REPORTABLE
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)
Versus
Kakinada Seaports Limited and Ors. ..Respondent(s)
With
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
DEEPAK GUPTA, J.
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 :-
“Policy
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
inapplicable.”
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
decision.
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
2007.
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.
....................................J.
(MADAN B. LOKUR)
....................................J.
(DEEPAK GUPTA)
New Delhi
March 01, 2017
-----------------------
[1]
(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
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)
Versus
Kakinada Seaports Limited and Ors. ..Respondent(s)
With
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
DEEPAK GUPTA, J.
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 :-
“Policy
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
inapplicable.”
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
decision.
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
2007.
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.
....................................J.
(MADAN B. LOKUR)
....................................J.
(DEEPAK GUPTA)
New Delhi
March 01, 2017
-----------------------
[1]
(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
