified to the petitioners that respondent No.2 would handle all containers, discharged/shipped from the gearless barges of the petitioners at the Ballard Pier Station berth and that the container handling in Mumbai port would be performed at BPS berth. As per the averments in para 20 of the reply, the petitioners like several other -10- owners of gearless container vessels are permitted and entitled to discharge their containers at the said BPS on payment of requisite tariff as approved by the Tariff Authority on non-discriminatory basis and that except the petitioners, no other owners of gearless container vessels have raised any objection regarding centralization of container traffic handling operations, inter alia, in respect of gearless vessels at the said BPS to the exclusion of all other areas in MPT. In paragraph 29 of the reply, it is averred by respondent No.1 that the tender was floated not only for the purpose of construction of offshore container berth and development of container terminal at Mumbai Port but also for the purpose of handing over of one of the existing container berth in Indira Dock for handling containers for a defined period till the new terminal becomes operational which may help the operator to have regular cash flow so as to build up the traffic during the construction period. It is stated in paragraph 31 that by no stretch of imagination it can even be conceived that by awarding the said license in respect of the said BPS to respondent No.2, any monopoly ha been created by respondent No.1. The respondent No.2 is bound and liable to offer their services to all users on non-discriminatory basis and subject to the traffic control by the tariff authorities and the petitioners are at liberty to carry on their container transportation business through their gearless vessels from the said container terminal at BPS. On these and such other averments, the petition has been resisted by respondent No.1. -11- 7. On behalf of respondent No.2 an affidavit in reply has also been filed. In para 5 of the said reply, it is stated that the concession under the license agreement was granted under a tendering process and the petitioner did not participate in the said tendering process and, therefore, the petitioner has no locus to file the present petition. In paragraph 8 of the reply it is averred that the project is a purely commercial venture aimed at the development of the Mumbai Port as a preferred port of call for container cargo. The right to exclusively handle container cargo has been accorded by respondent No.1 on respondent No.2 for valuable consideration, the consideration being the payment of an upfront fees of Rs. 4.50 crores, an annual license fee of Rs. 600 per square meter per annum (subject to 5% escalation every year) and a share of actual revenue with a floor as per Article 11.2 of the License Agreement. According to respondent No.2, the project also requires them to develop and equip the BPS with a minimum of 1,50,000 TEUs of container traffic to be handled at the end of the second year, which is about 250% of the current volume handled at the port. Such grant of exclusivity is also consistent with the country's stated economic policy on infrastructure development. It is also averred in the reply that the decision of respondent No.1 to make the Ballard Pier Station the exclusive berth for handling containerised cargo simultaneously with the development and enhancement of the handling capacity of the BPS as also the -12- engineering, construction, operation of the OCT is consistent with the objective of the offshore container terminal project, which is to develop the Mumbai Port as a world-class facility for handling containerised cargo with a capacity to handle over 1 million TEUs per annum, up from the current 60,000 TEUs per annum. It is also the say of respondent No.2 that the petitioners are one of the several line operators who have been loading/unloading containers at berth 14 on the Victoria Dock. The petitioners are not container terminal operator. The said berth has also never been allotted to the petitioners either exclusively or preferentially or otherwise and the petitioners cannot claim any rights over the said berth or claim an alternative berth. On the aforesaid averments, respondent no.2 prayed for dismissal of the petition in limine. 8. We have heard the learned counsel appearing for the parties at length. We have gone through the documents forming part of petition a well as the license agreement which is also produced on record. We have also considered the various judgments cited at the Bar by the leaned counsel for the parties. 9. By order dated 30th June, 2008, a Division Bench of this Court recorded the statement made on behalf of respondent Nos. 1 and 2 by which they had agreed to give copies of the license agreement to the petitioners. -13- Subsequently, the license agreement is already handed over to the petitioners which also forms part of the record. 10. Mr. Singh, learned counsel appearing on behalf of the petitioners, submitted that respondent No.1 has no right to create monopoly in favour of respondent No.2. Mr. Singh submitted that the petitioners are operating small barges and the petitioners have invested considerable amount in having its own crane and also engaged number of employees in carrying out the transshipment of containers. Mr. Singh submitted that Berth No.14 at Victoria Docks has already been allotted to the petitioners and now the petitioners cannot be compelled not to use the said berth. Mr. Singh submitted that the petitioner is not challenging the contract awarded to respondent No. 2 but his grievance is only regarding creating monopoly in favour of respondent No.2 by which respondent No.2 has given exclusive right of container traffic in the Ballard Pier Station to the exclusion of others. It is submitted by Mr. Singh that there is no clarity as to what will happen after five years as this exclusivity is given only for five years. Mr. Singh submitted that the exclusivity clause provided in the agreement is to be read in such a manner that it can only be an arrangement between respondent No.1 and respondent No.2 i.e. licensor and licensee in connection with the handling of container traffic at the Port of Mumbai,but others are not prevented from using such facility at the Port of Mumbai. Mr. Singh -14- submitted that in case the exclusivity clause is interpreted otherwise, then it may result in monopoly in favour of respondent No.2 which is not permissible. According to Mr. Singh, petitioners handle their own container and now they will have to depend upon respondent No. 2 and, therefore, such action is in clear violation of Article 19 (1) (g) of the Constitution. It is submitted by Mr. Singh that petitioners are paying necessary charges to the Mumbai Port Trust for operating crane at 14 Victoria Dock. It is submitted by Mr. Singh that in the tender document exclusivity clause was not mentioned. In the circumstances, it is not open for respondent No.1 to create monopoly in favour of respondent No.2 and the said action on the part of respondent No.1 is required to be struck down as being violative of Article 19 (1) (g) of the Constitution. Mr. Singh submitted that the manner in which the monopoly as is sought to be created is illegal, null and void. The action of directing the Petitioners to take berth facility from respondent No.2 is contrary to the Ministry's guidelines for private sector participation and also contrary to the provisions of the Act and violative of Article 14 of the Constitution of India. Mr. Singh also relied upon various judgments in order to substantiate his say that the action of respondent No.1 in giving exclusive right to respondent No.2 would be hit by Article 19 (1)(g) of the Constitution of India. 11. Mr. Bharucha, learned counsel appearing for respondent No.1 submitted that it can never be said that any monopoly is created by -15- respondent No.1 in favour of respondent No.2. Mr. Bharucha submitted that the petitioners are not handling cargo as cargo is being handled by respondent No.1 and that is why the petitioners are paying charges for handling cargo to respondent No.1. It is submitted by Mr. Bharucha that the petitioners are not having any vessel having crane facility. The petitioners are required to take permission separately for each and every barge. Mr. Bharucha submitted that all throughout respondent No.1 has retained its control and ultimately if any damage is done to any container, it is the respondent No.1 who is liable for the same. Mr. Bharucha has relied upon Section 29 which deals with transfer of assets and liabilities of Central Government, etc. to the Board. Mr. Bharucha also relied upon Sections 37 and 38 of the Act which read thus: “37. (1) When any dock, berth, wharf, quay, stage, jetty or pier erected at any port of port approaches under the provisions of this Act has been completed with sufficient warehouses, sheds and appliances for receiving landing or shipping goods or passengers from and upon sea-going vessels, the Board may, after obtaining the approval of the Collector of Customs and by notification published in three consecutive issues of the Official Gazette, declare that such dock, berth, wharf, quay, stage, jetty or pier is ready for receiving, landing and shipping or for landing or for shipping goods or passengers from and upon sea-going vessels. (2) As from the date of the publication of such notification for the third time, it shall be lawful for the Board, from time to time, when there is room at such dock, berth, wharf, quay, stage, jetty or pier, or order to come alongside of such dock, berth, wharf, quay, stage, jetty or pier for the purpose of landing and shipping goods or passengers or for landing or for shipping the same, any sea-going vessel within the port or -16- port approaches which has not commenced to discharge goods or passengers, or which being about to take in goods or passengers, has not commenced to do so. Provided that before making such order, the Board shall have regard, as far as possible, to the convenience of such vessel and of the shippers, in respect of the use of any particular dock, berth, wharf, quay, stage, jetty or pier; Provided further that if the Board is not the conservator of the port, the Board shall not itself make the order as aforesaid but shall require the conservator of the port, or other person exercising the rights, powers, and authorities of the conservator of the port, to make such order.” “38. When a sufficient number of docks, berths, wharves, quays, stages, jetties or piers have been provided at any port or port approaches as aforesaid, the Board may, after obtaining the approval of the Collector of Customs and by notification published in three consecutive issues of the Official Gazette, direct that no goods or passenger shall e landed or shipped from or upon any sea-going vessel within the port or port approaches otherwise than at such docks, berths, wharves,