Case: Apm Terminals B.V Vs. Union Of India

The appellant is a Company incorporated under the laws of the Netherlands. Together with the Container Corporation of India Limited it formed a Joint Venture Company under the name and style of "Gateway Terminals India Pvt. Ltd." registered under the Companies Act, 1956. The said Joint Venture Company, hereinafter referred to as the "GTI", was the successful bidder in the Tender floated by JNPT for development of its existing Bulk Terminal into a Container Terminal. Thereafter, in keeping with the guidelines issued by the Central Government in 1996, which were described as mandatory, the JNPT floated a Tender for the development of a new 600 meter Quay Length Container Terminal at Navi Mumbai and Nhava Sheva International Container Terminal, hereinafter referred to as the "NSICT", was the successful bidder in respect of the said Tender. The licence granted to NSICT to operate the first Container Terminal at JNPT culminated in a Build, Operate and Transfer Licence Agreement dated 3rd July, 1997 between JNPT and NSICT which was to subsist for a period of 30 years from the date of the agreement. Clause 2.3 of the said Licence Agreement provides as followsLicense will not bar the Licensee from participating in any subsequent bids invited by the Licensor for operation of Container Terminal.Accordingly, NSICT was given liberty to participate in any subsequent bid for operation of the Container Terminal.7. In 2002, JNPT floated another Tender for the development of the Second Container Terminal at JNPT and invited Requests for Qualification (RFQ) for the construction thereof. In order to prevent monopoly and promote competition, the JNPT subsequently incorporated Clause 1.3 in the Tender documents for the development of the Second Container Terminal, which reads as follows1.3 : The port is desirous of entrusting the Project of redevelopment of the bulk terminal to a container terminal, on BOT basis, to another licensee other than the existing Private Terminal Operator (Licensee) at JNPT i.e. Nhava Sheva International Container Terminal (NSICT) Limited or their associates, P&O or the associates, interconnected or sister companies or either of them.The net result was that NSICT was precluded from participating in the Tender for the development of the Second Container Terminal at JNPT, despite the express provisions of Clause 2.3 of the Licence Agreement.9. The said decision of the JNPT was challenged by NSICT and its affiliate, P&O Australia Ports Pvt. Ltd., by way of Writ Petition No.3083 of 2002 in the Bombay High Court. During the hearing of the said writ petition, the Union of India and JNPT took the stand that the 1996 Policy and the guidelines would prevail over Clause 2.3 of the Licence Agreement between the said Respondents and the NSICT. Upholding the decision of the Respondents to exclude P&O Australia Ports Pvt. Ltd. and NSICT from participating in the bid for the development of the Second Container Terminal, the Bombay High Court dismissed the writ petition by its order dated 28th January, 2003. The said decision of the Bombay High Court was challenged before this Court, which declined to interfere with the order of the Bombay High Court. However, the Petitioners Joint Venture Company, GTI Pvt. Ltd., was permitted to bid in the Tender for the development of the Second Container Terminal at JNPT. On completion of the bidding process, the work of development of the Second Container Terminal was awarded to GTI for a term of 30 years from the date of the Licence Agreement which also contained Clause 8.31, extracted hereinabove. In fact, before the Bombay High Court, JNPT had taken a stand that Clause 8.31 had been subsequently incorporated in the Licence Agreement in view of the guidelines promulgated in 1996, which were then in force.10. In the meanwhile, on or about 26th September, 2007, a decision was taken by the Union of India to alter the 1996 policy and a Circular No.PD- 12013/2/2005-JNPT, was issued indicating that the JNPT should proceed to invite global competitive bidding for an independent "Stand Alone" Container Terminal to expand the Container towards North of JNPT by 330 meters, which was designated as the Third Container Terminal. It also clarified the eligibility of existing private container terminal operators at JNPT to compete and bid for any project. In the said Circular dated 26th September, 2007, it was, inter alia, indicated as follows : "In the instant case while JNPT is in the process of undertaking the bidding for the development of the 330 metre extension of container berth towards North of NSICT project as a stand alone project on BOT basis (330 metre extension project) there are two different private BOT operators operating container terminals in JN Port. 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 and so on.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."11. As a result of the above, neither the appellant nor its affiliates and/or subsidiaries/allied organizations were permitted to participate in the bid for the Stand Alone Container Terminal. Thereafter, in the year 2000, the JNPT floated yet another Tender for development of the Third Container Terminal at JNPT, inviting Requests for Qualification for selection of a developer for the development of the said terminal in which it was categorically mentioned asis desirous of entrusting this project to a Licensee other than Maersk A/S-Concor Consortium and/or their subsidiaries/allied organizations including GTIPL.The explanation given for the insertion of the said clause was to implement the Circular dated 26th September, 2007. GTIs plea to allow it to participate in the bid was rejected. The appellant was, therefore, subsequently barred from participating in the Tender process for the development of the Third Container Terminal at JNPT. NSICT was, however, allowed to participate in the said Tender process for the development of the Third Container Terminal at the JNPT UN, but such Tender has not yet been finalized.13. In the meantime, on 2nd March, 2009, JNPT floated Tender No. PD/N-14th CT/C-60/2009 and issued a global invitation of a Request for Qualification for development of the Fourth Container Terminal at JNPT. The said Tender contained the followingsuccessful bidder/consortium members and/or their subsidiaries/allied organiza- tions in the project for the development of a Stand Alone Container Handling Facility with a key length of 330 meters towards North at JNPT was to be excluded from the bidding in respect of Fourth Container Terminal either as a single applicant or as a consortium.On a plain understanding of the above mentioned clause, neither the appellant nor its associate companies/allied organizations and/or consortium of GTI was precluded from participating in the said Tender for the development of the Fourth Container Terminal and raising its bid therein. The appellant, thereupon, along with its letter dated 5th March, 2009, addressed to the JNPT, forwarded a Demand Draft for Rs.10,000/- towards purchase of the RFQ document for participation in the bidding process for the Fourth Container Terminal. The appellant was provided with a copy of the RFQ documents, wherein, in Clause 2.2.1(e), it was categorically stipulated as followsTo avoid private monopoly and to promote competition, the successful bidder/consortium members and/or their subsidiaries/allied organization in th project for the "Development of a stand alone contasiner handling facility with a quay length of 330-m towards North at NJPT" 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 DEVELOMENT OF FOURTH CONTAINER TERMINAL Project would be excluded and so on.Even at this stage, JNPT did not preclude the appellant from participating in the said tender in respect of the Fourth Container Terminal at JNPT. The appellant was, thereafter, invited to participate in the process for grant of licence for the Fourth Container Terminal. However, to the surprise of the appellant, on 29th June, 2009, the appellant was informed that GTI and/or its associates/allied organizations had been disqualified from bidding for the Fourth Container Terminal in view of Clause 8.31 of the Licence Agreement. As indicated hereinbefore, it was after such decision that the appellant, who was worried about the rights and entitlements arising out of the said Circular, filed Writ Petition No.1551 of 2008 before the Bombay High Court on 29th July, 2009. The said Writ Petition was listed before the Bombay High Court on 25th August, 2009, which dismissed the same on 10th March, 2010, relying solely on the provisions of Clause 8.31 of the Licence Agreement, which disqualified the appellant from participating in the Tender process relating to the Third Container Terminal.16. It is the said order of the High Court which has been challenged in this appeal.

Reasoning:
The provisions of Clause 2.3 in the Agreements signed between the Tuticorin Port Trust and PSA Sical cannot be read in isolation of the other provisions in the agreement which prevented the Licensee from bidding for other work within the port area during the period of the licence. In fact, in our view, the change in policy to prevent private mobilization has been held to be justified by the Bombay High Court as well as this Court. In the absence of any arbitrariness in effecting such change in policy and keeping in mind the larger public interest, we are of the view, that the Central Government was within its powers to strike a balance with regard to the control of the port facilities so that the same did not come to be concentrated in the hands of one private group or consortium which would be in a dominant position to control not only the rights of tariff, but also the entry of ships, not belonging to such group, into the Major Ports and thereby give an undue advantage to its own ships over other shippingchange in policy by the Government can have an overriding effect over private treaties between the Government and a private party, if the same was in the general public interest and provided such change in policy was guided by reason. Several decisions have been cited by the parties in this regard in the context of preventing private manopolisation of port activities to an extent where such private player would assume a dominant position which would enable them to control not only the berthing of ships but the tariff for use of the port facilities. In both the cases under consideration, the same set of entrepreneurs are interested in gaining control over the different container terminals to the exclusion of other players. The Central Government in its Ministry of Shipping and Transport, therefore, took a decision not to permit licensees who have been granted a licence for running one of the container terminal berths from participating in the bid process for the immediate next container terminal, with the intention of promoting healthy competition for the benefit of the shipping industry and the ports in India as well. The decision to alter its policy is based on sound reasoning and the Central Government has taken such decision for the benefit of the consumers as a whole. The changed policy would also have the effect of preventing cartelisation and dominant status, which could inevitably affect the ultimate pricing of consumer goods within theonly qualifying condition is that such change in policy must be free from arbitrariness, irrationality, bias and malice and must be in conformity with the principle of Wednesburydecision taken by the Tuticorin Port Trust Authorities to exclude PSA Sical Terminals Ltd. from bidding for the 8th Berth Container Terminal cannot, therefore, be said to be arbitrary or unreasonable so as to warrant interference. In fact, the position of PSA Sical Terminals Ltd. is no different from that of A.P.M. Terminals B.V. which had been excluded from the bid for the Third Container Terminal at JNPT.