Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.       3572        OF 2009 (Arising out of SLP (C) No. 6977 of 2007)

Villianur Iyarkkai Padukappu Maiyam ... Appellant

Versus

Union of India and others ... Respondents

With

CIVIL APPEAL NO.    3573           OF 2009 (Arising out of SLP (C) No. 9988 of 2007)

J U D G M E N T

J.M. Panchal, J.

Leave granted in both the special leave petitions.

2. Appeal  arising from Special  Leave Petition (C)  No.  

9988  of  2007  is  directed  against  judgment  dated  

August 10, 2006, rendered by the Division Bench of  

Judicature at Madras, in Writ Petition No. 3304 of

2006 by which three prayers made by the appellant  

to quash (1) the Letter of Intent dated June 3, 2005  

granted by  the  Government  of  Pondicherry  to  the  

respondent  No.  11  herein,  i.e.,  M/s.  Subhash  

Project  and Marketing Limited, for development of  

port in Pondicherry on Build Operate and Transfer  

(‘BOT’ for short) basis, (2) approval dated January  

21,  2006  accorded  by  the  Lt.  Governor  of  

Pondicherry  to  the  detailed  project  report  dated  

November  16,  2005  submitted  by  the  respondent  

No. 11 and its partner M/s. Om Metals Limited for  

the development of Pondicherry Port on BOT basis  

as well as to the concession agreement to be entered  

into  between  the  Government  of  Pondicherry  and  

the respondent No. 11 with its consortium/partner  

M/s. Om Metals Limited and with their affiliates for  

the  development  of  the  Pondicherry  Port  and  all  

related  and  ancillary/other  activities  and  (3)  

direction  dated  January  24,  2006,  issued  by  the  

Director of Ports, Government of Pondicherry, Port  

Department, to the officers concerned, to prepare a  

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list of all the existing moveable/immoveable assets  

of  the  Pondicherry  Port  for  handing  over  to  the  

respondent  No.  11  by  January  30,  2006,  

consequent  upon  the  decision  taken  by  the  

Government of Pondicherry for the development of  

Pondicherry Port on BOT basis, are rejected.

3. Appeal  arising from Special  Leave Petition (C)  No.  

6977  of  2007  is  also  directed  against  judgment  

dated August 10, 2006, mentioned above, rendered  

in Writ  Petition No. 12337 of 2006, by which two  

prayers  made  by  the  appellant  to  quash  (1)  the  

approval dated January 21, 2006 accorded by the  

Lt. Governor of Pondicherry to the detailed project  

report dated November 16, 2005, submitted by the  

respondent No. 11 and its partner  M/s. Om Metals  

Limited, for the development of Pondicherry Port on  

BOT basis as well as to the concession agreement to  

be  entered  into  between  the  Government  of  

Pondicherry  and  the  respondent  No.  11  with  its  

consortium/partner  M/s.  Om Metals  Limited  and  

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with  their  affiliates  for  the  development  of  

Pondicherry Port and all related and ancillary/other  

activities  and (2)  the  direction  dated  January  24,  

2006, issued by the Director of Ports, Government  

of  Pondicherry,  Port  Department,  to  the  officers  

concerned  to  prepare  a  list  of  all  the  existing  

moveable/immoveable  assets  of  the  Pondicherry  

Port for handing over the same to the respondent  

No.  11  by  January  30,  2006  pursuant  to  the  

decision taken by  the  Government  of  Pondicherry  

for  the  development  of  Pondicherry  Port  on  BOT  

basis, are rejected.

4. As  both  the  appeals  arise  from  the  common  

judgment  delivered by the  Madras High Court  on  

August 10, 2006 and common question of facts and  

law  arise  for  consideration  of  this  Court,  it  is  

proposed  to  dispose  them  of  by  this  common  

judgment.

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5. In order to trace the development of events leading  

to filing of these appeals, it is necessary to notice  

certain basic facts.

6. Background

The existing Port of Pondicherry is situated in  

the East Coast of India between two Major Ports of  

India, i.e., Madras and Tuticorin.  It is located at the  

Ariankuppam  River  Mouth  in  Pondicherry.   The  

history  of  the  Pondicherry  Port  dates back to the  

tenth century A.D.  The Pondicherry Port flourished  

as a centre for international trade and commerce.  

However,  it  could  not  maintain  the  pace  of  

augmentation  in  improving  the  port  facilities  with  

respect  to  the  rapid  changes  in  transport  

technology.   Therefore,  the  port  facilities  became  

obsolete and the Port lost much of its importance.

With  the  objective  of  developing  the  port  

facilities,  offers  from  various  Marine  Technical  

Consultancy Firms were invited by the Government  

of Pondicherry in the year 1973 for the preparation  

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of a Master Plan and a detailed project report.  After  

examining  the  offers  received  from  various  firms,  

the Port Department of Government of Pondicherry  

recommended  that  the  project  be  awarded  to  

M/s. Consulting Engineers Services (India) Pvt. Ltd.  

By Government order dated September 27, 1973 the  

said  organization  was  entrusted  with  the  work of  

preparation  of  the  Master  Plan  and  a  detailed  

project  report.   The  said  organization  submitted  

various reports and finally updated its project report  

in  May,  1982.   On  the  basis  of  the  reports,  the  

Ministry  of  Shipping  and  Transportation  (Ports  

Wing), Government of India approved the project for  

the creation of certain facilities at the Pondicherry  

Port and sanctioned the cost of the project by letter  

dated  June  26,  1984.   The  Government  of  

Pondicherry  entered  into  an  agreement  with  

M/s. Consulting Engineering Services (India) Private  

Limited on January 22, 1985 for development of the  

facilities  in  terms  of  the  approval  and  sanction  

granted by  the  Government  of  India.   During the  

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construction of the facilities, there was a proposal to  

create  additional  development  facilities  for  

Commercial-cum-Fishing Vessels.

The creation of these additional facilities was  

discussed  in  a  meeting  held  on  March  22,  1989  

pursuant  to  which  the  Director  (Ports),  Port  

Department, Government of Pondicherry vide letter  

dated  March  23,  1989  informed the  Development  

Commissioner,  Government  of  Pondicherry  that  

creation of such additional facilities would require a  

feasibility  report.   In  the  said  letter  it  was  also  

stated  that  since  the  Port  Department  lacked  

competent  personnel  in  this  regard,  the  same  

should  be  got  prepared  by  a  body  having  the  

requisite  expertise.   It  was also  mentioned in the  

letter  that  M/s.  Consulting  Engineering  Services  

(India)  Private  Limited  had  no  requisite  expertise  

and  recommended  the  appointment  of  M/s.  Rail  

India  Technical  and  Economic  Services  India  

Limited, a Government of India undertaking under  

the  Ministry  of  Railways  (“M/s.  RITES  India  

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Limited”  for  short)  to  conduct  the  study  on  the  

technical  feasibility  and  economic  viability  of  the  

proposed development facilities.  This proposal was  

examined  and  approved  by  various  officials  

including the then Chief Minister of Pondicherry on  

March  27,  1989  and  the  then  Lt.  Governor,  

Pondicherry on March 28, 1989.  In terms of those  

decisions, a Government order dated May 29, 1989  

was  issued  by  the  Government  of  Pondicherry  

sanctioning  a  techno-economic  survey  to  be  

conducted by M/s. RITES India Limited.

On June 10, 1991, M/s. RITES India Limited  

submitted  its  Techno-Economic  Feasibility  Study  

Report  pertaining  to  the  Development  of  the  

additional  facilities  at  Ariankuppam  Port  Project.  

The  said  report  noticed  that  the  proposed  

development was not only necessary for bridging the  

gap of technological  changes in the sea transport,  

but  was  also  necessary  from  the  socio-economic  

point of view.  In the report it was mentioned that  

the  investments  in  the  proposed  project  was  

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justified.  By the said report a study to be done on  

the  ways  and means of  raising  the  funds  for  the  

project was recommended.  The report also pointed  

out that Environmental Impact Assessment for the  

proposed development indicated that the effect on  

the environment was not significant and would be  

well within the acceptable levels specified as per the  

Indian standards.

In spite of the positive Feasibility Study Report  

submitted by M/s. RITES India Limited, the project  

could not be carried forward in view of the paucity  

of funds.   

Again,  some  time  in  March  1996  the  

Government of Pondicherry made further attempt to  

develop  the  Port  by  inviting  the  officials  of  M/s.  

RITES  India  Limited  to  examine  and  provide  

consultancy services by privatization of the ports at  

Pondicherry,  Karaikal  and  Mahe.   Accordingly,  a  

meeting  was  held  between  the  officials  of  

Government and the Company on March 12, 1996.  

In the said meeting the officials of M/s. RITES India  

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Limited suggested that appropriate approach was to  

adopt the Build, Own, Share and Transfer mode of  

privatization.   In  terms  of  the  said  meeting  

M/s.RITES  India  Limited,  through  a  letter  dated  

March 12, 1996, submitted a ‘Terms of Reference’  

for offering consultancy assignment for privatization  

of aforementioned ports.  The total consultancy fee  

for the assignments was initially put as Rs.30 lakhs,  

which was reduced to Rs.20 lakhs as the proposal  

for  consultancy  was  subsequently  limited  to  the  

Pondicherry  Port  only.   The  Joint  Secretary,  

Ministry of Surface Transport, Government of India,  

vide letter dated March 22, 1996 informed the Chief  

Secretary,  Pondicherry  Administration  about  the  

need  to  expand  the  existing  capacity  of  the  

Pondicherry Port to meet the growth requirement of  

traffic handled by various major ports.  In the said  

letter it was mentioned that a decision was taken to  

invite  capital  participation  by  private  sector  and  

from non-maritime land-locked states.  In response  

to the said letter the Director of Ports, Government  

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of  Pondicherry  addressed  a  letter  dated  April  18,  

1996  enclosing  therein  the  material  for  inviting  

capital participation by the private sector and non-

maritime land-locked states.

One company,  i.e.,  Megah Venture Lines  (M)  

SDN  BHD  vide  letter  dated  March  28,  1996  

addressed to the Secretary (Health & Welfare and  

Port),  Government  of  Pondicherry,  referred  to  the  

discussion it had on March 28, 1996 and made a  

proposal to conduct a Feasibility Study relating to  

the modernization/privatization of  the Pondicherry  

Port.   The  said  company  wanted  permission  to  

conduct  the  said  Feasibility  Study.   The  said  

proposal  was  examined  by  the  Director  (Ports),  

Government of Pondicherry and by letter dated April  

19,  1996,  the  Director  (Ports),  Government  of  

Pondicherry,  recommended  that  as  the  entire  

privatization  of  port  was  being  examined  by  

M/s. RITES India Limited, the study sought to be  

conducted by M/s. Megah Ventures Lines should be  

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permitted only after  tenders for  privatization were  

invited by M/s. RITES India Limited.

The Managing Director of M/s. Mega Ventures  

Lines  along  with  letter  dated  January  25,  1997,  

addressed  the  then  Chief  Minister,  Pondicherry,  

enclosed a draft  of  MOU pursuant to the meeting  

which  had  taken  place  between  the  then  Chief  

Minister and the officials of M/s. Megah Ventures  

Lines  on January  23,  1997 and claimed that  the  

same was in accordance with the economic policy of  

the Government of India.  The benefits, which were  

to accrue,  were also mentioned in the said letter.  

The Director of Ports, Government of Pondicherry,  

by his letter dated June 24, 1997, made a proposal  

to  the  Under  Secretary  (Ports),  Pondicherry  to  

examine  the  issue  as  to  whether  it  would  be  

preferable  to  call  for  competitive  tenders.   It  was  

also  mentioned  in  the  said  letter  that  in  the  

meanwhile M/s. RITES India Limited be approached  

for  consultancy  services.   By  the  said  letter  the  

Director  of  Ports  also  proposed  that  M/s.  RITES  

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India Limited be appointed as the consultant for the  

assignment  of  selection  of  suitable  entrepreneurs  

for  ‘additional  development  facilities  of  

Ariankuppam Port  Project’  by  competitive  tenders  

on BOOST basis.  The Director also requested for  

sanction  of  Rs.14  lakhs  as  expenditure.   On  

September  19,  1997 a meeting was held  between  

the  senior  officials  of  the  Government  of  

Pondicherry  and  the  Group  General  Manager  of  

M/s.  RITES  India  Limited.   The  minutes  of  the  

meeting recorded that due to resource crunch at the  

Centre  and  State  level,  the  Government  of  

Pondicherry  had  decided  to  invite  private  

participation  for  the  development  of  Pondicherry  

Port.  The minutes also reflected that a decision was  

taken to call for pre-qualifications bids in order to  

ascertain  the  technical  capacity  and  financial  

soundness of the entrepreneurs.  The minutes also  

indicated that a decision was taken that in order to  

invite  the  best  parties,  the  Government  of  

Pondicherry  should grant  concessions at par with  

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other  maritime  States.   On  November  4,  1997  a  

meeting  was  held  between  the  officials  of  the  

Government  of  Pondicherry  including  the  then  

Lt.  Governor  and  the  Group  General  Manager  of  

M/s. RITES India Limited.  At the said meeting the  

officials of M/s. RITES India Limited gave a detailed  

presentation  relating  to  various  aspects  of  

competitive bidding process.  At the said meeting a  

decision  was  taken  to  adopt  a  transparent  open  

competitive bidding procedure in preference to the  

MOU Route.  The minutes of the said meeting also  

reflected that a decision relating to the appointment  

of M/s. RITES India Limited as a consultant for this  

purpose  was  also  taken.   The  minutes  further  

recorded that the Pondicherry Port was a minor Port  

and, therefore, the provisions of Major Ports Trust  

Act were not applicable.   The draft  minutes were,  

thereafter,  approved and signed by the officials  of  

the Government of Pondicherry.

On  November  6,  1997,  a  Government  Order  

was issued appointing M/s. RITES India Limited as  

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a consultant.  The Consultancy Service Agreement  

between  the  Government  of  Pondicherry  and  

M/s. RITES India Limited was signed on December  

10, 1997.  The Group General Manager (Ports) by  

letter  dated  December  22,  1997  forwarded  draft  

advertisement  titled  “Invitation  for  Private  

Investment in Pondicherry Port”, a Draft Invitation  

Document  for  “Initial  Proposals”  and  the  Draft  

Agreement  to  be  entered  into  between  the  

Government of Pondicherry and M/s. RITES India  

Limited.   These  draft  documents  and  the  draft  

advertisement  were  forwarded  for  the  purpose  of  

approval  by  the  competent  authority.   The  draft  

advertisement  and  the  draft  initial  proposal  were  

examined  by  various  departments  of  the  

Government  of  Pondicherry.   The  Secretary  

(Finance), Government of Pondicherry in his noting  

dated May 18, 1998 noted that there were long term  

implications  of  the  Draft  Advertisement.   He,  

therefore,  recommended  that  the  draft  initial  

proposal and the Draft Agreement be placed before  

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the Council of Ministers.  These recommendations  

were approved by the Chief Secretary, Pondicherry  

on August 3, 1998 and by the then Chief Minister  

on  August  13,  1998.   Accordingly,  a  Cabinet  

meeting  was  convened  on  January  19,  1999  

wherein the agenda of the meeting was to discuss  

and decide  amongst  other  items,  the  proposal  for  

privatization of Port and calling for advertisements  

by M/s. RITES India Limited.  The Cabinet in the  

said meeting resolved to defer the discussion on this  

item till  the  next  meeting.   The  said  agenda was  

again circulated to the Ministers of the Cabinet on  

April 7, 1999 and all the Ministers of the Cabinet  

approved the proposal for privatization of the Port  

as well as calling for advertisement by M/s. RITES  

India Limited.  The proposals were finally approved  

by  the  Cabinet  on  October  13,  1999.   The  then  

Lt. Governor accorded his approval on October 15,  

1999.  After the said approval, various departments  

of  the  Government  of  Pondicherry  examined  the  

Draft  Agreement  to  be  entered  into  between  the  

16

Government of Pondicherry and M/s. RITES India  

Limited.   After  necessary  changes,  the  agreement  

was  entered  into  between the  parties  on January  

10, 2000.

7. Relevant facts

The General  Manager  (Ports)  of  M/s.  RITES India  

Limited by his letter dated March 16, 2000 informed the  

Secretary  (Ports)  Government  of  Pondicherry  that  the  

advertisement  seeking  interest  of  the  parties  for  

development  of  Pondicherry  Port  through  private  

investment had appeared in the Daily Hindustan Times  

on March 16, 2000 and the same advertisement would  

appear in editions of the Economic Times, Times of India  

(Bombay  edition),  Hindu  (Chennai  and  Delhi  editions)  

and  Statesman  (Calcutta  edition)  between  17th to  21st  

March, 2000.  By this advertisement, the Government of  

Pondicherry sought involvement of the private sector in  

the development and operation of the Pondicherry Port  

on  BOST  basis  from  reputed  and  financially  sound  

Indian and/or  international  parties.   The  last  date  for  

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submissions of proposal for pre-qualification of the above  

project  was  May  20,  2000.   However,  the  General  

Manager (Ports) of M/s. RITES India Limited by his letter  

dated  May  9,  2000  sought  permission  from  the  

Government of Pondicherry for extension of last date by  

one month, i.e., June 20, 2000, which was approved on  

May  19,  2000.   The  General  Manager  (Ports)  of  

M/s. RITES India Limited by his letter dated June 29,  

2000  informed  the  Principal  Secretary  (Power),  

Government  of  Pondicherry  about  the  developments  of  

private investment in the Pondicherry Port.  In the said  

letter  it  was  mentioned  that  in  response  to  the  

advertisement, 48 parties had initially indicated interest  

in the project and that certain firms were short listed.  It  

was  mentioned  that  the  document  seeking  initial  

proposals  from  short  listed  parties  was  issued  to  all  

interested  parties  and  they  were  requested  to  submit  

their initial proposals by May 20, 2000.  However, by the  

last  date  for  submission  of  initial  proposals,  only  five  

parties/ consortiums had submitted their proposals.  It  

was also mentioned in the said letter that the evaluation  

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of the proposals by M/s. RITES India Limited would be  

submitted on or before July 15, 2000.  M/s. RITES India  

Limited  submitted  its  report  on  evaluation  of  initial  

proposals  as  well  as  invitation  documents  for  detailed  

proposals.   The  said report  indicated  that  M/s.  RITES  

India Limited had rejected the proposal of one party, i.e.,  

M/s. Rockers (India) Pvt. Ltd.  In the report preference  

regarding remaining four parties was shown as under: -

1. M/s. Ashok Leyland of India – 81 marks out of 100  

(This firm had unconditionally qualified).

2. M/s. Seaways Shipping Limited of India – 92 marks  

out  of  100  (This  firm  had  qualified  with  some  

conditions).

3. M/s.  Kvaerner  Construction  International  Ltd.  –  73  

marks out of 100 (This firm had qualified with some  

conditions).

4. M/s.  Durgeshwari  Shipping  Agency  Pvt.  Ltd.  –  79  

marks out of 100 (This Firm had qualified with some  

conditions).

The short listing of four parties and recommendation of  

M/s.  RITES  India  Limited  to  invite  detailed  proposals  

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from the four parties within five months was approved by  

the Government of Pondicherry on July 21, 2000.  The  

parties  which  were  short  listed  subject  to  certain  

conditions were asked to provide documentary proof in  

support of their claims before September 15, 2000.  In  

consequence thereof, M/s. Durgeshwari Shipping Agency  

Pvt.  Ltd.  had  submitted  the  requisite  documents.  

Therefore M/s. RITES India Limited confirmed the short  

listing  of  consortium  of  M/s.  Durgeshwari  Shipping  

Agency  Pvt.  Ltd.  whereas  the  other  two  short  listed  

parties  had  sought  extension  of  time  by  about  two  

months for furnishing the required documentary proof.  

Accordingly the General Manager (Ports) of M/s. RITES  

India  Limited  had,  by  his  letter  dated  September  22,  

2000, sought approval of the Government of Pondicherry  

in  relation  to  (a)  final  confirmation  of  short  listing  of  

consortium of  M/s.  Durgeshwari  Shipping  Agency  Pvt.  

Ltd. and (b) allowing time up to November 15, 2000 for  

the  parties  mentioned  at  serial  numbers  1  and  2  for  

submitting proof in respect of conditions mentioned by  

them.   The  Government  of  Pondicherry  by  its  

20

communication  dated  October  8,  2000  informed  

M/s. RITES India Limited that a decision in this regard  

would be made after hearing the representations of the  

consortium parties in the pre bid meeting to be held on  

October 12, 2000.  A pre bid meeting for the development  

and operation  of  Pondicherry  Port  on the  basis  of  the  

clarifications sought by the short listed parties was held  

in Delhi on October 13, 2000.  This meeting was to clarify  

all  the  doubts  of  the  parties  in  relation to  the  project  

prior  to  the  submission  of  a  detailed  proposal.   The  

meeting was attended by the Principal Secretary (Power  

and Ports),  Government of Pondicherry,  and only three  

parties/  consortiums,  i.e.,  (i)  M/s.  Ashok  Leyland  of  

India, (ii) M/s. Seaways Shipping Limited of India and (iii)  

M/s. Durgeshwari Shipping Agency Pvt. Ltd.  After the  

said  pre  bid  meeting,  only  two  parties/consortiums  

submitted  their  detailed  proposals,  i.e.,  M/s.  Ashok  

Leyland of India and M/s. Durgeshwari Shipping Agency  

Pvt.  Ltd.   M/s.  Durgeshwari  Shipping Agency Pvt.  Ltd.  

sought  an  extension  of  time  till  January  15,  2001  to  

submit their detailed proposals, which was granted.  The  

21

General Manager (Ports) of M/s. RITES India Limited by  

his letter dated January 15, 2001 informed the Principal  

Secretary (Power and Ports) Government of Pondicherry  

that till the last date of submission of detailed proposals  

it  had  received  proposals  from  two  parties,  namely,  

(i)  consortium  with  M/s.  Ashok  Leyland  of  India  and  

(ii) consortium with M/s. Durgeshwari Shipping Agency  

Pvt. Ltd.  In the said letter it was mentioned that both the  

parties had not submitted valid Bank Guarantee as bid  

securities and, therefore,  both the proposals should be  

rejected  straightaway.   As  only  two  proposals  were  

received and both were found to be deficient with regard  

to  the  bid  security  deposit,  it  was  recommended  that  

both  the  parties  should  be  given  time  of  seven to  ten  

working  days  to  enable  them  to  submit  valid  Bank  

Guarantees.  The Government accordingly extended the  

time up to January 25, 2001 to enable both the parties to  

submit  valid  Bank Guarantees.   The General  Manager  

(Ports)  of  M/s. RITES India Limited by his letter dated  

January  27,  2001  informed  the  Principal  Secretary  

(Power and Ports), Government of Pondicherry that even  

22

within the extended time limit, the parties mentioned had  

not submitted valid Bank Guarantees.  In the said letter  

it  was stated that the attitude of  both the parties had  

shown utter  lack of conviction and commitment to the  

project.  It was further mentioned that the privatization  

process  was  not  successful.   By  the  said  letter  the  

General  Manager  recommended  two  other  alternative  

schemes for the development of Pondicherry Port.  Those  

recommendations were examined by various officials  of  

Government of Pondicherry.  On the proposals made by  

the  General  Manager,  the  then  Lt.  Governor  of  

Pondicherry in her note dated March 8, 2001 expressed  

her  desire  to  have  a  meeting  with  the  officials  of  

M/s. RITES India Limited.  On March 30, 2001 the then  

Lt. Governor of Pondicherry convened a meeting with the  

officials of M/s. RITES India Limited.  At the said meeting  

various  alternative  methods  were  suggested  for  the  

development of the Pondicherry Port.  At the said meeting  

it  was  decided  that  a  Corporation  on  the  line  of  

Pondicherry  Power  Corporation  be  established  and  a  

proposal  be made to  the  Planning Commission for  the  

23

purpose of grant of funds to undertake the development  

of the Pondicherry Port.   This is how the first  attempt  

made by the State Government to develop the Port failed.

Again on February 6, 2003, a meeting was held in  

the Chamber of the then Chief  Minister of Pondicherry  

regarding  the  development  of  Pondicherry  Port.   The  

meeting was attended by the Chief Secretary, Secretary  

(Port), the Director (Port) and a private party.  In the said  

meeting it was decided that an “Expression of Interest”  

calling  for  private  investment  be  floated.   The  Chief  

Secretary,  in  his  notings  dated  February  27,  2003,  

proposed  various  steps  to  be  undertaken  for  the  

development of the Port.  One of the steps proposed by  

him was to immediately issue an Expression of Interest  

from  private  parties.   He  also  recommended  that  the  

Director  (Port)  should  propose  the  constitution  of  a  

committee of officials to look into the entire gamut of the  

privatization process as was done in relation to the power  

sector.  The recommendations of the Chief Secretary were  

approved by the then Chief  Minister  of Pondicherry on  

March  6,  2003.   In  terms  of  the  said  decision,  an  

24

advertisement  titled  as  “Invitation  of  Expression  of  

Interest  for  the  Development  of  Pondicherry  Port  by  

Private  Investment”  was  published  in  various  

newspapers.   The  advertisement  sought  private  

participation  of  the  parties  in  the  development  and  

operation of the project on Build, Own, Operate, Share  

and Transfer basis.  The advertisement also stated that  

the  interested  parties  should  communicate  their  

Expression of Interest within 21 days.  In terms of the  

recommendations  made  by  the  Chief  Secretary  in  his  

letter dated February 27, 2003 a decision was taken by  

the Government of Pondicherry, which was noted by the  

Director  (Port)  in  his  noting  dated  March  25,  2003  

recommending constitution of a committee to look into all  

the  matters  relating to  the  privatization  process.   This  

recommendation  was  approved  by  various  Government  

officials including the then Chief Minister of Pondicherry  

on  April  30,  2003  and  by  the  then  Lt.  Governor  of  

Pondicherry on May 8, 2003.  It was further decided that  

the issue of re-engaging of M/s. RITES India Limited as  

Consultant should be taken later on.  The Government of  

25

Pondicherry vide Government Order dated May 13, 2003  

constituted  a  Committee  to  look  into  the  privatization  

process of the Port under the Chairmanship of Secretary  

to  Government  (Port).   After  the  constitution  of  the  

Committee it was decided by the Government to co-opt a  

representative of the Ministry of Shipping, Government of  

India.  By Government Order dated April 30, 2003, the  

Ministry  of  Shipping,  Government  of  India,  nominated  

Mr.  P.C.  Dhiman  as  a  Member  of  the  Committee.  

Accordingly, Mr. Dhiman was appointed as a Member of  

the  Committee  by the  Government  of  Pondicherry  vide  

Government  Order  dated  August  20,  2003.   The  first  

meeting  of  the  Committee  was  held  on  June 2,  2003,  

which  was  attended  by  all  the  Members  of  the  

Committee.   In  the  said  meeting  various  courses  of  

actions  were  discussed.   One  of  the  issues  related  to  

seeking  of  consent  of  Government  of  India  for  the  

privatization  of  the  Port.   It  was  also  decided  to  seek  

clarifications from the Ministry of Shipping, Government  

of India in this regard.  The Chief Secretary, Government  

of  Pondicherry  in  his  notings  dated  June  25,  2003  

26

mentioned  that  he  had  discussed  the  issue  with  the  

former  Secretary,  Ministry  of  Shipping  and  he  was  

informed that no permission to develop a minor port like  

Pondicherry  port  was required  and that  the  guidelines  

issued  by  the  Government  of  India  on  private  sector  

participation in the Port  sector were applicable  only to  

major ports.  The Chief Secretary further noted that he  

had  also  asked  the  Assistant  Liaison  Commissioner,  

Government  of  Pondicherry  in  New  Delhi  to  meet  

personally  the officials of  the Ministry of Shipping and  

report.   The  Assistant  Liaison  Commissioner,  

Government  of  Pondicherry  in  New  Delhi  by  his  Inter  

Departmental Report dated June 25, 2003, informed that  

the management and development of ports was a State  

subject  and,  therefore,  no  clearance  from  the  Central  

Government was required.  Therefore, the Chief Secretary  

recommended that further steps for privatization of the  

Port be taken.  One of the steps recommended by him  

was  to  re-engage  M/s.  RITES  India  Limited  as  a  

Consultant to the entire process.  The then Minister of  

Ports by his notings dated July 18, 2003 accepted the  

27

proposals of the Chief Secretary but noted that instead of  

engaging  M/s.  RITES  India  Limited  straightaway,  it  

would  be  appropriate  to  issue  notice  inviting  firms  or  

consultants in general.  This proposal was approved by  

the  then  Chief  Minister  of  Pondicherry.   Therefore  

necessary  advertisements  were  issued  by  the  

Government  of  Pondicherry.   In  response  to  the  

advertisements,  13  parties  submitted  Expression  of  

Interest for the development of Pondicherry Port.  These  

parties  were asked to  give  detailed presentation to  the  

Pondicherry Port Privatisation Committee.  Out of these  

13 parties only six parties made their presentation before  

the Committee on August 20, 2003.  It was noticed that  

out  of  six  parties  only  IPCO-Menang,  Singapore  and  

Larsen  and  Toubro,  Chennai  had  experience  

internationally  and nationally  in  port  development  and  

were  also the  only  parties  who had requisite  technical  

know-how  as  well  as  ability  to  mobilize  funds.   The  

minutes of the meeting dated August 20, 2003 indicated  

that M/s. Larsen and Toubro had put certain conditions  

and  wanted  certain  work  to  be  done  by  the  Port  

28

Department.  The Committee noticed that the conditions  

were contrary to the  expectation of  the Government  of  

Pondicherry and accordingly the Committee proposed to  

grant Letter of Intent to M/s. IPCO-Menang, Singapore.  

In  terms  of  the  recommendations  of  the  Privatization  

Committee,  the  Government  of  Pondicherry,  on  

September  2,  2003,  issued  a  Letter  of  Intent  to  

M/s.  IPCO-Menang  to  undertake  the  preparation  of  a  

Detailed  Project  Report  and  Feasibility  Study  for  the  

development of  Pondicherry Port.   The Detailed Project  

Report  as  well  as  Feasibility  Study  Report  were  to  be  

submitted  by  November  5,  2003.   M/s.  IPCO-Menang  

was not able to submit the above mentioned Reports by  

November 5, 2003.  In fact the said company through its  

communication dated November 19, 2003 had requested  

the Director of  Ports to extend the time to submit  the  

report till December 31, 2003.  In response thereof, the  

Director of Port, by his letter dated November 19, 2003,  

informed the said company that the request for extension  

of  time  limit  up  to  December  31,  2003  could  be  

considered  only  on  the  condition  that  the  company  

29

deposited  an  amount  of  Rs.50  lakhs  to  show  its  

seriousness and commitment towards implementation of  

the  project.   The  said  company  neither  submitted  the  

Reports  by  December  31,  2003  nor  deposited  the  

amount.   In  these  circumstances,  the  Government  of  

Pondicherry decided to grant Letter of Intent to the other  

party,  which  was  short  listed,  i.e.,  M/s  Larsen  and  

Toubro,  Chennai.   This  decision  was  approved  by  the  

Minister  of  Ports  on April  5,  2004.   A Letter  of  Intent  

dated  April  30,  2004  was  issued  to  M/s.  Larsen  and  

Toubro, Chennai.  The said company did not respond to  

the issuance of Letter of Intent.  In such circumstances,  

the  second  attempt  for  getting  private  investments  for  

development  of  Pondicherry  Port  also  resulted  into  a  

failure.

Sometimes in September 2004, the Chief Secretary,  

Government  of  Pondicherry  had  a  meeting  with  the  

officials  of  Ministry  of  Shipping,  Government  of  India,  

relating to the development of Pondicherry Port.  In the  

said  meeting  the  Joint  Secretary,  Ministry  of  Shipping  

had  informed  that  it  would  be  possible  to  provide  an  

30

amount of  Rs.20 lakhs for  the  purpose of  preparing a  

Feasibility Study Report and the rest of the expenditure  

should  be  born  by  the  State  Government.   The  Chief  

Secretary, Government of Pondicherry by his letter dated  

September 6, 2004 requested the Secretary, Ministry of  

Shipping, Government of India to provide an amount of  

Rs.50  lakhs  for  the  purpose  of  making  the  Feasibility  

Study  Report.   A  copy  of  the  letter  was  sent  to  the  

Director of Ports with a request to issue a press release in  

the  newspapers  calling  proposals  from  the  interested  

parties for preparation of Feasibility Study Report.  The  

objective  of  the  entire  exercise  was  to  get  prepared  a  

Feasibility Study Report so that a private investor might  

not  be  required  to  conduct  the  study  prior  to  decide  

whether the private investor would be required to invest  

or not.  It was the understanding of the Government of  

Pondicherry  that  in  such  an  event  the  possibility  of  

attracting private investments in the development of Port  

would substantially increase.

In  terms  of  letter  dated  September  6,  2004  the  

Director  (Ports)  submitted  a  proposal  for  issuing  an  

31

advertisement in various newspapers thereby calling for  

the  interested  parties  to  prepare  the  Feasibility  Study  

Report.   This  proposal  was  approved  by  the  Secretary  

(Ports)/Chief Secretary.  In response to the letter dated  

September 6, 2004 the Ministry of Shipping, Government  

of India by its letter dated September 30, 2004 informed  

the Chief Secretary, Government of Pondicherry that in  

terms  of  the  guidelines  framed  by  the  Ministry,  the  

Central  assistance  would  be  restricted  to  50%  of  the  

expenditure to be incurred by the State Government and  

the annual ceiling fixed was Rs.20 lakhs for a State in a  

year on reimbursement basis.  On October 5, 2004, the  

officials  of  one  company,  i.e.,  Apollo  Infrastructure  

Projects Finance Company Limited, had a meeting with  

the  Minister  of  Port,  Government  of  Pondicherry  

regarding  the  development  of  the  Port.   The  company  

sought time from the Minister to make a technical and  

financial presentation in this regard.  The said company  

also, by its letter dated November 22, 2004, requested for  

an opportunity  to  submit  a  technical  report.   Another  

company,  i.e.,  Subhash Project  and  Marketing  Limited  

32

-respondent  No.  11  herein  -  (‘SPML’  for  short),  by  its  

letter dated October 6, 2004, submitted an Expression of  

Interest  for  development  of  ports,  which  is  a  Special  

Economic  Zone  in  Pondicherry.   The  company,  by  its  

letter  dated November 4,  2004,  intimated the Principal  

Secretary (Port) that they had identified their partner who  

would be associated in the work and requested for  an  

appointment  to  make  a  presentation  to  the  Principal  

Secretary.  The Director (Ports) submitted a proposal for  

issuing an advertisement seeking “Expression of Interest”  

from the  consultants  for  the  preparation  of  Feasibility  

Study  Report  for  the  development  of  Pondicherry  Port.  

Based on this proposal a decision was taken to issue an  

advertisement  in  various  newspapers  in  this  regard.  

Accordingly, an advertisement was published in various  

newspapers.   In  terms  of  the  said  advertisement  the  

consultants, interested in undertaking a Feasibility Study  

for the Pondicherry Port Development, were required to  

submit  their  Expression  of  Interest  to  the  Director  of  

Ports within 21 days from the date of publication of the  

advertisement.   In pursuance  of  the  advertisement,  33  

33

firms/companies  had  responded  and  submitted  their  

Expression of Interest.  Out of these 33 firms/companies,  

27 firms/companies had responded within the time limit  

specified in the advertisement.  One of such consortium  

(i.e. MOH Group) submitted their Expression of Interest  

vide  letter  dated  November  21,  2004.   The  Director  of  

Ports  in  his  proposal  dated  November  24,  2004  

recommended that  the  remaining six  firms/companies,  

which had not responded within the time stipulated in  

the  advertisement,  should  also  be  considered  for  the  

purpose of obtaining a Feasibility Study Report to ensure  

maximum benefit from the advertisement.  The Director  

of  Ports  also  recommended  that  the  Port  Privatisation  

Committee,  including  the  Member  co-opted  from  the  

Ministry of Shipping, Government of India, constituted in  

the earlier round, should examine the proposals made by  

the firms/ companies.  The proposal was examined and  

approved  by  various  officials  of  the  Government  of  

Pondicherry and it was decided that the firms/companies  

should be called upon to make their presentation before  

the Committee from December 6, 2004 to December 8,  

34

2004.  In relation to the remaining six firms/companies,  

who had submitted their Expression of Interest after the  

time limit, it was recommended by the Under Secretary  

(Port)  in his  noting dated December 3,  2004 that  they  

should not be considered in view of previous experience  

and  the  General  Financial  Rules,  1963.   This  

recommendation  was  accepted  by  the  Secretary  

(Port)/Chief Secretary, Government of Pondicherry, which  

is quite evident from his noting dated December 6, 2004.  

Under the circumstances, it was decided to exclude those  

six  firms/companies  from  the  exercise  undertaken  for  

obtaining the Feasibility Study Report.  On various dates  

the Port Department, Government of Pondicherry, issued  

e-mails  to  the  27  firms/companies  to  make  a  

presentation  on  the  Expression  of  Interest  for  the  

preparation  of  the  Feasibility  Study  Report.   These  e-

mails  were  sent  between  December  2,  2004  and  

December 4, 2004.  Out of these 27 firms/companies, 10  

firms/companies  made their  presentation on December  

6, 2004.  However, due to certain other pre-occupations,  

the  date  for  presentation  was  shifted  to  December  8,  

35

2004.  The other 10 firms/ companies were requested to  

make their presentation on December 7, 2004, whereas  

the remaining 7 other firms/ companies were requested  

to make their presentation on December 8, 2004.  Thus  

in  all,  27  firms/companies  were  invited  to  make  their  

presentation before the Committee.

On December 3, 2004 the Vice President of Marshall  

Power & Consultancy Services informed the Director of  

Ports  by e-mail  that  the  officials  of  the  company were  

busy on 7th and 8th of  December,  2004 and,  therefore,  

meeting  dated  December  11,  2004  be  postponed.  

Similarly, the Advisor to Scott-Wilson Kirkpatrick (P) Ltd.  

by  e-mail  dated  December  3,  2004  sought  for  an  

alternative  date  of  December  10,  2004.   Another  

company,  i.e.,  WAPCOS,  through  its  e-mail  dated  

December 3, 2004, informed the Director of Ports that its  

officials would not be able to reach for presentation and  

sent necessary materials by courier.  STUP Consultants  

P. Ltd. vide its e-mail dated December 6, 2004 informed  

the  Director  of  Ports  that  it  be  allowed  to  make  the  

presentation  on  December  9,  2004.   Mac  Knight  

36

Infrastructure P. Ltd.,  by its e-mail dated December 6,  

2004, informed the Director of Ports that due to prior and  

conflicting commitments, its official would not be able to  

appear  and  requested  for  an  alternative  date.   The  

Director and Chief  Operating Officer, DS Constructions  

vide letter dated December 7, 2004 informed the Director  

of  Ports that officials  of  the Company wanted to make  

presentation  on  development  and  construction  of  the  

Pondicherry Port.  The Vice President of SPML through  

its e-mail dated December 7, 2004, informed the Director  

of Ports that they were going to develop and operate the  

ports and would like to work more as an operator and a  

developer.   By  the  said  e-mail  the  said  company  

requested  for  an  opportunity  to  enable  it  to  make  a  

presentation.   On December 7,  2004 and December 8,  

2004  various  firms/companies  made  presentations  

before  the  Committee.   The  parties,  who  made  their  

presentations, were as under:-

1. Hauer Associates, Chennai, made the presentation  

on December 7, 2004.

37

2. D.S.  Constructions  made  the  presentation  on  

December 7, 2004.

3. Howe India made the presentation on December 7,  

2004.

4. Price  Water  House  Corpus,  Chennai,  made  the  

presentation on December 7, 2004.

5. Royal Haskoning, Delhi, made the presentation on  

December 7, 2004.

6. CRISIL  made  the  presentation  on  December  7,  

2004.

7. Mahindra  Acres  Consulting,  Chennai,  made  the  

presentation on December 7, 2004.

8. National  Institute  of  Port  Management,  Chennai,  

made the presentation on December 8, 2004.

9. Cullen  Grummit  &  Roe,  Bombay,  made  the  

presentation on December 8, 2004.

10. Deloitte,  Chennai,  made  the  presentation  on  

December 8, 2004.

11. A.F. Ferguson, Chennai, made the presentation on  

December 8, 2004.

38

Certain parties were unable to make their presentations  

on  the  above  mentioned  dates  and,  therefore,  the  

Director  of  Ports,  Government  of  Pondicherry,  by  his  

e-mails  dated  December  10,  2004,  requested  the  

following  parties  again  to  make  a  presentation  on  the  

preparation of  the Feasibility  Report,  on December 17,  

2004.   The  parties,  to  whom  the  said  e-mails  were  

dispatched, were as under: -

1. Scott Wilson Kirkpatrick India Pvt. Ltd.

2. Indian Ports Association, New Delhi.

3. Sree Eikon Constructions, Chennai.

4. Mott Macdonald, Mumbai.

5. Subhash Projects & Marketing Limited

6. Consulting Engineering Services India Limited

7. MECON Ltd., Ranchi.

8. Marshall’s  Power  &  Telecommunication  Limited,  

Bangalore.

9. Larsen and Toubro, Ramboll

10. Mac Knight Infrastructure Private Ltd., Mumbai.

11. Beckett Rankine Partnership, Bombay.

12. National Institute of Oceanography.

39

In  the  meantime  one  company  named  Menang  

Amalgamated  Sdn  Bhd  vide  its  fax  message  dated  

December 15, 2004 addressed a communication, to the  

Minister of Port, Secretary of Port and Director of Port,  

making a reference to the letter dated December 30, 2003  

and  stated  that  the  company  was  in  the  process  of  

finalizing  the  Detailed  Project  Report  as  well  as  the  

Feasibility Study Report and that the company was keen  

on exploring ways to move forward after depositing the  

earnest money of Rs.50 lakhs.  It may be stated that the  

letter was sent after more than a year from the date the  

company was supposed to submit its report.  In terms of  

the  e-mails  dated  December  10,  2004  the  following  

firms/ companies made their presentations on December  

17, 2004 before the Committee: -

1. Consulting Engineering Services, New Delhi

2. Beckett Rankine, Mumbai

3. STUP Consultants, Mumbai

4. L & T Ramboll, Chennai.

40

The minutes of the meetings dated December 7,  2004,  

December 8, 2004 and December 17, 2004 indicate the  

nature of presentations, made by various parties.   The  

presentations included modes of development, etc.  The  

minutes of the meetings show that the Chief Secretary/  

Secretary (Port), Government of Pondicherry while going  

through the presentations of every party had asked them  

whether they would be able to develop the Pondicherry  

Port and would able to bring in investors for the purpose  

of developing the Port.  The minutes further reflect that  

certain parties,  like Hauer Associates,  Haskoning India  

Private  Limitd,  CRISIL  Infrastructure  Advisory,  

Consulting  Engineering  Services  India  Limited,  Beckett  

Rankine Partnership, informed the Committee that they  

might  be  able  to  get  a  private  investor  only  at  a  later  

stage  or  after  seeking  certain  clarifications.   These  

firms/companies  were,  however,  not  willing  to  develop  

and  operate  the  Pondicherry  Port.   The  minutes  also  

reflected  that  only  two  companies,  i.e.,  M/s.  Apollo  

Infrastructure and M/s. D.S. Constructions stated that  

41

they would be able to develop the Pondicherry Port on  

their own.

The  General  Manager  (Ports)  of  M/s.  Larsen  and  

Toubro, Chennai, by his letter dated December 22, 2004,  

informed  the  Chief  Secretary/Secretary  (Port),  

Government of Pondicherry that the company was willing  

to  develop  the  Pondicherry  Port.   The  said  letter  also  

referred to a meeting held on December 20, 2004 with  

the  Chief  Secretary  and  stated  that  the  company  be  

allowed  to  enter  into  MOU  with  the  Government  of  

Pondicherry  for  the  development  of  Pondicherry  Port.  

This  letter  was  received  by  Directorate  of  Ports  on  

December 27, 2004.  M/s. Apollo Infrastructure Projects  

Finance Company Limited, by its letter dated December  

23, 2004, informed the Minister of Ports, Government of  

Pondicherry  that  it  was  willing  to  develop  Pondicherry  

Port on DBOOT basis and proposed certain Development  

Phases.  This letter was received on December 31, 2004.  

In  the  said  letter  a  reference  was  made  to  the  

presentation  made  by  the  company  on  December  17,  

2004.  These letters as well as minutes of the meetings of  

42

the  Port  Privatisation  Committee  clearly  show  that  

certain  firms/companies  were  keen  to  develop  and  

operate the Port.  The Director of Ports by his letter dated  

January  12,  2005  forwarded  a  short  note  on  the  

proposals submitted by 27 firms/companies.  It is clear  

from the said note that the proposals received from the  

firms/ companies  were examined on the  basis  of  their  

experience in preparing the Feasibility Report as well as  

in conducting the consultancy services in Port Sector in  

India and abroad.  This short note was prepared from the  

view  point  of  selecting  a  consultant  to  prepare  a  

Feasibility Study Report and not from the view point of  

selecting  a  developer/operator  for  the  purpose  of  

operating the Port.  In the earlier process of privatization,  

two companies were short listed and were granted Letters  

of Intent.  Those two companies, i.e.,  (i)  IPCO Menang,  

Singapore and (ii) M/s. Larsen and Toubro, Chennai, did  

not  submit  the  requisite  reports  and,  therefore,  their  

claim  lapsed.   These  two  companies  by  letters  dated  

December 15, 2004 and December 22, 2004 respectively  

again  expressed  their  interest  in  developing  the  

43

Pondicherry Port.  In view of these letters, the Director of  

Ports  by  his  letter  dated  January  7,  2005  sought  a  

decision from the Under Secretary (Port) about the future  

course  of  action  to  be  adopted.   The  Under  Secretary  

(Port) in his note dated January 19, 2005 recounted the  

facts and circumstances in which the Letters of  Intent  

were issued as well as the conduct of the parties.  The file  

was  thereafter  submitted  to  the  Secretary  (Port)/Chief  

Secretary for necessary orders.  The Chief Secretary, who  

was also Chairman of the Port Privatisation Committee,  

by his note dated January 19, 2005, noticed that the Port  

Privatisation Committee in its meeting had short listed  

two  parties  and  recommended  that  the  Government  

should  consider  short-listing  M/s.  Larsen and Toubro,  

Chennai as the third party.  It was mentioned in the note  

that this was subject to the approval of the Government.  

He also recommended that the legal position with regard  

to  the  first  two  parties,  who  had  desired  to  prepare  

Feasibility Report, should be examined and thereafter the  

project should be allotted.  An Inter Departmental Note  

dated January 20, 2005 was prepared.  In the said note  

44

the Under Secretary (Ports) referred to the notings made  

by the Chief Secretary on January 19, 2005 and directed  

the  Director  of  Ports  to  send  a  proposal  to  the  Law  

Department for getting confirmation.  In terms of the said  

note a proposal dated January 25, 2005 was made by the  

Director  of  Ports,  who  is  also  a  Member  of  the  Port  

Privatisation Committee.  In his proposal, he pointed out  

the recommendation made by the Chief Secretary in his  

notings and stated that the two parties mentioned in the  

notings,  i.e.,  (1)  M/s.  D.S.  Construction,  which  had  

applied for the preparation of the Feasibility Study Report  

and  was  willing  to  take  development  of  the  Port  and  

(2) M/s. Apollo Infrastructure Projects Finance Company  

Limited,  could  be  considered.   The  other  party,  which  

was recommended for short listing, was M/s. Larsen and  

Toubro,  Chennai.   It  was  pointed  out  that  the  three  

parties were short listed since they had shown interest in  

developing the Port by Private Investment.  In response to  

the  proposal  for  the  Inter  Departmental  Note  dated  

January 25, 2005, the Law Department, Government of  

Pondicherry,  by  its  noting  dated  February  17,  2005,  

45

stated that any consultancy firm, who was entrusted the  

work of  preparing the  Feasibility  Study Report,  should  

only select the promoter and cite example whether it was  

so done.  The Law Department further pointed out that  

clearance  from  the  Government  should  be  taken  in  

respect of various issues involved in the proposal.  The  

said noting of the Law Department was examined by the  

Chief Secretary.  The Chief Secretary in his noting dated  

February  24,  2005  noted  that  the  issue  of  seeking  

clearance from the Government of India had already been  

clarified  by  his  predecessor-in-Office  vide  noting  dated  

June 25, 2003 and, therefore, the said issue should not  

delay the consideration of the matter.  During this period  

certain parties expressed their interest in developing the  

Pondicherry  Port.   One  company,  i.e.,  Water-Bau-AG,  

through  its  communication  dated  January  23,  2005,  

informed the Chief Secretary, Government of Pondicherry  

about its desire to participate in a Deep Sea Project on  

BOT  basis  and  submitted  its  profile.   This  letter  was  

received by the Directorate of Ports on February 2, 2005.  

Similarly,  another  company,  i.e.,  Digital  Hub Sdn Bhd  

46

through  its  letter  informed  the  then  Chief  Minister  of  

Pondicherry  that  they  wanted  to  participate  in  a  Deep  

Sea Project on BOT basis and submitted its analysis.  In  

the meantime on February 2, 2005, the Chief Secretary  

had a  meeting with Lt.  Governor  of  Pondicherry.   The  

noting  of  the  Executive  Engineer,  Directorate  of  Ports,  

Government  of  Pondicherry  dated  February  2,  2005  

indicate  that  after  the  meeting,  the  Chief  Secretary  

directed that a list of all the firms, which had expressed  

their  interest  to  develop  the  Port  through  Private  

Investment, be forwarded to him.  In terms of the said  

direction  the  Director  of  Ports  by  his  letter  dated  

February  3,  2005  gave  the  list  of  11  firms  and  

companies,  which had expressed desire  to  develop the  

Port through Private Investment.  It was also mentioned  

therein  that  out  of  11  firms/companies,  seven  

firms/companies  had  already  made  their  presentation  

before  the  Port  Privatisation  Committee  on  different  

dates.  The note was examined by various Government  

officials  and  it  was  decided  that  the  remaining  four  

firms/corporations should be again invited for making a  

47

presentation before the Committee.  The Director of Ports  

through e-mails dated February 25, 2005 invited above  

mentioned  four  firms/companies  to  make  their  

presentations on March 11, 2005.  The firms/companies  

were (1) Subhash Projects and Marketing Limited, New  

Delhi, (2) Marshall Power & Telecom (I) Ltd., Bangalore,  

(3) Digital Hub SDN BHD, Malaysia and (4) Walter Bau  

AG,  Germany.   M/s.  SPML,  through  its  letter  dated  

February 4, 2005, informed the Principal Secretary (Port),  

Government of Pondicherry that earlier it had not taken  

interest in the project, but the said company expressed  

its  desire  for  development  of  the  Port,  Beaches,  etc.  

Similarly, the General Manager (Tech.), Ashoka Buildcon  

Limited by his letter dated February 7, 2005, informed  

the  then  Chief  Minister  of  Pondicherry  that  they  had  

joined  hands  with  an  overseas  Port  Developer  and,  

therefore, would like to offer services for the Port Project  

in  Pondicherry  on  BDOOT  basis.   M/s.  Apollo  

Infrastructure Projects Finance Company Limited by its  

letter dated February 8,  2005 informed the Minister of  

Ports, Government of Pondicherry that it had entered into  

48

a joint  venture agreement with L&T Romboll,  Chennai.  

Similarly, LA-V-JAY and Associates Pvt. Ltd. through its  

letter dated February 14, 2005 informed the then Chief  

Minister of Pondicherry that the said company was part  

of  a  consortium  comprising  of  Royal  Hoskoning  and  

Ashoka Buildcon.   The said company also pointed  out  

that it would like to develop Pondicherry Port in a unique  

manner.  The said consortium also forwarded one letter  

from the Director Operations, Royal  Haskonin to La-V-

Jay and Associates  wherein  Royal  Haskonin confirmed  

that  they  were  able  to  provide  consultancy  service  to  

La-V-Jay for  the  purpose of  development of  Port.   The  

Director  of  Ports,  Government  of  Pondicherry  by  his  

e-mail dated March 1, 2005 informed the consortium led  

by  M/s.  LA-V-JAY  and  Associates  that  if  they  were  

interested in developing the Pondicherry Port, they were  

free  to  make  presentation  on  March  11,  2005.   In  

response thereto, M/s. U-Pranav Consultancy, who was  

acting on behalf of the consortium vide its e-mail dated  

March  8,  2005,  confirmed  that  they  would  be  able  to  

make the presentation on March 11, 2005.  The Director  

49

(Operations) of M/s. Royal Haskoning by his letter dated  

March 11, 2003 apologised to the then Chief Minister of  

Pondicherry for absence of its officials on March 11, 2005  

and requested that an opportunity be provided to enable  

it to make presentation on March 14, 2005.

M/s.  Digital  Hub  vide  its  e-mail  dated  March  7,  

2005 informed the Deputy Director of Ports, Government  

of Pondicherry that they would not be able to get their  

investor from Germany.  The Chief Executive Officer of  

M/s. SPML vide letter dated March 7, 2005 informed the  

Director of Ports that it would make a presentation on  

March 11, 2005.  The following statement indicates that  

on March 11, 2005 following firms/companies had made  

presentations before the Port Privatisation Committee: -

S.

No.

Date of  e-mail sent

Name of the Firm/  Company/Authority

Proposed  date of  presentation

Presentation  given  and  date

01. 2.12.2004 Sree Eikon Construction 06.12.2004 08.12.2004 17.12.2004

NO

02. 2.12.2004 National Institute of  Oceonography, Goa

06.12.2004 08.12.2004 17.12.2004

NO

50

03. 2.12.2004 National Institute of  Port Management,  Chennai

06.12.2004 08.12.2004

YES 8.12.2004

04 2.12.2004 STUP Consultants (P)  Ltd., Mumbai

06.12.2004 08.12.2004

YES 17.12.2004

05. 2.12.2004 A.F. Ferguson & Co.,  Chennai

06.12.2004 08.12.2004

YES 8.12.2004

06. 2.12.2004 Hauer Associates,  Chennai

06.12.2004 08.12.2004

YES 7.12.2004

07. 2.12.2004 Subhash Projects &  Marketing Ltd., New  Delhi

06.12.2004 08.12.2004 17.12.2004 11.03.2005

YES 11.3.2005

08. 2.12.2004 Cullen Grumnit & Roe,  Mumbai

06.12.2004 08.12.2004

YES 8.12.2004

09. 2.12.2004 D.S. Constructions, New  Delhi

07.12.2004 YES 7.12.2004

10. 2.12.2004 KVR Rail Infra  Consultancy Services,  Secundrabad

07.12.2004 NO

11. 2.12.2004 Consulting Engineering  Services (I) Pvt. Ltd.,  New Delhi

07.12.2004 YES 17.12.2004

12. 2.12.2004 Howe India Pvt. Ltd.,  New Delhi

07.12.2004 YES 7.12.2004

13. 2.12.2004 Macknight  Infrastructure Pvt. Ltd.,  Mumbai

07.12.2004 17.12.2004

NO

14. 2.12.2004 Price Waterhouse  Coopers Pvt. Ltd.,  Chennai

07.12.2004 YES 7.12.2004

15. 2.12.2004 Royal Haskoning India  Ltd., New Delhi

07.12.2004 YES 7.12.2004

16. 2.12.2004 Mahindra Acres  Consulting Engineers  Ltd., Chennai

07.12.2004 YES 7.12.2004

17. 2.12.2004 (WAPCOS) Water &  Power Consulting  Services (I) Ltd., New  Delhi

08.12.2004 NO

18. 2.12.2004 Beckitt Rankine  Partnership, Bombay

08.12.2004 17.12.2004

YES 17.12.2004

19. 2.12.2004 Deloitte Touche  Tohmatsu India Ltd.,  Baroda

08.12.2004 YES 8.12.2004

20. 2.12.2004 MECON Ltd., Ranchi 08.12.2004 17.12.2004

NO

51

21. 2.12.2004 Bicard-JNTU Consortium  Poly-engineers &  Consultants, Hyderabad

08.12.2004 NO

22. 2.12.2004 Marshall’s Power &  Telecom (I) Ltd.,  Bangalore

08.12.2004 17.12.2004 11.03.2005

NO

23. 2.12.2004 L&T Ramboll Consulting  Engineers Ltd., Chennai

08.12.2004 17.12.2004

YES 7.12.2004

24. 3.12.2004 CRISIL Ltd., Mumbai 07.12.2004 YES 7.12.2004

25. 4.12.2004 Mottmacdonald, Mumbai 06.12.2004 08.12.2004 17.12.2004

NO

26. 4.12.2004 Indian Ports Association,  New Delhi

06.12.2004 08.12.2004 17.12.2004

NO

27. 10.12.04 Scott Wilson Kirkpatrick  India Pvt. Ltd., New Delhi

07.12.2004 17.12.2004

NO

28. 25.2.2005 Digital Hub Group,  Malaysia

11.03.2005 NO

29. 25.2.2005 Water Bau, Germany 11.03.2005 NO 30. 01.3.2005 LA-V-JAY and Associates  

Ahmedabad, Gujarat 11.03.2005 NO

On March 11, 2005 a consortium led by M/s. SPML  

made its presentation.  The minutes of the meetings of  

the Committee held on December 7, 2004, December 8,  

2004, December 17, 2004 and March 11, 2005 show that  

the advertisement dated October 18, 2004 was only for  

the  purpose  of  conducting  the  Feasibility  Study.   The  

minutes further indicate that certain other firms had also  

come forward with offers for the development of the Port.  

The  minutes  of  the  meetings  clearly  show  that  after  

52

discussions and on the basis of the presentations four  

firms were short listed in the following preferences: -

1. M/s. Subhash Projects and Marketing Limited

2. M/s. D.S. Constructions

3. M/s.  Apollo  Infrastructure  Projects  Finance  

Company Limited  

4. M/s. Larsen and Toubro, Chennai

The Committee, therefore, recommended that the Letter  

of Intent be issued to M/s. SPML.  The Committee also  

felt  that  the  development  of  Pondicherry  Port  was  of  

considerable  importance  and,  therefore,  the  company  

rightly  recommended  to  the  Government  that  

Government should appoint the National Institute of Port  

Management,  Chennai  (NIPM)  as  a  Consultant  to  the  

Government of Pondicherry for the eventual development  

of the Port.

The  Under  Secretary  (Ports),  Government  of  

Pondicherry issued a Letter of Intent dated June 3, 2005  

in favour of M/s. SPML.  It was stated in the said letter  

that it was proposed to engage the said company for the  

53

development of Pondicherry Port on BOT basis and the  

Letter of Intent was subject to the condition that Detailed  

Project Report was approved by the Competent Authority.  

It was mentioned in the said letter that the said company  

would have to undertake the preparation of  a Detailed  

Project Report and Feasibility Study at its own cost.  It  

was  also  mentioned  therein  that  the  Detailed  Project  

Report should be submitted within 45 days from the date  

of issue of the letter and if the company agreed upon the  

conditions  stipulated  in  Letter  of  Intent  then  the  

company  should  deposit  a  Bank  Guarantee  of  Rs.50  

lakhs  within  a  period  of  15  days.   In  terms  of  the  

aforesaid Letter of Intent, the company made available a  

Bank Guarantee  to  the  Government  of  Pondicherry  on  

June 18, 2005.  The company, along with its letter dated  

July 18, 2005, submitted a Detailed Project Report to the  

Government  of  Pondicherry.   In  terms  of  the  

recommendations of the Committee for Port Privatisation  

the Government of Pondicherry by order dated August 4,  

2005 appointed National Institute of Port Management,  

Chennai as a Consultant for the development of the Port.  

54

The Under Secretary (Port), Government of Pondicherry,  

by his letter dated August 4, 2005, forwarded a Detailed  

Project Report submitted by M/s. SPML to NIPM with a  

request  to  make  a  detailed  analysis  and  evaluation  of  

technical, financial, environmental and legal aspects on  

the Detailed Project Report.  The Detailed Project Report  

was examined in a meeting held on August 31, 2005 and  

various draw-backs such as traffic forecast, detailing of  

the plans, etc. emerging from the Detailed Project Report  

were  examined.   It  was  thereafter  decided  that  

M/s. SPML should have a re-look on the issues raised  

and  revise  the  Detailed  Project  Report  suitably.   The  

NIPM submitted its draft report on September 13, 2005.  

In  terms of  the  discussions held  on August  31,  2005,  

M/s.  SPML  by  its  letter  dated  September  23,  2005  

submitted the First Revised Detailed Project Report to the  

Director of Ports.  The meeting was held on September  

24, 2005 and it was agreed that NIPM would examine the  

First  Revised  Detailed  Project  Report  and  submit  a  

report.   The  reports  submitted  were  examined.  

M/s.  SPML  submitted  the  Second  Revised  Detailed  

55

Project Report along with its letter dated October 5, 2005,  

after which a meeting was held on November 12, 2005.  

In the said meeting officials of M/s. SPML, the officials of  

M/s.  NIPM  and  the  officials  of  the  Government  of  

Pondicherry were present and the minutes were drawn  

and  noted.   In  pursuance  thereof  NIPM submitted  its  

final report on December 1, 2005.  The issues raised by  

all  the  parties  concerned  were  resolved and,  therefore,  

the Second Revised Detailed Project Report was accepted  

by the Government as Approved Detailed Project Report.  

The Government of Pondicherry thereafter constituted a  

Committee  to  draft  the  Concession  Agreement  to  be  

entered into between the Government of Pondicherry and  

M/s.  SPML.   The  Committee  examined  various  model  

Concession  Agreement  of  various  States  and  more  

specifically  of  Gujarat  State.   The  said  Concession  

Agreement  was  thereafter  drafted  on  the  basis  of  the  

Approved  Detailed  Project  Report.   The  said  draft  

agreement  was  examined  and  approved  by  various  

departments  of  the  Government  of  Pondicherry.   The  

draft  agreement  was  placed  before  the  Council  of  

56

Ministers for its approval.  The Council of Ministers in a  

meeting dated January 20, 2006 approved the same and  

resolved  that  the  existing  Port  Land  of  153  acres  be  

handed over for Port development whereas remaining 107  

acres should be acquired and handed over  within 180  

days  to  SPML.   It  was  further  resolved  that  a  lease  

amount  of  Rs.2,000/-  per  acre  per  annum should  be  

charged from SPML.  The order dated January 21, 2006  

issued by the Government of Pondicherry indicates that  

approval of the Lt. Governor of Pondicherry was obtained  

to the Detailed Project Report as revised on November 16,  

2005 for  the  development  of  Port  on BOT basis.   The  

Government Order also mentions that approval was also  

granted to the Concession Agreement to be entered into  

between the Government of Pondicherry and SPML along  

with its consortium partners.  On January 21, 2006 the  

Government  of  Pondicherry  entered  into  a  Concession  

Agreement  with  SPML  along  with  its  consortium  

partners.   On January 24,  2006 the Director  of  Ports,  

Government  of  Pondicherry  issued  an  Office  

Memorandum  in  favour  of  SPML.   By  the  said  

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Memorandum  all  the  existing  moveable/immoveable  

assets of the Port were to be handed over to the developer  

as per the Concession Agreement.

8. The Letter of Intent dated June 3, 2005, granted to  

SPML – Respondent No. 11 – as well as approval dated  

January  2,  2006  accorded  by  the  Lt.  Governor  of  

Pondicherry  to  the  Detailed  Project  Report  dated  

November 16, 2005 submitted by respondent No. 11 on  

BOT  basis  and  to  the  Concession  Agreement  to  be  

entered into between the Government of Pondicherry and  

the respondent No. 11 as well as direction dated January  

24, 2006 issued by the Director of Ports to the officers  

concerned to prepare list of all the existing moveable and  

immoveable assets of the Pondicherry Port for handing  

over the same to respondent No. 11 were challenged by  

the appellants by filing Writ  Petition No. 3304 of  2006  

and Writ Petition 12337 of 2006 before the Madras High  

Court on several grounds.

9. The  Madras  High  Court  has  rejected  the  two  

petitions giving rise to the instant appeals.

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10. We have heard the learned counsel for the parties at  

length and in great detail and considered the documents  

forming part of the two appeals.

11. Mr.  G.E.  Vahanvati,  learned  Solicitor  General  of  

India, spelt out three preliminary objections, namely, (1)  

the appellants had fairly conceded before the High Court  

that  the  selection  of  the  Developer  was  correctly  done  

and,  therefore,  the  argument  advanced  by  the  learned  

counsel for the appellants, assailing the selection of the  

respondent  No.  11  as  Developer  of  Pondicherry  Port,  

should not be considered by this Court at all  and this  

Court  should  confine  itself  to  examination  of  

environmental impact that the project may have, which  

was emphasized before the High Court; (2) the appellants  

had no locus standi to file the writ petition challenging  

the  Award  of  Contract  for  the  development  of  the  

Pondicherry  Port  to  the  respondent  No.  11,  which  is  

purely commercial  in nature;  and (3)  the list  of  events  

and  dates  submitted  by  the  appellants  is  not  only  

misleading  but  a  calculated  attempt  made  by  the  

59

appellants  to  prejudice  the  Court  by  suppressing  and  

omitting  to  make  reference  to  relevant  materials  and  

events and, therefore, the appeals should be dismissed.

12. Dealing with the first preliminary objection, raised  

on behalf  of  the  respondents,  this  Court  finds  that  in  

paragraph 19 of the impugned judgment the High Court  

has observed as under: -

“19. It is at this juncture, the learned counsel  for  the  petitioners  fairly  conceded  that  his  clients’  concern  was  more  on  the  environmental  impact  that  the  project  may  have and he was not canvassing the relative  merits of the parties, who had submitted offer  to  the  Government  of  Pondicherry.   He  requested the Court to safeguard the interest  of the general public and future development  of  the  Union  Territory  of  Pondicherry  with  reference  to  the  development  of  the  Pondicherry Port.”

A  fair  and  reasonable  reading  of  the  above  quoted  

paragraph makes it  very clear that the appellants  had  

fairly conceded before the High Court that they were not  

assailing  the  selection  of  the  respondent  No.  11  as  

Developer  for  the  Pondicherry  Port,  but  were  more  

concerned with the environmental impact that the project  

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may  have  and,  therefore,  the  learned  counsel  for  the  

appellants  had  requested  the  Court  to  safeguard  the  

interest of general public and future development of the  

Union  Territory  of  Pondicherry  with  reference  to  the  

development  of  the  Pondicherry  Port.   It  is  relevant to  

notice that in the grounds of memorandum of the Special  

Leave Petitions it is not contended by the appellants that  

no concession was made by the learned counsel before  

the High Court or the concession made was different and  

was  not  correctly  recorded  by  the  High  Court.   The  

respondent Nos. 2 to 9 have filed counter affidavit to the  

Special  Leave  Petitions  filed  by  the  appellants.   The  

respondents,  in  paragraphs  6  and  7  of  the  counter  

affidavit filed before this Court, have stated as under: -

“6. I  also  say that  the Hon’ble  High Court,  during the course of the arguments and after  examining  the documents,  had expressed its  view that  the  selection of  the  Developer  was  correctly  done.   In  these  circumstances,  the  Hon’ble  High  Court  ascertained  from  the  petitioner  herein  whether  it  would  like  to  concede  on  the  issue  of  selection  of  the  Developer and agitate its concerns in relation  to the Environmental Impact of the project.

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7. I say that the Counsel for the Petitioner  sought  for  a  pass  over  of  the  matter  and  requested the Hon’ble Court to list the matter  in the second half on the same day i.e. at 2.15  p.m.  This was to enable the Counsel for the  present  Petitioner  to  get  his  instructions.   I  also say that in the afternoon, the Counsel for  the Petitioner pointed out to the Hon’ble Court  that he could not get in touch with his Clients  and therefore sought an adjournment on the  said date to seek instructions from his client.  That  on  the  next  date  the  counsel  for  the  Petitioner informed the Hon’ble Court that his  client  had instructed  him to  concede  on the  issue  of  the  selection  of  the  Developer.  However, he pointed out that his client seeks  certain  safeguards  relating  to  the  issue  of  environmental  impact.   In  this  regard,  the  Petitioner’s  counsel  also  handed  over  a  note  containing  the  desired  directions  from  the  Hon’ble High Court.”

Though the appellants were duly served with a copy of  

the counter affidavit filed by the respondent Nos. 2 to 9,  

they have failed to traverse the assertions and averments  

made  in  paragraphs  5  to  6  of  the  counter  affidavit  

reproduced above.  From the above quoted untraversed  

paragraphs of the reply affidavit, it is evident that during  

the  course  of  the  arguments  and  after  examining  the  

documents, the High Court had expressed its view that  

the selection of the Developer was correctly made and,  

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therefore,  in  those  circumstances,  the  High Court  had  

ascertained from the appellants as to whether they would  

like to concede on the issue of selection of the Developer  

and agitate its concern in relation to the environmental  

impact  of  the  project.   The  above  quoted  paragraphs  

further  make  it  clear  beyond  pale  of  doubt  that  the  

learned counsel for the appellants had sought for a pass  

over of the matter and requested the Court to take up  

the matter in the second half on the same day at 2.15  

P.M.  to  enable  him  to  get  instructions  from  the  

appellants.  It is also evident that the learned counsel for  

the appellants pointed out to the court that he was not  

able  to  get  in  touch  with  his  clients  and,  therefore,  

sought  an  adjournment  to  seek  instructions  from  the  

appellants.  What is relevant to notice is that on the next  

date  of  hearing  the  learned  counsel  for  the  appellants  

had  informed  the  High  Court  that  his  clients  had  

instructed him to concede on the issue of selection of the  

Developer,  but  had  pointed  out  that  his  clients  were  

seeking  certain  safeguards  relating  to  the  issue  of  

environmental impact of the project and had handed over  

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a note containing the desired directions from the High  

Court.   The  fact  that  the  learned  counsel  for  the  

appellants had handed over the note to the High Court is  

admitted  but  it  is  alleged  that  since  the  conditions  

mentioned in the note were not accepted, there was no  

concession  as  is  sought  to  be  made  out  by  the  

respondents.   Having  gone  through  the  proceedings  

before the High Court, this Court finds that the assertion  

made on behalf of the appellants is factually wrong.  The  

judgment,  impugned  in  the  appeals,  incorporates  the  

concerns of the appellants as reflected in the note in the  

form of directions, which are to be found in paragraph 24  

of the impugned judgment.  No application was filed by  

the appellants before the High Court making a grievance  

that  concession  was  never  made  and/or  was  wrongly  

recorded  by  the  court.   On  the  facts  and  in  the  

circumstances  of  the  case,  this  Court  is  of  the  firm  

opinion that the appellants had fairly conceded before the  

High Court that the selection of the respondent No. 11 as  

Developer of the Pondicherry Port was never canvassed  

nor the relative merits of the parties were pointed out to  

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the High Court and, therefore,  the High Court has not  

recorded  any  finding  as  to  whether  selection  of  the  

Respondent No. 11 as Developer was correct or not.  In  

view  of  the  concession  made  by  the  appellants,  the  

appellants are not entitled to canvass before this Court  

that the selection of the respondent No. 11 as Developer  

of the Pondicherry Port was not correctly made.

13. As  far  as  second  preliminary  objection  regarding  

locus standi of the appellant to challenge the Award  

of  the  Contract  for  the  development  of  the  

Pondicherry  Port  to  the  respondent  No.  11  is  

concerned,  this  Court  finds  that  the  contract  

assailed in the writ petitions is purely commercial in  

nature.  Neither the parties, which had participated  

in  the  process  of  selection  of  the  

consultant/Developer  nor  one  of  those,  who  had  

expressed  desire  to  develop  the  Pondicherry  Port  

but was not selected, has come forward to challenge  

the selection procedure adopted by the Government  

of  Pondicherry  or  the  selection  of  the  respondent  

65

No. 11 as Developer of the Pondicherry Port.  The  

question of locus standi in the matter of awarding  

the contract has been considered by this Court in  

BALCO Employees’ Union (Regd.) vs. Union of India  

[(2002) 2 SCC 333].  This Court, after review of law  

on  the  point,  has  made  following  observations  in  

paragraph 88 of the judgment: -

“88. It  will  be seen that whenever the Court  has  interfered  and  given  directions  while  entertaining  PIL  it  has  mainly  been  where  there  has  been  an  element  of  violation  of  Article  21  or  of  human  rights  or  where  the  litigation has been initiated for the benefit of  the  poor  and  the  underprivileged  who  are  unable  to  come  to  court  due  to  some  disadvantage.   In  those  cases  also  it  is  the  legal rights which are secured by the courts.  We  may,  however,  add  that  public  interest  litigation  was  not  meant  to  be  a  weapon  to  challenge the financial  or economic decisions  which are taken by the Government in exercise  of  their  administrative  power.   No  doubt  a  person  personally  aggrieved  by  any  such  decision,  which  he  regards  as  illegal,  can  impugn  the  same  in  a  court  of  law,  but,  a  public  interest  litigation  at  the  behest  of  a  stranger ought not to be entertained.  Such a  litigation cannot per se be on behalf of the poor  and  the  downtrodden,  unless  the  court  is  satisfied that there has been violation of Article  21  and  the  persons  adversely  affected  are  unable to approach the court.”

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From the passage quoted above it is clear that the only  

ground on which a person can maintain a PIL is where  

there has been an element of violation of Article 21 or  

human rights or where the litigation has been initiated  

for the benefit of the poor and the underprivileged who  

are  unable  to  come  to  the  court  due  to  some  

disadvantage.  On the facts and in the circumstances of  

the case, this Court is of the view that the only ground on  

which the appellants could have maintained a PIL before  

the High Court was to seek protection of the interest of  

the  people  of  Pondicherry  by  safeguarding  the  

environment.   This  issue was raised by the  appellants  

before  the  High Court  and the  High Court  has issued  

directions regarding the same, which are to be found in  

paragraph 24 of the impugned judgment.  After the High  

Court’s  directions the element of  public  interest  of  the  

appellants’  case  no  longer  survives.   The  appellants  

cannot, therefore, proceed to challenge the Award of the  

Contract  in  favour  of  the  respondent  No.  11  on  other  

grounds as this would amount to challenging the policy  

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decision of the Government of Pondicherry through a PIL,  

which is not permissible.  Thus on the ground of locus  

standi also the appeals should fail.

14. As far as the list of events and dates, submitted on  

behalf  of  the  appellants,  is  concerned,  this  Court  

finds  that  the  appellants  have  omitted  to  state  

events, which have been narrated in the earlier part  

of this judgment.  The list of dates submitted by the  

appellants straightaway refers to the advertisement  

dated October 18, 2004, published in the Economic  

Times,  but  omits  to  mention  that  even  prior  to  

October 18,  2004,  on October 5,  2004 the Apollo  

Infrastructure  Projects  Finance  Company  Limited  

had  a  meeting  with  the  Minister  of  Ports,  

Government of Pondicherry and had sought time to  

make  a  presentation  for  the  development  of  

Pondicherry  Port  and  such  an  opportunity  was  

given  to  the  said  firm.   Significant  events,  which  

took place during January 12, 2005 to January 20,  

2005, are not mentioned in the list of dates at all.  

68

To  enable  the  Court  to  know  the  factual  

background, in the absence of records, clause (b) of  

Rule 4(1) of Order XVI of the Supreme Court Rules,  

1960 requires a list of dates in chronological order  

with relevant material facts or events pertaining to  

each of  the  dates  to  be  furnished  along  with  the  

special leave petition.  In practice, the list of dates is  

prefaced  by  a  brief  synopsis  of  facts  to  give  a  

complete and coherent picture of  the facts but in  

the instant case this Court finds that in the special  

leave  petitions,  the  synopsis/list  of  dates  filed  

suffers  from the  defect  of  filing  of  a  list  of  dates  

without relevant material  facts/events or synopsis  

and  from  the  defect  of  filing  of  inaccurate  and  

incomplete  synopsis/list  of  dates.   The  above  

defects have resulted in defeating the very purpose  

of requiring the filing of synopsis/list of dates.  The  

filing of inaccurate and incomplete list of dates has  

caused confusion necessitating detailed reference to  

the  facts  carved  out  from  the  pleadings  of  the  

parties before the High Court and this Court.  But  

69

for  the  filing  of  list  of  events  on  behalf  of  the  

respondents, the list of events filed on behalf of the  

appellants  would  have  resulted  into  unintended  

miscarriage of justice.  To say the least, the list of  

events submitted on behalf of the appellants cannot  

be termed as accurate and such a practice of filing  

of  incomplete/inaccurate  list  of  events  is  not  

approved by this Court at all.

15. Having held that the appeals should fail because of  

concession made by the appellants before the High  

Court that the selection of the respondent No. 11 as  

Developer was proper and that the appellants have  

no locus standi  to  challenge  the  contract  entered  

into  between  the  Government  of  Pondicherry  and  

the  respondent  No.  11  with  its  consortium,  this  

Court  notices  that  the  appeals  were  argued  at  

length and on behalf of the respondents also details  

submissions  were  made  on  merit  and,  therefore,  

this  Court  proposes  to  consider  the  submissions  

made by the parties on merits also.

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16. The contention that the Government of Pondicherry  

having taken a conscious decision on the basis of  

available guidelines to get a Feasibility Report before  

taking  up  development  of  Pondicherry  Port  could  

not have given it up in an arbitrary manner, all of a  

sudden, to benefit M/s SPML and therefore grant of  

Letter  of  Intent  dated  June  3,  2005  to  the  

Respondent No. 11 should be voided, has no factual  

basis.

The record  clinchingly  establishes  that  right  from  

the  year  1973,  successive  Governments  of  the  Union  

Territory of Pondicherry were concerned for development  

of the Pondicherry Port.  The first attempt to privatize the  

Pondicherry Port was made in the year 1973 when offers  

for preparation of a Master Plan and detailed project for  

development  of  Pondicherry  Port,  were  invited.   The  

project  was  awarded  to  M/s  Consulting  Engineering  

Services  (India)  Private  Limited  for  preparation  of  the  

Master Plan and a Detailed Project Report.  The said firm  

submitted  its  report  in  May  1982.   The  report  was  

approved  by  the  then  Government  of  Pondicherry  and  

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therefore an agreement with the said firm was entered  

into  on  June  26,  1984  for  development  of  certain  

facilities.   In  the  year  1989,  a  proposal  was  made  to  

create  additional  development  facilities  for  commercial-

cum-fishing  vessels.   Later  on,  it  was  found  that  

M/s  Consulting  Engineering  Services  (India)  Private  

Limited had no expertise to develop certain facilities at  

Pondicherry Port.  Therefore, M/s RITES India Limited, a  

Government  of  India  undertaking,  was  appointed  to  

conduct a study on the technical feasibility and economic  

viability  of  the  facilities  to  be  developed.   M/s  RITES  

India Limited submitted its Feasibility Study Report.  The  

Techno-Economic  Feasibility  Report  submitted  by  

M/s  RITES  India  Limited  pertained  to  additional  

facilities.   In  spite  of  positive  Feasibility  Study  Report  

submitted by RITES India Limited, the project could not  

be carried forward in view of paucity of funds.  In 1996, it  

was  suggested  by  M/s  RITES  India  Limited  to  adopt  

Build,  Own, Share  and Transfer  mode of  privatisation.  

The record of the case makes it clear that between 1996  

and  2000  various  proposals  for  privatisation  of  

72

Pondicherry  Port  including  that  of  one  Megah Venture  

Lines (M) SDN BHD were received and considered.   

It  is  necessary  to  notice  that  in  response  to  

advertisement issued seeking interest of the parties for  

development  of  Pondicherry  Port  through  private  

investment, 48 parties initially indicated their interest in  

the  project.   However,  only  5  parties/consortiums  

submitted  their  proposals.   Ultimately,  after  a  long  

process  of  deliberations/discussions,  only  two  parties  

were short listed but none of them submitted requisite  

Bank Guarantees within time specified and therefore the  

process  initiated  by  issuing  advertisement  seeking  

interest  of  parties  for  development  of  Pondicherry  Port  

through private investment, was called off.

From  March  16,  2003  to  March  18,  2003,  

Advertisement titled “Invitation of Expression of Interest  

for  the  Development  of  Pondicherry  Port  by  Private  

Investment” was published in various newspapers.  On  

May  13,  2003,  the  Government  of  Pondicherry  

constituted  a  Committee  to  look  into  the  privatisation  

process of the Pondicherry Port and Secretary (Port) as its  

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Chairman.  What is evident from the record is that the  

Chief  Secretary,  Government  of  Pondicherry,  in  his  

notings  dated  June  25,  2003  indicated  that  he  had  

discussion  about  the  issue  with  the  former  Secretary,  

Ministry of Shipping, who had informed him that it was  

not  obligatory  to  obtain  permission  from  Central  

Government  for  development  of  a  minor  Port  like  

Pondicherry  and  that  the  guidelines  issued  by  the  

Government  of  India  on Private  Sector  Participation  in  

the Port Sector only applied to Major Ports.  It was also  

noted by the Chief Secretary in his notings that he had  

asked  Assistant  Liaison  Commissioner,  Government  of  

Pondicherry in New Delhi to meet personally the officials  

of  the  Ministry  of  Shipping  and  report  to  him.   The  

Assistant  Liaison  Commissioner,  Government  of  

Pondicherry  in  New  Delhi  in  his  Inter-Departmental  

Report dated June 25, 2003 mentioned that the officials  

of  the Ministry of  Shipping had informed him that the  

management and development of Minor Ports was a State  

subject  and  therefore  no  clearance  from  the  Central  

Government was required.  The Chief Secretary therefore  

74

recommended that further steps for privatisation of the  

Port  be taken.   One of  the steps recommended by the  

Chief  Secretary  was  to  re-engage  M/s  RITES  India  

Limited  as  a  Consultant  to  the  entire  process.   The  

notings  prepared by  the  Minister  of  Ports  on July  18,  

2003 indicate that he accepted the proposals of the Chief  

Secretary but noted that instead of engaging M/s RITES  

India  Limited  straightaway,  it  would  be  appropriate  to  

issue a notice inviting firms or Consultants in general.  

This proposal of Minister of Ports was approved by the  

Chief  Minister.   Accordingly,  notice  inviting  firms  or  

Consultants  was  issued.   In  all,  13  parties  submitted  

Expression  of  Interest  but  only  6  parties  made  

presentation before the Committee on August 20, 2003.  

Only 2 Consultants namely IPCO-Menang, Singapore and  

M/s  Larsen  &  Toubro,  Chennai  had  the  requisite  

experience.  Therefore, those two firms were short listed.  

A Letter of Intent was issued in favour of IPCO-Menang,  

Singapore.  The said Consultant was asked to prepare a  

Detailed Project Report by November 5, 2003.  However,  

the  said  consultant  could  not  submit  Detailed  Project  

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Report within stipulated period.  Therefore, the Letter of  

Intent  was  issued  in  favour  of  M/s  Larsen  & Toubro,  

Chennai  on  April  30,  2004.   M/s  Larsen  &  Toubro,  

Chennai, also failed to respond to the Letter of Intent.   

The  events  leading  to  the  award  of  the  Letter  of  

Intent in favour of Respondent No. 11 indicate that on  

October 5, 2004, Apollo Infrastructure Projects Finance  

Limited had a meeting with the then Minister  of  Ports  

and  had  sought  time  to  make  a  presentation  for  the  

development  of  Pondicherry  Port.   The  record  also  

indicates that the said firm was given an opportunity to  

do so before the Minister on October 17, 2004.  Similarly,  

the Respondent No. 11 had also shown interest in the  

development  of  the  Port  by  addressing  a  letter  dated  

October 6, 2004 which was received in the office of Chief  

Secretary on October 28, 2004.  By another letter dated  

November 4, 2004, Respondent No. 11 had indicated that  

it had identified a partner who would be associated with  

the work of development of the Port.  In the meanwhile,  

on October 18, 2004, advertisement was issued seeking  

Expression of Interest from Consultants for preparation  

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of  Feasibility  Study  Report  for  the  development  of  

Pondicherry Port.  The record shows that 27 firms were  

called  to  make  a  presentation  on  December  6  and  

December 7, 2004.  But on representation of some of the  

firms, the former date was shifted to December 8, 2004.  

The  Minutes  of  the  Meeting  of  the  Committee  dated  

December 7, 2004, December 8, 2004 and December 17,  

2004 showed that the Chief  Secretary had asked each  

and  every  firm  as  to  whether  it  was  in  a  position  to  

develop the Pondicherry  Port  and whether  it  would  be  

able  to  bring  investors  for  this  purpose.   The  Minutes  

indicate  that  some  firms  informed the  Committee  that  

they would get a private investor at a later stage but two  

companies  namely  Apollo  Infrastructure  and  DS  

Construction stated that they would be able to develop  

the Pondicherry Port on their own.

Meanwhile,  on  December  15,  2004,  Menang  

Amalgamated Sdn Bhd sent a fax message stating that it  

was in the process of finalizing a Detailed Project Report  

as well as Feasibility Study Report.  It may be mentioned  

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that  the  aforesaid  communication  was  received  after  

more than one year.   

After  making  reference  to  a  meeting,  which  its  

officials had with the Chief  Secretary on December 20,  

2004, M/s Larsen & Toubro, Chennai, also claimed on  

December  22,  2004  that  it  was  willing  to  develop  the  

Pondicherry Port.   

The Apollo Infrastructure Projects Finance Company  

Limited by its letter dated December 23, 2004 once again  

reiterated that it was willing to develop the Pondicherry  

Port on DBOOT basis.  This letter was received by the  

Committee on December 31, 2004.   

The  IPCO Menang,  Singapore  and  M/s  Larsen  &  

Toubro,  Chennai,  had  participated  in  the  Port  

privatisation  process  in  the  year  2003  but  had  not  

responded, though they were chosen.  However, they had  

expressed their intent to develop the Pondicherry Port by  

communications  dated  December  15,  2004  and  

December 22, 2004 as mentioned above.  In view of these  

letters, the Director of Ports by his letter dated January  

7, 2005 sought a decision from the Under Secretary (Port)  

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regarding the future course of action to be taken in the  

matter.  The Under Secretary (Port) made a noting dated  

January  19,  2005  recounting  the  facts  and  

circumstances relating to IPCO Menang, Singapore and  

M/s  Larsen  &  Toubro,  Chennai.   The  Chief  Secretary  

expressed his view on this noting and recommended that  

M/s Larsen & Toubro, Chennai, be called as third party  

in  addition  to  Apollo  construction  and  M/s  DS  

Constructions.   The  Deputy  Secretary  (Law)  was  

requested to examine the issue.  It was for this reason  

that  the  Inter-Departmental  Note  dated  January  21,  

2005  was  submitted  to  the  Law  Department.   On  

January  23,  2005,  one  Walter-Bau-AG  sent  a  

communication informing the Chief  Secretary about its  

desire to participate in the Deep Sea Project on DBOOT  

basis and submitted its profile.  A letter was also written  

by  Digital  Hub,  Malaysia,  stating  that  it  wanted  to  

participate  in  the  Deep  Sea  Project  on  DBOOT  basis.  

What is important to note is that the moment firm offers  

for development of the Port came before the Government  

of  Pondicherry,  the  choice  before  the  Government  was  

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very clear.  The Government had been trying to develop  

the  Port  since  1973.   As  concrete  proposals  for  the  

development of the Port were available, the Government  

felt  that  proper  course  was  to  move  the  proceeding  

forward to select a developer.  It is relevant to notice that  

certain parties had sought permission to participate  in  

the process of development of the Port itself and not just  

prepare a Feasibility Report.   The records indicate that  

the  Chief  Secretary  met  the  Lieutenant  Governor  on  

February 2, 2005 and it was decided that a list of firms,  

which had expressed their  interest  to develop the Port  

through private investment, should be prepared.  This is  

clearly reflected in the note of the Executive Director of  

Port to the Government of Pondicherry dated February 2,  

2005.  In terms of the said direction, the Director (Ports)  

in  his  note  dated  February  3,  2005  gave  a  list  of  11  

firms/  companies  which had expressed  their  desire  to  

develop the Port through private investment.  Out of the  

11 parties, whose names were mentioned, IPCO Menang  

and Larsen & Toubro  were  already  short  listed  in  the  

year  2003.   Hauer  Associates,  Mahindra  Acres  

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Consulting Engineers Ltd., Marshals Power and Telecom  

(I) Ltd. and M.O.H. Group did not give any firm indication  

about  their  willingness  to  develop  the  Port.   DS  

Constructions,  Subhash Projects & Marketing Ltd. and  

Apollo  Infrastructure  Projects  and  Finance  Co.  Ltd.  

expressed willingness  to  develop the Port.   The  Digital  

Hub and Walter  Bau AG came in the year 2005.  The  

record makes it very clear that this was only a list of the  

firms/companies  interested  in  developing  the  Port  and  

not ranking.  The Digital Hub and Walter Bau AG had  

also  expressed their  willingness  to  develop the  Port  in  

January 2005 itself.  The respondent No. 11 addressed a  

letter  dated  February  4,  2005  reiterating  its  desire  to  

develop  the  Port.   It  was  clearly  pointed  out  by  the  

Respondent No. 11 that it was desirous of developing the  

Port and was not interested in acting as a Consultant.   

Around  this  time,  the  Apollo  Infrastructure  again  

reiterated its interest in the development of the Port by  

addressing letter dated February 8, 2005 wherein it was  

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also mentioned that it had tied up with Larsen & Toubro,  

Ramboll, Chennai.

Another firm, LA-V-JAY Associates Pvt. Ltd. by its  

letter  dated  February  14,  2005  mentioned  that  it  was  

part  of  consortium  comprising  Royal  Haskoning  and  

Ashoka Buildcon.  By the said letter, the said firm also  

expressed its desire to develop the Pondicherry Port.   

The  Director  (Ports)  referred  to  the  note  dated  

February 3, 2005 and stated that out of the 11 firms/  

companies mentioned in the note, 7 firms and companies  

had  already  made  presentations  before  the  Committee  

but 4 firms had not made presentation.  It is relevant to  

notice that DS Constructions and Apollo Infrastructure  

were  part  of  the  7  firms  who  had  already  made  

presentations.  In these circumstances, it was decided on  

February 25, 2005, that the remaining 4 firms namely,  

the respondent No. 11, Digital Hub, Walter-Bau-AG and  

Marshall Power should be called for giving presentation  

before the Committee on March 11, 2005.  Accordingly,  

E-mails  were  sent  to  those  parties  on  March  8,  2005  

asking  them to  give  presentation  on  March  11,  2005.  

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The E-mails were sent to the 4 firms listed in the note  

dated February 25, 2005.  Well before March 11, 2005,  

Digital Hub expressed its inability to attend the meeting  

and  indicated  that  it  would  give  the  presentation  on  

another date.  But even, later on also, the said firm failed  

to make any presentation before the Committee.  Though  

U Pranav Consultancy acting on behalf  of  LA-V-JAY &  

Associates  -  Royal  Haskoning  -  Ashoka  Buildcon  

consortium confirmed by  E-mail  dated  March  8,  2005  

that  the  presentation  would  be  made  in  the  meeting  

dated  March  11,  2005,  Royal  Haskoning  by  its  

communication sought for deferment of date for making  

presentation.  What is most important to notice is that in  

the meeting held on March 11, 2005 only Respondent No.  

11 was present.  During the presentation made by the  

Respondent No. 11, it was found that Respondent No. 11  

had  entered  into  consortium  with  Halcrow,  a  very  

prominent  company  in  the  field  of  Port  development  

projects.  The background of the said firm is set out in  

the Minutes of the proceedings held on March 11, 2005.  

The said firm is described as a company which has been  

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in India for more than 30 years and its expertise is in the  

development of multi purpose ports.   

It may be mentioned that the petitioners have not  

made any reference to the proceedings of March 11, 2005  

or the Minutes of the said Meeting.  Instead, they have  

straightaway  referred  to  the  note  prepared  on  April  5,  

2005  to  suggest  that  Mr.  S.D.  Sunderesan,  Director  

(Ports) was opposed to the development of the Port and  

for that reason he was transferred by the Government.  

The  affidavit  in  reply  makes  it  very  clear  that  this  

allegation  of  the  petitioner  is  factually  wrong.  

Mr.  Sunderesan  was  recommended  for  promotion  to  

higher grade by Departmental  Promotion Committee  in  

March 2005 itself and his posting as a Deputy Secretary  

was effected in May 2005.  Thus, it is wrong on the part  

of the petitioners to allege/suggest that merely because  

he was opposed to the development of the Port, he was  

transferred by the Government.  The note dated April 5,  

2005  was  considered  and  the  Under  Secretary  (Port)  

made a detailed note with reference thereto on April 8,  

2005 dealing with every aspect,  point-wise.   The Chief  

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Secretary prepared a detailed note pointing out that the  

matter had been considerably delayed and that the Port  

Privatisation Committee had recommended that a Letter  

of Intent be issued to SPML.  The Chief Secretary sent a  

note dated May 26, 2005 which was put-up before the  

Minister  of  Ports  for  orders.   The  Minister  of  Ports  

approved the note on June 1, 2005 recommending that  

suitable clauses be incorporated to bind the party down  

to ensure that the project did not get delayed.  The Chief  

Minister  approved  the  proposal  on  June  3,  2005  and  

thereafter the proposal was approved by the Lieutenant  

Governor on June 3, 2005.   

17. The different documents produced on record of the  

case  read  with  averments  made  in  counter  affidavits  

clearly show that on the basis of the reports submitted by  

M/s.  Consulting  Engineers  Services  (India)  Private  

Limited,  The  Ministry  of  Shipping  and  Transportation  

(Ports  Wing),  Government  of  India  had  approved  the  

project for creation of certain facilities at the Pondicherry  

Port and sanctioned the cost of the project by letter dated  

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June 26, 1984.  Further, M/s. RITES India Limited had  

submitted Techno-Economic Feasibility Study Report on  

June 10, 1991, pertaining to development of additional  

facilities to be provided at Ariankuppam Port Project and  

in  spite  of  said  positive  Feasibility  Study  Report,  the  

project could not be carried forward because of paucity of  

funds.  The record shows that after revival of the process  

for  development  of  the  port  in  the  year  2003,  the  

Government  of  Pondicherry  had  decided  to  issue  an  

advertisement calling for Expression of Interest from the  

private  parties  and  vide  G.O.Ms.  dated  May  13,  2003  

constituted a Port Privatisation Committee to go into the  

entire gamut of the privatisation process of the Port of  

Pondicherry through private investment.  The Committee  

so  constituted  was  consisting  of  the  following  

Government officials and no politician was appointed on  

the said Committee at all: -

(1) Secretary to Government (Port) Chairman

(2) Joint Secretary to Government (Revenue) Member

(3) The Director of Ports Member

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(4) The Director of Science, Technology and

Environment Member

(5) Deputy Secretary to Government (Law) Member

(6) Under Secretary to Government (Finance) Member

(7) Under Secretary to Government (Port) Member

(8) Executive Engineer (Port) Member Secretary

Subsequently,  Mr.  P.C.  Dhiman,  Director  (Port  

Development),  Ministry  of  Shipping  (Port  Wing),  New  

Delhi,  was also nominated as Co-opted Member of  the  

above mentioned Committee.  Pursuant to advertisement  

dated February 3, 2003, 13 parties had responded and  

out  of  them,  only  6  parties  had  made  presentations  

before the expert committee, expressing interest for the  

development  of  the  Pondicherry  Port  through  private  

investment.   The  Committee,  after  considering  the  

presentations made by six firms, in its meeting held on  

August 28, 2003, came to the conclusion that only two  

firms,  namely,  (1)  IPCO  Menang,  Singapore  and  (2)  

Larsen and Toubro, Chennai had necessary experience in  

port development and technical  knowhow for the same  

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and,  therefore,  short  listed  those  two  firms.   The  

recommendations of the expert committee were accepted  

by the Government of Pondicherry and a Letter of Intent  

was  issued  on  September  9,  2003  in  favour  of  IPCO  

Menang,  Singapore,  for  feasibility  studies  and  

preparation  of  Detailed  Project  Report  for  the  

development of the Port.  However, the said firm did not  

submit  the  Report  despite  extension  of  time  nor  

deposited the required performance guarantee amount of  

Rs.50 lacs.  Therefore, the second short listed firm, i.e.,  

M/s. Larsen and Toubro, Chennai, was issued Letter of  

Intent,  but  this  firm also  did  not  respond to  the  said  

Letter for more than eight months.

18. Under  such  circumstances,  the  Government  of  

Pondicherry decided to make one more attempt to attract  

private investment for development of the Port and call  

for  Expression  of  Interest  for  undertaking  feasibility  

studies  for  development  of  the  port.   Accordingly,  

advertisement dated October 18, 2004 was issued in the  

leading  newspapers,  pursuant  to  which,  27  firms  had  

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responded.  However, out of 27 firms, only 15 firms had  

given presentations before the expert committee during  

December,  2004  in  the  presence  of  Minister  of  Ports.  

Thereafter, it was decided by the Committee, after having  

meeting with the then Lt. Governor of Pondicherry, that  

out  of  27  firms  which  had  responded  to  the  

advertisement,  number  of  firms  who  were  willing  to  

undertake the feasibility studies should be ascertained.  

Accordingly such exercise was undertaken by the expert  

committee and the expert committee found that only 11  

firms had shown the willingness to undertake feasibility  

studies.  Seven out of those 11 firms had already made  

presentations  before  the  Committee  and,  therefore,  

remaining  four  firms  were  called  upon  to  make  

presentation before the Committee.

19. The record further shows that the expert committee,  

after  approval  of  the  Minister  (Port),  the  Hon'ble  Chief  

Minister and the Lt. Governor, decided to short list the  

under mentioned four firms in order of preference, out of  

the firms which had expressed interest in development of  

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the  Port  by  undertaking  the  feasibility  studies  and  

Detailed Project Report: -

1. M/s. Subhash Projects and Marketing Ltd., New Delhi;

2. M/s. D.S. Constructions, New Delhi;

3. M/s.  Apollo  Infrastructure  Project  Finance Company  

Ltd.; and

4. M/s. Larsen & Toubro, Chennai.

The order of preference was prepared by the Committee  

keeping in  mind the  credentials  and the  presentations  

made  by  the  firms  as  well  as  on  the  basis  of  

recommendations  and  approval  given  by  the  Minister  

(Port),  the  then  Chief  Minister  and  the  Lt.  Governor.  

Thereafter  a decision was taken by the Government of  

Pondicherry to issue a Letter of Intent to the respondent  

No.  11  as  its  name  appeared  first  in  the  order  of  

preference.   Another  decision  was  also  simultaneously  

taken to appoint National Institute of Port Management,  

a Government of India Undertaking, as the consultant for  

the  Government  of  Pondicherry  and  accordingly  the  

appointment order was issued to the respondent No. 14  

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for carrying out a detailed analysis and evaluation of the  

Detailed Project Report (‘DPR’ for short) from all angles  

and for submission of comprehensive report, as well as  

finalization of DPR which would form the basic document  

for  the Port development.   The respondent No.  14 was  

also to advise and assist the Government of Pondicherry  

in  obtaining all  the  statutory  clearance,  preparation of  

Draft Concession Agreement for the development of the  

Port on BOT basis, assist the Government in negotiation  

and finalization of final Agreement as well as to monitor,  

supervise  and  other  related  work.   It  is  necessary  to  

mention  that  pursuant  to  advertisement,  which  had  

appeared  in  The  Hindu  dated  October  18,  2004,  the  

respondent  No.  14  had  offered  to  prepare  a  feasibility  

report.  In the order of appointment issued to respondent  

No.  14,  it  was  mentioned  that  a  Letter  of  Intent  was  

issued to the respondent No. 11 for preparation of DPR.  

The  record  further  establishes  that  the  DPR  was  

submitted by the respondent No. 11 to the Government  

which  was  forwarded  to  the  respondent  No.  14  for  

offering comments/views along with an advance payment  

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of Rs.2 lacs.  Thereafter, a number of meetings were held  

between the  officers  of  respondent  No.  11,  respondent  

No. 14 and the officials of Government of Pondicherry to  

discuss  the  DPR.   During  the  meetings  certain  

shortcomings in the DPR prepared by the respondent No.  

11 were pointed out and, therefore, the respondent No.  

11 was called upon to revise the DPR.  Accordingly 2nd  

and final revised DPR was submitted by the respondent  

No. 11 on November 16, 2005.  The 2nd revised DPR was  

also sent to the respondent No. 14.  After assessment,  

analysis  and  evaluation  of  the  2nd revised  DPR,  the  

respondent  No.  14  gave  independent  analysis  and  

evaluation of the various aspects of the final DPR.  In the  

independent analysis made by the respondent No. 14 it  

was stated that though the project was technically viable,  

it was not financially viable.  However the respondent No.  

11 and its associates had come forward to undertake the  

project  with  their  own  investment,  whereas  the  

Government of Pondicherry was not expecting to invest  

any  money.   Further,  the  Port  Development  Project  

is/was to result in direct and indirect employment to a  

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large number of persons as well as other economic and  

infrastructure development catering to the needs of the  

shipping industry and development of allied industries in  

the  immediate  hinter  land  and,  therefore,  the  

Government  of  Pondicherry  had  decided  to  proceed  

further  in  the  matter.   Accordingly  the  Government  of  

Pondicherry  constituted  a  Committee  to  draft  the  

Concession  Agreement  to  be  entered  into  between  the  

Government  of  Pondicherry  and  M/s.  SPML.   The  

Committee  so  constituted  examined  various  model  

concession  agreements  of  different  states  and  more  

particularly  of  Gujarat  State.   After  undertaking  such  

study, Concession Agreement was drafted on the basis of  

approved DPR.  The said draft agreement was examined  

and approved by various departments of the Government  

of  Pondicherry.   Thereafter,  the  draft  agreement  was  

placed before the Council  of  Ministers for its approval.  

The Council of Ministers in meeting dated January 20,  

2006, approved the same and resolved that the existing  

port land measuring 153 acres be handed over for port  

development,  whereas  remaining  107  acres  should  be  

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acquired to be handed over to M/s. SPML.  It was further  

resolved that a lease amount of Rs.2000/- per acre, per  

annum, should be charged from M/s. SPML.  The order  

dated January 21,  2006, issued by the Government of  

Pondicherry,  indicate that approval  of the Lt.  Governor  

was  obtained  to  the  revised  DPR  as  well  as  to  the  

Concession  Agreement  after  which  the  Government  of  

Pondicherry  entered into  a  Concession Agreement with  

M/s.  SPML  along  with  its  consortium  partners  on  

January 21, 2006.

20. It would be absurd on the part of the appellants to  

attribute motives to all by stating that the Letter of Intent  

was  amended  to  the  respondent  No.  11  for  oblique  

motives in order to favour respondent No. 11 arbitrarily.  

The appellants could not specify either in the petitions  

filed  before  the  High  Court  or  in  the  memorandum of  

appeals as to which member of the expert committee or  

which official of the Government of Pondicherry or which  

Minister  of  the  Council  of  Ministers  or  which  Chief  

Minister  or  Lt.  Governor  was  interested  in  awarding  

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Letter of Intent to respondent No. 11 for oblique motives.  

The record shows that  the  Government  of  Pondicherry  

had  advertised  three  times  calling  for  Expression  of  

Interest  from  the  interested  firms  and  had  identified  

respondent  No.  11  for  development  of  the  Port  after  

adopting transparent procedure.  The procedure adopted  

for  identifying  the  respondent  No.  11  is  crystalline,  

distinct, forthright, manifest and unambiguous.  To say  

the  least  the  appellants’  understanding  of  the  issue is  

absolutely  baseless  and  not  only  incorrect  but  also  

contrary to the records of the case.  The selection of the  

respondent No. 11 as developer cannot be regarded as  

capricious, despotic, fanciful or personal as is sought to  

be made out by the appellants.  It is rightly pointed out  

in  the  counter  reply  that  the  objective  of  the  entire  

exercise was to get prepared a feasibility study report so  

that a private investor might not be required to conduct  

the study prior to deciding whether he would be required  

to  invest  or  not.   It  was  the  understanding  of  the  

Government  of  Pondicherry  that  in  such  an  event  the  

possibility  of  attracting  private  investment  in  the  

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development  of  the  Port  would  substantially  increase,  

which cannot be termed as impractical or not warranted  

in the facts of the case, more particularly, where earlier  

attempts made since the year 1973 to develop the Port  

had failed.   The  Government  of  Pondicherry  could  not  

have risked loosing offers for privatisation of the Port by  

insisting  upon  the  process  of  selection  of  developer  

merely on the ground that the advertisement was only for  

the selection of consultant and not for the selection of  

developer.  On the facts and in the circumstances of the  

case,  this Court  is  of  the  firm opinion that  the  events  

leading to the award of Letter of Intent to the respondent  

No. 11 in June, 2005 do not indicate,  in any manner,  

that  the  Government  had acted  arbitrarily  or  that  the  

Letter of Intent was issued to favour the respondent No.  

11 with oblique motives and, therefore, the contention of  

the appellants in this regard is rejected.

21. The  plea  raised  by  the  learned  counsel  for  the  

appellants  that  the  Government  of  Pondicherry  was  

arbitrary  and  unreasonable  in  switching  the  whole  

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public  tender  process  into  a  system  of  personal  

selection  and,  therefore,  the  appeals  should  be  

accepted, is devoid of merits.  It is well settled that  

non-floating  of  tenders  or  not  holding  of  public  

auction would not be in all cases be deemed to be the  

result  of  the  exercise  of  the  executive  power  in  an  

arbitrary manner.  Generally, when any State land is  

intended  to  be  transferred  or  the  State  largesse  

decided  to  be  conferred,  resort  should  be  had  to  

public auction or transfer by way of inviting tenders  

from the people.  However, what is important to notice  

is  that  the  old  Pondicherry  Port  is  very  much  in  

existence.  This is not a case of establishment of new  

port at Pondicherry but this is a case of developing an  

existing  port  to  meet  rapid  changes  in  transport  

technology and to improve the existing port facilities.  

The development of an existing port on Build, Operate  

and  Transfer  basis  can  never  be  equated  with  

intended sale of Government land or transfer of State  

largesse.   This is not a case where a State asset is  

sought  to  be  sold  or  the  State  is  out  to  purchase  

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goods.  Such cases stand on a different footing from a  

major  issue  of  economic  development  such  as  

development  of  a  port.   The  respondent  No.  11  is  

called upon to develop the Pondicherry Port on BOT  

basis.  Thus after development of the Port, the same  

will  have  to  be  retransferred  to  the  Government  of  

Pondicherry.   In  the  matter  of  policy  decision  and  

economic  tests  the  scope  of  judicial  review  is  very  

limited.  Unless the decision is shown to be contrary  

to  any  statutory  provision  or  the  Constitution,  the  

Court would not interfere with an economic decision  

taken by the State.   The  court  cannot examine the  

relative  merits  of  different  economic  policies  and  

cannot strike down the same merely on ground that  

another policy would have been fairer and better.  In a  

democracy,  it  is  the  prerogative  of  each  elected  

Government to follow its own policy.  Often a change  

in  Government  may  result  in  the  shift  in  focus  or  

change in economic policies.  Any such change may  

result  in  adversely  affecting  some  vested  interests.  

Unless any illegality is committed in the execution of  

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the policy or the same is contrary to law or malafide, a  

decision  bringing  about  change  cannot  per  se be  

interfered with by the court.  It is neither within the  

domain of the courts nor the scope of judicial review  

to embark upon an enquiry as to whether a particular  

public policy is wise or whether better public policy  

can be evolved.  Nor are the courts inclined to strike  

down a  policy  at  the  behest  of  a  petitioner  merely  

because  it  has  been  urged  that  a  different  policy  

would have been fairer or wiser or more scientific or  

more  logical.   Wisdom and advisability  of  economic  

policy are ordinarily not amenable to judicial review.  

In  matters  relating  to  economic  issues  the  

Government  has,  while  taking  a  decision,  right  to  

“trial  and error” as long as both trial  and error are  

bona fide and within the limits of the authority.  For  

testing  the  correctness  of  a  policy,  the  appropriate  

forum is  Parliament and not the  courts.   Normally,  

there is always a presumption that the Governmental  

action is reasonable and in public interest and it is for  

the  party  challenging  its  validity  to  show that  it  is  

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wanting  in  reasonableness  or  is  not  informed  with  

public interest.  This burden is a heavy one and it has  

to be discharged to the  satisfaction of  the  court by  

proper  and  adequate  material.   The  court  cannot  

lightly  assume  that  the  action  taken  by  the  

Government is unreasonable or against public interest  

because  there  are  large  number  of  considerations,  

which  necessarily  weigh  with  the  Government  in  

taking an action.  In a case like this where the State is  

allocating  resources  such  as  water,  power,  raw  

materials,  etc.  for  the  purpose  of  encouraging  

development  of  the  port,  this  Court  does  not  think  

that the State is bound to advertise and tell the people  

that it wants development of the Port in a particular  

manner and invite those interested to come up with  

proposals for the purpose.  The State may choose to  

do so if it thinks fit and in a given situation it may  

turn out to be advantageous for the State to do so, but  

if any private party comes before the State and offers  

to develop the port, the State would not be committing  

breach of any constitutional obligation if it negotiates  

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with such a party and agrees to provide resources and  

other facilities for the purpose of development of the  

port.  The State is not obliged to tell the respondent  

No. 11 “please wait I will first advertise, see whether  

any  other  offers  are  forthcoming  and  then  after  

considering all offers, decide whether I should get the  

port  developed  through  you”.   It  would  be  most  

unrealistic to insist on such a procedure, particularly,  

in  an  area  like  Pondicherry,  which  on  account  of  

historical,  political  and  other  reasons,  is  not  yet  

industrially developed and where entrepreneurs have  

to  be  offered  attractive  terms  in  order  to  persuade  

them to set up industries.  The State must be free in  

such a case to negotiate with a private entrepreneur  

with a view to inducing him to develop the port and if  

the  State  enters  into  a  contract  with  such  an  

entrepreneur  for  providing  resources  and  other  

facilities for developing the port, the contract cannot  

be  assailed  as  invalid  because  the  State  has  acted  

bona  fide,  reasonably  and  in  public  interest.   The  

terms and conditions of the contract entered into with  

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the  respondent  No.  11  as  well  as  the  surrounding  

circumstances  show that  the  State  has  acted  bona  

fide and not out of improper or corrupt motive or in  

order to promote the private interest of the respondent  

No. 11 at the cost of the State.  Therefore, it is difficult  

to  interfere  and  strike  down  the  State  action  as  

arbitrary, unreasonable or contrary to public interest.  

It  is  true  that  one  of  the  methods  of  securing  the  

public  interest,  when  it  is  considered  necessary  to  

dispose of a property, is to sell the property by public  

auction or by inviting tenders.  But as noted earlier,  

this  is  not  a  case  of  sale  of  property  by  the  State.  

Though public  auction  or  inviting  of  tenders  is  the  

ordinary  rule  in  case  where  the  State  Government  

proposes  to  dispose  of  a  property,  it  is  not  an  

invariable rule.  There may be situations where there  

are compelling reasons necessitating departure from  

the  rule,  the  reasons indicated in  this  case  for  the  

departure  are  shown  to  be  rational  and  are  not  

suggestive  of  discrimination.   The  Government  is  

entitled  to  make  pragmatic  decisions  and  policy  

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decisions which may be necessary or called for under  

the  prevalent  peculiar  circumstances.   The  issue of  

privatisation  of  the  Port  had  been  engaging  the  

attention  of  the  Government  of  Pondicherry  since  

1973.   The said  issue had been delayed for  a long  

time.  Therefore, no fault can be found with the expert  

Committee,  with  the  various  officers  of  the  

Government  including  the  Chief  Secretary,  the  

Ministers, the Chief Minister and the Lt. Governor for  

deciding to develop the Port with the assistance of the  

respondent No. 11 and not just restricting the process  

to appoint a consultant.  The sole purpose behind the  

said exercise was to ensure development of the Port in  

a proper manner and as expeditiously as possible.  It  

is  necessary  to  mention  that  the  Government  of  

Pondicherry was trying to develop the Port and was  

looking  for  an  appropriate  partner.   It  must  be  

remembered that  technology  for  development  of  the  

Port would not be available for the mere asking of it.  

All  the  leading  firms/companies  were  not  found  

suitable  to  develop the  Port  and none of  them has  

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made grievance either before the High Court or before  

this Court regarding selection of respondent No. 11 as  

Developer  of  the  Port.   It  is  ultimately  a  matter  of  

bargain.  In such cases, all that needs to be assured is  

that the Government or the authority, as the case may  

be,  has  acted  fairly  and  has  arrived  at  the  best  

available  arrangement  in  the  circumstances.   The  

materials on record substantiated the absolute need  

and  necessity  to  undertake  the  development  of  the  

Port by the Government of Pondicherry in furtherance  

of  great  public  interest  and  for  larger  public  and  

common good.  The admitted dire financial position of  

the State Government and its inability to undertake  

such a project at the cost of Government coupled with  

the fact that the venture was long overdue apparently  

made  the  State  Government  and  its  authorities  to  

avail of the project as unfolded and volunteered by the  

respondent  No.  11,  subject,  of  course,  to  further  

revisions,  modifications and suggestions in the best  

interest  of  the  State  Government.   A  careful  and  

dispassionate  assessment  and  consideration  of  the  

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materials  placed  on  record  does  not  leave  any  

reasonable  impression,  on  the  peculiar  facts  and  

circumstances of this case, that anything obnoxious  

which  requires  either  public  criticism  or  

condemnation by courts of law had taken place.  The  

objective of the Government of Pondicherry to develop  

the Port was admitted to be fulfilled at the initial stage  

by  short  listing  a  consultant  itself.   However,  the  

Government did not wish to continue the process of  

selection of the consultant and risk losing the chance  

of  privatisation  of  the  Port  again.   As  firms/  

companies had offered to develop the Port directly, the  

Government of Pondicherry could not have asked the  

firms/companies to first participate in the process of  

selection of a consultant, prepare a project report and  

require them to participate in the process for selection  

of the developer all  over again.  The Government of  

Pondicherry  adopted  a  pragmatic  approach  and  

proceeded to short list the developer directly and in  

doing  so  the  Government  has  acted  in  the  best  

interest of the State to overcome the failed attempts in  

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the  past  to  secure  a  developer  to  develop  the  

Pondicherry  Port.   Under  the  circumstances,  this  

Court, which is a constitutional Court, is not expected  

to  presume  the  alleged  irregularities,  illegalities  or  

unconstitutionality nor this Court would be justified  

in substituting its opinion for the bona fide opinion of  

the State Government.  Therefore, the plea raised on  

behalf  of  the  appellants  that  the  Government  of  

Pondicherry had acted in arbitrary and unreasonable  

manner in switching the whole public tender process  

into a system of personal selection, is rejected.

22.The contention that a conjoint reading of Article 239  

and 239A of the Constitution and Sections 46, 50 of  

the  Government  of  Union  Territories  Act  read  with  

Rule 5 of the Rules of Business of the Government of  

Pondicherry, 1963, would show that the Government  

of  Pondicherry  has  to  take  prior  approval  of  the  

Central Government before awarding the contract to  

any private party and, therefore, the Letter of Intent  

issued in favour of the respondent No. 11 should be  

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regarded  beyond  jurisdiction  of  the  Government  of  

Pondicherry, is misplaced and has no substance.

23.It is admitted position that the Pondicherry Port is not  

a “major port” and as such jurisdiction and control to  

develop  the  said  port  vests  in  the  Government  of  

Pondicherry.   The  guidelines  relied  upon  by  the  

learned  counsel  for  the  appellants  relate  to  

privatisation of “major port”.  Those guidelines do not  

apply to minor ports.  There is no manner of doubt  

that development and privatisation of minor ports can  

be  undertaken  by  the  respective  State  Government  

after  formulating  its  own guidelines  and modalities.  

The  Indian  Ports  Act,  1908  permits  the  State  

Government to develop the minor ports.  By virtue of  

power vested in the Parliament by Article 239A of the  

Constitution, the Government of Union Territories Act,  

1963 was enacted and Pondicherry was provided with  

a Legislative Assembly.  The extent of the legislative  

power of the State Legislative Assembly is laid down in  

Section  18  of  the  Act  of  1963,  which,  inter  alia,  

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provides that the Legislative Assembly is empowered  

to make laws in respect of any matters in the State  

List  or  the  Concurrent  List.   Entry  31  of  the  

Concurrent List provides for “Ports other than those  

declared  by  or  under  law  made  by  Parliament  or  

existing law to be major ports”.  As the Pondicherry  

Port  has  not  been  declared  as  a  major  port,  the  

Legislative  Assembly  of  Pondicherry  has  absolute  

power  to  make  laws  in  relation  to  the  Pondicherry  

Port.  Article 162 of the Constitution provides that the  

executive  power  of  a  State  is  co-extensive  with  its  

legislative powers.  Therefore, there is no manner of  

doubt  that  the  Government  of  Pondicherry  has  

complete jurisdiction in relation to Pondicherry Port,  

which  is  a  minor  port.   The  reliance  placed  upon  

Section 3(9) of the Indian Ports Act, 1908 read with  

Section  6(b)  of  the  Pondicherry  (Laws)  Regulation,  

1963 is totally misconceived.  Section 3(9) of the said  

Act provides that the jurisdiction of ports other than  

major  ports  vests  in  the  State  Government.   The  

learned  counsel  for  the  appellants  have  contended  

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that  reference  to  State  Government,  appearing  in  

Section  3(9)  of  the  Indian  Ports  Act,  should  be  

construed to be a reference to the Central Government  

and, therefore, only the Central Government will have  

jurisdiction  over  the  ports  in  Pondicherry.   Having  

considered the different provisions of the Constitution  

and Statutes, referred to by the learned counsel  for  

the  appellants,  this  Court  finds  that  there  is  

fundamental  fallacy  in  the  argument  and  it  is  that  

they rely upon Regulation 6(b) only in part.  Though  

the  said  Regulation  provides  that  reference  to  the  

State Government shall be construed as a reference to  

the  Central  Government,  it  also  provides  that  

reference to the State Government shall be construed  

as reference to the Chief Commissioner.  The learned  

counsel for the appellants have failed to take note of  

the  words  “and  also  as  reference  to  the  Chief  

Commissioner”.   This phrase must be read with the  

definition  of  “Chief  Commissioner”  provided  under  

Regulation  2(b),  which  specifies  that  the  Chief  

Commissioner  means  the  Administrator  of  

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Pondicherry (now the Lt. Governor of Pondicherry).  A  

conjoint and meaningful reading of the provisions of  

the  Constitution  read  with  Regulation  6(b)  of  the  

Pondicherry (Laws) Regulation, 1963 leaves no doubt  

that  the  power  in  respect  of  Pondicherry  Port  

necessarily  vests  in  the  Government  of  Pondicherry  

and  not  in  the  Central  Government.   The  reliance  

placed on Rule 5(2) of the Rules of Business of the  

Government of Pondicherry read with Rule 21 of the  

Delegation  of  Financial  Rules  to  contend  that  prior  

approval of the Central Government was required to  

be  taken  by  the  Government  of  Pondicherry  before  

entering  into  the  Concession  Agreement  with  the  

respondent  No.  11  as  it  was  beyond  the  financial  

powers of the Government of Pondicherry, is devoid of  

merits.   Rule  21  relates  to  the  power  to  sanction  

expenditure  in  relation  to  contracts.   Execution  of  

Concession Agreement or grant of Letter of Intent does  

not  entail  any  expenditure  to  be  incurred  by  the  

Government of Pondicherry and as such the learned  

counsel for the appellants are not justified in pressing  

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into service those provisions.  An attempt was made to  

demonstrate  that  in  terms  of  Section  5  of  the  

Pondicherry (Administration) Act, 1962 all properties  

and assets in the State of Pondicherry vest with the  

Union and, therefore, the Government of Pondicherry  

has no right to deal with the same in any manner.

24.It  is  relevant  to  notice  that  the  Union  Territory  of  

Pondicherry  gained  its  freedom  in  the  year  1962.  

Therefore, several laws were passed by the Parliament  

for its integration with the Union of India.  One such  

law was Pondicherry Administration Regulations Act,  

1963.   Article  240  of  the  Constitution  deals  with  

power  of  President  to  make  regulations  for  certain  

Union  Territories.   The  first  proviso  to  Article  240,  

inter  alia,  provides  that  when  any  body  is  created  

under Article 239A to function as a Legislature for the  

Union Territory of Puducherry [substituted by Section  

4 of the Pondicherry (Alteration of name) Act, 2006 for  

Pondicherry],  the  President  shall  not  make  any  

regulation  for  the  peace,  progress  and  good  

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Government of that Union Territory with effect from  

the  date  appointed  for  the  first  meeting  of  the  

Legislature.   Therefore,  the  Pondicherry  

Administration Regulation Act,  1963 will  have to be  

regarded as a Transitional Legislation.  Moreover, the  

primary  reason  for  enacting  Section  3  of  the  

Pondicherry Administration Regulation Act, 1963 was  

to extend all the laws enacted by the Union of India  

under the Union List to the Pondicherry.  It is only an  

Act akin to adaptation Act by which the laws of Union  

of India were extended to this Union Territory, which  

was  incorporated  with  India  after  partition.   The  

extension of laws of Union of India shall only mean  

that  those  laws  would  be  applicable  as  they  are  

applicable  to  any  other  State  of  India.   As  noticed  

earlier, the Port in question is admittedly a minor port  

and, therefore, not covered by the provisions of Indian  

Major Ports Act, 1908.  The extension of law to Indian  

Major  Ports  Act,  1908  would  only  mean  that  a  

particular law is prevalent but its applicability would  

be  dependant  upon  as  to  whether  facts  and  

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circumstances warrant its invocation.  Had the Port in  

question been a major port,  Indian Ports Act,  1908  

would  have  applied.   In  this  case  as  the  Port  in  

question is a minor port, the Indian Major Ports Act,  

1908 would not apply.

25.This  Court  finds  that  Section  5 is  the  provision  by  

which all properties and assets, which earlier vested  

in  the  French  Republic,  stood  transferred  to  the  

Union, i.e., Union of States (India).  In other words,  

Section 5 was enacted for the purpose of transfer of  

properties  from  one  sovereign  State  to  another  

sovereign  State.   It  has  no  power  on  the  right  of  

Government  of  Pondicherry  over  the  properties  and  

assets  in  Pondicherry.   The  vesting  of  land  from  

French Republic to the Republic of India can have no  

bearing on the powers of Government of Pondicherry  

to dispose of land in accordance with the provisions of  

the Constitution.  Further, it is to be noticed that the  

entire  Pondicherry  Administration  Act,  1962  was  a  

Transitional Act for transfer of power from the French  

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Republic  to  the  Republic  of  India,  which is  evident  

from the Statement of Objects and Reasons to the said  

Act.   Therefore,  the  plea  that  the  Government  of  

Pondicherry  could  not  have  taken  the  decision  to  

privatize  the  Pondicherry  Port  without  

consent/approval of the Central Government is totally  

misconceived.   

26.Further,  the  Ministry  of  Shipping  filed  an  affidavit  

before the High Court expressly endorsing the stand  

taken  by  the  Government  of  Pondicherry  that  

Pondicherry Port is not a major port and as such its  

jurisdiction and control vest with the Government of  

Pondicherry.

27.The  record  further  shows  that  M/s.  RITES  India  

Limited  through  a  letter  dated  March  12,  1996  

submitted  ‘Terms  of  Reference’  for  offering  

consultancy  assignment  for  privatisation  of  three  

major  ports  situated  at  Pondicherry,  Karaikal  and  

Mahe.  The total consultancy fee for the assignments  

was initially put at Rs.30 lakhs, which was reduced to  

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Rs.20  lakhs  as  the  proposal  for  consultancy  was  

subsequently  limited  to  the  Pondicherry  Port  only.  

The  Joint  Secretary,  Ministry  of  Surface  Transport,  

Government of India vide letter dated     March 22,  

1996  informed  the  Chief  Secretary,  Pondicherry  

Administration about the need to expand the existing  

capacity of the Pondicherry Port to meet the growth  

requirement of traffic handled by various major ports.  

In the said letter it was mentioned that a decision was  

taken to invite capital participation by private sector  

and from non-maritime land-locked states.  Further,  

by  Government  Order  dated  April  30,  2003  the  

Ministry  of  Shipping,  Government  of  India,  had  

nominated            Mr. P.C. Dhiman as a Member of  

the Committee.         Mr. Dhiman was appointed as a  

Member  of  the  Committee  by  the  Government  of  

Pondicherry vide Government Order dated August 20,  

2003.  The first meeting of the Committee was held on  

June 2, 2003, which was attended by all the members  

of the Committee.  In the said meeting various courses  

of actions were discussed.  One of the issues related  

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to seeking the consent of Government of India for the  

privatisation of the port.  It was also decided to seek  

the  clarifications  from  the  Ministry  of  Shipping,  

Government  of  India,  in  this  regard.   The  Chief  

Secretary,  Government  of  Pondicherry  in  his  noting  

dated  June  25,  2003  mentioned  that  he  had  

discussed the issue with former Secretary, Ministry of  

Shipping  and  he  had  informed  the  Chief  Secretary  

that no permission was required for a minor port like  

Pondicherry  and  that  the  guidelines  issued  by  the  

Government of India on private sector participation in  

the Port sector only applied to major ports.  The Chief  

Secretary  further  noted that  he had also  asked the  

Assistant  Liaison  Commissioner,  Government  of  

Pondicherry  in  New  Delhi  to  meet  personally  the  

officials of the Ministry of Shipping and report.  The  

Assistant  Liaison  Commissioner,  Government  of  

Pondicherry in New Delhi, by his Inter-Departmental  

Report  dated  June  25,  2003,  informed  that  the  

management  and development  of  ports  was a State  

subject and, therefore, no clearance from the Central  

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Government  was  required.   Under  these  

circumstances the Chief Secretary recommended that  

further  steps  for  privatisation  of  the  port  be  taken.  

These  facts  indicate  that  the  Government  of  

Pondicherry  had  full  jurisdiction  to  deal  with  the  

minor port situated in the Union Territory and it was  

not necessary for the Government of Pondicherry to  

take prior approval of the Central Government before  

awarding the contract.   However,  as noticed earlier,  

the  Joint  Secretary,  Ministry  of  Surface  Transport,  

Government of India by letter dated March 22, 1996  

informed  the  Chief  Secretary,  Pondicherry  

Administration about the need to extend the existing  

capacity of the Pondicherry Port to meet the growth  

requirement of traffic handled by various ports and to  

invite capital participation by private sector and from  

non-maritime  land-locked  states.   The  letter  dated  

March 22, 1996 addressed by the Joint Secretary of  

India  to  the  Chief  Secretary  of  Pondicherry  

Administration  read  with  decision  taken  by  the  

Committee  of  which  Director  (Port  Development),  

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Ministry  of  Shipping,  New  Delhi,  was  one  of  the  

Member,  to  privatize  the  Port  will  have  to  be  

construed  as  approval/consent  of  the  Central  

Government  to  the  project  for  the  development  of  

Pondicherry  Port  by  privatisation  and  it  was  not  

necessary for the Government of Pondicherry to seek  

further approval at every stage of development of the  

Port.   Therefore,  the  plea  that  the  Government  of  

Pondicherry  could  not  have  taken  the  decision  to  

privatize  the  Pondicherry  Port  without  

consent/approval of the Central Government is found  

to be misconceived and is rejected hereby.  

28.The argument that the project in question is cleared  

without examining the environmental aspects by the  

Union Territory of Pondicherry in total violation of the  

Precautionary and Trusteeship principles and is also  

prohibited under the CRZ notification as the same is a  

real-estate  activity  in  the  garb of  port  development,  

has no substance worth the name.

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29. The  record  of  the  case  indicates  that  concession  

agreement  is  already  entered  into  between  the  

Government of Pondicherry on one hand and the 11th and  

12th respondents  on  the  other,  on  January  21,  2006.  

Those respondents in terms of the concession agreement  

have  incorporated  a  Special  Purpose  Vehicle  (SPV)  

company  known  as  Pondicherry  Port  Limited  for  

implementation  of  the  Port  Development  Project.   An  

Assignment  agreement  to  this  effect  in  favour  of  

Pondicherry Port Limited is executed by the Respondent  

Nos.  11  and  12  and  confirmed  by  the  Government  of  

Pondicherry.  In terms of the Concession agreement, the  

Government of Pondicherry has entered into Lease and  

Possession agreement with the Special  Purpose Vehicle  

Company  on  February  4,  2006.   The  Lease-hold  

occupancy  is  given  to  the  Pondicherry  Port  Limited  

subject  to  obtaining  necessary  clearance  including  

environmental  clearance from the Government of India.  

There  is  no  manner  of  doubt  that  no  one  can  be  

permitted  to  carry  on  construction  activity  which  is  

prohibited  by  the  CRZ.   However,  this  being  a  project  

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exceeding  Rs.50  crores  necessary  environmental  

clearance  has  to  be  obtained  from  the  Ministry  of  

Environment  and  Forest  Union  of  India.   Before  such  

consent is granted/obtained, a full Environmental Impact  

Assessment has to be done.  During that exercise, public  

hearing would be conducted as a matter of rule and all  

the  concerns  expressed  by  the  public  will  have  to  be  

taken due note  of,  by  the  authorities  concerned.   The  

specific objections raised by the appellants will also have  

to be considered and they would be entitled to hearing by  

the competent authority.  Mere submission of DPR is not  

the  end  of  any  decision  making  process.   The  

implementation  of  the  project  as  per  DPR  is  solely  

dependent on the clearance to be given by the Ministry of  

Environment  and  Forest  Union  of  India.   There  is  no  

manner of doubt that the Government has every power to  

stop the project if  it  violates environmental safeguards.  

The consideration of CRZ regulations would also be part  

of  the  said  exercise.   Further,  the  notification  issued  

under the Environment Protection Act clearly requires a  

prior consent and provides for an appeal to be filed before  

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the  tribunal  constituted  for  the  said  purpose  by  an  

aggrieved  party.   The  plea  that  the  environmental  

clearance must precede the award of the project is wholly  

misconceived and is incorrect.  The application form for  

obtaining environment clearance under the notification of  

2006 makes it very clear that the application has to be  

made by the entity which has been entrusted with the  

project.   In  the  judgment,  impugned  in  the  appeals,  

appropriate directions addressing all the issues raised on  

behalf of the appellants relating to the environment have  

been issued by the High Court.  In addition, the Ministry  

of Environment and Forest which has to given clearance  

for  the  project  has  to  examine  the  proposals  of  the  

developer  and  follow  due  procedure  before  granting  

approval.  Therefore, the judgment impugned is not liable  

to be set aside on the ground that environmental aspects  

were not examined by the Union Territory of Pondicherry  

in  total  violation  of  the  Precautionary  and Trusteeship  

principles or that the project  in question is  completely  

prohibited under the CRZ notification.

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30.The  argument  that  the  Respondent  No.  11  is  

permitted  to  carry  on  Real-Estate  business  by  

construction of five-star hotels, a trade centre as well  

as  a  beach  resort  in  the  garb  of  development  of  

Pondicherry Port and therefore, the project should be  

grounded,  cannot  be  accepted.   It  can  hardly  be  

disputed  by  anyone  that  the  main  objective  of  the  

project is the development of Pondicherry Port.  The  

Government  of  Pondicherry  has  not  entered  into  

Concession agreement with the Respondent No. 11 to  

permit  the  said  respondent  to  run  a  Real-estate  

business.  While developing the port, it is necessary to  

provide  certain  infrastructural  facilities  for  

passengers,  shipping  crew,  port  staff  and  other  

personnel associated with the port, as part of the port  

development  activity.   The  Respondent  No.  11  as  

developer of the Port has not yet submitted necessary  

plans  for  scrutiny  of  Ministry  of  Environment  and  

Forest, Government of India, seeking clearance to the  

project.   As and when,  the plans are  submitted for  

clearance, the competent authority can always decide  

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upon  the  desirability  of  making  of  constructions  

which do not fall within the development of port.  The  

ancillary activities to be undertaken while developing  

a port cannot be stopped by merely naming them as  

Real-estate business.  The affidavit  in reply filed on  

behalf of the Respondent Nos. 11 and 12 before the  

Madras  High  Court  would  indicate  that  the  

Government  of  Pondicherry  is  not  going  to  make  

investment  in  the  project  at  all.   Therefore,  the  

question of Government of Pondicherry favouring the  

Respondent No. 11 does not arise.  The affidavit filed  

by the Respondent Nos. 11 and 12 makes it clear that  

they  have  taken  up  the  project  after  conducting  

detailed study and have decided to make investment  

in the project.  The Respondent Nos. 11 and 12 are  

permitted to develop the Port only on Build, Operate  

and Transfer (BOT) basis.  No material was placed by  

the appellants before the High Court to substantiate  

the claim that the Respondent Nos. 11 and 12 are the  

Real-estate  agents.   The  development  of  Port  of  

Pondicherry on BOT basis makes it  evident that,  in  

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effect and substance, the Government of Pondicherry  

would get  back the assets  built  by  the  Respondent  

Nos. 11 and 12 after the expiry of period mentioned in  

the Concession agreement.  Grant of Letter of Intent  

or  execution  of  Concession  agreement  in  favour  of  

Respondent No. 11 to permit it to develop the Port on  

BOT  basis  cannot  be  regarded  as  gifting  public  

largesse.   The  appellants  have  failed  to  bring  on  

record any material to substantiate the allegation that  

there is a conspiracy to grab the land belonging to the  

Government of Pondicherry for the purpose of Real-

estate  of  Respondent  No.  11  by  permitting  it  to  

construct five-star hotel,  commercial  mall,  etc.   The  

reply affidavit filed by the Respondent before the High  

Court,  on  the  contrary,  shows  that  the  feasibility  

report prepared by it indicated that the Port was to be  

developed in composite manner and therefore project  

should  be  commercially  viable  and  therefore  

considering  the  enormous  cost  involved  in  the  

development of the Port, certain activities are sought  

to be undertaken for the benefit of passengers, crew of  

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ships,  staff  etc.   On  the  facts  and  in  the  

circumstances of the case, this court is of the opinion  

that the appellants have failed to make out the case  

that the Pondicherry Government has permitted the  

Respondent No. 11 to carry on Real-estate business  

and therefore the appeals should be accepted.

31.For  the  reasons stated  in  the  judgment,  this  Court  

does not find any merit in any of the appeals and both  

the  appeals  are  liable  to  be  dismissed.   Therefore,  

both  the  appeals  fail  and  are  dismissed.   Having  

regard to the facts of the case, there shall be no orders  

as to cost.     

………………………....…CJI. (K.G. BALAKRISHNAN)

.......................................J. (P. SATHASIVAM)

…………………………....…J. (J.M. PANCHAL)

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New Delhi; May 14, 2009.  

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