Bombay High Court
Abg Ports Pvt. Ltd. And Another vs Board Of Trustees Of The ... on 4 October, 2012
Bench: Dr. D.Y. Chandrachud, A.A. Sayed
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO.785 OF 2012
ABG Ports Pvt. Ltd. and another ..Petitioners.
versus
Board of Trustees of the Jawaharlal
Nehru Port Trust and another ..Respondents.
.....
Mr. R.M. Kadam, Senior Advocate with Mr. Indranil Deshmukh, Mr. Aditya Mehta
and Ms. Ankita Godbole i/b Amarchand Mangaldas & S.A. Shroff & Co. for the
Petitioners.
Mr. Kevic Setalvad, Senior Advocate with Mr. Karam Advani, Mr. Deepak Lad
and Mr. Swapnil Gupte i/b M/s. Advani & Co. for Respondent No.1.
Mr. Kevic Setalvad, Additional Solicitor General with Mrs. S.V. Bharucha for
Respondent No.2.
......
CORAM : DR.D.Y.CHANDRACHUD, and
ig A.A.SAYED, JJ.
4 October 2012.
ORAL JUDGMENT (PER DR.D.Y.CHANDRACHUD, J.) :
Rule, by consent made returnable forthwith. The learned counsel
appearing on behalf of the Respondents waive service on behalf of the
respective Respondents. By consent, the Petition is taken up for hearing and
final disposal.
2. In pursuance of its policy of privatization including private
participation in the port sector, the Union Government issued guidelines on 26
September 1996. These guidelines called the Guidelines for Private Sector
Participation in Major Ports through Joint Ventures and Foreign Collaborations
contained inter alia provisions to ensure competition and the seamless award of
contracts for augmenting capacity at major ports. On 26 September 2007 the
Union Government framed certain guidelines by which it permitted the
Jawaharlal Nehru Port Trust (JNPT) to pursue global competitive bidding for an
independent standalone container terminal, described as the 330 meter
extension of the container berth. While issuing this permission the Central
Government considered the eligibility of existing private container terminal
operators in JNPT to compete and bid for the project. The guidelines of October
1996 required the Port Trust to ensure that private investments did not result in
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the creation of private monopolies and that facilities are available to all users on
equal and competitive terms. Hence, the Union Government in its guidelines of
26 October 2007 provided the procedure which JNPT must follow in respect of
the 330 meter extension project and laid down that the same convention should
be followed in all Ports with a view to avoid monopoly and promote competition,
until a formal policy was notified. The relevant part of the guidelines reads as
follows :
"5. In the instant case while JNPT is in the process of undertaking the
bidding for the development of the 330 metre extension of container berth
towards north of NSICT project as a stand alone project on BOT basis
(330 metre extension project), there are two different private BOT
operators operating container terminals in JN Port. As a rational and
logical consequence of the stand taken earlier it has been decided that
the successful bidder of the previous container terminal on BOT basis
(Maersk A/S. CONCOR Consortium) and/or their subsidiaries / allied
organizations should be excluded from bidding for the 330 metre
extension project. This would mean that for the next BOT container
terminal in JN Port in future, the successful bidder of the 330 metre
extension project would be excluded and so on.
6. It has also been decided that the above convention shall be
followed in all Ports in its true spirit with a view to avoid monopoly and
promote competition till such time a formal policy is finalized and notified."
Simply stated, the principle to be followed was that a successful bidder in
respect of the award of a contract would not be eligible to bid for the next project
for which bids were invited.
3. In June 2008, the First Respondent issued a Global Invitation of Request
For Qualification (RFQ) for the 330 meter extension project. In March 2009 an
RFQ was issued by the First Respondent for a fourth container terminal at
JNPT.
4. On 8 April 2009 the First Respondent issued a clarification in regard to the
fourth container terminal to the following effect :
"To avoid private monopoly and to promote competition, the successful
bidder / consortium members and / or their subsidiaries / allied
organization in the project for the "Development of a standalone container
handling facility with a quay length of 330-m towards North at JNPT" shall
be excluded from the bidding for DEVELOPMENT OF FOURTH
CONTAINER TERMINAL either as a single applicant or as a consortium.
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Further, for the next BOT container terminal in JN Port in future, the
successful bidder / consortium members in the DEVELOPMENT OF
FOURTH CONTAINER TERMINAL Project would be excluded and so on."
5. This constituted an amendment to the RFQ document, in terms of clause
2.10.
6. The Petitioner is a member of a consortium led by the Port Authority of
Singapore (PSA). In August 2009 an application was submitted by PSA as lead
member of the consortium for the fourth container terminal. On 11 November
2009 the First Respondent reissued a global invitation of RFQ for the 330 mtr.
extension project. Queries were received by the First Respondent from various
applicants in relation to the 330 mtr. extension project in pursuance of which the
First Respondent issued an amendment on 24 December 2009 which was to
form part of the RFQ document. At this stage, since there was a global invitation
of RFQ in respect of both the projects, several clarifications were sought by
bidders / applicants which were addressed by the First Respondent in the
following terms :
Query Reply
2.2.1(e) states "Further, for the next
BOT container terminal in JN Port in
future the successful bidder of the 330
m extension project would be
excluded"
a) Please clarify whether the 4 th The RFQ for 330 m extension project
Container Terminal is the "next BOT was initially invited before RFQ of 4 th
container terminal in JN Port" with Container Terminal and now RFQ for
reference to the exclusion of the 330m extension project is re-invited.
successful bidder of the 330m The Fourth Container terminal is likely
extension project. In case the 4th to be the next BOT container terminal.
Container Terminal is the "next BOT
container terminal in JN Port" with The request for extension of deadline
reference to the exclusion of the for Fourth Container Terminal is
successful bidder of the 330m irrelevant in this forum.
extension project, it is requested that
JNPT may extend the Due Date for
submission of RFQ bids for the 4th
Container Terminal project till such time
that the successful bidder for the 330m
extension project is decided.
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b) Please clarify whether Applicants Applicants are allowed to participate in
(including Applicants who are both the Projects simultaneously,
Consortiums) can participate in both subject to the conditions of the RFQ.
the projects (330m and 4th CT)
simultaneously (basically betting on
two hourses at a time)
c) In case an Applicant becomes the In case an Applicant becomes the
successful bidder for the 330m successful bidder, then such Applicant
extension project, such shall be allowed to withdraw from
Applicant/Member(s) of Consortium another consortium in the 4th container
should be allowed to withdraw from terminal within a specified period of
another Consortium in the 4th Container time. If such a withdrawal is not
Terminal RFQ bid and vice-versa in communicated to the Authority within
case JNPT decides award of License the specified period, then such
for the 4th Container Terminal prior to Consortium may be disqualified for the
the 330m extension project Bidding process. The withdrawal /
ig replacement of such applicant shall be
governed by the provisions of RFQ.
7. On 26 February 2010 the Petitioners submitted an application in
pursuance of the RFQ documents for the 330 mtr. extension project. In June
2010 an RFP (Request For Proposal) document was issued to the consortium
comprising of PSA and the First Petitioner in respect of the fourth container
terminal. On 6 August 2010 the First Respondent issued further clarifications to
the RFP in respect of the fourth container terminal. The relevant clarification was
that the 330 mtr. extension project and the fourth container terminal project are
independent projects and the schedule for bidding for one project shall not affect
the bidding for the other project.
8. On 15 October 2010 RFP bids were submitted for the fourth container
terminal by the consortium led by PSA which included the Petitioners. On 24
January 2011 the First Respondent informed the First Petitioner that it had been
shortlisted as a bidder for the Request For Proposal (RFP) stage of the bidding
process for the 330 mtr. extension project. An RFP was accordingly issued to
the First Petitioner for the 330 mtr. extension project on 31 January 2011.
9. On 23 May 2011 the First Respondent issued an amendment to the RFP
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document and replied to queries received from bidders for the 330 mtr.
extension project. The amendment insofar as is relevant was to the following
effect :
"However, the successful bidder / consortium members and/or their
subsidiaries / allied organizations of the terminal, which may be awarded
of either 330 m container project or 4 th container terminal project, shall be
automatically excluded from bidding for the subsequent container
terminal."
10. On 26 September 2011 the First Respondent issued a letter of award for
the fourth container terminal at JNPT to the consortium comprising of the First
Petitioner and PSA Mumbai Investments Pte. Ltd. On 15 November 2011 the
First Respondent informed the First Petitioner that the due date for the
submission of the RFP documents for the 330 mtr. extension project have been
extended to 30 December 2012. On 21 February 2012 the First Petitioner
addressed a letter requesting the First Respondent to confirm that the Petitioners
would be allowed to participate in the bidding process for the 330 mtr. extension
project.
11. These proceedings under Article 226 of the Constitution have been
instituted in order to seek the following reliefs :
i) That the Petitioners are entitled to submit their RFP documents for the
330 mtr. extension project and that the First Respondent should allow the
Petitioners to participate in the bidding process for that project;
ii) That a policy formulated by the Union Government on 2 August 2010 be
held to be applicable in order to enable the Petitioners to bid for the 330
mtr. extension project.
12. Before we deal with the contentions which have been urged on behalf of
the Petitioners, it will be necessary to place in perspective the monopoly
guidelines of 26 September 2007 which held the field when the First Respondent
issued a global invitation of RFQ both in respect of the 330 mtr. extension
project and for the fourth container terminal at JNPT. The guidelines dated 26
September 2007 which were issued in the form of a communication to the First
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Respondent were specifically with reference to the 330 mtr. extension project.
Essentially what the guidelines stipulated was that a successful bidder of a
previous container terminal on a BOT basis as well as its subsidiaries or allied
organisations would be excluded from bidding for the next project.
Consequently, the successful bidder in respect of the previous container terminal
would be excluded from bidding for the 330 mtr. extension project. Moreover, the
bidder declared successful for the 330 mtr. extension project would be excluded
from the bidding process for the next BOT container terminal at the Jawaharlal
Nehru Port in future. This was then the policy which was directed to be applied
in all Ports across the country with a view to avoid monopolies and promote
competition until a formal policy came to be notified in due course.
13.
A litigation involving the First Respondent and involving specifically an
interpretation of the policy guidelines of 26 September 2007 had emanated in
this Court and the issue was finally resolved by the Supreme Court in its decision
in APM Terminals B.V. v. Union of India 1. The first container terminal at JNPT
was awarded in pursuance of a tendering process to Nhava Sheva International
Container Terminal Limited (NSICT) and an agreement was entered into in July
1997. Subsequently JNPT floated a tender for a second container terminal and
invited RFQs pursuant to which a joint venture company, GTI (P) Limited (GTIL)
was awarded the contract for the second container terminal. APM Terminals
B.V., the appellant before the Supreme Court, was a joint venture partner of
GTIL. JNPT thereafter invited global competitive bidding for a third container
terminal at which neither the appellant nor its affiliates were permitted to
participate in view of the award of the contract to them for the second terminal.
JNPT then invited bids for a fourth container terminal and in the bidding process
the appellant before the Supreme Court was informed that GTIL and its
associates or allied organisations had been disqualified in view of a condition in
the licence agreement. The petition filed before this Court challenging the
disqualification for bidding in respect of the fourth container terminal was
dismissed by this Court. The Supreme Court held on appeal that the appellant
having been excluded from one bid on the basis of an existing policy could not
be debarred from participating in the next bid by taking recourse to a different
1 (2011) 6 SCC 756.
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yardstick. While interpreting the policy guidelines of 26 September 2007, the
Supreme Court has observed as follows :
"It is not as if the right of a licensee to bid for a further container terminal
berth has been excluded for the entire period of the licence agreement but
in order to ensure proper competition and participation by all intending
tenderers, the said policy has also been altered to enable such licensees
to bid for the next but one tender as and when invited."
14. The judgment of the Supreme Court therefore clearly enunciates that
under the policy guidelines of 26 September 2007 a successful bidder in respect
of a tendering process for a container terminal would be excluded from
participating in the next tender. In other words, following the award of the
contract a successful bidder would be entitled to bid in the next but one tender
and thereafter, under the policy guidelines.
15. The policy guidelines of 26 September 2007 were subsequently
superseded by fresh guidelines issued by the Union Government in the Ministry
of Shipping on 2 August 2010. In exercise of the powers conferred under
Section 111-A of the Major Port Trusts Act 1963 the Union Government directed
all major ports to follow the policy enunciated therein while awarding contracts.
The new policy is to the following effect :
"If there is only one private terminal / berth operator in a port for a
specific cargo, the operator of that berth or his associates shall not be
allowed to bid for the next terminal / berth for handling the same cargo in
the same port."
16. For the purposes of the policy, the expression specific 'cargo' is defined to
mean containers, liquid bulk, dry bulk or multi purpose /other general cargo.
Clause 3 of the policy, however, stipulates as follows :
"3. The policy shall be applicable with immediate effect and shall apply
to Request for Qualification (RFQs) issued on or after this date."
17. Now it is in this background that it would be necessary to appreciate the
submissions which have been urged on behalf of the Petitioners. Learned
Senior Counsel appearing on behalf of the Petitioners submits that :
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i) The amended policy guidelines dated 2 August 2010 must govern this
case. The rationale of the policy being to promote competition and since
the policy applies with immediate effect, the Petitioners in terms of the
new policy would not be precluded from bidding in respect of the tender
for the 330 mtr. extension project;
ii) During the course of the bidding process for the 330 mtr. extension
project, the First Respondent had issued a clarification to the effect that
bidders would be allowed to bid in respect of both the projects
simultaneously subject to the conditions of RFQ and in the event that an
applicant becomes a successful bidder, he would be allowed to withdraw
from another consortium in the fourth container terminal within a specified
period of time. The submission is that upon the award of the contract in
respect of the fourth container terminal on 26 September 2011, the
Petitioners ought to have been provided with a reasonable opportunity to
withdraw from the contract which would have enabled them to pursue the
bid in respect of the tender for the 330 mtr. extension project. In this
context, it was urged that the clarification which was subsequently issued
by the First Respondent on 23 May 2011 was after bids were submitted in
respect of both the tenders; and
iii) Even after the award in respect of the fourth container terminal on 26
September 2011, the First Respondent informed the First Petitioner that
the due date for the submission of bids in respect of the 330 mtr. project
had been extended, thereby implicitly accepting that the Petitioners were
still in the frame in respect of the second tender enquiry as well.
18. On the other hand, the learned Additional Solicitor General of India has
submitted that :
i) Ex facie, the policy guidelines issued on 2 August 2010 are prospective in
nature and apply only to those RFQs that were issued after that date;
ii) The Petitioners admittedly are part of the consortium to which there has
been an award of the contract for the J-4 terminal. The plain
consequence of the award of that contract is that the Petitioners would
stand automatically excluded from bidding for the 330 mtr. extension
project which was the next project. This is evident both from the policy
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document dated 26 September 2007 and from the clarification which was
issued on 23 May 2011. Clause 2.8.3 of the RFP stipulates that all the
clarifications and interpretations issued by the authorities are deemed to
be part of the bidding documents; and
iii) The clarification that was issued on 24 December 2009 does not on its
plain terms stipulate that a bidder to whom a contract has been awarded
is entitled to withdraw from the contract which has been awarded. The
clarification provides that while bidders were at liberty to bid for both the
tenders, on the award of the contract to the successful bidder, that bidder
would be at liberty to withdraw from the bid for the other contract and not
from the contract which already stands awarded.
The rival submissions fall for consideration.
19. Under the policy guidelines that were formulated by the Union
Government on 26 September 2007, it was stipulated that a successful bidder in
respect of a previous project would be excluded from bidding for the next project.
This has been described as "the next project exclusion" policy. The import of the
guidelines dated 26 September 2007 has also been thus understood and
elucidated in the judgment of the Supreme Court in APM Terminal B.V. (supra)
where the Supreme Court noted that a successful bidder is entitled to bid for the
next but one tender. In other words, the exclusion from the bidding process that
is contemplated under the guidelines was in respect of the award of the contract
immediately following the award made in favour of a successful bidder. The
Petitioners, as the facts on the record show, are part of a consortium led by the
Port Authority of Singapore to whom a letter of award was issued in respect of
the fourth container terminal on 26 September 2011. Plainly, in terms of the
policy guidelines, every member of the consortium would therefore not be
eligible to bid in respect of the next project. This was also so clarified by the
First Respondent in a clarification dated 23 May 2011.
20. During the course of the bidding process for the 330 mtr. extension project
a clarification was sought by various applicants in view of the fact that the
bidding process was underway both in respect of the 330 mtr. extension project
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as well as the fourth container terminal. During the course of the bidding
process the first clarification that was sought was whether the fourth container
terminal is the next BOT container terminal in the Port with reference to the
exclusion of a successful bidder of the 330 mtr. extension project. If that was so,
there was a request that the date for the submission of RFQ bids for the fourth
container terminal may be extended until the successful bidder for the 330 mtr.
extension project is decided. In response to this query the First Respondent
stated that initially the RFQ for the 330 mtr. extension project was notified before
the RFQ for the fourth container terminal. Subsequently the RFQs for the 330
mtr. extension project were re-notified. Hence, the First Respondent clarified
that the fourth container terminal was likely to be the next BOT container
terminal and hence, the request for the extension of the deadline for the fourth
container terminal was not relevant. This clarification by the First Respondent
made it abundantly clear to bidders that the contract for the fourth container
terminal was likely to be awarded immediately next in point of time. The second
query was whether the applicants could participate in respect of the tender
process for both the projects (the 330 mtr. extension and the fourth container
terminal) simultaneously, "basically betting on two hourses at a time". In
response the clarification was that applicants would be allowed to participate in
both the projects simultaneously subject to the conditions of the RFQ. The final
query was whether in the event that an applicant becomes a successful bidder
for the 330 mtr. extension project, he would be allowed to withdraw from another
consortium for the bid of the fourth container terminal and vice versa in the
event that the First Respondent decided to award the licence for a fourth
container terminal prior to the 330 mtr. extension project. The First Respondent
clarified that in case an applicant becomes a successful bidder, such an
applicant would be allowed to withdraw from another consortium in the fourth
container terminal within a specified period of time. If such a withdrawal was not
communicated to the authority within the specified period, the consortium may
be disqualified from the bidding process. Both the query as well as the
clarification that was issued by the First Respondent did not envisage that a
successful bidder would be permitted to withdraw from the first contract in
respect of which the bid was found to be successful. Once there was an award
of a contract in pursuance of a bidding process, there would be no occasion
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for the successful bidder to withdraw from the award of the contract. The query
that was submitted by the bidders in fact did take into account the possibility that
the contract for the fourth container terminal would be awarded prior to the 330
mtr. extension project, which is in fact what has happened in the present case.
Bidders were clearly aware of the policy guidelines of 26 September 2007 under
which upon the award of a contract the successful bidder would not be eligible
for participating in the immediate next tender floated by the JNPT. A specific
clarification was issued in terms of those policy guidelines on 23 May 2011. The
clarification again made it clear that a successful bidder to whom a contract has
been awarded either of the 330 mtr. extension project or the fourth container
terminal project shall be automatically excluded from the bidding for the
subsequent container terminal.
21.
But, it has been urged that in the present case the bidding process would
have to be governed by the new policy guidelines which were notified by the
Union Government on 2 August 2010. Paragraph 3 of the guidelines clearly
stipulates that the policy shall be applicable with immediate effect and shall
apply to Requests For Qualification (RFQ) issued on or after the date of the
issuance of the guidelines. Admittedly, the RFQs both in respect of the 330 mtr.
extension project as well as the fourth container terminal were issued prior to 2
August 2010. The new guidelines would therefore not apply to this situation.
22. For the reasons, therefore, that we have indicated, we have come to the
conclusion that : (i) The policy guidelines that were formulated by the Union
Government on 2 August 2010 would have no application in view of the fact that
the RFQs for both the 330 mtr. extension project and the fourth container
terminal were issued prior to the guidelines in view of the specific provision
contained in paragraph 3; and (ii) The bid of the Petitioners in respect of the 330
mtr. project would stand governed by the policy guidelines of 26 September 2007
and since the Petitioners were part of a consortium to whom a contract had been
awarded in respect of the fourth container terminal on 26 September 2011, the
Petitioners would not be eligible to participate in the bids for the 330 mtr.
extension project.
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23. For these reasons, we have come to the conclusion that the Petitioners
would not be entitled to the reliefs as prayed. We note that the bids are to be
opened today. The Petition shall stand dismissed.
24. Since any extension to the period for the opening of bids is likely to delay
the implementation of an important infrastructural project and is likely to lead to
cost escalation, we are not inclined to stay the operation of the order. Stay
refused.
(Dr. D.Y. Chandrachud, J.)
(A.A.Sayed, J.)
