IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE THOTTATHIL B.RADHAKRISHNAN & THE HONOURABLE MR. JUSTICE P.BHAVADASAN FRIDAY, THE 22ND OCTOBER 2010 / 30TH ASWINA 1932 WA.No. 1520 of 2010 ----------------------------- (AGAINST THE INTERIM ORDER IN W.P.(C).NO.26030/2010 DTD. 31/08/2010) .................... APPELLANTS/RESPONDENTS: -------------------------------------------- 1. SOCIETY FOR THE PROMOTION OF RECREATIONAL TOURISM AND SPORTS (SPORTS)UTL, KAVARATTI-682 555, REPRESENTED BY SECRETARY & CHIEF EXECUTIVE OFFICER. 2. THE ADMINISTRATOR,UTL, KAVARATTI-682 555. * 3. UNION OF INDIA, REPRESENTED BY THE SECRETARY, MINISTRY OF TOURISM, NEW DELHI-110 011. * 4. UNION OF INDIA, REPRESENTED BY ITS SECRETARY, MINISTRY OF HOME AFFAIRS, NEW DELHI-110 011. * 5. THE PLANNING COMMISSION, GOVERNMENT OF INDIA, REPRESENTED BY ITS SECRETARY, YOJANA BHAVAN, SANSAD MARG, NEW DELHI-110 001. *APPELLANTS 3 TO 5 TRANSPOSED AS ADDITIONAL RESPONDENTS 4 TO 6 AS PER ORDER DTD. 08/09/2010. BY ADV. SRI.S.RADHAKRISHNAN,S.C. W.A. NO. 1520/2010: RESPONDENT/PETITIONERS/RESPONDENTS /RESPONDENTS: ------------------------------------------------------------------------------------------ 1. M/S.HOTEL & ALLIED TRADES PRIVATE LIMITED, CASINO HOTEL, WILLINGDON ISLAND, COCHIN-682 003, REPRESENTED BY ITS MANAGING DIRECTOR, MR.JOSE DOMINIC. 2. MR.JOSE DOMINIC, MANAGING DIRECTOR M/S.HOTEL & ALLIED TRADES PRIVATE LIMITED, CASINO HOTEL, WILLINGDON ISLAND, COCHIN-682 003. 3. SRI.VIJAYA MALLYA, MEMBER OF PARLIAMENT, (RAJYA SABHA), CHAIRMAN, UB GROUP, VITAL MALLYA ROAD, BANGALORE-560 001. * ADDL.4. UNION OF INDIA, REPRESENTED BY THE SECRETARY, MINISTRY OF TOURISM, NEW DELHI-110 011. * ADDL. 5. UNION OF INDIA, REPRESENTED BY ITS SECRETARY, MINISTRY OF HOME AFFAIRS, NEW DELHI-110 011. * ADDL. 6. THE PLANNING COMMISSION, GOVERNMENT OF INDIA, REPRESENTED BY ITS SECRETARY, YOJANA BHAVAN, SANSAD MARG, NEW DELHI-110 001. R1 & R2 BY SRI.JOSEPH KODIANTHARA, SENIOR ADVOCATE, ADVS. SRI.V.ABRAHAM MARKOS, SRI.MATHEWS K.UTHUPPACHAN, SRI.BINU MATHEW, SRI.TERRY V.JAMES, SRI.B.J.JOHN PRAKASH, SRI.TOM THOMAS (KAKKUZHIYIL), R3 BY SRI. P.S. RAMAN, SENIOR ADVOCATE, ADV. SRI. VINOD CHANDRAN, *ADDL.R4 TO R6 BY ASSISTANT SOLICITOR GENERAL OF INDIA. THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 29/09/2010, ALONG WITH WA NO.1517 OF 2010 AND CONNECTED CASES, THE COURT ON 22/10/2010 DELIVERED THE FOLLOWING: prv. THOTTATHIL B. RADHAKRISHNAN & P. BHAVADASAN, JJ. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - W.A. 1520/2010 in W.P.(C) 26030/2010, W.A. 1517/2010 in W.P.(C) 25455/2010, W.P.(C) Nos.24593, 25455, 26030 & 26925/2010. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 22nd day of October, 2010. JUDGMENT Bhavadasan, J, Bangaram Island, one among the group of 36 Islands constituting the Union Territory of Lakshadweep (UT), was lying unattended for a long time. It is now a well developed high value tourism centre. It has a wonderful beach, luscious coconut groves and is rich in blue lagoons, coral reefs and marine wealth. As on date, it is stated as one of the most attractive tourist spots for high profile tourists. 2. The UT Administration took over the lands of the inhabitants in 1973. Initially the Hotel Corporation of India set up a small resort to cater to the needs of the tourists. Later, it was taken over by ITDC, which developed a few facilities in the Island. However, they failed to work in W.A.1517/2010 & con.cases. 2 the way and manner in which the development was planned. Further efforts also did not yield any result. For want of professional approach to tourism, the Island suffered and therefore it was decided to hand over the development of the resort to professionally qualified persons so as to develop it into an attractive and lucrative Island Resort. In 1982, Society for Promotion of Recreational Tourism and Sports (SPORTS), a society registered under the Societies Registration Act came into existence. The Chairman of the Society is the Administrator of the Union Territory, Collector cum Commissioner is the Vice Chairman etc. The Society has a general body and a Board of Management (hereinafter referred to as BOM) to govern and manage its affairs. The Island Development Authority indicated that SPORTS should be the supportive agency for development of tourism. It was recommended that SPORTS expand its activities and fields of action. Soon thereafter SPORTS began to act as an W.A.1517/2010 & con.cases. 3 agency of the Tourism Department, taking over the management of tourism in the Island. That was in the year 1982. Though SPORTS took earnest efforts to develop tourism, it too failed to achieve it on an international level. SPORTS too suffered for want of professionals to develop the Island and make it an attractive resort for the foreigners. 3. Then it was decided to hand over Bangaram Island Resort (hereinafter referred to as BIR) to private entrepreneurs, who are well versed, well experienced and well equipped in the field of tourism. That resulted in going for global tenders in the year 1988. M/s.Hotel and Allied Trades Private Limited (hereinafter referred to as M/s.Casino) who is the first respondent in the writ appeals and the petitioner in the corresponding writ petitions, bid in the auction and turned out to be the successful bidder. The concern offered to run the resort for a proposed period of 25 years, i.e., till 2013. W.A.1517/2010 & con.cases. 4 4. M/s. Casino obtained permission to utilize the facilities offered by SPORTS in the year 1988. That was extended under one circumstance or another till 2001. Then the Administration decided to terminate the arrangement with Casino and to go in for global tenders. M/s. Casino approached the District Court and obtained a stay. They then initiated arbitration proceedings. The arbitration proceedings culminated in an award dated 3.6.2004. It is in furtherance thereof, the arrangement was extended till 31.8.2010 in favour of M/s. Casino. Meanwhile, the Island was involved in several litigations. Ultimately, it was held that SPORTS was amenable to writ jurisdiction, as it was performing a public duty. 5. It is stated that on 25.2.2010, M/s. Casino sought renewal for a further period of five years. They received no reply for a while. On 1.7.2010, the first respondent in the writ petitions filed by M/s. Casino, issued W.A.1517/2010 & con.cases. 5 a notification calling for global tenders for running the resort, which is marked as Ext.P9 in W.P.(C) 26030 of 2010. M/s. Casino sent a communication dated 26.7.2010 reminding about the renewal application. The pre-bid notification meeting was held on 3.8.2010, in which M/s.Casino also participated. M/s. Casino would say that quite to their dismay and surprise, Ext.P9 notification was rescinded and a fresh notification proposing a two tire system of evaluation was issued, which is Ext.P10. M/s.Casino initiated arbitration proceedings and appointed an Arbitrator. They also moved the District Court, Kavarathi and sought for interim relief from the said court. Unfortunately for them, that court was not functioning at the relevant time and they were constrained to approach this court under Article 226 of the Constitution. In W.P.(C) 25455 of 2010, the relief sought for is to keep the proceedings as per Ext.P10 in abeyance till Exts.P1 to P3 are W.A.1517/2010 & con.cases. 6 disposed of by the District Court. Soon thereafter, they also filed W.P.(C) 26030 of 2010 seeking to have Ext.P10 quashed. They also sought for a relief directing the Administration not to proceed with Ext.P10. 6. In the above two writ petitions, M/s. Casino moved interlocutory applications for interim relief. By order dated 31.8.2010, interim relief was allowed and M/s. Casino was allowed to carry on their activities till 31.8.2010 on certain specified conditions. Aggrieved by those decisions, SPORTS, who is the first respondent in both the writ petitions, have come up in appeal. W.A. 1520 of 2010 is directed against the order in W.P.(C) 26030 of 2010 and W.A. 1517 of 2010 is directed against order in W.P.(C) 25455 of 2010. 7. When those writ appeals were taken up for consideration, it was brought to the notice of this court that two other writ petitions are pending before this court W.A.1517/2010 & con.cases. 7 regarding the same issue. The Bench felt that all the cases need to be considered together and disposed of by a common order. Hence, the writ petitions were called for and tagged along with the writ appeals. This is how the matters are before this court. 8. On consent of all parties, all the writ petitions were heard on merits. 9. It will be useful to refer to the allegations in each of the petitions and the contentions of the respondents therein. 10. W.P.(C) 26030 of 2010 and W.P.(C) 25455 of 2010 filed by M/s. Casino can be dealt with together, since the facts are the same and so also the respondents. The allegations in the petitions have already been stated, and it is unnecessary to repeat them. In W.P.(C) 26030 of 2010, they seek to have Ext.P10 notification quashed. Apart from the facts already mentioned, they say that in an earlier W.A.1517/2010 & con.cases. 8 litigation before this court, SPORTS had acknowledged the commendable efforts put in by M/S.Casino and the success achieved by them. In the counter affidavit filed by SPORTS, it was pointed out that it would be illegal if the arrangement is not extended and it was necessary to extend the arrangement in favour of M/S. Casino. In their petitions, they have detailed the developments made by them. 11. In their writ petitions, M/s. Casino would say that they had applied for renewal on 25.2.2010 and there was no reply till 7.8.2010. They were under the impression that the lease will be renewed. It was at that point of time that Ext.P9 came to be issued. Therefore, they had sent Ext.P8 letter to SPORTS reminding them of the renewal application. Thereafter, the Arbitration O.P. was filed and then this court was moved under Article 226 of the Constitution of India. They also mention about the issuance of Ext.P10 notification. Their main assertions are, i) renewal W.A.1517/2010 & con.cases. 9 ought to have been granted, ii) Ext.P9 provides for a low volume high eco-tourism. Ext.P9 contains various clauses, which are reasonable and fair, and iii) it gives various other relevant details and options, iv) Ext.P9 is given a complete go by and Ext.P10 is introduced to favour the sixth respondent in W.P.(C) 26030 of 2010, v) all the conditions in Ext.P9 have been altered and totally new clauses are introduced in Ext.P10, which are onerous and irrational, vi) the attempt of SPORTS in introducing various clauses, regarding financial credibility, experience, facilities etc., which have no nexus to the project, is with ulterior motive and Ext.P10 is unreasonable, unfair, arbitrary, unjust and malafide. 12. In both the writ petitions, the first and the second respondents have filed their counter affidavits. They denied the allegations in the petitions and stated that they were baseless. According to them, the allegation regarding W.A.1517/2010 & con.cases. 10 malafides is mischievous and is intended only to prejudice and mislead this Court. Ext.P10 had been given effect to and the process had reached a final stage. The petitioner did not choose to offer their bid. The present offer made by the bidders are much more attractive than the one offered by M/s. Casino. M/s. Casino has set up Mr. P. Koya and others to file W.P.(C) 24593 of 2010 giving a spirited litigant picture finding that they have only a remote chance to succeed in their petitions. The said Mr. Koya had favoured M/s. Casino by filing W.P.(C) 25647 of 2001 earlier, and that was dismissed. An appeal was preferred and when the appeal came up for hearing, since the petitioner had succeeded in its efforts, the spirited litigant, Mr. Koya, chose not to pursue the matter further. Thereafter, Mr. Koya has again come up now to favour M/s. Casino based on imaginary and untenable claims. M/s. Casino has no vested right of renewal. The arrangement expires on 31.8.2010. W.A.1517/2010 & con.cases. 11 The decision to go in for global tender was in pursuance of the observations made by this court, while disposing of the earlier matters, and after taking into consideration the essential details, best interests for the land and the lessor. The agreement relied on by M/s. Casino does not envisage an automatic renewal, nor does it contemplate any reason to be given for going in for fresh global tenders. The files would disclose that the request for renewal was considered by the BOM of SPORTS and for cogent and convincing reasons they decided not to renew and to invite fresh tenders. Respondents 1 and 2 did not dispute the claim made by M/s. Casino regarding the development of the Resort. They however stress that M/s. Casino have been operating the Resort for the last 22 years. Considering the potential for development and the recent trends in tourism, the requirements for running a Resort had considerably changed and therefore, it became necessary to issue fresh W.A.1517/2010 & con.cases. 12 notification. The allegations made against Ext.P10 is incorrect and without foundation. The BOM of SPORTS, in the meetings held on 4.5.2010 and 21.5.2010, decided to go in for fresh global tenders to see if attractive offers could be obtained. It was in pursuance to the said decision that Ext.P9 was issued. After issuing Ext.P9, it was brought to the notice of these respondents that the guidelines issued by the Planning Commission had to be followed in order to ensure healthy competition and to get best results. Ext.R1 (c) is the communication from the Ministry and Ext.R1(d) is the guidelines published by the Finance Department. Exts.R1(c) and (d) read along with Ext.P10 will clearly reveal that SPORTS had only the best interests in mind and allegations to the contrary are unfounded. When SPORTS realized the mistake committed in issuing Ext.P9, they rectified the same by issuing Ext.P10. In fact the first petitioner had purchased bid document on 7.8.2010. It W.A.1517/2010 & con.cases. 13 shows that they were fully aware of the developments in the matter. There is no basis for the allegation that Ext.P10 was issued to favour the sixth respondent. Ext.P10 was issued so as to abide by PPP norms set by the Planning Commission and approved by the Ministry of Finance. They refer to the various clauses in Ext.P10 and say that the conditions in Ext.P10 were approved by the BOM and it was verified by a team of experts. The allegations of fraud, unreasonableness, unfair etc are without any basis. The respondents had no intention to exclude anybody from submitting his bid. 13. In the separate counter affidavit filed by the sixth respondent, he challenges the very maintainability of the petition. It is well settled that the Government have a right and discretion to prescribe terms for operating Governmental enterprises and issue tender notifications on that basis. The challenge to Ext.P10 based on the allegation W.A.1517/2010 & con.cases. 14 that it was intended to favour the sixth respondent is untrue and the sixth respondent has been unnecessarily dragged into this litigation. It is also contended that the sixth respondent is an unnecessary party in the proceedings. 14. In the reply filed by the petitioners, they make mention of various clauses in Ext.P10 and assert that these conditions are illogical, arbitrary, unreasonable, unfair and malafide. It was issued to favour the sixth respondent. They also pointed out that the first and second respondents cannot justify their action by contending that pursuant to Ext.P10, four persons have come into the arena of selection. 15. W.P.(C) 24593 of 2010 is filed by some of the residents of Bangaram Island, who are members of Scheduled Tribe. They own lands in Bangaram Island. They say that a good portion of their land had been taken on lease by the second respondent and leased out to the third respondent. According to them, transactions are hit by the W.A.1517/2010 & con.cases. 15 Laccadive, Minicoy and Amindivi Islands Land Revenue and Tenancy Regulation, 1965 and Laccadive, Minicoy and Amindivi Islands (Protection of Scheduled Tribes) Regulation, 1964 and Rules thereunder. For their livelihood, petitioners depend on the income derived from their land. They challenged the dubious and unfair method adopted by the second respondent in running the resort. Their acts cause considerable prejudice to the petitioners. The first respondent is the Administrator of the Union Territory as well as the Chairman of the second respondent. Even though several complaints were made against the second respondent, the first respondent paid no heed to them. It was pointed out by them that at the time of entering into the lease with the second respondent, the understanding was that the property will be leased out only to the third respondent in W.P.(C) 24593 of 2010. They have also filed a statement, which show that they derived only meagre W.A.1517/2010 & con.cases. 16 income. When disputes arose between respondents 2 and 3, two of the petitioners approached this court in W.P.(C) 25647 of 2001, wherein an interim order of status quo was passed. Since the third respondent continued to run the resort, the writ petition was not pursued further and that was dismissed. W.A. 3404 of 2001 filed against the said order of dismissal was later disposed of. The petitioners had sent Ext.P9 alleging that the acts of the second respondent violated the regulations. The prayers made in W.P.(C) 24593 of 2010 are i) to quash Ext.P8, ii) to declare Clauses 3(i) and 4 of the Regulation of 1964 as unconstitutional, and iii) not to enforce those provisions etc. 16. In the counter affidavit filed by the first respondent, they referred to the conduct of the petitioners. They say that amounts due to the petitioners have already been granted and no objections have been received so far. A reading of the petition makes it clear that the intention is W.A.1517/2010 & con.cases. 17 only to give strength and support to the writ petitions filed by M/s. Casino. The claim based on the provisions of the Regulations is as a result of the misunderstanding of those provisions. There is no total prohibition against alienation. The restriction is that such transfers shall be only with the approval of the Administrator. The Administrator is also the Chairman of SPORTS. He acts in dual capacity. There is nothing to believe that SPORTS will not protect the interests of the inhabitants. They therefore prayed for a dismissal of the writ petition. 17. In the reply affidavit filed by the petitioners, they have denied the allegation that they have been set up by the third respondent. They have also stated that they have not been paid any amount from 1971 till 1988. 18. W.P.(C) No. 26925 of 2010 is filed by an inhabitant of Amindivi Island, who operates 20 bed Agatti Island Beach Resort from 1996 onwards. He has experience W.A.1517/2010 & con.cases. 18 in the field of tourism and is a local man. He gives details about the Island and also the Regulations of 1964 and 1965. As per the petition filed by him, SPORTS is a Society registered under the Societies Registration Act. Petition also contains details of the office bearers. It is pointed out in the petition that in respect of another resort, a Society by name Pykla Society had opted for running a tourist resort. Ultimately, it ended up in a litigation and Pykla Society had come before this court. While disposing of the petition filed by Pykla society, certain observations were made by this court. However, the administration did not formulate a tourism policy as observed by this court. According to the petitioner, SPORTS has only the same status as that of Pykla Society, which was held to be not an instrumentality of the State. According to him, as per Ext.P5 notification issued by SPORTS on 1.7.2010, preference was suggested for local persons to bid. SPORTS has no authority to issue W.A.1517/2010 & con.cases. 19 notification on behalf of the President of India and also cannot lease the land to an outsider. However, the conditions stipulated in Ext.P5 being reasonable and fair, he opted to bid in pursuance thereof. However, to his utter shock and surprise, Ext.P5 was rescinded and Ext.P6 notification was issued. Ext.P6 notification issued on 7.8.2010 takes away most of the advantages mentioned in Ext.P5 and the bid conditions are made very stringent. Attack is made on Ext.P6 on the same lines as done by M/s. Casino. It is pointed out that SPORTS cannot take the aid of Article 299 of the Constitution of India. The reliefs sought for are i) to quash Exts.P5 and P6, to quash Clauses 1.5.2(A) (i), (ii) and 1.5.3(i) and (ii) of Ext.P6, ii) issue a writ of mandamus to respondents 1 to 5 to invite tenders for running the resort at Bangaram confining it to members of Scheduled Tribes of the Lakshadweep, iii) to prohibit further proceedings being taken in pursuance of Ext.P6. W.A.1517/2010 & con.cases. 20 19. In the counter affidavit filed by respondents 4, 5 and 6, they point out that the petition is a frivolous one. According to them, it is nothing but an attempt to come to the rescue of M/s. Casino. There was no response from the part of the petitioner to the notification, Ext.P5 dated 1.7.2010. The counter affidavit mentions in detail the conduct of the petitioner with reference to the lease in his favour of another resort. 20. SPORTS falls within the ambit of Article 12 of the Constitution of India. Status of SPORTS have been determined as per Ext.R4(a) judgment in W.A. 3404 of 2001 and connected matters. The respondents gave reasons for not renewing the lease in favour of the petitioner in respect of the resort run by him. The Society went in for a global tender as per the observations in the the judgment of this court. The position of Pykla society is totally different. That is purely a private society. That is not the case of SPORTS. W.A.1517/2010 & con.cases. 21 SPORTS is recognized as an agency of the Union Territory and a look at its constitution will reveal that it is entirely different from Pykla Society. They contend that by the activities of SPORTS, the land owners have benefited considerably and it is also concerned with the interest and welfare of the people of the Island. In fact the conditions in Ext.P6 will be beneficial to the inhabitants of the Island and the land owners, who leased out their lands to SPORTS. The counter affidavit also narrates in detail the context under which Ext.P6 came to be issued. According to SPORTS, they do not lease out the property to operators. They only give them permission to make use of the infrastructure provided by SPORTS. They thus tried to justify Exts.P5 and P6. 21. In the reply affidavit filed by the petitioner, he attacked the authority of SPORTS to call for tenders. It is also pointed out that the lease in favour of the SPORTS is totally invalid and confers no right on them. Even though an W.A.1517/2010 & con.cases. 22 enquiry was demanded in that regard, nothing transpired, because the Administrator was one of the officers of SPORTS. It is also contended that whatever be the position, the lease can only be for a period of five years and no further. 22. It may be noticed here that the petitioners in almost all the petitions attacked Ext.P10 produced in the writ petitions filed by M/s.Casino referring to the RFQ issued by SPORTS. There is also a challenge to the authority of SPORTS to invite tenders, since, according to the petitioner in W.P.(C) 26925 of 2010, they are not covered by Article 229 of the Constitution of India. Again, the question that arises is whether there is any violation of the relevant regulations as alleged by some of the petitioners. 23. The main issue infact is whether there was any justification in rescinding Ext.P9 in the writ petitions filed by M/s.Casino, and issuing Ext.P10