Sunday, April 2, 2017

JSW Infrastructure Limited and Anr V/s.Kakinada Seaports Limited and Ors. March 01, 2017


                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURSIDICTION

                        CIVIL APPEAL NO. 3422 OF 2017
      (Arising out of Special Leave Petition (Civil )No.23241 of 2016)

JSW Infrastructure Limited and Anr.                ..  Appellant(s)


Kakinada Seaports Limited and Ors.                     ..Respondent(s)


                        CIVIL APPEAL NO. 3424 OF 2017
      (Arising out of Special Leave Petition (Civil)No. 23695 of 2016)

                               J U D G M E N T


      Leave granted.

2.    These two Civil Appeals are  directed  against  the  judgment  of  the
Division Bench of the Orissa High Court dated 14th July, 2016, whereby  Writ
Petition No.4895 of  2016,  filed  by  the  consortium  comprising  of   M/s
Kakinada Seaports Limited, M/s Bothra Shipping  Service  Pvt.  Ltd.,M/s  MBG
Commodities Pvt. Ltd., (hereinafter referred to as  the  second  consortium)
Respondent Nos. 1-3 herein, was allowed and the High  Court  held  that  the
consortium of the appellants JSW Infrastructure Limited and South West  Port
Limited, (hereinafter referred to as the first consortium) was not  entitled
to take part in the bid and, therefore, the acceptance of its bid  was  also
held to be illegal and set aside.

3.    The facts necessary  for  decision  of  these  appeals  are  that  the
Paradip Port Trust, issued Request For  Qualification  (RFQ)  on  31.10.2015
inviting global invitations for Mechanisation of EQ-1-2 and EQ-3  berths  at
Paradip Port Trust of 30 MTPS Capacity on  BOT  basis  under  PPP  mode  for
concession period of  Thirty  (30)  years.   It  is  not  disputed  that  in
response to  the  said  RFQ,  4  parties  including  the  first  and  second
consortium, submitted their bids.  All the four parties were duly  qualified
and were asked to participate in the next stage of  bid,  that  is,  Request
For Proposal (RFP) and submit their offers with regard to  revenue  sharing.
Only two parties, i.e., the  first  consortium  and  the  second  consortium
submitted the RFP.  The bid quoted by the first  consortium  was  31.70%  as
against 28.70% bid  quoted  by  the  second  consortium.   Since  the  first
consortium were the highest  bidders  their  proposal  was  recommended  for
acceptance by the tender committee of the Paradip Port Trust on  26.02.2016.
At this stage, on 27.02.16 the second  consortium  submitted  objections  to
the consideration of the application of the first consortium on  the  ground
that in terms  of  the  Policy  Clause  against  creation  of  monopoly  the
appellants were not entitled to take part in  this  entire  bidding  process
since they were already operating one  berth  for  dry  cargo.   The  Clause
which is subject matter of interpretation reads as follows :-

If there is only one  private  terminal/berth  operator  in  a  port  for  a
specific cargo, the operator of that berth or his associates  shall  not  be
allowed to bid for the next terminal/berth for handling the  same  cargo  in
the same port.”

It would also be pertinent to mention  that  specific  cargo  in  this  very
Policy has been defined to be (i) containers, (ii)  liquid,  (iii)dry  bulk.
Letter of Award  was  issued  in  favour  of  the  appellant  of  the  first
Consortium by the Paradip Port Trust on 29.02.2016.

4.    Aggrieved by this action, the second consortium filed a writ  petition
before the Orissa High Court. The submission  of  unsuccessful  bidders  was
that since the first consortium was already operating a berth for dry  cargo
it could not have  submitted  its  application  to  bid  for  the  berth  in
question which is also admittedly meant for dry  cargo.   It  was  contended
that as per the policy quoted above, if a private operator  is  operating  a
berth he cannot be allowed to bid for the next berth for handling  the  same
cargo in the same port.  This contention of the  original  writ  petitioners
was accepted by the Orissa High Court which interpreted  the  Policy  clause
by holding that the word “next” in  the  Clause  indicated  that  a  private
operator cannot take part or bid for next  successive  berth  for  the  same
cargo.  The High Court, therefore, held that the application for  the  first
consortium  JSW  Infrastructure  Limited,   was   wrongly   considered   and
consequently set aside the award of Letter of Award in favour of  the  first
consortium and further directed that  the  Paradip  Port  Trust  may  either
accept the single remaining bid of the second consortium of Respondent  Nos.
1-3 after negotiating the price which should not  be  less  than  the  price
offered by the consortium of JSW Infrastructure,  or  it  may  invite  fresh
bids for the berth in question.

5.    Aggrieved by the judgment of the High Court the first  consortium  and
the Paradip Sea Port have filed the two appeals.

6.    We have heard learned senior counsel for the appearing  parties.   The
contention of Mr. Kapil Sibal, learned senior counsel  appearing  for  first
consortium  is  that  the  High  Court  has  misinterpreted  the  Clause  in
question. According to him a plain and simple reading of the Clause  clearly
indicates that this Clause will only apply when a single  private  berth  in
port for a specific cargo is being run by a private operator.  He  submitted
that in the present case there are as many as  16  berths  in  Paradip  Port
Trust, out of which 8 are being run by the  Paradip  Port  Trust.   One  dry
cargo berth is being run by the Indian  Oil  Corporation,  a  Public  Sector
Undertaking, 5 are being run by private operators and one was being  run  by
the appellant. Letter of Award for another berth was  issued  in  favour  of
the first consortium, which is the subject matter of dispute.  He  submitted
that the purpose of this clause is to avoid monopoly  and  the  judgment  of
the High Court is erroneous because it does not do away  with  the  monopoly
but only restricts a private operator from bidding in  the  next  successive
berth for the same type of cargo.  Dr. A.M. Singhvi, learned senior  counsel
appearing on behalf of Paradip Port Trust submitted that the employer  i.e.,
Paradip Port Trust is best qualified to interpret the terms and  meaning  of
the terms of the tender and the High Court should  not  have  interfered  in
the decision taken by the Paradip Port Trust. On the other hand,  Mr.  Gopal
Subramaniam, learned senior counsel  for  the  second  consortium  submitted
that the word “next” in the Clause cannot be treated to be superfluous  and,
according to him, the clause which is the subject matter  of  interpretation
in this case clearly envisages that the private operator operating  a  berth
cannot bid for the next successful berth for similar type of cargo.

7.    We have given our careful consideration to the arguments.  This  Court
in Ramana Dayaram Shetty vs. International  Airport  Authority  of  India[1]
held that the words used in documents cannot be treated to be surplusage  or
superfluous or redundant and must be given some meaning and  weightage.   It
was held as follows:-

“......It is a well-settled  rule  of  interpretation  applicable  alike  to
documents as to statutes that, save  for  compelling  necessity,  the  Court
should be prompt to ascribe superfluity to the language of a  document  “and
should be rather at the outset inclined to suppose every  word  intended  to
have some effect or be of some use”.  To reject words as  insensible  should
be the last resort of judicial interpretation, for it is an elementary  rule
based on common sense that no author of a formal  document  intended  to  be
acted upon by the others should be presumed to use words without a  meaning.
 The court must, as far  as  possible,  avoid  a  construction  which  would
render the words used by the author of the document meaningless  and  futile
or reduce to silence any  part  of  the  document  and  make  it  altogether

This view has consistently held the field and  was  recently  reiterated  in
Central Coal Fields  Limited   and  Another   vs.   SLL-SML  (Joint  Venture
Consortium and Others)[2].

8.    On a bare reading of the Policy Clause some weightage and meaning  has
to be given not only to the word “next” as done by the High Court  but  also
to the words “only one private operator” appearing in the  opening  part  of
the Clause.  The words “only one private  operator”  cannot  be  treated  as
surplusage.  The entire clause has to be read as a whole in the  context  of
the purpose of the policy which is to avoid and restrict monopoly.   In  our
opinion, this Clause will apply  only  when  there  is  one  single  private
operator in a port.  If this single private operator is operating  a  berth,
dealing with one specific cargo then alone will he not  be  allowed  to  bid
for next berth for handling the same specific cargo.  The High  Court  erred
in interpreting the clause only in  the  context  of  the  word  “next”  and
ignored the opening part of the Clause  which  clearly  indicates  that  the
Clause is only applicable when there is only  one  private  berth  operator.
It appears to us that the intention is that when a port is started,  if  the
first berth for a specific  cargo  is  awarded  in  favour  of  one  private
operator then he cannot be permitted to bid for the next berth for the  same
type of cargo.  However, once there are  more  than  one  private  operators
operating in the port then any one of them can be permitted to bid even  for
successive berths.  In the present case, as pointed out above there  already
5 private operators other than the first consortium.

9.    We may also add that the law is  well  settled  that  superior  courts
while exercising their power of judicial  review  must  act  with  restraint
while dealing with contractual matters. A Three Judge Bench  of  this  Court
in Tata Cellular  vs.   Union of India[3] held  that  (i)  there  should  be
judicial restraint in review  of  administrative  action;   (ii)  the  court
should not act like court of appeal; it cannot review the decision  but  can
only review the decision making process (iii) the  court  does  not  usually
have the necessary expertise to correct such technical decisions.; (iv)  the
employer must have play in  the  joints  i.e.,  necessary  freedom  to  take
administrative decisions within certain boundaries.

10.   In Jagdish Mandal  vs.  State  of  Orissa[4]   this  Court  held  that
evaluation of tenders and  awarding  contracts  are  essentially  commercial
functions and if the decision is bonafide and taken in the  public  interest
the superior courts should refrain from exercising their power  of  judicial
review.  In the present case there are no allegations of mala fides and  the
appellant consortium has offered better revenue sharing to the employer.
11.   In Afcons Infrastructure Ltd. Vs. Nagpur Metro Rail  Corporation  Ltd.
& Anr.[5]  This Court held as follows :-

      “14.....a mere disagreement with the decision making  process  or  the
decision of the administrative authority is no reason for  a  constitutional
Court to interfere.  The  threshold  of  mala  fides,  intention  to  favour
someone or arbitrariness, irrationality or perversity  must  be  met  before
the constitutional Court interferes with the decision making process or  the

xxx              xxx              xxx

      16.   We may add that the owner or the employer of a  project,  having
authored the  tender  documents,  is  the  best  person  to  understand  and
appreciate   its   requirements   and   interpret   its   documents.     The
constitutional Courts must defer to this understanding and  appreciation  of
the tender documents, unless  there  is  mala  fide  or  perversity  in  the
understanding or appreciation or in the application  of  the  terms  of  the
tender conditions.  It is possible that the owner or employer of  a  project
may give an interpretation to the tender documents that  is  not  acceptable
to the constitutional Courts  but  that  by  itself  is  not  a  reason  for
interfering with the interpretation given.

      17.   In the present appeals, although there does  not  appear  to  be
any ambiguity or doubt about  the  interpretation  given  by  NMRCL  to  the
tender conditions, we are of the  view  that  even  if  there  was  such  an
ambiguity or doubt, the High Court ought to have refrained from  giving  its
own interpretation unless it  had  come  to  a  clear  conclusion  that  the
interpretation given by NMRCL was perverse  or  mala  fide  or  intended  to
favour one of the bidders.  This was certainly not the  case  either  before
the High Court or before this Court....”

The view taken in Afcons (supra)  was followed  in  Monte  Carlo  Ltd.   Vs.
NTPC Ltd.[6] . Thus it is apparent that in  contractual  matters,  the  Writ
Courts should not interfere unless the decision taken is totally  arbitrary,
perverse or mala fide.

12.   Strong reliance has been placed on behalf of the second consortium  on
the judgment rendered in  APM  Terminals  B.V.   vs.   Union  of  India  and
Another[7] .  We are of the considered view that the  said  judgment  cannot
be applied to the present case because in that case  this  court  considered
the clauses of  the  contract.  The  policy  which  was  applicable  in  APM
Terminal, was not the policy of 2010 but the policy of 2007, the wording  of
which is  totally  different.   True  it  is,  that  in  the  said  judgment
reference  has  also  been  made  to  the  new  policy  but  that  was   not
specifically dealt with by the Court, and  the  matter  was  decided  on  an
interpretation of the terms of the contract and  the  policy              of

13.   In view of the above discussion we are clearly of the  view  that  the
High Court erred in interpreting the Clause in the manner which it is  done.
 As explained above, the  Clause  will  apply  only  when  there  is  single
private operator operating a single berth.  Once there  are  more  than  one
private operators then the Clause will not  apply.  The  decision  taken  by
Paradip Port Trust could not be termed to be  arbitrary,  perverse  or  mala
fide. Therefore, the High Court was  not  justified  in  setting  aside  the
same. In this view of the matter, both the Civil Appeals are  allowed.   The
Judgment of the High Court is set aside and the writ petition filed  by  the
second consortium before the High Court is dismissed.

                                                            (MADAN B. LOKUR)

                                                              (DEEPAK GUPTA)

New Delhi
March 01, 2017


       (1979) 3 SCC 489

[2]     (2016) 8 SCC 622
[3]     (1994) 6 SCC 651
[4]     (2007) 14 SCC 517
[5]     2016 SCC Online SC 940
[6]     2016 SCC Online SC 1149
[7]     (2011 ) 6 SCC 756

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