1 wp-10112-09 pdp IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 10112 OF 2009 1. DP World Privat Limited and anr. .. Petitioners Vs. 1. The Jawaharlal Nehru Port Trust and ors. .. Respondents Mr. Ravi Kadam, Senior Advocate with Mr. V. Dhond, Mr. Ashish Kamat, Mr. Farhad Sorabjee and Mr. Bir Bahadur Singh i/by M/s. J. Sagar Associate for petitioners. Mr. Rajeev Kumar, Mr. Himanshu Kode and Mr. Omprakash Jha i/by M/s. Law Point for respondent no.1. Mr. D. J. Khambatta, Addl. Solicitor General a/w Mr. Kevic Setalvad i/by Mr. Dhiren Shah for respondent no.2. CORAM: B. H. MARLAPALLE & A. A. SAYED, JJ. Reserved On : August 30, 2010. Pronounced On : September 06, 2010. 2 wp-10112-09 P.C.: 1. While issuing notice before admission, as per the order dated 9/2/2010, the parties were put to notice that the petition would be decided finally at the admission stage itself. Ad-interim relief in terms of prayer clause (d)(i) was granted and it reads as under:- “(d) that pending the hearing and final disposal of this petition, this Hon’ble Court pass appropriate interim orders and directions:- (i) restraining the respondents, whether by themselves or through or through their servants or agents or otherwise from proceeding with the new tender process and/or new RFQ;” The respondent nos.1 and 2 have filed their separate affidavits and the petitioner has thereafter filed rejoinder and consequently the petition is ready for final hearing. We have heard the learned counsel for the parties at length so as to decide this petition finally at the admission stage. 3 wp-10112-09 2. On 5/12/2007 the Planning Commission of India circulated guide-lines for public-private partnership. Respondent no.1 is a statutory body established under the Major Port Trusts Act, 1963 by the Government of India (Respondent No.2) through its Ministry of Shipping and Surface Transport. The said Ministry is entrusted with the function of overseeing and regulating, inter alia, the functioning of shipping and ports in India and it exercises overall superintendence and control over the respondent no.1 (JNPT for short). There can be no doubt that the respondents are a “State” within the meaning of Article 12 of the Constitution of India. 3. On or about 19/6/2008 the JNPT released an advertisement inviting applications from interested parties of Request for Qualification (RFQ) in order to shortlist competent applicants who may be subsequently invited to bid for the project of “DEVELOPMENT OF A STANDALONE CONTAINER HANDLING FACILITY WITH A QUAY LENGTH OF 330 M. TOWARDS NORTH AT JNPT ON D.B.F.O.T. BASIS” (Design, Build, Finance, Operate and Transfer basis) for a concession period of eighteen (18) years. The petitioners were one of the 23 firms who purchased tender 4 wp-10112-09 forms and ultimately only 9 firms submitted the bids. The total project cost, including development of civil work, cost of equipment etc. was estimated to be about Rs.600 crores. It was intended to shortlist the bidders through an open competitive bidding process as set out in the tender document. The petitioners had submitted their bid on 7/9/2008. One of the 9 bids was rejected as the submission was not as per the tender requirements and remaining 8 bids were submitted for RFQ evaluation. Ultimately, only two firms were shortlisted after completing the RFQ procedure and the petitioners were one of these two firms. 4. Writ Petition No. 3338 of 2009 was filed by M/s. ABG Infralogistics Ltd., which was one of the 8 firms and the said petition was dismissed on 8/4/2009. Writ Petition No. 3847 of 2009 came to be filed by Mundra Port & Special Economic Zone Limited challenging the letter dated 20/3/2009 issued by respondent no.1, by which the petitioner therein was not qualified. The said petition also came to be dismissed on 24/8/2009. On 5/10/2009 the petitioner-firm submitted a letter to respondent no.1 requesting to proceed further with the bid process. A news appeared in the press on 7/10/2009 stating that JNPT had received a letter from the Union of India to scrap the earlier tender process and on the 5 wp-10112-09 same day the petitioners filed Writ Petition No. 8880 of 2009. On 15/10/2009 the petitioner no.1 received a letter from JNPT informing that the petitioners RFQ had been discharged and the bid was cancelled. On the very next day the petitioner-firm addressed a letter to JNPT requesting to provide reasons for discharging the RFQ and cancelling the bid, but on 7/11/2009 JNPT refused to provide reasons for cancelling the bid and discharging the RFQ and further informed the petitioner-firm that no further clarification or query would be entertained. Ultimately, on 11/11/2009 an advertisement appeared in the newspapers, released by JNPT for a fresh GLOBAL INVITATION OF REQUEST FOR QUALIFICATION and hence in the changed circumstances, Writ Petition No. 8880/09 was dismissed as withdrawn with liberty to file a fresh petition and that is how the instant petition came to be filed on or about 25/11/2009. 5. Admittedly, the petitioners, during the pendency of this petition, purchased a fresh tender on 4/12/2009 by paying a sum of Rs. 60,000/- and the last date for filing the RFQ bid was 28/1/2010. On 14/12/2009 the petitioner-firm had participated in the “Pre Application Conference” and it had also participated in the new tender proceeding by 6 wp-10112-09 raising queries vide its letter dated 7/12/2009. Ad-interim order was passed by this court on 15/12/2009, however, this order has not detained the petitioners from submitting the fresh bid which, in fact, has been submitted before 28/1/2010. However, it is contended that the submission of the fresh bid is without prejudice to the challenge raised in this petition. 6. When the petition was filed, the challenge was to the letter dated 7/11/2009 thereby informing the petitioner-firm that the earlier RFQ was discharged and its bid was cancelled and for further directions to JNPT to proceed with the bidding process and issue RFQ to the shortlisted bidders and further to award the contract to the successful bidder. On submission of their fresh bid, the petitioners amended the prayers. The first prayer is to declare that the letter dated 14/9/2009 addressed by the Union of India to JNPT and the consequential steps taken by JNPT discharging the earlier tender process and floating the fresh RFQ and taking any step or action pursuant thereto, as illegal, bad in law, without legal sanction, null and void and constitutionally ultra vires and, therefore, required to be set aside and quashed. The petitioners pray for a writ or order directing the respondents to withdraw the letter dated 14/9/2009 and/or the fresh RFQ along with the letter dated 7/11/2009 by which the earlier RFQ was 7 wp-10112-09 discharged and the petitioners’ bid was cancelled. 7. It was submitted by Mr. Ravi Kadam, the learned Senior Counsel appearing for the petitioners that the decision to withdraw the RFQ and cancel the two shortlisted bids was arbitrary and thus in violation of the guarantee under Article 14 of the Constitution of India. No reasons were set out in the letter dated 7/11/2009 to cancel the bid and in any case it was an arbitrary exercise of power by the Union of India to issue the said letter to JNPT. It was further contended that even in the fresh bid invited, the Transaction Adviser continued to be the Axis Bank and the RFQ is identical. Therefore, there was no justifiable reason to issue the letter dated 7/11/2009 by the Union of India to JNPT. Reference has been made to the letter dated 14/9/2009 issued by the Union of India and it has been contended that the decision to discharge the tender process and carry out fresh tendering was because the Transaction Adviser had not performed its duty in a professional manner. It is contended that the said reason was clearly not well founded and it was a sham and/or a show to mask the real reason i.e. being to mala-fide accommodate bidders who failed to qualify in response to the earlier tender or whose disqualification was upheld by 8 wp-10112-09 the orders of this court passed in Writ Petition No. 3338 of 2009 and Writ Petition No. 3847 of 2009. It is also alleged that the impugned action of the respondents is a colorable exercise of their power actuated by oblique motives. The respondents are required to act in a fair and transparent manner actuated by pubic interest, but the impugned actions sought to propagate exactly the opposite and public interest has been sacrificed and/or jettisoned to further extraneous and/or other private vested interests. In support of his contentions, Mr. Kadam has relied upon the judgments in the case of Food Corporation of India vs. M/s. Kamdhenu Cattle Feed Industries [(1993) 1 SCC 71] and Monarch Infrastructure (P) Ltd. vs. Commissioner, Ulhasnagar Municipal Corporation and ors. [(2000) 5 SCC 287]. 8. The JNPT has filed affidavit-in-reply through Mr. Vishwanath G. Gharat, Deputy Manager and an additional affidavit, after the petition was amended, through the very same officer. The petitioners filed their rejoinder on 1/2/2010 and in response thereto, yet another additional affidavit came to be filed by JNPT through Mr. Vishwanath Gharat on or about 20/4/2010. The allegations of mala-fides and/or exercise of arbitrary powers without any justification have been denied. The Union of India has 9 wp-10112-09 filed affidavit-in-reply through Mr. Abhijit Bakshi, Under Secretary in the Ministry of Shipping (Vigilance Wing) so as to oppose the petition. Along with the affidavit, the relevant record has also been sought to be placed before us. 9. The record placed before us shows that on 7/7/2009 the Under Secretary in the Ministry of Shipping (Vigilance Wing) addressed a letter to the Chief Vigilance Officer of JNPT informing him that the Ministry had received some information regarding the bidding process for the subject project and, therefore, JNPT was requested to furnish certain information vide the letter dated 10/6/2009. The Chief Manager had sent some documents vide his letter dated 23/6/2009 and on examination of those documents, the Ministry desired that the Chief Vigilance Officer would furnish a report on the bidding process. On 20/7/2009 the Chief Vigilance Officer of JNPT submitted his report and based on that the Under Secretary placed his note dated 30/7/2009 and some objections to the self certification of the petitioner-firm was raised on the ground that the same yardstick was not applied for L & T Transport, another bidder who was not shortlisted. The report was further considered by Mr. Anuj Agrawal, PPP 10 wp-10112-09 Expert, on 4/8/2009. The Joint Secretary considered the said report and noted that there were only two qualified bidders left for consideration and it militated against the spirit of competition in an important project. However, being a commercial decision, it be left to the decision of JNPT to finalize the list of participants. The Joint Secretary further stated that there did not seem to be any vigilance angle in the evaluation process. But the Planning Commission held that the bidding process was flawed since only two bidders had qualified for RFQ. The Joint Secretary has, in his note dated 11/8/2009, therefore, suggested to direct JNPT to qualify all the bidders who had submitted RFQ bids, including M/s. Balaji Infra Projects Ltd. This note was considered by Mr. Arun Gaur and he recommended that in the circumstances, to quell any aspersion cast either on the Ministry of Shipping or JNPT in future, it would be advisable to discharge the tender and inviting fresh bids would be a better alternative. All these reports were considered by the Secretary in the Ministry of Shipping on 2/9/2009 and he recommended that it would be desirable to cancel the tender and call for fresh bids to avoid any controversy. This opinion was endorsed by the Minster for Shipping on 8/9/2009. The Under Secretary in the Ministry of Shipping addressed a letter dated 14/9/2009 to the Chairman of JNPT. It reads as under:- 11 wp-10112-09 “Ministry of Shipping has received a number of reports from various sources regarding tendering process for the above mentioned project. The matter has been examined and the Ministry has come to the conclusion that the tendering process needs to be discharged and tendering carried out afresh. Therefore, under Section 111 of the Major Port Trusts Act, 1963, the Ministry of Shipping directs the Port Trust to discharge the tender and call for fresh bids. Ministry is also of the view that the Transaction Adviser has not performed its duties in a professional manner and the Port may seek explanation from the Transaction Adviser and take further necessary action on this issue. 10. Mr. Arun Gaur in his report dated 28/8/2009 clearly recorded that there was no supporting document in the file to indicate that the Transaction Adviser (M/s. Axis Bank) had not acted professionally and the report of the Chief Vigilance Officer, JNPT did not record any such opinion 12 wp-10112-09 that the Transaction Adviser had acted unprofessionally. He, therefore, recommended “if any decision for blacklisting the Transaction Adviser is concerned, the Vigilance Wing/JNPT would be required to follow the procedure obtained in this regard with due diligence, which would give a fair opportunity to the Transaction Adviser to defend their case”. It appears that the JNPT did not find anything adverse against the Transaction Adviser and, therefore, it appears to have retained the very same Transaction Adviser in the fresh bid. We do not find any fault in retaining the very same Transaction Adviser in the fresh bid. 11. Mr. Khambatta, the learned Additional Solicitor General, has taken us through the entire record as well as the notings made by various authorities till the Secretary, Ministry of Shipping recorded his opinion on 2/9/2009 and submitted that the decision so taken does not suffer from any mala-fides and it cannot be termed as an arbitrary decision. He urged that the decision so taken is with due diligence and application of mind and so long as the decision so taken does not suffer from any malice, it cannot be termed as arbitrary or illegal. He has, in support of these arguments, invited our attention to the following observations made by a three Judge 13 wp-10112-09 Bench of the Supreme Court in the case of Tata Cellular vs. Union of India [(1994) 6 SCC 651]. Para 94 of the said decision reads as under:- “94. The principles deducible from the above are: (1) The modern trend points to judicial restraint in administrative action. (2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made. (3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible. (4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of 14 wp-10112-09 negotiations through several tiers. More often than not, such decisions are made qualitatively by experts. (5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides. (6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure. The arguments of Mr. Khambatta have been adopted by Mr. Rajeev Kumar, the learned counsel for JNPT. It was urged that the petition be dismissed on the sole ground that the petitioner has submitted a fresh tender. 15 wp-10112-09 12. We are, therefore, required to examine the petitioners’ challenge to the fresh bid invited by JNPT on 11/11/2009 on the backdrop of the above legal position. It is clear from the record that the petitioner- firm was not the sole shortlisted bidder and there were two such bidders. The 8 bids considered by the Tender Committee in its report dated 12/3/2009 were, 1. DP World Private Limited 2. Vadinar Oil Terminal Limited 3. Grup Maritime TCB (GMTCB) SL 4. ABG Infralogistics Limited 5. Mundra Port and Special Economic Zone Ltd. 6. IL & FS Maritime Infrastructure Company Ltd. 7. L & T Transco Pvt. Ltd. 8. Sterlite Industries (I) Ltd. 13. The report submitted by the Chief Vigilance Officer of JNPT on 20/7/2009 was re-examined by the Vigilance Wing of the Shipping Ministry and there were various alternatives before the JNPT, namely, to qualify all the 9 bidders provided they submitted their RFQ bids or to 16 wp-10112-09 cancel the bids and invite fresh bids. There were only two shortlisted bids and it was rightly opined that the same issue by itself may not be a reason to cancel the bids. However, the opinion of the Planning Commission that the bidding procedure was flawed was also taken into consideration and with due application of mind, it was decided to cancel the bids, invited at the first instance, and invite fresh bids for better competition. The record does not indicate any malice on the part of the Shipping Ministry or any of its officers. In our opinion, there has been due application of mind to the report submitted by the Chief Vigilance Officer of JNPT by all the concerned. 14. Section 111 of the Major Port Trusts Act, 1963 empowers the Central Government to issue directions to every Board/Port in discharge of its functions under the said Act and the directions issued on questions of policy will be binding. The Union of India has thus exercised its statutory powers in calling upon JNPT to cancel the old bids and invite fresh bids. The view taken by the Ministry of Shipping, based on the report submitted by the Chief Vigilance Officer of JNPT and other record pertaining to the fresh bids, is a possible decision which cannot be termed as grossly erroneous or against public interest. We cannot sit in appeal over the said 17 wp-10112-09 decision and having regard to the manner in which the decision has been taken by the Shipping Ministry, there is no ground to find fault with the same. There have been due deliberations at all levels and it cannot be accepted that the Shipping Ministry called for the report from JNPT at the instance of any of the parties who had failed before this court or any other firm which was not shortlisted. The orders passed by this court in Writ Petition No. 3338 of 2009 and Writ Petition No. 3847 of 2009 cannot be read as an approval to the shortlisted two bids or as a direction to proceed further with the shortlisted two bids. These orders did not come in the way of the Union of India or JNPT, to take the impugned decision and invite fresh bids. 15. It is not the case of the petitioners that JNPT did not have the power to cancel the bids and invite fresh bids, nor was it canvassed before us that the petitioners were not made aware of such powers. Clause 2.7 of the tender provides right to accept or reject any or all applications/bids and it reads as under:- “2.7 Right to accept or reject any or all Applications/Bids. 18 wp-10112-09 2.7.1 Notwithstanding anything contained in this RFQ, the Authority reserves the right to accept or reject any Application and to annul the Bidding process and reject all Applications/Bids, at any time without any liability or any obligation for such acceptance, rejection or annulment and without assigning any reasons thereof. Similarly, Clause 6 of the tender provides for Miscellaneous powers and Clause 6.2 under the said head reads as under:- 6. Miscellaneious 6.2 The Authority, in its sole discretion and without incurring any obligation or liability, reserves the right, at any time to: a. Suspend and/or cancel the Bidding Process and/or amend and/or supplement the Bidding Process or modify the dates or other terms and condition relating thereto; 19 wp-10112-09 b. Consult with any Application in order to receive clarification or further information; c. Pre-qualify or not to pre-qualify any Applicant and/or to consult with any Applicant in order to receive clarification or further information; d. Retain any information and/or evidence submitted to the Authority by, on behalf of, and/or in relation to any Applicant; and/or e. Independently verify, disqualify, reject and/or accept any and all submission or other information and/or evidence submitted by or on behalf of the any Applicant.” 16. Thus the exercise of power by JNPT to cancel the bids is provided under Clause 2.7.1 as well as Clause 6.2 of the tender and the petitioners were aware of the tender terms. We are, therefore, satisfied that the challenge raised in this petition to the cancellation of the old bids and to invite fresh bids is devoid of merits and it must fail. 20 wp-10112-09 17. Hence, the petition is rejected and the ad-interim order granted earlier stands vacated. It would be in public interest that the fresh bids are processed further without any further loss of time by JNPT. (A.A. SAYED,J.) (B. H. MARLAPALLE, J.)