1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 1551 OF 2009 APM Terminals B.V., a company incorporated under Dutch laws, having their registered office at The Hague, The Netherlands and their place of business in India at CG House, 11th Floor, Dr. Annie Besant Rd, Worli Colony, Mumbai 400030 … Petitioner Versus 1. Union of India, through the Ministry of Shipping having its office at Transport Bhuvan, 1, Sansad Marg, New Delhi- 100001 and as also for service at Aayakar Bhavan, 2nd Floor, New Marine Lines, Mumbai. 2. Board of Trustees for the Jawaharlal Nehru 2 Port Trust, a statutory body constituted under the Major Port Trusts Act, 1963, having its office at ADMN Building, Sheva, Tal Uran, Navi Mumbai 400 707 and 1107, Raheja Centre, 214 FPJ Marg, Nariman Point, Mumbai – 400 021. … Respondents Mr. Janak Dwarkadas, Sr. Adv., ith Rahul Narichania i/by Mulla & Mulla & CB & C for the petitioner. Mr. D.J. Khambhatta, ASG., with A.M. Sethana for Respondent No.1. Mr. Rajiv Kumar with Karan Advani Dinesh Pednekar & R. S. Bidkar i/by Advani & Co. for Respondent No.2. CORAM : J. N. PATEL & C.L. PANGARKAR, JJ. JUDGEMENT RESERVED ON 25/02/2010. JUDGEMENT DELIVERED ON 10/03/2010. ORAL JUDGMENT (PER J.N. PATEL, J.) :- Rule. Rule returnable forthwith. By consent of the parties taken up for final hearing. 3 1. The Petitioner is a company incorporated under the laws of the Netherlands. The Petitioner and Container Corporation of India Ltd (CONCOR) formed a Joint Venture company in the name and style of Gateway Terminals India Pvt. Ltd., registered under the Companies Act, 1956. The Petitioner and CONCOR hold 74% and 26% respectively of the shareholding in GTI. GTI was the successful bidder in the tender floated by JNPT for development of its then existing bulk terminal into a container terminal. 2. The petitioner has challenged the validity and propriety of the action of the respondent no. 2 in disqualifying the petitioner from participating and/or from bidding in the tender process for the project of development of the 4th Container Terminal at JNPT through public- private partnership and seeks that the said decision be quashed and set aside and the petitioner be permitted to participate in the tender process in accordance with the new policy i.e. circular PD-12013/2/2005- JNPT dated 26.9.2007 issued by the respondent no. 1 be read in the licence agreement dated 10.8.2004 between GTI and the respondent no. 2 and further for a direction that respondent no. 1 or respondent no. 2 to release the petitioner from the said restriction contained in clause 8.31 of the licence agreement and/or to treat the same as not binding on the petitioner. 4 3. The petitioners were informed that they are disqualified from participating in the tender process which has been notified for development of a standalone container handling facility with quay length of 330-m towards North at JNPT through a private operator on BOT basis on the ground that as per clause 8.31 of the licence agreement with M/s. GTIPL, M/s. Maersk A/S - CONCOR consortium amd/or their subsidiaries/allied organizations including Gateway Terminals India Pvt., Ltd., (GTIPL) shall be excluded in any form from the bidding for any future/existing facilities at JNPT, including the proposed berth above. The petitioners were further informed in response to their letter dated 18.7.2008 that since clause 8.31 is already available in the signed license agreement with the GTI, the contents of para-2 of JNPT's letter No.PPD/M-II/330-Extension/2008/553 dated 18.6.2008 remain unchanged thereby disqualifying the petitioner from participating in tender No.PPD/M-I/4th CT/T-60/2009 Global Invitation or Request for Qualification for project of the development of the Fourth Container Terminal at JNPT through public-private partnership on BOT basis for a period of 30 years. 4. It is the case of the petitioner that GTI being the successful bidder in the tender floated for the redevelopment of the Bulk Terminal into a Container Terminal of Respondent No. 2 (hereinafter referred to as the 2nd Container Terminal), entered into a License Agreement dated 10th August 2004 with the Respondent No.2 (hereinafter referred to as 5 the License Agreement ) for the 2 “ ” nd Container Terminal. The said License Agreement is valid for a period of 30 years and is presently in subsistence. Clause 8.31 of the said License Agreement, the validity and legality of which clause, this Petitioner not being party to the said License Agreement, seeks to challenge, reads as under: 8.31 “ The Licensee acknowledges and agrees that it shall forgo the right to bid for either directly or indirectly, including being a Management Contractor, through any associate company, whether such company is registered in India or any other country, or any company in which the Licensee has a shareholding, for the Additional Facilities or existing facilities during the term of this Agreement. The Licensee also agrees that in the event of it or its parent company taking over/ acquiring/ amalgamating/ merging with the licensee or the parent company to whom the Additional Facilities are awarded it shall be obliged to divest its stake in one of the two licenses to a third entity not linked to the Licensee within 6 months from the date of such change in control failing which it shall be deemed to be a Licensee Even of Default. The Licensee also agrees that in the event of it or its parent company being taken over/acquired/amalgamated/merged by another licensee operating container facilities at JNPT, it shall be obliged to 6 divest the License to a third entity not linked to the Licensee within 6 months from the date of such change in control failing which it shall be deemed to be a Licensee Event of Default. The Licensee acknowledges, agrees and accepts the above as essence of this Agreement and the Licence granted to the Licensee . ” Therefore, it is the contention of the petitioner that Clause 8.31 of the said License Agreement is being misconstrued as effectively disqualifying or barring the Petitioner from participating in any tender floated by Respondent No.2 in respect of the Container Terminal at JNPT for a period of 30 years i.e., till 2034. 5 It is the case of the petitioner that at the relevant time a private container terminal operator viz. Nhava Sheva International Container Terminal (NSICT), owned by P&O ports (later taken over by Dubai Port) also existed within the Port premises at (JNPT) Respondent No. 2 and was carrying out the development of the 1st Container Terminal at Respondent No. 2. At the time of the Petitioner bidding for the project for the 2nd Container Terminal (which was ultimately awarded to it), NSICT was not allowed to raise a bid in the tender floated for the 2nd Container Terminal. NSICT filed a Writ Petition but failed to succeed in the said Writ Petition. 7 6. It is the case of the petitioner that on or about 26th September 2007, the Respondent No.1 issued a Circular No. PD-12013/2/2005-JNPT to Respondent No.2 stating that the Respondent No.2 should proceed to invite global competitive bidding for an independent, stand alone container terminal for a project viz. 330mts Extension of container berth towards North of JNPT (hereinafter referred to as the 3rd Container Terminal). It was further clarified that the eligibility of existing private container terminal operators in Respondent No.2 to compete and bid for any project has also been examined and on the basis of the guidelines, the Respondent No.2 should ensure that private investment does not result in the creation of private monopolies and that private facilities are available to all users on equal and competitive terms. The relevant portion of the said Circular reads as follows:- 5. As a rational and logical consequence of the stand “ taken earlier, it has been decided that the successful bidder of the previous container terminal on BOT basis (Maersk A/S CONCOR Consortium) and/or their subsidiaries/allied – organizations should be excluded from bidding for the 330 metre extension project. This would mean that for the next BOT container terminal in JN Port in future, the successful bidder of the 330 metre extension project would be excluded as so on. 8 6. It has also been decided that the above convention shall be followed in all Ports in its true spirit with a view to avoid monopoly and promote competition till such time a formal Policy is finalized and notified.” 7. It is the case of the petitioner that the said Circular provides that Maersk A/S-CONCOR Consortium and/or their subsidiaries / allied organizations are excluded from bidding for the 330 mtrs extension project (i.e. 3rd Container Terminal) and the successful bidder of the 330 mtrs extension project would be excluded from bidding for the immediate next project and so on. Thus, the successful bidder of one tender would not be eligible to bid for the immediate next tender within that port. However, the said successful bidder would be eligible to bid for the next but one subsequent tender after the immediate one awarded to it. Thus, a successful bidder of a project (X) would not be eligible to bid for the immediate next tender (Y) at JNPT. However, in a bid after that viz. (Z), it would be able to bid for the same. This procedure was precisely followed by the Respondent No. 2 in the case of NSICT. Since, NSICT were awarded the contract of the 1st Container Terminal at Respondent No. 2, they were not allowed to participate in the tender for the development of the 2nd Container Terminal (which was awarded to GTI). However, NSICT were allowed to participate in the tender for development of the 3rd Container Terminal at Respondent 9 No. 2 (Extension of 330 mts. North at JNPT) as they were debarred as per the circular dated 26.9.2007 . 8. It is the case of the petitioner that on on 2nd March 2009, the Respondent No.2 vide a Global Invitation of Request for Qualification floated a Tender No. PPD/M-I/4thCT/T-60/2009 for development of its 4th Container Terminal at (JNPT) the Respondent No. 2. 9. The said Tender No. PPD/M-I/4thCT/T-60/2009 floated on 2nd March 2009 inter alia contains the following clause: The successful bidder / consortium members and / or “ their subsidiaries / allied organization in the project for the Development of a standalone container handling ‘ facility with a quay length of 330-m towards North at JNPT shall be excluded from the bidding for ’ DEVELOPMENT OF FOURTH CONTAINER TERMINAL either as a single applicant or as a consortium . ” It is therefore, contended by the petitioner that on a plain reading and interpretation of the said Tender No. PPD/M-I/4thCT/T-60/2009 dated 2nd March 2009, the Petitioner is not precluded from participating in the said Tender and raising its bid as it did not bid for tender floated 10 for 330-M (Third Container Terminal ) Extension towards North at JNPT. It is the case of the petitioner that on the basis of the said Circular issued by Respondent No. 1, and on the basis of the said Tender No. PPD/M-I/4thCT/T-60/2009, the Respondent No.2 also issued the Tender document to the Petitioner. On 2nd / 4th March 2009, the Respondent No.2 addressed a letter to the Petitioner informing them that the Tender No. PPD/M-I/4thCT/T-60/2009 was available on the website of Respondent No.2 i.e. www.jnport.com and also enclosing a copy of the Global Notice in respect of the Tender No. PPD/M-I/4th CT/T-60/2009. The Petitioner was also allowed by the Respondent No.2 to participate in the pre-bid meeting (the 1st Stage of the Tendering process). The Petitioner also attended the pre-bid meeting held by the Respondent No.2 for finalizing the technical bids submitted by various bidders including the Petitioner. According to the petitioner by its letter dated 5th March 2009 requested the Respondent No.2 to issue the RFQ document and forwarding a demand draft for Rs.10,000/- (Rupees Ten Thousand only) for purchase of the RFQ document and for their participation and qualification in the forthcoming bidding process for the 4th Container Terminal. Accordingly, the petitioner was issued the said RFQ document by the Respondent No.2. The relevant clause of the said RFQ document reads as under: “2.2.1.(e) : To avoid private monopoly and to promote competition, the successful bidder / consortium members 11 and/ or their subsidiaries / allied organization in the project for the Development of a standalone container “ handling facility with a quay length of 330-m towards North at JNPT shall be excluded from the bidding for ” DEVELOPMENT OF FOURTH CONTAINER TERMINAL either as a single applicant or as a consortium. Further, for the next BOT container terminal in JN Port in future, the successful bidder/ consortium members in the DEVELOPMENT OF FOURTH CONTAINER TERMINAL Project would be excluded and so on.” 10. Subsequent thereto, the Petitioner vide its letter dated 27th March 2009 requested for further information/ clarification on the RFQ document and also forwarded their list of queries to the Respondent No.2. 11. It is the case of the Petitioner that certain clarifications were sought on the RFQ document. The Respondent No.2 vide their letter dated 8th April 2009 also forwarded the amendments to the RFQ document and informed that the same shall form a part of the RFQ document. 12. It is the further case of the petitioner that vide an email 12 dated 13th April 2009 addressed by the Respondent No.2 to the Petitioner, the Respondent No.2 invited the Petitioner to attend the pre-application conference to be held on 15th April 2009. In reply to the said email, the Petitioner addressed their email to the Respondent No. 2 on the same day confirming that the Petitioner would be participating in the said meeting. 13. It is the case of the petitioner that suddenly and to the surprise of the Petitioner, the Petitioner received a letter dated 29th June 2009 from the Respondent No.2 stating that GTI and/or its associates/ allied organizations are disqualified from bidding for the 4th Container Terminal in view of the said License Agreement entered into between GTI and the Respondent No.2. 14. It is the case of the petitioner that immediately on receipt of the said letter dated 29th June 2009, the Petitioner considered its contents and addressed a letter dated 7th July 2009 to the Respondent No.1 pointing out that the Circular was issued by the Respondent No.1 to ensure that monopoly is avoided and to promote competition at all ports, to the effect that a successful bidder for a particular terminal project in a port will not be allowed to participate in the immediate next facility tendered for within that port. Further, vide the said letter the Petitioner mentioned that while they are barred from participating in the tender for 330 mts of berth (the 3rd Container 13 Terminal) at Respondent No.2, they must be allowed to participate in the future facilities tendered at that port. The Petitioner vide its said letter also requested the Respondent No.1 to intervene and allow the Petitioner and its subsidiaries and/or associates to participate in the tender process for development of the 4th Container Terminal at Respondent No.2. 15. It is the case of the petitioner that till date of filing of the petition the Respondent No. 1 has not responded to the said letter dated 7th July 2009 addressed by the Petitioner and has purported to disqualify and/or bar the petitioner from participating further in the said Tender No. PPD/M-I/4thCT/T-60/2009 dated 2nd March 2009 on and after 29th June 2009, namely in the submission of its bidding documents, participation in the bidding process and/or the opening of the qualification papers submitted / accepted by Respondent No. 2 scheduled for 31st July 2009. As the petitioners were deprived from participating in the said tender it will visit them with grave harm, prejudice and injury, they have filed this petition on the ground that the resondent by interpretation of clause 8.33 of the licence agreement entered into between GIT and respondent no. 2 by ignoring the circular dated 26.9.2007 has permanently restrained the petitioner and its associates from participating in said tender and for all time which is unfair, unreasonable and wrongful and an excessive restraint on the petitioner's fundamental rights as enshrined under Article 19 (1) (g) of 14 the Constitution of India. It is further contended that the said clause 8.33 is patently discriminatory and ultra vires Article 14 of the Constitution of India. 16. It is contended that Clause 8.31 of the said License Agreement as is sought to be presently enforced is patently discriminatory and ultra vires Article 14 of the Constitution of India inasmuch as on the one hand, it seeks to prohibit and/or bar the Petitioner s right to bid either directly or indirectly for additional and ’ existing facilities during the term of the said License Agreement which is 30 years w.e.f. 10th August 2004, whereas on the other hand, after the issuance of the Circular No. PD-12013/2/2005-JNPT dated 26th September 2007 by Respondent No.1, all other successful companies/ bidders though ineligible to bid for the immediate next tender within that port, are held to be eligible to bid for the next but one subsequent tender after the immediate successful one. Thus whilst for a period of 30 years the Petitioner are sought to be disqualified or barred from participating in any tender floated by Respondent No.2 for its Container Terminals, other successful bidders/ companies are held to be entitled to participate and bid in tenders for the subsequent tender next after the immediate successful one. 17. It is contended that whilst the Petitioner and/or its associate companies including GTI, are effectively being barred from 15 bidding for any subsequent tender, the other successful companies / bidders for other projects therein are eligible to bid for the next but one immediate tender within that port and would be eligible to bid for such subsequent tender after the immediate one. This places other companies/ bidders in an unduly advantageous position as compared to the Petitioner who would be disqualified and/or barred for 30 years i.e. till the year 2034 thereby ensuring diminution of competition in the teeth of the Respondent No.1 s Circular No. PD-12013/2/2005-JNPT dated ’ 26th September 2007. 18. The petitioners have also taken a stand that the respondent no. 2 should be directed to release the petitioner of the restraint of clause 8.31 of the licence agreement and/or treat the same as not binding on the petitioner as it is contrary to its own policy and/or guidelines and/or law and having altered the policy by issuing the guidelines/policy dated 26.9.2007 as permitting successful biddes to bid for the next but one container terminal, which fact is evidenced by the participation of NSICT in the biding for the 3rd container terminal and, therefore, the petitioners are entitled to a writ of mandamus or any other appropriate writ, direction or order directing the respondent no. 1 and/or respondent no. 2 to relieve the petitioner from the said restriction contained in clause 8.31 of the license agreement and/or treat the same as not binding on the petitioner. 16 19. In reply, the respondent no. 2 have taken a stand that the petitioners have based their entire case on the circular dated 26.9.2007 issued by respondent no. 1. The petitioners have no right to bid directly or indirectly for construction of the container terminal during the term of agreement i.e. for a period 30 years in view of the specific clause 8.31 of the Licence Agreement dated 10.8.2004. It is the case of the respondent no. 2 that as per the policy of respondent nos. 1 and 2, which is in accordance with the guidelines issued by the Government of India the Petitioners have been disqualified / barred from bidding process for subsequent tenders in respect of the construction of container terminals in Respondent No. 2 Port during the subsistence of the term of their license agreement with a specific purpose of avoiding private monopoly and for promoting competition. The above policy has been formulated keeping in mind standard policies followed by different ports all over the world and keeping in mind the public interest involved. The decision to exclude the Petitioners from the bidding process has been taken in the interest of preventing private monopoly or concentration of power in a single private party. It is further contended that the Respondent's action of disqualifying the petitioner bidding for the 4th terminal as discriminatory and/or violative of the fundamental rights of the petitioner is erroneous, fallacious and deserves to be rejected. It is contended by resondent no. 2 that in Writ Petition No. 3083 of 2002 this Court has upheld the policy of Respondents of excluding existing private container terminal operators 41. 17 for reasons of public interest which has also been upheld by the Supreme Court. The respondents have justified their decision of disqualifying the petitioners from participating in bid process for construction of the 4th Container Terminal on the basis : (a) Jawaharlal Nehru Port Bulk Terminal was commissioned on 26°i May 1989. The Port has two terminals, the container terminal and bulk terminal. The Bulk Terminal was designed to handle imported fertilizers, fertilizer raw materials and food grains through a mechanized bulk handling facility. Fertilizers like DAP, MOP and fertilizer raw materials like Sulphur and rock phosphate which are corrosive in nature were also designed to be handled at the bulk terminal. (b) By and large it was envisaged by Respondent no. 2 that the expenditure for maintaining the bulk Terminal, the structures at the bulk terminal and other equipments was not economically viable. The expenditure of repairs, maintenance and administrative overheads further rendered the bulk terminal economically unviable. Respondent No. 2 therefore decided to convert the bulk terminal into a container terminal. It was decided by Respondent No. 2 to redevelop the bulk terminal into a container terminal on Built, Operate and Transfer 18 (BOT) basis for a license period of 30 years. (c) Since 1996 the policy of the Government of India has been to permit participation/investment by the private sector in the leasing of assets of the port, construction/creation of additional assets, lease of equipments, pilotage, etc. The Ministry of Surface Transport has issued guidelines to be followed by Major Ports for private sector participation in the major ports. As per the policy and guidelines, the Respondent No. 2 has started the process of privatization. The said privatization is permitted subject to the regulatory role of Respondent No. 2. The published guidelines pertaining to the regulatory role framework are as follows: "REGULATORY FRAMEWORK The Port will continue to maintain its regulatory role under Major Port Trust Act, 1963. However for the purpose of faxing and revising port tariffs, an independent Tariff Regulatory Authority will be set up. The tariff so fixed would be a ceiling and both the private entrepreneurs and the port would be free to charge less than such notified tariff.' Till such a Regulatory Authority is set up, the present procedure, namely, that of Ports fixing the tariffs with the approval of Central Government will continue. The Port should ensure that private investment does not 19 result in the creation of private monopolies and that private facilities are available to all users on equal and competitive terms. However, in the case of berths constructed or taken on lease by private entrepreneurs, they would he permitted to give priority berthing to their own ships and they would service other ships on a first come first served basis. The private entrepreneurs will be obliged to protect the national interests like national security whenever necessary and required, and also honour priority berthing orders of Central Government, in this regard. The private entrepreneurs will also abide by the various statutory requirements on the protection of the environment, antipollution measures, safety, conservancy, etc. and also abide by the directives issued by the Government/Port in this regard from time to time. The Ports will with