IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 13-07-2009 CORAM THE HONOURABLE MR.JUSTICE V.DHANAPALAN WRIT PETITION No.9746 OF 2009 PSA Sical Terminals Limited, South India House, 36-40, Armenian Street, Chennai-600 001, rep.by its Whole Time Director S.R.Ramakrishnan. ... Petitioner -vs- 1.Union of India, rep.by its Secretary, Ministry of Shipping, Road Transport and Highways, Port Department, Transport Bhawan No.1, Parliament Street, New Delhi-110 001. 2.Tuticorin Port Trust, rep.by its Chairman, Tuticorin. ... Respondents Petition under Article 226 of the Constitution of India. For petitioner : Mrs.Nalini Chidambaram, Senior Counsel, for M/s.C.Uma. For respondent 1 : Mr.M.Raveendran, Addl.Solicitor General, for M/s.Priya Kumar, Central Govt.Standing Counsel. For respondent 2 : Mr.V.T.Gopalan, Senior Counsel, for M/s.S.Yashwanth. https://hcservices.ecourts.gov.in/hcservices/ O R D E R This Writ Petition has been filed praying for issuance of a writ of mandamus, forbearing the respondents from applying the policy "Two-Terminal-per-Operator cap" to the petitioner, in the matter of developing the 8th berth at the Tuticorin Port as a container terminal and consequently directing the respondents to permit the petitioner to participate in the bidding process for the development of 8th berth at the Tuticorin Port as a container terminal and its operation, management and maintenance on Build, Operate and Transfer (BOT) basis for 30 years in terms of clause 2.3 of the Licence Agreement, dated 15.07.1998. 2. The case of the petitioner is as under : 2.1. It is incorporated as a joint venture company between the Port of Singapore Authority, South India Corporation (Agencies) Limited,, and Nur Investment And Trading PTE Ltd. It entered into the Build, Operate and Transfer License Agreement (Lease Agreement), dated 15.07.1998, with the second respondent, to design, engineer, finance, erect, operate, replace container handling equipment and to maintain and repair the container terminal at Tuticorin Port. Pursuant to the licence agreement, it commenced development of the 7th berth as a container terminal at Tuticorin and has been operating and maintaining the same as on date. 2.2. As per Clause 2.3 of the Licence Agreement, the petitioner is permitted to bid for any other new additional facility or for operating any other berth at the port. 2.3. The second respondent issued a notice inviting tender in No.E(M) P & M/AEE (M)/F.13/2005 for development of the second container terminal at existing berth No.8 at Tuticorin Port and its operation, management and maintenance on BOT basis for 30 years. The total value of the work was approximately Rs.150 crores. Eleven prospective bidders, including the petitioner, procured the RFQ documents for developing the 8th berth as the second container terminal. 2.4. In the year 2002, a policy decision was taken by the first respondent to exclude existing operators from participating in the bid for new container terminals. But, in view of Clause 2.3 of the Licence Agreement, the petitioner was permitted to participate in the bidding process. Apart from the petitioner, four other bidders were also shortlisted. 2.5. In the newspaper "Business Line", dated 07.02.2005, it was reported that the first respondent had introduced the "two terminal-per-operator" cap. The policy originally restricted the cap to one major port, but the first respondent sought to extend the said https://hcservices.ecourts.gov.in/hcservices/ proposal to an adjacent major port as well to foster competition. 2.6. The petitioner, apart from operating the container terminal at 7th berth at Tuticorin Port, is operating the second container terminal at the Chennai Port in the name of Chennai International Terminal Pvt.Ltd. By not furnishing the revised RFP documents, the respondents have effectively prevented the petitioner from participating in the bid for the 8th berth. Hence, this Writ Petition, for the relief stated supra. 3. First respondent has filed a counter affidavit, stating as follows : 3.1. Barring the petitioner having its office at Chennai, all other things concerning the petitioner and the respondents took place only at Tuticorin and as such filing of this Writ Petition before this Hon'ble Court is totally devoid of jurisdiction. There is no guarantee of any future bids for the petitioner. The petitioner, who has thoughtfully adduced clause 2.3 of the Licence Agreement, had conveniently and deliberately lost sight of what has been stated in Clause 14, dealing with Change in Law, with particular reference to clauses 14.1 to 14.3. 3.2. Clauses 2.3 and 6.2.3 of the Licence Agreement entered into between the second respondent and the petitioner had been incorporated only taking the agreement, dated 03.07.1997 (Clause 2.3) of JNPT with P&O Australia Ports Pvt.Ltd. as the model, which has subsequently been frustrated in view of the Government policy framed with a view to prevent private monopoly in port sector and the same policy has been upheld initially by the Hon'ble Bombay High Court and subsequently by the Hon'ble Supreme Court vide its judgment dated 05.05.2003 in SLP (C) No.7488 of 2003. In view of the said development, clauses 2.3 and 6.2.3 relied on by the petitioner lose their force and validity and can be of no avail to the petitioner and the change in law came to be effected as a direct sequel. 3.3. If the petitioner is allowed to participate in the subject project, the policy decision consciously taken by the Government of India would be whittled down, thereby leading to fresh litigations by various other companies, which were denied permission to participate in the tender process of various such projects in the port sector in pursuance of the Government policy. 3.4. Only impelled by the policy decision taken by the Union of India, the second respondent could not allow the petitioner to further participate in the tender in respect of 8th berth. 4. Second respondent has filed a counter, which reads as under: https://hcservices.ecourts.gov.in/hcservices/ Writ Petition is liable to be dismissed in limine for want of territorial jurisdiction. The first respondent had taken a policy decision and the said policy decision is binding on every Board of Major Ports in discharge of its functions under the Major Port Trusts Act,1963. The rejection of the application of the petitioner had been made pursuant to the valid statutory policy which itself was put into effect for the purpose of preventing private monopoly in the port sector and in public interest in the matter of administration of ports in general and the container terminal in ports in particular. The petitioner was not provided with RFP document in view of the policy decision taken by the Ministry to debar the existing terminal operator with a view to avoid private monopoly and promote competition in Port sector. The communication of the first respondent not to permit the petitioner from bidding for RFP as per the extant policy of the Government of India has to be followed by the second respondent. The respondent is well within its right as conferred by RFQ document to issue or not to issue the RFP document to any of the shortlisted bidders. As such, the petitioner is not issued with the RFP document. Hence, there is no illegality or infirmity in the action of the second respondent. 5. The contentions of the learned Senior Counsel for the petitioner are three fold. They are : (i) the petitioner should be permitted to participate in the bidding process for the development of 8th berth at the Tuticorin Port as a container terminal and its operation, management and maintenance on Build, Operate and Transfer (BOT) basis for 30 years in terms of clause 2.3 of the Licence Agreement, dated 15.07.1998; (ii) the so called policy decision of the first respondent to exclude the existing operator from participating in the bid for the second container terminal has no force of law and (iii) the written statutory contract between a government undertaking and a private party cannot be nullified by a policy decision. The learned Senior Counsel has cited the following decisions : (i) A-One Granites v. State of U.P.,2001 (3) SCC 537 : "12. ... A decision which is not express and is not founded on reasons nor it proceeds on consideration of issue cannot be deemed to be a law declared to have a binding effect as is contemplated by Article 141." "13..... A decision not expressed, not accompanied by reasons and not proceeding on a conscious consideration of an issue cannot be deemed to be a law declared to have a binding effect as is contemplated by Article 141. That which has escaped in the judgment is not the ratio decidendi. This is the rule of sub silentio, in the technical sense when a particular point of law https://hcservices.ecourts.gov.in/hcservices/ was not consciously determined." (ii) D.C.M. v. Rajasthan State Electricity Board, (1986) 2 SCC 431 : "34. On a plain construction of the terms of the agreement, the appellants were no doubt guaranteed the supply of electricity for a period of 20 years but the right to get the supply at the concessional rate was subject to the power of the Board to effect a revision of the rate of supply every fifth year starting from the date of first supply subject to the only restriction that such revision could not be effected before January 1, 1971. The Board’s contention that the right of the appellants to the supply of electricity at a concessional rate under the agreement entered into by the Board with them under Section 49 of the Act was defeasible, is clearly well-founded and must be given effect to. It follows that the rights derived by the appellants under the contract were subject to the stipulation contained in clause 34(b) which made the mutual rights and obligations of the parties subject to any legislation relating to supply and consumption of electricity enacted during the period of the agreement. 37. On a fair construction of the terms of clause 34(b) taken in conjunction with the conduct of the parties, the conclusion is irresistible that the parties had contemplated that the mutual rights and obligations under the contract would be subject to alteration by future legislation. That being so, Sections 49-A and 49-B of the Act have to be read into the contract and these provisions by virtue of clause 34(b) became a contractual stipulation. Whether the raising of demand for payment of difference between the uniform tariffs and the agreed rate was in disregard of the guiding principles contained in Section 49(3) contrary to the mandate of Section 49-A(2) of the Act" (iii) State of U.P. v. Synthetics and Chemicals Ltd., (1991) 4 SCC 139 : https://hcservices.ecourts.gov.in/hcservices/ "40. ‘Incuria’ literally means ‘carelessness’. In practice per incuriam appears to mean per ignoratium. English courts have developed this principle in relaxation of the rule of stare decisis. The ‘quotable in law’ is avoided and ignored if it is rendered, ‘in ignoratium of a statute or other binding authority’. (Young v. Bristol Aeroplane Co. Ltd. 11). Same has been accepted, approved and adopted by this Court while interpreting Article 141 of the Constitution which embodies the doctrine of precedents as a matter of law. In Jaisri Sahu v. Rajdewan Dubey 12 this Court while pointing out the procedure to be followed when conflicting decisions are placed before a bench extracted a passage from Halsbury’s Laws of England incorporating one of the exceptions when the decision of an appellate court is not binding. 41. Does this principle extend and apply to a conclusion of law, which was neither raised nor preceded by any consideration. In other words can such conclusions be considered as declaration of law? Here again the English courts and jurists have carved out an exception to the rule of precedents. It has been explained as rule of sub-silentio. “A decision passes sub-silentio, in the technical sense that has come to be attached to that phrase, when the particular point of law involved in the decision is not perceived by the court or present to its mind.” (Salmond on Jurisprudence 12th Edn., p. 153). In Lancaster Motor Company (London) Ltd. v. Bremith Ltd. 13 the Court did not feel bound by earlier decision as it was rendered ‘without any argument, without reference to the crucial words of the rule and without any citation of the authority’. It was approved by this Court in Municipal Corporation of Delhi v. Gurnam Kaur. 14 The bench held that, ‘precedents sub-silentio and without argument are of no moment’. The courts thus have taken recourse to this principle for relieving from injustice perpetrated by unjust precedents. A decision which is not express and is not founded on reasons nor it proceeds on consideration of issue cannot be deemed to be a law declared to have a binding effect as is contemplated by Article 141. Uniformity and consistency are core of judicial discipline. But that which escapes in the judgment without any occasion is not ratio decidendi. In B. Shama Rao v. Union Territory of Pondicherry 15 it https://hcservices.ecourts.gov.in/hcservices/ was observed, ‘it is trite to say that a decision is binding not because of its conclusions but in regard to its ratio and the principles, laid down therein’. Any declaration or conclusion arrived without application of mind or preceded without any reason cannot be deemed to be declaration of law or authority of a general nature binding as a precedent. Restraint in dissenting or overruling is for sake of stability and uniformity but rigidity beyond reasonable limits is inimical to the growth of law. Neither there was any occasion nor there is any constitutional inhibition or statutory restriction under the legislative entry nor does the taxing statute make any distinction between luxuries and necessities for levying tax. In any case, the bench did not examine it nor did it base its conclusions on it. In absence of any discussion or any argument the order was founded on a mistake of fact and, therefore, it could not be held to be law declared. The bench further was not apprised of earlier Constitution Bench decisions in Hoechst Chemicals v. State of Bihar and Ganga Sugar Mill v. State of U.P., which specifically dealt with the legislative competence of levying sales tax in respect of any industry which had been declared to be of public importance. Therefore, the conclusion of law by the Constitution Bench that no sales or purchase tax could be levied on industrial alchohol with utmost respect fell in both the exceptions, namely, rule of sub-silentio and being in per incuriam, to the binding authority of the precedents." (iv) Municipal Corporation of Delhi v. Gurnam Kaur, 1989 (1) SCC 101 : "A decision passes sub silentio, in the technical sense that has come to be attached to that phrase, when the particular point of law involved in the decision is not perceived by the court or present to its mind. The court may consciously decide in favour of one party because of point A, which it considers and pronounces upon. It may be shown, however, that logically the court should not have decided in favour of the particular party unless it also decided point B in his favour; but point B was not argued or considered by the court. In such circumstances, although point B was logically involved in the facts and although the case had a specific https://hcservices.ecourts.gov.in/hcservices/ outcome, the decision is not an authority on point B. Point B is said to pass sub silentio." (v) Arnit Das v. State of Bihar, (2000) 5 SCC 488 : "20. A decision not expressed, not accompanied by reasons and not proceeding on a conscious consideration of an issue cannot be deemed to be a law declared to have a binding effect as is contemplated by Article 141. That which has escaped in the judgment is not the ratio decidendi. This is the rule of sub silentio, in the technical sense when a particular point of law was not consciously determined." 6. Conversely, learned Senior Counsel for the respondents would contend that the petitioner has no locus standi to file this Writ Petition and therefore the same is not maintainable; the petitioner has not challenged the policy decision of the Government of India; Section 42 of the Act merely confers powers on the Board to undertake the services described therein, but the actual contract to be entered into by the Port Trust with any party including its terms has not been provided for under the Act or in the Rules framed thereunder; merely because statutory bodies have been given the power to enter into contracts will not make such contracts statutory and Article 226 in respect of such contracts cannot be an appropriate remedy, for which the remedy is only before the Civil Court or Arbitration, provided under the contract; the contract dated 15.07.1998 is only a non-statutory contract and the contract itself provides the machinery for resolution of disputes; policy is a high public policy formulated by the Government in public interest and there cannot be any question of principle of estoppel being involved in the application of such policy; the policy can be executive as well as legislative and that the Government is free to decide upon its policy and the Courts will not interfere in such policy matters; there can be no question of legitimate expectation with reference to the old policy after the old policy has been changed and the rights of the parties have to be angulated with regard to the changed policy and that when the law itself is not challenged, such a law or policy is binding on the parties and, therefore, no mandamus, as sought for by the petitioner can be given. The learned Senior Counsel has relied upon the following authorities : (i) Har Shankar v. Dy. Excise & Taxation Commr., (1975) 1 SCC 737 : "21. On the preliminary objection it was finally urged by the appellants that the objection was misconceived because there was, in fact, no contract between the parties and therefore they https://hcservices.ecourts.gov.in/hcservices/ were not attempting to enforce any contractual rights or to wriggle out of contractual obligations. The short answer to this contention is that the bids given by the appellants constitute offers and upon their acceptance by the Government a binding agreement came into existence between the parties. The conditions of auction become the terms of the contract and it is on those terms that licences are granted to the successful bidders in Form L. 14-A of the Rules. As stated in Cheshire and Fifoot’s Law of Contract (8th Edn., 1972; p. 24): “In order to determine whether, in any given case, it is reasonable to infer the existence of an agreement, it has long been usual to employ the language of offer and acceptance. In other words, the court examines all the circumstances to see if the one party may be assumed to have made a firm ‘offer’ and if the other may likewise be taken to have ‘accepted’ that offer. These complementary ideas present a convenient method of analysing a situation, provided that they are not applied too literally and that facts are not sacrificed to phrases.” Analysing the situation here, a concluded contract must be held to have come into existence between the parties. The appellants have displayed ingenuity in their search for invalidating circumstances but a writ petition is not an appropriate remedy for impeaching contractual obligations. 22. In Civil Appeals Nos. 485 and 2205 of 1969, filed respectively by Northern India Caterers (P) Ltd., and M/s Green Hotel, Bar and Restaurant and Others, the appellants hold licences in Form Nos. L-3, L-4 and L-5 for the retail vend of foreign liquor in a hotel, restaurant and in a bar attached to a restaurant. No auctions were held for granting these licences and therefore the reasoning that acceptance of bids brought into existence a concluded contract between the successful bidders and the Government will not apply to the cases of these appellants. But they also accepted the licences subject to the provisions of the Punjab Excise Act, 1914 and the Punjab Liquor Licence Rules, 1956. By Section 34 https://hcservices.ecourts.gov.in/hcservices/ of the Act a licence under the Act has to be granted, inter alia, on payment of such fees and subject to such restrictions and on such conditions as the Financial Commissioner may direct. Section 59(d) of the Act confers power on the Financial Commissioner to make rules prescribing the scale of fees in respect of any licence. Rule 24 provides that the fees payable in respect of licences shall be either (a) fixed fees or (b) assessed fees, or (c) auction fees. By amendments made on February 22, 1968 and March 30, 1968, the fixed fees were substantially enhanced and the appellants were called upon to pay those fees. Just as country liquor contractors offered bids voluntarily on terms and conditions governing the auctions, so in these two appeals the appellants voluntarily applied for and accepted the licences knowing fully well that the Financial Commissioner had the power to frame rules governing the licences. Whether the amendments made to the Rules after the appellants’ licences were renewed are applicable is another matter but the appellants cannot question the power of the Financial Commissioner to frame those rules. The licences, in a large measure, owe their existence and validity to the rule-making power of the Financial Commissioner. One of the reliefs which the appellants ask for is that Rules 27-A, 30 and 31 be declared ultra vires and unconstitutional and consequently the respondents be directed to refund the assessed fees already recovered. By attempting to exploit the licences without the burden of assessed fees originally attaching to them under the Rules framed by the Financial Commissioner, the appellants are seeking to work the licences on such terms as they find convenient. The writ jurisdiction of High Courts under Article 226 of the Constitution is not intended to facilitate avoidance of obligations voluntarily incurred. That, however, will not estop the appellants from contending that the amended Rules are not applicable as their licences were renewed before the amendments were made." (ii) State of Haryana v. Lal Chand, (1984) 3 SCC 634 : "11. It is well settled that Article 299(1) applies to a contract made in exercise of the executive power of the Union or the State, but not to a contract made in exercise of statutory power. https://hcservices.ecourts.gov.in/hcservices/ Article 299(1) has no application to a case where a particular statutory authority as distinguished from the Union or the States enters into a contract which is statutory in nature. Such a contract, even though it is for securing the interests of the Union or the States, is not a contract which has been entered into by or on behalf of the Union or the State in exercise of its executive powers. In respect of forest contracts which were dealt with by this Court in K.P. Chowdhary10, Mulamchand11, Rattan Lal12 and Firm Gobardhan Dass13 cases, there are provisions in the Indian Forest Act, 1927 and the Forest Contract Rules framed thereunder for entering into a formal deed between the forest contractor and the State Government to be executed and expressed in the name of the Governor in conformity with the requirements of Article 299(1), whereas under the Punjab Excise Act, 1914, like some other State Excise Acts, once the bid offered by a person at an auction sale is accepted by the authority competent, a completed contract comes into existence and all that is required is the grant of a licence to the person whose bid has been accepted. It is settled law that contracts made in exercise of statutory powers are not covered by Article 299(1) and once this distinction is kept in view, it will be manifest that the principles laid down in K.P. Chowdhary10, Mulamchand11, Rattan Lal12 and Firm Gobardhan Dass13 cases are not applicable to a statutory contract e.g. an excise contract. In such a case, the Collector acting as the Deputy Excise and Taxation Commissioner conducting the auction under Rule 36 (22) and the Excise Commissioner exercising the functions of the Financial Commissioner accepting the bid under Rule 36(22-A) although they undoubtedly act for and on behalf of the State Government for raising public revenue,