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Judgment
K. Chandru, J.—The petitioner in all the three writ petitions is a firm of partnership represented by its Partner styling itself as ""Creative
Infrastructure"".
In the first writ petition, i.e. W.P. No. 6881 of 2009, the prayer of the petitioner is for a direction to first and second respondents to take action
against third and fourth respondents based on their various representations dated 28.7.2007, 16.12.2008, 17.2.2009 and 09.04.2009. When the
writ petition came up on 18.4.2009, notice was taken on behalf of respondents 3 and 4. Further, when the matter came up on 22.4.2009, the
name of the learned Government Pleader (Puducherry) was directed to be printed in the cause list. Even when that writ petition was pending, the
same firm subsequently filed two writ petitions in W.P. Nos. 16508 and 16509 of 2009.
In W.P. No. 16508 of 2009, the prayer of the petitioner is for a direction to first and second respondents to invoke the powers under Clause
10.9 of the concession agreement dated 25.1.2006 and substitute the fourth respondent concessionaire with another developer for the
implementation of the Karaikal Port development project in public interest.
In W.P. No. 16509 of 2009, the prayer of the petitioner is for a writ of declaration declaring that the conduct of first and second respondents in
permitting the implementation of Karaikal Port Development by the fourth respondent without the equity participation of the petitioner in the fourth
respondent company is against public interest and contrary to the basis on which the Letter of Intent (LOI) was issued and the Concession
agreement, dated 25.1.2006 was signed beween the parties. They also seek for a consequential direction to first and second respondents to direct
the fourth respondent to proceed with the development of Karaikal Port Project only with the active participation of the petitioners as envisaged in
the LOI dated 21.05.2005 and the concession agreement, dated 25.1.2006.
When both these writ petitions came up for admission, on 17.8.2009 notice was taken on behalf of learned Government Pleader (Puducherry)
for respondents 1 and 2 and by other counsels for private respondents. The matter was directed to be posted for admission with a direction to
respondents to file counter affidavits. Accordingly, counter affidavit has been filed by respondents 3 and 4 on 22.6.2009 along with supporting
documents. On behalf of respondents 1 and 2, a counter affidavit, dated 24.4.2009 was also filed. The petitioner filed an additional affidavits,
dated 28.4.2009 and 26.11.2009 and also a rejoinder in W.P. No. 6881 of 2009, dated 29.06.2009.
Heard the arguments of Mrs. Nalini Chidambaram, learned Senior Counsel leading Mr. K. Moorthy, learned Counsel appearing for petitioner,
Mr. D. Murugesan, learned Government Pleader (Puducherry) leading Ms. Mala, learned Special Government Pleader (Puducherry) for
respondents 1 and 2 and Mr. Vijay Narayan, learned Senior Counsel leading Mr. J. Sivam Sivanandaraj, learned Counsel appearing for
respondents 3 and 4.
The case of the petitioner as projected in the affidavit was that the petitioner firm was floated in the year 2002 with two partners having equal
stake. They are in the business of Port Development since then. Both the partners of the firm were technopreneurs from IIT, Madras. They have
extensive experience in development of Ports. It is also claimed that the third respondent was running business in real estate, building and wind
mills, etc. and they have no knowledge about Port sector. In order to enter into the Port sector, the third respondent approached the petitioner.
The petitioner firm associated itself with the third respondent to claim development experience to develop the Port on the basis of BOT. Based on
mutual decision between the parties, the third respondent and the petitioner initiated a concept of developing a deepwater, all-weather port at
Karaikal with the Government of Puducherry. Various discussions took place between the petitioner firm and the Government of Puducherry
during June, 2005. It called for an Expression of Interest (EOI) from all interested parties for development of deepwater, all-weather port at
Karaikal. Pursuant to the EOI, the petitioner firm organised a consortium consisting of third respondent as a lead member, the petitioner as an
associate as well as a Belgium company and Axis Bank. The Government of Puducherry by its letter, dated 12.7.2005 invited all parties who had
responded to the EOI for a formal presentation to be made before the High Powered Committee on 19.7.2005. The presentation was made by
one of the partner of the petitioner firm.
Based on the representation made, the Port Privatisation committee of the Government of Puducherry issued a Letter of Intent (LOI) to the third
respondent being the lead member of the consortium on 21.9.2005. The letter itself came to be issued based on the presentation made by the
partner of the petitioner firm, as the third respondent never had their own experience in the matter of development of Port. According to the
petitioner, the third respondent''s experience in developing Port was nil and M/s.L&T Ramboll has only engineering skill. The Belgium company is
only a dredging company and the Axis Bank was the financing bank. Therefore, if at all any prior experience, it is only the petitioner firm which has
experience. The LOI granted by the first respondent involved preparation of a Detailed Project Report (DPR) by the consortium within 45 days
from the date of LOI. It was the petitioner who prepared DPR along with M/s.L&T Ramboll, Chennai. It was submitted well before the cut-off
date. The DPR submitted by the third respondent was reviewed by the Government and its Consultant, i.e. the National Institute of Port
Management, Chennai and was approved by them. The DPR was signed by the authorised signatories and was made an an integral part of the
Concession agreement. The agreement clearly mentioned that the team was to be led by the third respondent. Since the DPR fulfilled all the pre-
requisites, the Government of Puducherry entered into a long term BOT Concession agreement with the third respondent on 25.1.2006. The
Concession agreement envisages construction period of 40 months and thereafter, operation period of 30 years extendable by two additional
periods of 10 years each.
The Government of Puducherry also issued G.O. Ms. No. 2, dated 21.1.2006 approving the agreement, to be entered into between the
Government of Puducherry and the third respondent. Since the Concession agreement obviously includes the name of the petitioner that the
Associates will be the stakeholders in the Special Purpose Company (SPC) to be formed, any action contrary to the said understanding will be
amounting to gross misrepresentation. Though the petitioner firm expressed its readiness and willingness to participate in the equity of the company
upto 26% based upon their experience, the same was not done. Inspite of the petitioner''s readiness and willingness, which were given in writing by
various representations, dated 28.7.2007, 16.12.2008, 17.2.2009 and 09.04.2009, in the formation of fourth respondent company, the third
respondent had declined to allow the participation of the petitioner in the Special Purpose Company, i.e. 4th respondent for one reason or other.
Even the Government of Puducherry (first respondent) was not showing interest in implementing the true spirits of the Concession Agreement.
The petitioner firm had substantially discharged its responsibility as a consortium member by undertaking appropriate studies consisting of huge
documentation. It is also claimed that without the involvement of the petitioner firm, the development, operations, Traffic arrangement for Karaikal
Port project can never be completed. The petitioner claimed that the Director of Port by his letter, dated 30.3.2007 informed the petitioner that
their role has been sufficiently mentioned for the development, operations and traffic arrangement for Karaikal Port project and their association
with the third respondent company was recognised. The fact that they were the associates of third respondent was also put out in the website of
2006 by the third respondent. It is further claimed that without participation of the petitioner, they would not have got the LOI.
It is further claimed that there was no response to the petitioner''s letter from the third respondent. Though the Port work was incomplete, it
has been thrown open for operations. By the exclusion of expert in the related field of Port development, the project had suffered substantially. It
was further claimed that because of lack of planning and indifference, the loan amount even before Phase-I is completed had reached Rs. 453
crores, which is 150 crores higher than the approved amount and that the substantial work has not been completed so far. The expenditure by the
Government of Puducherry was also bound to increase, which necessitated the petitioner to make complaint to the authorities relating to various
illegal acts committed by the third respondent. The petitioner''s continued representations show that they had made out a strong case for
cancellation of award of project to the third respondent. By the terms of the Concession Agreement, the Government has power to review the
project regarding its progress with the help of experts.
It was further claimed that despite petitioner''s seeking to know more information through the mechanism of RTI Act, the information have
been stonewalled. It was further stated that the first and second respondents had formed Port Privatisation Committee for the Karaikal Port
consisting of various Head of Department. They were in-charge of pre-tender process till award of the port project. All these proceedings have
been recorded in the minutes, which will speak about the claim made by the petitioner. It was further claimed that if respondents are permitted to
continue the port project without the participation of the petitioner, it will lead to irreparable loss and damages. Thefore, the prayer of the petitioner
may be considered.
In response to these averments, the first and second respondents in the counter affidavit stated that the three writ petitions are not maintainable
and it is a clear abuse of process of Court. The petitioner''s prayers cannot be considered to enforce the contractual obligation of the parties. The
allegations made by the petitioner are contrary to truth. It was claimed that Karaikal port has been in existence from time immemorial and has also
been referred to Sangam literature. However, the new Greenfield port at Karaikal was proposed by the Government during 1996. The Captive
Marine Terminal facility for Chemplast Sanmar was permitted to be set up at Karaikal during April, 2003. There were repeated request for a
regular port at Karaikal under the Central Sector project. It was only on 17.3.2005 in the Budget speech, the Government took up a policy
decision to have a port at Karaikal and the same was to be conceived with the private sector participation. This was to be made on the basis of
Build, Operate, Own share and Transfer (BOOT).
It was claimed that an offer made by the third respondent was scrutinsed by the Port Privatisation committee and the third respondent was
issued LOI on 21.9.2005 because their offer was the most attractive offer. They were asked to prepare DPR within 45 days and also to create a
bank guarantee of Rs. 50 lakhs. In respect of same, the third respondent submitted the DPR which was evaluated with the consultant, i.e. National
Institute of Port Management, which is an autonomous body owned by the Government of India. The Government by G.O. Ms. No. 2, dated
21.1.2006 accepted and approved the DPR and also the execution of concession agreement with the third respondent as a developer of Port.
It is seen from the concession agreement that the Award has been made only to the third respondent and in favour of the fourth respondent and
that it is not given to any consortium as contended by the petitioner. Even the award of 26% shareholdings in the SPC for developing Karaikal port
only vest with the developer, which is the third respondent and not for anyone else. If the petitioner has any right as against third respondent, they
will have to work out their right among themselves and not to drag the first respondent in their fables. It was also claimed that the progress made
by the developer has been reviewed and the Government is satisfied with the progress. Though the petitioner made several allegations, it was only
with a view to secure the stake allotted to the developer. The allegations of the petitioner are frivolous. The Government did not enter into any
correspondence with the petitioner.
In the counter affidavit filed by respondents 3 and 4, dated 22.6.2009, apart from setting out circumstances under which the third respondent
got concession agreement, the allegations made by the petitioner have been completely denied. It is relevant to extract the following assertions
made in the counter affidavit with reference to the specific allegations made by the petitioner, which is as follows:
...The partners of the petitioner firm also ran into a lot of operational, technical, financial and other difficulties and were during the period from
2001 to 2005 not engaged in any meaningful or professional port related ventures.... The partners of the petitioner firm chose to associate with the
third respondent acknowledging the fact that, by then, it was a company already well established and forming part of the group of companies which
were in existence since 1990, while they were merely two individuals with no support, technical or operational staff or other executive set-ups.... It
is denied that the petitioner''s past experience was ever highlighted to the first respondent for the development of Karaikal Port, as the petitioner
firm which was admittedly created only in the year 2002 had not undertaken any port projects by the year 2005 to seek credit therefor....
...It is vehemently denied that there was any joint decision between the petitioners and the third respondent or that the concept of developing a
deep water, all-weather port at Karaikal was initiated by the petitioners. It is an undeniable fact that the plans for setting up a port at Karaikal had
been mooted out by the first respondent as early as 1996.
...The presentation of the third respondent was made before the High Powered Committee on 19th July 2005 by its directors and not by Mr.
Ramani Ramaswamy, in his individual capacity or as partner of petitioner firm. All the self-seeking and self-laudatory averments of the petitioners in
relation to the making of the presentation are denied.
...In the entire process of award of the concession, the first respondent corresponded with and awarded the letter of intent only to the third
respondent. Subsequently the concession also was awarded only to the third respondent. Further this was also not awarded to the third
respondent in the so-called capacity as a lead member of the consortium.... All this clearly establish that there was no consortium and the first
respondent dealt with the third respondent as the sole developer....
...the petitioners being complete strangers to the said Concession Agreement, can never place any reliance thereon, nor press the same into
service or seek any relief or remedy by or under the same, as they are neither a party or privy to the same. Secondly, there is not even an iota of
truth to contend that the same had been awarded to a so-called consortium being represented by the Third respondent as a Lead Member. There
is no merit in contending that the term ""associates"" as envisaged in the Concession Agreement would mean only the institutions who have offered to
extend their support to the bid of the third respondent while it was responding to the expression of interest for the Karaikal Port Project. . Besides,
under the scheme of the Concession Agreement, there is no requirement or mandatory need for any of the ""associates"" of the petitioners to hold at
least 26% of shareholding in the SPC, but rather the tone, tenor and unassailable import of the said requirement is that the minimum safeguard of
holding 26% shareholding in the SPV should be met and maintained for at least a period of 10 years from the date of commercial operation, by
third respondent company and their promoters, nominees and associates. In other words, it is merely an anti-dilution covenant required to be
complied with by the third respondent....
...the petitioners, despite an interim order dated 13th April 2009 of the Hon''ble High Court of Madras Court passed in O.A. Nos. 319 and
320 of 2009 in C.S. No. 291 of 2009 directing the petitioners, inter alia, herein not to (a)interfere or obstruct with the peaceful implementation,
completion, commercial commissioning and functioning of the Karaikal Port Project by the third/fourth respondents and (b)directly or indirectly
publish any statement, whether orally or in writing or otherwise in, any manner, which defames, derogates or denigrates the third/fourth
respondent''s reputation and its projects in the implementation of the Karaikal Port Project, proceeded to prefer the instant writ petition seeking
reliefs and remedies which will tantamount to interfering and obstructing in the peaceful implementation, completion, commercial commissioning and
functioning of the Karaikal Port Project....
...The petitioners have also categorically and unambiguously declared and averred in their letter dated 28th July 2007 addressed to the
Secretary (Ports), government of Pondicherry, Pondicherry and others that ""we are no longer associated with the project"". In the backdrop of the
above, neither petitioners nor its partners can claim, maintain or seek any right or remedy against the third and fourth respondents in relation to the
development of the Karaikal Port Project.
In response to the counter, the petitioner had filed a rejoinder dated 29.6.2009. In the rejoinder, once again they had repeated their original
assertion. They have also contended that the Government of Puducherry has no right to execute the project contrary to the power vested in the
Indian Ports Act, 1908.
With reference to the jurisdiction of the Government of Puducherry, reliance was placed upon the judgment of the Supreme Court in Villianur
Iyarkkai Padukappu Maiyam Vs. Union of India (UOI) and Others, . The Supreme Court in paragraph 204 of the judgment held as follows:
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.
It was contended by Mrs. nalini Chidambaram, learned Senior Counsel that the case referred to by the respondents, i.e. Villianur Iyarkkai
Padukappu Maiyam (cited supra) is still pending in the Supreme Court and had not reached any finality and therefore, no reliance can be placed
upon the same.
On the question of maintainability of writ petitions, reliance was placed upon the judgment of the Supreme Court in ABL International Ltd. and
Another Vs. Export Credit Guarantee Corporation of India Ltd. and Others, . The relevant passage found in paragraph 23 may be usefully
extracted below:
It is clear from the above observations of this Court, once the State or an instrumentality of the State is a party of the contract, it has an
obligation in law to act fairly, justly and reasonably which is the requirement of Article 14 of the Constitution of India. Therefore, if by the impugned
repudiation of the claim of the appellants the first respondent as an instrumentality of the State has acted in contravention of the abovesaid
requirement of Article 14, then we have no hesitation in holding that a writ court can issue suitable directions to set right the arbitrary actions of the
first respondent....
Thereafter, the learned Senior Counsel also placed reliance upon the judgment of the Supreme Court in State of Kerala Vs. Zoom Developers
Pvt. Ltd. and Others, . In that case, the Supreme Court went into the question as to what constitute consortium and to what extent an agreement
with consortium affects individual responsibility and upheld the order of the Kerala High Court.
22.The learned Senior Counsel also placed reliance upon the judgment of the Himachal Pradesh High Court in Reliance Infrastructure Limited Vs.
State of H.P. and Others , where a writ was issued against the State of Himachal Pradesh for violating the terms of agreement and they were
restrained from entering into an agreement to any other party.
23.The learned Senior Counsel for the petitioner also placed reliance upon the judgment of the Supreme Court in Food Corporation of India and
Another Vs. SEIL Ltd. and Others, . The following passages found in paragraphs 23 to 25 may be usefully extracted below:
Article 14 of the Constitution of India has received a liberal interpretation over the years. Its scope has also been expanded by creative
interpretation of the court. The law has developed in this field to a great extent. In this case, no disputed question of fact is involved.
The High Court, in an appropriate case, may grant such relief to which the writ petitioner would be entitled to in law as well as in equity.
We do not, thus, find any substance in the contention of Mr Sharan that while exercising its review jurisdiction, no interest on the principal sum
could have been directed to be granted by the High Court. A writ court exercises its power of review under Article 226 of the Constitution of
India itself. While exercising the said jurisdiction, it not only acts as a court of law but also as a court of equity. A clear error or omission on the
part of the court to consider a justifiable claim on its part would be subject to review; amongst others on the principle of actus curiae neminem
gravabit (an act of the court shall prejudice none). We appreciate the manner in which the learned Judge accepted his mistake and granted relief to
the respondents.
The learned Senior Counsel also placed reliance upon the judgment of the Supreme Court in Karnataka State Forest Industries Corporation
Vs. Indian Rocks, . In paragraphs 38 and 39, the Supreme Court held as follows:
Although ordinarily a superior court in exercise of its writ jurisdiction would not enforce the terms of a contract qua contract, it is trite that
when an action of the State is arbitrary or discriminatory and, thus, violative of Article 14 of the Constitution of India, a writ petition would be
maintainable. (See ABL International Ltd. v. Export Credit Guarantee Corporation of India Ltd.)
There cannot be any doubt whatsoever that a writ of mandamus can be issued only when there exists a legal right in the writ petition and a
corresponding legal duty on the part of the State, but then if any action on the part of the State is wholly unfair or arbitrary, the superior courts are
not powerless.
Per contra, Mr. D. Murugesan, learned Government Pleader (Puducherry) contended that similar challenge to the development of Puducherry
Port by way of Public Interest Litigation was rejected by a division bench of this Court in Villianur Iyarkkai Padukappu Maiyam in W.P. No.
12337 of 2006, dated 10.8.2006, which order was also confirmed by the Supreme Court vide its judgment in Villianur Iyarkkai Padukappu
Maiyam Vs. Union of India (UOI) and Others, . He also stated that the dispute raised by the petitioner is of a private nature and such questions
cannot be gone into the writ petition under Article 226 of the Constitution. The quarrel between the petitioner and the third respondent cannot in
any way affect the BOT agreement entered into between respondents 1 and 2 and respondents 3 and 4. If at all, the petitioner has to invoke his
right elsewhere.
Mr. Vijay Narayan, learned Senior Counsel appearing for respondents 3 and 4 supported the stand of the learned Government Pleader
(Puducherry). In addition, the learned Senior Counsel relied upon the judgment of the Supreme Court in State of U.P. and others Vs. Bridge and
Roof Co. (India) Ltd., . He placed reliance upon the following passages found in paragraph 15 and 21, which is as follows:
In our opinion, the very remedy adopted by the respondent is misconceived. It is not entitled to any relief in these proceedings, i.e., in the writ
petition filed by it. The High Court appears to be right in not pronouncing upon any of the several contentions raised in the writ petition by both the
parties and in merely reiterating the effect of the order of the Deputy Commissioner made under the proviso to Section 8-D(1).
....
There is yet another substantial reason for not entertaining the writ petition. The contract in question contains a clause providing inter alia for
settlement of disputes by reference to arbitration (Clause 67 of the contract). The arbitrators can decide both questions of fact as well as questions
of law. When the contract itself provides for a mode of settlement of disputes arising from the contract, there is no reason why the parties should
not follow and adopt that remedy and invoke the extraordinary jurisdiction of the High Court under Article 226. The existence of an effective
alternative remedy in this case, provided in the contract itself is a good ground for the court to decline to exercise its extraordinary jurisdiction
under Article 226. The said article was not meant to supplant the existing remedies at law but only to supplement them in certain well-recognised
situations. As pointed out above, the prayer for issuance of a writ of mandamus was wholly misconceived in this case since the respondent was not
seeking to enforce any statutory right of theirs nor was it seeking to enforce any statutory obligation cast upon the appellants. Indeed, the very
resort to Article 226 whether for issuance of mandamus or any other writ, order or direction was misconceived for the reasons mentioned supra.
He also placed reliance upon the judgment of the Supreme Court in Kerala State Electricity Board and Another Vs. Kurien E. Kalathil and
Others, . The following passage found in paragraph 10 may be usefully extracted below:
We find that there is a merit in the first contention of Mr Raval. Learned Counsel has rightly questioned the maintainability of the writ petition.
The interpretation and implementation of a clause in a contract cannot be the subject-matter of a writ petition. Whether the contract envisages
actual payment or not is a question of construction of contract. If a term of a contract is violated, ordinarily the remedy is not the writ petition under
Article 226. We are also unable to agree with the observations of the High Court that the contractor was seeking enforcement of a statutory
contract. A contract would not become statutory simply because it is for construction of a public utility and it has been awarded by a statutory
body. We are also unable to agree with the observation of the High Court that since the obligations imposed by the contract on the contracting
parties come within the purview of the Contract Act, that would not make the contract statutory. Clearly, the High Court fell into an error in
coming to the conclusion that the contract in question was statutory in nature.
28.The learned Senior Counsel for respondents 3 and 4 also placed reliance upon the judgment of the Supreme Court in National Highway
Authority of India Vs. Ganga Enterprises and Another, . In paragraph 6 of the said judgment, the Supreme Court held as follows:
The respondent then filed a writ petition in the High Court for refund of the amount. On the pleadings before it, the High Court raised two
questions viz.: (a) whether the forfeiture of security deposit is without authority of law and without any binding contract between the parties and
also contrary to Section 5 of the Contract Act; and (b) whether the writ petition is maintainable in a claim arising out of a breach of contract.
Question (b) should have been first answered as it would go to the root of the matter. The High Court instead considered Question (a) and then
chose not to answer Question (b). In our view, the answer to Question (b) is clear. It is settled law that disputes relating to contracts cannot be
agitated under Article 226 of the Constitution of India. It has been so held in the cases of Kerala SEB v. Kurien E. Kalathil, State of U.P. v.
Bridge and Roof Co. (India) Ltd. and Bareilly Development Authority v. Ajai Pal Singh. This is settled law. The dispute in this case was regarding
the terms of offer. They were thus contractual disputes in respect of which a writ court was not the proper forum. Mr Dave, however, relied upon
the cases of Verigamto Naveen v. Govt. of A.P. and Harminder Singh Arora v. Union of India. These, however, are cases where the writ court
was enforcing a statutory right or duty. These cases do not lay down that a writ court can interfere in a matter of contract only. Thus on the ground
of maintainability the petition should have been dismissed.
Considering the rival submissions, this Court is of the opinion that the three writ petitions filed by the petitioner are not maintainable. It is not
withstanding the fact that in case of any legal infringement by the State or arbitrary action on the part of State, the power under Article 226 of the
Constitution is still available. The nature of grievance projected by the petitioner is purely their own internal dispute with the third respondent. If at
all, it can be only resolved through civil litigation before the appropriate civil court. The Government of Puducherry has no way come into the
picture. In fact, declaratory relief sought for by the petitioner is very peculiar. By the nature of relief, the petitioner wants to latch on to the
concession agreement to the exclusion of the third respondent. The attempt to interpret the concession agreement to get a stake by the petitioner is
not an issue which can be gone into a writ petition under Article 226 of the Constitution. Merely because the petitioner had sent some
representations to the respondents 1 and 2, that by itself will not give locus standi to the petitioner to seek relief from respondents 1 and 2, who are
parties to concession agreement with respondents 3 and 4. This Court do not find any illegality or arbitrary action on the part of respondents 1 and
2 so as to adjudicate the issues raised in public interest.
In the light of the above and in view of the binding legal precedents cited above, this Court is not inclined to entertain the three writ petitions.
Accordingly, all the three writ petitions will stand dismissed. No costs. Consequently, connected miscellaneous petitions stand closed.