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Judgment
K.S. Bakthavatsalam, J.—Writ Petition No. 13234 of 1987 is filed by the petitioner company praying for an issuance of a writ of certiorari
to call for the records of the respondents culminated in the report of the second respondent therein dated 30.11.1986 and quash the observation.
While no action is recommended against A-17 firm, the Ministry of Shipping may be advised to recommend banning of business dealings with the
firm by the Ports"" made in the said report.
Writ Petition No. 916 of 1988 is filed by the petitioner company praying for an issuance of a writ of certiorari to call for the records of the
respondents culminated in Letter ED/(C)/DB/ F.59-1/88 dated 30th January 1988 issued by the second respondent therein and quash the same
and direct the respondents to issue Work Order to the petitioner company for Balance Dredging of Approach Channel between 525 to 1450
metres minus 10-98 metres in the Tuticorin Port Trust.
Writ Petition No. 6174 of 1988 is filed by the petitioner praying for an issuance of a writ of certiorari to call for the records of the respondents
culminated in Letter E(C) 59/1/88-EE/P1 dated 5.2.1988 issued by the second respondent therein, and quash the same.
The petitioner Company is represented by its Managing Partner B. Hanumantha Rao in all these writ petitions. During the year 1979, Tuticorin
Port Trust called for tenders for deepening the 1450 metres long Approach Channel upto a depth of minus 10.98 metres level to have 30'' draft for
the ships coming in to the Harbour. In order to encourage Dredging Corporation of India Limited, Tuticorin Port Trust, a Government of India
concern, split the entire length of 1450 metres into two portions and awarded the contract 00 metres to 525 metres and 1050 to 1450 metres to
the petitioner company and the middle portion 525 to 150 metres to the Deredging Corporation of India. The petitioner company was able to
complete the outer portion 1050 metres to 1450 metres and inner portion 00 to 400 metres without any problem. Insofar as the portion 400
metres to 525 metres is concerned, the seabed is full of hard coral conglomerates does not respond to the conventional method of drilling, blasting
and grabbing and since the hard coral conglometrate rocky stratum extends upto 1100 metres, the Dredging Corporation of India also could not
complete whole work and could complete only 40% of the work. As such, between 400 metres, to 1100 metres the work of deepening of the
channel came to a standstill. It seems the petitioner company informed the Tuticorin Port Trust that it can tackle the problem with the Latest
Technology available in Europe. Since bringing the latest cutters, for a shorter length of 150 metres will be costly, the petitioner company requested
the Tuticorin Port Trust to give time to complete the work along with the balance of the reach 525 to 1050 metres abandoned by the Dredging
Corporation of India. In the year 1983, the Tuticorin Port Trust invited tenders for dredging the balance length in the Approach Channel from 525
metres to 1050 metres upto a depth of minus 10.98 metres. The petitioner company and two other companies submitted tenders. It seems the
Tender Committee constituted by the Tuticorin Port Trust, after scrutinising the tenders, advised Tuticorin Port Trust to award the contract to the
petitioner company. However, it seems one of the tenders M/s. Asia Foundation and Construction Limited (herein after referred to as M/s.
AFCONS'') who did not attend the tender committee meetings, filed a Writ Petition No. 9648 of 1988 before this Court praying to direct the Port
Trust to award the contract to them. One of the members of the Board of the Tuticorin Port Trust Mr. D.M. Stephen interested in the abovesaid
company filed another Writ Petition No. 9823 of 1986 praying to direct the Port Trust to award the contract to M/s. AFCONS as their
subsequent offer was the lowest of all other tenderers. In those writ petitions, orginally the petitioner company was not included as the party-
respondent. They got impleaded as the party-respondent in those writ petitions, the writ petitioner in those writ petitions, had alleged that the
petitioner company herein had committed irregualarities while executing the work in Madras Port Trust and the C.B.I. Madras had been
investigating those irregularities and on those circumstances it was prayed the petitioner company in these writ petitions should not be considered
for entrusting the dredging contract work. In the above mentioned cases, the Port Trust submitted stating that it was true that a case was registered
by the C.B.I, against the petitioner herein on the complaint of Madras Port Trust and having come to know of that the chairman of Tuticorin Port
Trust referring the matter to the Deputy General of Police, C.B.I. Madras requested for advice. It seems a reply was received from the C.B.I, to
the effect that the complaint is still under investigation and as nothing incriminating has been found so far against the petitioner company, the Board
of Trustee of Tuticorin Port Trust could decide the matter on merits. After due consideration of all the relevant facts mentioned above, the Board
of Trustees of Port Trust, Tuticorin resolved to abide by its earlier decision of awarding the contract to the petitioner company and all the
objections of M/s. AFCON raised by Mr. D.M. Stephen. A member of the Board were duly considered and rejected by the Board. The Writ
Petitions W.P. 9648 and 9823 of 1986 came to be dismissed by Mohan, J. (as he then was) by order dated 24.12.1986 in which the learned
Judge has specifically considered the submissions of the petitioners there in regarding the C.B.I. investigation against the petitioners there in
regarding herein and the allegations of the petitioners therein that inspite of such investigations, the Port Trust had gone out of the way to award the
work to the petitioner company herein. Further, the learned Judge in his order has considered the submissions of the petioners therein and held that
when the Board of Trustees of the, Port Trust had been advised by the C.B.I, that they could decide the awarding of the contract on merits, there
could be no impediment as contended by the petitioners therein. Aggrieved by the above mentioned order, M/s. AFCONS preferred Writ Appeal
No. 56 of 1987 before this Court and after due consideration of all relevant submission and perusing the relevant records, a Division Bench of this
Court dismissed the abovesaid writ appeal at the stage of admission itself. M/s. AFCONS preferred SLP (Civil) No. 2578 of 1987 before the
Supreme Court against the order of the Division Bench of this Court and after issuing notice to the respondents therein, Supreme Court dismissed
the Special Leave Petition. It seems the petitioner company undertook the construction of the ''Outer Protection Arm'' of Madras Port and the said
work involved quarrying, transporting and dumping of 1.2 Million tonnes of stones and casting and placing 7,000 numbers of Tetrapods. It seems
during the month of December, 1984 the Chief Engineer of Madras Port Trust informed the petitioner company that certain irregularities had been
noticed by him in the supply, transport and dumping of stones in connection with the above mentioned construction and the Madras Port Trust
lodged a complaint with the C.B.I. Madras for due investigation. After due investigation, the C.B.I, submitted a final report in the month of
November, 1986 and the investigation conducted by C.B.I. conclusively showed that there was no incriminating evidence against the petitioner
company. It is alleged in the affidavit that it has now come to light that the C.B.I. submitted a final report dated 30.11.1986 to the Ministry of
Shipping of Government of India recommending no action against petitioner company that on the complaint lodged by Madras Port Trust, the
Ministry could consider whether it could recommend banning of business dealings with the petitioner company by the various Ports in the country
and Madras Port Trust could take action to recover Rs. 1,01,220.50 from the petitioner company towards the loss sustained by them. It is also
stated in the affidavit that the advise of C.B.I. is contrary to all known principles of law, that after specifically coming to the conclusion that no
action is recommended against the petitioner company, as nothing incriminating has been found against them, the Central Bureau of Investigation
ought not to have given such improper and unsustainable advice to the Ministry of Shipping and that black listing a firm/company from awarding
any business dealings with it is serious act that amounts to penalty, that such a decision could be taken only on sufficient materials after affording an
opportunity to the errant firm to state its case, and that as such the said advice of Central Bureau of Investigation is per se illegal and improper. It is
submitted in the affidavit filed in support of the petition that after receiving the letter dated 30.11.1986 from the Central Bureau of Investigation, the
Ministry of Shipping were consulting Law Ministry and other legal advisers of the Government of India as to what action should be taken against
the petitioner company, that the Higher Law Officer of the Government of India had advised that action should be taken only in accordance with
law and not otherwise, and that under these circumstances, the Ministry of Shipping is deliberately keeping alive the subject without giving a finality
to the matter. It is further alleged in the affidavit that because of the improper advice given by the Central Bureau of Investigation, the business
activities of the petitioner company with ports have come to a standstill, that the petitioner company alone has necessary expertise in the field of
precast concrete block work, that the Madras Port Trust called for applications from contractors to submit their qualifications for due
consideration in connection with the tenders for the extension of work in Madras Trust, that the petitioner company submitted its pre-qualifications
application (SIC) 24.12.1986 to the Chief Engineer of Madras Port and that since the Central Bureau of Investigation had sent a report dated
30.11.1986, the Port Trust, Madras did not approve the qualification application as submitted by the petitioner company. It is further submitted in
the affidavit that even the contract to execute balance dredging in the Approach Channel of Tuticorin Port, wherein the petitioner company has
been selected by the Board of Trustees for awarding the work as early as 1984, is yet to be formally awarded by the Port Trust, that though the
Ministry of Shipping advised the Board of Trustees, Tuticorin in the year 1985 to their decision in awarding the contract, in view of the advice
tendered by the C.B.I, to the Ministry of Shipping, even though no formal orders have been issued by the Ministry in this regard, the Chairman of
the Port Trust is hesitant in issuing the work order to the Petitioner company. It seems that without issuing the work order, the Port Trust, Tuticorin
is merely directing the petitioner company to renew the validity of its tender periodically and the petitioner company extended the validity of its
tender upto 31.3.1988 and that the delay in awarding the work order to execute the balance dredging of the Approach Channel had caused
financial loss to the petitioner company and to the general public. It is also alleged in the affidavit that every year the Electricity Board is incurring a
loss of Rs. 2 crores and Tuticorin Port is losing more revenue. It is further submitted that for about four years the deepening of the approach
channel has been delayed, that the total loss runs to several crores of rupees, and that since the petitioner company has kept its offer valid for more
than three years expecting work order, it is maintaining its site organisation at enormous cost. It is also stated by the petitioner in the affidavit that
the officials of the Port Trust have informed the petitioner company that unless the Ministry of Shipping gives clearance in respect of the C.B.I.''s
advice, the Work Order cannot be issued to the petitioner company, that because of the improper report submitted by the C.B.I. the petitioner
company is put to immense hardship, that after exonerating the petitioner company totally from the criminal liability, the C.B.I. has no right to
advise the Ministry of Shipping that it should ban business dealings with the petitioner company by the Ports in the country, and that the above
mentioned actions of the respondents infringe the fundamental rights under Article 19(1)(g) of the Constitution of India. With these allegations, the
petitioner company has come up to this Court with the prayer in W.P.No. 13234 of 1987 to quash the order of the C.B.I, dated 30.11.1986, as
stated above.
Based on the report of the C.B.I., which is impugned in W.P.No. 13234 of 1987, the first respondent Ministry of Shipping and Transport
issued an advice to port Trust not to entrust the work to the petitioner company. Only in the month of January, 1988, the petitioner company came
to know of above said fact. On 12.1.1988, the Ministry of Shipping Corporation, advised the Tuticorin Port Trust to discharge all the existing
tenders and call for fresh tenders. On 29.1.1988, the Tuticorin Port Trust passed a resolution, as per the Ministry''s guidelines, rejecting the tender
of the petitioner company. The said rejection has been informed by way of telex/telegram on 29.1.1988 and it has been challenged by the
petitioner company in Writ Petition No. 916 of 1988. It has been stated in the telex, a copy of which is produced, that to award a contract in 1988
based upon 1983 tenders and rates, it has been decided by the Board in its meeting on 29.1.1988 to discharge all the tenders received in and that
the tender submitted by the petitioner company herein for the balance of dredging in approach channel from CH.525 to 1050 M has been
rejected, on the advise by the Government of India. On 9.2.1988, the Port Trust cancelled the earlier work awarded to the petitioner stating that
the completion of remaining work under the agreement will be done as per the relevant terms of agreement. The petitioner company got the refund
of Earnest Money Deposit. Against the said cancellation, the petitioner company has filed Writ Petition W.P.No. 4174 of 1988 praying to quash
the letter dated 5.2.1988.
The fourth respondent in W.P.No. 13234 of 1987, the Tuticorin Port Trust, in its counter-affidavit states that the writ petition filed by the
petitioner company is premature and that it is not maintainable. It is further claimed in the counter affidavit that the impugned letter of the Director,
Central Bureau of Investigation, the second respondent herein is an inter-departmental correspondence between the respondents 1 and 2, and that
it is purely Of a recommendatory nature. It is also claimed in the counter-affidavit, referring to paragraphs 6 and 7 of the affidavit filed by the
petitioner company, that as per the terms and conditions of tender, the respondent Tuticorin Port Trust can always reject all the tenders without
assigning any reason, that there was time lag of more than five years and that the very cost of dredging all over the world having been reduced
considerably and the subsequent conduct of the petitioner in the collateral proceedings are all taken into consideration by the Board and it was
resolved to reject, all the tenders and to call for fresh tenders. It also claims in the counter affidavit that the recommendation given by the second
respondent is valid and within its jurisdiction, that in view of the subsequent development and the filing of W.P.No. 916 of 1988 the writ petition
W.P.No. 13234 of 1987 itself has become infractious, and that the contention that the petitioner company kept its offer valid for more than three
years and on that score entitled to the work order is wholly misconceived. It is further claimed that the same contention has been rejected by this
Court as well as by the Supreme Court to which the petitioner was a party. It is further claimed that if the petitioner is aggrieved against the order
of rejection, it can always resort to arbitration or to the Civil Court.
The first respondent Ministry of Surface Transport has filed a counter-affidavit in each of W.P.Ps. It is claimed in the counter that on the basis of
the investigation carried out by the Madras Port Turst, it had noticed various irregularities amounting to great loss to the Madras Port Trust which
at the same time enabled the petitioner company the chance of unjust enrichment, the facts leading to the investigation of the C.B.I. are narrated in
the counter-affidavit. It is also claimed in the counter affidavit that on the basis of charges the C.B.I. had recommended to the Government to
consider the advisability for banning future dealings with the petitioner''s company, that no instructions have been issued by the Government to the
Madras Port Trust and Tuticorin Port Trust forbidding them to issue tender forms to any company including the petitioner company. It is further
submitted by the first respondent that the report of the C.B.I. is a confidential document, that the same cannot be furnished to the petitioner
company, and that the prayer in this regard is quite unsustainable. It is clearly stated in paragraph 9 of the counter-affidavit that invoking the
principles of natural justice, the petitioner company is trying to create sympathy from the court knowing very well that the Government would not
straight away implement the recommendation of the C.B.I., that banning business dealings with the petitioner company would require compliance
with the principles of natural justice and would have to be covered by the instructions of the Government of India regarding the banning of business
dealings as held by Supreme Court in M/s. Erusian Equipment and Chemicals Ltd. v. State of West Bengal AIR 1975 S.C.226. It is further
claimed in the counter affidavit that any action leading to banning of the business dealings with any firm in question would require sufficient
opportunity to be given to the concerned company and also after proper enquiry if it is found to be guilty and the punishment to be imposed would
depend on the gravity of the charges. Then only any action could be taken against the company, that the petitioner company at present has not
been served with show-cause notice, that no action has been taken against the petitioner company by the Government for banning business
dealings with the petitioner company and that the prayer of the petitioner company to restrain the respondents from taking into consideration the
advice of the C.B.I. is not entitled to be considered. It is further submitted in the counter affidavit filed by the first respondent that at this juncture
the petitioner company cannot invoke the jurisdiction of this Court under Article 226 of the Constitution of India.
The Director, Central Bureau of Investigation New Delhi, the second respondent herein has filed a separate counter affidavit in W.M.P. It is
claimed in the counter affidavit that the investigation clearly disclosed that the petitioner company along with several Port trust officials fabricated
documents and made false claims and cheated the Madras Port Trust and that all the payments were received by the petitioner company submitting
false bills. It is also claimed in the counter affidavit that the petitioner company in the sub-contract with M/s. Brokhovan submitted the bills toward:
non-existent lorries and trips not made and payments were received, that by the above said act of the petitioner company, Port Trust sustained a
loss of Rs. 1,01,220.50 towards the items subjected to investigation alone and that therefore it was recommended by the C.B.I. to the Ministry of
Shipping to consider banning of business dealings with the petitioner company by the ports. It is further submitted in the counter-affidavit that the
impugned letter of the second respondent addressed to the first respondent dated 30.11.1986 is a confidential inter-department communication
and purely of recommendatory in nature and that since the report of the C.B.I. is only recommendatory in nature it cannot be questioned in the
Court of law.
The Chairman, Tuticorin Port Trust, the second respondent in W.P.No. 916 of 1988 has filed a counter-affidavit stating that the writ petition is
misconceived and is not maintainable. It is stated in the counter-affidavit that the reliefs which are sought for, relate to two contractual transactions,
one covered by the notice dated 9.12.1983 inviting tenders for the work of balance dredging of the Approach Channel of Tuticorin Port from
Ch.5254 M to Ch.1050M, that another contract is covered by agreement entered into by the petitioner company with the second respondent
herein for executing the work of dredging the Approach Channel from Ch.00M to 525M and from 1050M to 1450m. to a depth of minus
10.98m. level. It is further stated that the rights and obligations of parties are governed by the terms and conditions respectively of the tender notice
and the contract, that the relationship between the parties is purely contractual, and that the petitioner company can seek redress for grievance, if
any, in respect of the above said transactions, only in the Civil Court. It is further claimed in the counter-affidavit that the petitioner company is not
entitled, to invoke the jurisdiction of this Court under Article 226 of the constitution of India. It is further claimed in the counter-affidavit that as
regards the work of dredging entrusted to the petitioner company under agreement for the year 1970-80, more than 25% of the work has not
been executed, that the said work was abandoned by the petitioner company in June 1985, that the averment made by the petitioner company with
regard to the basis on which the tender committee made its recommendations for award of the contract to the petitioner company is not correct,
that the Writ Petition No. 9648 of 1986 filed by M/s. AFCONS and one Mr. D. Stephen respectively are not relevant to the writ petitions, that
the petitioner company cannot try to take advantage of the letter of the CBI dated 20.8.1986 to the second respondent at a time when the
investigation made by it on the case registered against the petitioner company had not been completed. The fact that the second respondent acted
upon the letter then received, from the C.B.I, is admitted in the counter affidavit filed by the Chairman, Tuticorin Port Trust. It is further submitted
in the counter affidavit that the second respondent herein is not aware of the final report of the C.B.I. that the contention of the petitioner company
that the C.B.I. ought not to have given the advice to the Ministry is not tenable, that the plea that any blacklisting of a firm would amount to penalty
and it cannot be done without giving an opportunity to the erring firm has no point at all in as much as no black listing has so far been done as could
be seen from the averments in paragraph 8 of the affidavit to the effect that no final action has been taken by the Government. It is further
submitted in the counter affidavit that the plea based on the assumption by the petitioner company that nothing incriminating has been investigated is
not well founded, that the story trotted out by the petitioner company that in issuing the said direction, the officials of the Ministry succumbed to the
pressure brought by interested parties is a concoection and a figment of imagination and does not deserve any consideration, and that the petitioner
company ignores the basic concept that the Ministry of shipping, the first respondent herein, has got statutory powers to give proper advice and
issue suitable direction to the second respondent in the matter of contracts and matters with financial implications and the exercise on the part of the
petitioner company to assail such advice or direction on the grounds which are baseless and attributing motives to officials acting in the discharge of
their duties is opposed to fairness and equity. It is claimed in the counter affidavit that the contention of the petitioner company that the Board of
Trustees of Tuticorin Port is an autonomous body is not correct, that the Board of Trustee is only a statutory body having a creation of the Major
Port Trusts Act, 1963, that its functions are governed by the various provisions of the said Act, and that the Board is subject to the control of the
Central Government. It is further claimed in the counter-affidavit that all the tenders received for the balance dredging work have been rejected.
The telegrams and the confirmation Letters which are Impugned herein, given by the second respondent herein to the petitioner company are
admitted in the counter affidavit. It is submitted by the respondent that Clause 8 of the tender notice clearly stipulates that the Port reserves the
right to waive any formality thereof to reject any or all tenders received, without assigning any reason, that the second respondent has a right to
reject any or all tenders at any time without assigning any reason whatever and that the said right of the second respondent exists till the work order
is issued and as such the contentions raised by the petitioner company are not correct. It is also stated in the counter affidavit, that no right can flow
from revalidation of a tender for award of the contract, that the tenders of all the three tenderers have been revalidated as required in para 24 of
the ''Instructions for tendering'' read with Rules of C.P.W.D. Manual Volume II, that none of the tenderers revalidated the tenders as entitled to set
up a claim and as such the petitioner company has no right to set up any claim. It is further stated in the counter-affidavit that no work order was
issued to the petitioner company pending clearance from the Ministry, the first respondent herein, that the Ministry has now given advice to
discharge all the tenders received for the work, that the Board of Trustees of Tuticorin Port has duly considered the advice given by the Ministry as
can be seen from the minutes of the meeting held on 29.1.1988 and has taken a final decision to reject all the tenders. It is further submitted in the
counter affidavit that the advice given by the Ministry that it would be against the normal principle of project formulation and management to award
the contract in 1988 based upon the 1983 tenders and rates has all been considered by the Board to be not reasonable, and that Clause 8 of the
tender notice, which provides that any or all the tenders can be rejected without assigning any reason has been referred to in the counter affidavit.
It is also clearly stated in the counter-affidavit that not only the tender of the petitioner company but also all the tenders in regard to the balance of
dredging work have been advised by the Ministry to be discharged and the attribute of motives of officials is unfair and unjustified. It is further
stated that in any case the rejection of tenders can be made at any time without assigning any reason therefor, and that therefore there is no point in
the petitioner company harping again and again upon the contention that the reasoning given by the Ministry is untenable in law. It is further
submitted that when on the above mentioned reasoning all the tenders have been rejected, the contention of the petitioner that the, reasoning has
been devised only in view of the report, which is impugned in W.P.No. 13234 of 1987 is not only incorrect-but also misleading. In paragraph 17
of the counter affidavit it is stated that many of the dredging companies in the world have recession period, that it is not possible to do the dredging
work at a lower cost as will be made out from the minutes of the meeting held on 10.9.1987 by the Development Adviser (Ports) New Delhi at
Tuticorin with the port officials and as such the advice given by the Ministry to discharge all the tenders and call for fresh tenders cannot be said as
incorrect or untenable. It is further claimed in the counter affidavit that the company has suppressed facts and set up wrong affidavit that the work
under the 1970-80 agreement has been running into difficulties and the petitioner company has not been able to cope up with the work they
abandoned the work in the year 1985, that inspite of several persuasions and strict warnings they were not able to revive it, that as a result the
second respondents invoking the forfeiture Clause 43(3) of the contract and issued a notice of forfeiture on 18.8.1986 informing the petitioner
company that after 14 days after receipt of notice, She port will enter upon the site and works expelling them therefrom. It is also stated in the
counter affidavit that proceedings were initiated by the second respondent only to forfeit the contract in terms of Clause 43(3) of the agreement
and as such the rights of the petitioner company will not be affected. It is categorically stated in the counter-affidavit that the petitioner company
has to seek any remedy, if so desired, only in the civil Courts and a writ will not lie. It is also stated in the counter-affidavit that Clause 47 of the
Agreement provides for arbitration, and that if at all the petitioner company is aggrieved by the forfeiture notice and the order of taking over of the
site and works by the second respondents, it has to work out its rights by resorting arbitration, and that the petitioner company is estopped and
barred from taking any other different action. A couple of legal proceedings instituted by the petitioner company against the second respondent
herein is referred to in the counter affidavit It is also stated that the question of rejecting all the tenders received in 1984 for the balance of dredging
work was fully considered by the Board of Trustees of Tuticorin Port in its meeting held on 29.1.1988 and decided to reject all the tenders. The
tenders were all rejected in pursuance of the Resolution of the Board of Trustees. A reference to judgment of this Court in W.A. Nos. 307 and
403 of 1986 is also referred to in the counter affidavit. The judgment of W.P.Nos. 307 and 403 of 1986 dated 27.8.1986 has been reported in
Chokhani International Ltd. v. Board of Trustees of the Port of Madras 1987 W.L.R. 529.
I do not think it necessary to refer to the counter affidavit filed by the respondent Port Trust in miscellaneous petitions in W.P.No. 4174 of
1988. The Chairman, Tuticorin, Port Trust has almost repeated the same contentions raised in the counter affidavit filed in W.P.No. 916 of 1988,
except extracting the terms and conditions of the contract, under Clause 43(3).
Mr. S. Govindaswaminathan, the learned Senior Counsel, appearing for the petitioner in all these writ petitions refers to the affidavit filed by the
Chairman, Tuticorin Port Trust, Tuticorin before the Supreme Court in the SLP No. 2578 of 1987 filed against the order passed in earlier writ
petitions. The learned Counsel refers to paragraph 10 of the counter-affidavit filed bf the Chairman, Tuticorin Port Trust tuticorin before the
Supreme Court. It is stated in the said counter-affidavit as follows:
...with regard to the awarding of contract to the second respondent by the Tuticorin Port Trust the decision could be taken on merits as deemed fit
by the Board of Trustees and further stated that it was not possible to say that anything for certain at that stage when investigation was in its final
stage, with reference to the matter relating to the Madras Port Trust...
The learned Counsel also refers to the said counter-affidavit in which it is stated that the contract was awarded to the petitioner herein for the
balance of dredging in the approach channel from ch.525 m to 1050 m upto minus 10.908 m level, subject to the condition that that petitioner
company agreed categorically in writing to the deletion of the clause relating to arbitration from the contract. The learned Senior counsel further
argues that among the rates quoted by tenderers, the petitioner company alone quoted the lowest rate in the year 1983 and that no company can
give the same rate, even now since seven years have elapsed. The learned Senior counsel further argues that though the C.B.I, has taken note of
the fact that behind the back of the petitioner company, all actions were defended by the Port Trust in favour of the petitioner company in the
earlier writ petitions upto Supreme Court. It is also stated that the Port Trust in an autonomous body and that it cannot act on the directions of the
Ministry. The learned Counsel further argues that black-listing cannot be done without a notice and refers to the decisions in Erusian Equipment
and Chemicals Ltd. Vs. State of West Bengal and Another, for this proposition. The sum and substance of the argument of the learned senior
counsel for the petitioner company is that the petitioner company alone has given the lowest rate and as such the petitioner company is entitled to
get that contract. The learned Counsel further argues that the work order alone has to be issued in this case and it has been stopped because of the
C.B.I. report which is impugned in W.P.No. 13234 of 1987. The learned Senior counsel''s main contention is that invoking of forfeiture Clause-43
is erroneous, and that the authorities concerned should not take such an extreme step of taking over the balance of dredging work.
Mr. P. Narasimhan, the learned Senior Central Government Standing Counsel, appearing for the Ministry, the first respondent in all these writ
petitions contends that u/s 111 of Act 38 of 1963 (the Major Port Trusts Act, 1963) the Central Government has got power to give directions to
the Board. The learned Counsel further argues that the C.B.I, report is on record, that no action has been taken that no showcause notice has been
issued to the petitioner and as such the writ petitions filed by the petitioner company are pre-mature. The learned Counsel further argues that the
contention of the petitioner as if he has been black-listed is not correct. The learned Counsel further submits that no question of black-listing arises
in this case. According to the learned Counsel for the first respondent, the petitioner company is not at all black-listed. The learned Counsel further
argues that the petitioner company cannot rely upon the report of the C.B.I. which is impugned in W.P.No. 13234 of 1987 and that the petitioner
company also build up an argument as if it had been black-listed.
Mr. R. Krishnamurthy, the learned Senior Counsel appearing for the Tuticorin Port Trust contends that the petitioner company is not correct in
setting up rights based on the revalidation of tender from time to time upto 31.3.1988, that the Ministry has given advice to the Board of Trustees
of Tuticorin Port to discharge all the tenders received for the dredging of balance work and that the Board of Trustees of Tuticorin Port has
considered the advice given by the Ministry and discharged all the tenders and fresh tenders were called for. It is argued by the learned Senior
Counsel that because of re-validation, the petitioner company has no right to get the contract. The learned Counsel further argues that it is true that
the Port Trust defended the petitioner company before the Supreme Court as well as before this Court with regard to awarding the tender in
favour of the petitioner company and the fresh tenders called for by the respondent Port Trust on the ground of delay. The learned Senior Counsel
further states that the reasoning has been stated in paragraph 17(3) of the counter-affidavit filed by the Port Trust. The learned Counsel also stated
that it may be true that the petitioner company is the lowest tenderer, that it will not preclude the respondents inviting fresh tenders, and that since
no tender has been accepted no question of going back arises in this case on the part of the respondents. The learned Counsel also argues that no
question of black-listing arises in this case. Assuming that the petitioner company has been black-listed, referring to the decisions of the Division
Bench of this Court in Chokhani International Ltd. v. Board of Trustees of the Port of Madras 1987 W.L.R. 529 and in Sheik Mohammad
Rowther and Co. (P) Ltd. v. The Shipping Corporation of India 1987 W.L.J. 628 the learned Senior Counsel argues that these writ petitions
under Article 226 of the Constitution is not the proper remedy and so far as there is no concluded contract between the parties and the matter is
under consideration. It is open to the Port Trust to reject all tenders and call for fresh tenders and no question of violation of Article 14 of the
Constitution arises in these cases. With regard to balance of 50 m forfeiture under Clause 43 of the agreement, the learned Counsel argues that
there is no hope that the petitioner company could complete it and as such under Clause 43 (3) of the agreement, the tender has been revoked. It
is also submitted by the learned Counsel that any belated offer cannot be considered and should not be countenanced in this Court.
Having considered the arguments of Mr. S. Govindaswamjnathan, the learned Senior Counsel for the petitioner company, Mr. P. Narasimhan
the learned Senior Central Government Standing Counsel appearing for the Ministry, Mr. R. Krishnamurthy the learned senior counsel appearing
for the Port Trust and of Mr. B. Sriramulu, the learned Counsel appearing for the C.B.I. I am of the opinion that there are no merits in all these writ
petitions. The entire question reduces upon a contract entered into in the year 1979-80 with regard to one portion of dredging work between the
Port Trust and the petitioner company and all the tenders were rejected with regard to another portion. All the respondents have categorically
stated that the petitioner company has not at all been black-listed and that it is only an apprehension on the part of the petitioner company. The
letter of the C.B.I. dated 30.11.1986 reads as follows:
...While no action is recommended against A17 firm, the Ministry of Shipping may be advised to recommend banning of business dealings with the
firm by the Ports. Madras Port Trust should take action to recover Rs. 1,01,220.50 from A17 firm....
Based on the above mentioned letter, the learned Counsel for the petitioner company wants to build up an argument as if the petitioner company
has been black-listed. This letter has been considered by Mohan, J. (as he then was) in W.P.No.s.9648 and 9823 of 1986 and the learned Judge
in that case observed as follows:
...Therefore, the first respondent Port Trust was fully aware of the pendency of the vigilance enquiry as against the 2nd respondent and on a
consideration of the same if a decision is arrived at to award the contract, this Court cannot reconsider it on the ground or the other, because the
ratio of the judgment in W.A.No. 307 and 403 of 1986 extracted above, would squarely apply....
As such, this has been considered by this Court inspite of the letter, regarding the petitioner company''s tender was considered. The learned Judge,
in the above mentioned case has rejected the contention put forth by the petitioner company here in that the petitioner''s offer was considered
without knowing the fact of pending investigation of the C.B.I. As such, it cannot be said that any black-listing has been made against the petitioner
company. It has been clearly stated in the counter-affidavits that no question of black-listing arises in these cases because the petitioner company
has not been black-listed and that if they had decided to do that the principles laid down by the Supreme Court had to be followed. As such, in
view, W.P.No. 13234 of 1987 is pre-mature. I am inclined to agree with the argument of the learned Counsel for respondent Port Trust that it is
only an inter-departmental communication and the petitioner cannot try to build up an argument as if he has been side-lined because of this inter-
departmental letter. In my view, no question of quashing a inter-departmental letter has arisen in this case and as such the writ petition is not
maintainable. In so far as no order has been passed, I do not think the petitioner company can have any grievance especially when the respondents
in their counter-affidavits maintain that the petitioner was not black-listed, that means the petitioner''s case will be considered by the respondents in
future if it takes part in any tender.
Coming to the question of rejection of tenders and balance of dredging of work in the Approach channel in the Tuticorin Port Trust, I am of the
view that the entire matter has fallen into the realm of this Court. In Sheik Mohammed Rowther and Co. (P) Ltd. v. The Shipping Corporation of
India 1987 W.L.R. 638 it has been held that in a case of breach of contract a petition under Article 226 of the Constitution will not lie. It is not the
case of the petitioner that any other tender has been accepted. When the case of the respondents is that all tenders have been rejected, I am of the
view that even as per the terms and conditions of the tender, under which the petitioner herein gave an offer, they have a right to reject the same.
After signing an offer accepting the terms and conditions of the tender it is not open to the petitioner to question the rejection of its tender alone. It
is nobody''s case that the petitioner''s tender alone has been rejected. Admittedly all the tenders were rejected. In my view, the Port Trust has right
to do so and it has been held so in Chokhani International Ltd. v. Board of Trustees of the Port of Madras 1987 W.L.R. 529. In the above
mentioned decision it has been held that the reservation of power to reject all offers in a tender, without assigning any reasons is not arbitrary and
violative of Article 14 of the Constitution. In that case, it has been held by the Division Bench of this Court as follows (at p.551).
...It is settled law that in the case of an auction or in the case of a tender, the Government, and therefore also a public authority, has the right to
reject the highest bid or tender unless the conditions of auction or tender shall be accepted. Undoubtedly, rejection of the highest tender being
permissible on good and sufficient grounds may become arbitrary if it is based on irrelevant consideration or if it is found that the authority has not
acted fairly and justly....
It is well settled that no person has a right to get a contract and this Court cannot compel anybody to enter into a contract between one person and
another person. Assuming that the Port Trust is an autonomous body and it is open to take decision by the Port Trust, the Port Trust is bound by
the directions of the Central Government u/s 111 of the Major Port Trusts Act, 1963, I am inclined to agree with Mr. P. Narasimhan, the learned
Central Government Standing Counsel, on this aspect.
Assuming that this Court can test the reasoning for rejection of the tenders, I am of the view, that the reasoning given by the respondents
cannot be said to be arbitrary. The reasons for calling fresh tenders have been stated in the counter affidavit If at all the petitioner company is
aggrieved, on that it is always open to them to approach the civil Court, for any remedy if it is so advised.
With regard to taking over of the balance of dredging work to the Approach channel, by the Port Trust, Clause 43(3) of the said contract
envisages such situation and it runs as follows:
43(3) Forfeiture If the contractor shall become a bankrupt or receiving order made against him or shall present his petition in bankruptcy or shall
make an arrangement with or assignment in favour of his creditors or shall agree to carry out the contract under a committee of inspection of his
creditors or (basing a Corporation) shall go into liquidation (other then a voluntary liquidation for the purposes of amalgamation or reconstruction)
or the Contractor (being a partnership) shall dissolve, the partnership or if the contractor shall assign the contract without the consent in writing of
the Port first obtained or shall have an execution levied on his goods or if the Engineer shall certify in writing that in his opinion the contractor, has
abandoned the contract of
(b) without reasonable excuse has failed to commence the works or has suspended the progress of the works Engineer''s written notice to
proceed; or
(c) is not executing the works in accordance with the contract or his persistently or-flagrantly neglecting to carry out his obligations under the
contract or
(d) has to the detriment of good workmanship or in defiance of the Engineer''s instructions to the contrary sub-let any part of the Contract or
(e) has expired or
(f) has become insane then the Port may after giving 15 days notice in writing to the contractor enter upon the site and the works and expel the
Contractor therefrom without thereby avoiding the Contract or releasing the Contractor from any of his obligations or liabilities under the Contract
or affecting the rights and power conferred on the Port or the Engineer by the Contract and may himself complete the works or may employ any
other Contractor to complete the works and the Port or such other contractor may use for such completion so much of the construction and other
plant, temporary works and materials which have been deemed to be reserved exclusively for the construction and completion of the works under
the provisions of the Contract, as they of he may think proper and the Port may at any time sell any of the said construction plant temporary works
and unused materials and apply the proceeds of sale in or towards the satisfaction of any sums due or which may be come due to Port from the
Contractor under the Contract....
Clause 43(3) being a forfeiture clause, it is open to the Port Trust to take over the balance of dredging work of the Approach Channel and refund
the E.M.O. amount and if the petitioner is aggrieved it has to find its remedy only in a Civil Court or arbitration and not by way of a writ petition
under Article 226 of the Constitution.
On the facts and circumstances of the cases, I am of the opinion that the Port Trust has not acted arbitrarily and the decision taken by it cannot
be said to be unreasonable. It also cannot be said that any decision has been taken for extraneous consideration. I am also not satisfied with the
allegation made by the petitioner company that because of the directions of the Central Government, the said decision has been taken by the Port
Trust rejecting all the tenders. Further I do not see any relevance when the petitioner company relying upon earlier decisions of this Court in writ
petition filed by another tenderer. Simply because the Port Trust was defending its action and support the tender of the petitioner company, does
not mean that the contract of tender has been awarded to the petitioner.
Since all the respondents have categorically stated in the counter-affidavits that the petitioner has not been black-listed, I do not think it is
necessary to refer to the decisions cited by the learned Counsel for the petitioner. Factually, also I do not see the petitioner company has been
black listed.
With regard to the question whether the tender has been taken over by other companies, I do not think it is necessary to go into that question
since, I am resting my decision more on law than on facts. There are no merits in the writ petitions. The result will be all the writ petitions will stand
dismissed. However, there will be no order as to costs.