2009 (5) TMI 860 - SC - Indian Laws

Whether selection of the Respondent No. 11 as Developer was correct or not? Held that - The appellants have failed to bring on record any material to substantiate the allegation that there is a conspiracy to grab the land belonging to the Government of Pondicherry for the purpose of Real- estate of Respondent No. 11 by permitting it to construct five-star hotel commercial mall etc. The reply affidavit filed by the Respondent before the High Court on the contrary shows that the feasibility report prepared by it indicated that the Port was to be developed in composite manner and therefore project should be commercially viable and therefore considering the enormous cost involved in the development of the Port certain activities are sought to be undertaken for the benefit of passengers crew of ships staff etc. On the facts and in the circumstances of the case this court is of the opinion that the appellants have failed to make out the case that the Pondicherry Government has permitted the Respondent No. 11 to carry on Real-estate business and therefore the appeals should be accepted. Thus this Court does not find any merit in any of the appeals and both the appeals are liable to be dismissed.

Summary

Issues Involved:
1. Concession by appellants on the selection of the developer.
2. Locus standi of appellants to challenge the award of contract.
3. Alleged arbitrary issuance of the Letter of Intent to the respondent.
4. Necessity of prior approval from the Central Government.
5. Environmental impact assessment and compliance with CRZ notification.
6. Allegation of real-estate activities disguised as port development.

Detailed Analysis:

1. Concession by Appellants on the Selection of the Developer:
The appellants conceded before the High Court that they were not challenging the selection of the respondent as the developer of the Pondicherry Port but were more concerned with the environmental impact. The High Court recorded this concession, and the appellants did not contest this recording. The Supreme Court noted that the appellants had not filed any application before the High Court to correct the record, confirming that the concession was correctly recorded. Thus, the appellants are estopped from challenging the selection of the developer.

2. Locus Standi of Appellants to Challenge the Award of Contract:
The Supreme Court held that the contract in question is purely commercial and the appellants, who were not participants in the selection process, lack the locus standi to challenge the award. The Court referred to the precedent set in BALCO Employees' Union (Regd.) vs. Union of India, emphasizing that public interest litigation (PIL) should not be used to challenge financial or economic decisions unless there is a violation of Article 21 or human rights.

3. Alleged Arbitrary Issuance of the Letter of Intent to the Respondent:
The Court found that the process leading to the issuance of the Letter of Intent to the respondent was transparent and followed due procedure. The Government of Pondicherry had made multiple attempts to privatize the port since 1973, and the selection of the respondent was based on a pragmatic approach to ensure the development of the port. The Court rejected the appellants' contention that the issuance of the Letter of Intent was arbitrary or motivated by oblique reasons.

4. Necessity of Prior Approval from the Central Government:
The Court held that the Pondicherry Port is a minor port, and its jurisdiction and control vest with the Government of Pondicherry. The guidelines for the privatization of major ports do not apply to minor ports. The Court noted that the Government of Pondicherry had the legislative and executive authority to develop the port without requiring prior approval from the Central Government. The Ministry of Shipping had also clarified that no such approval was necessary.

5. Environmental Impact Assessment and Compliance with CRZ Notification:
The Court noted that the concession agreement required the respondent to obtain necessary environmental clearances from the Ministry of Environment and Forests. The project, being over Rs.50 crores, necessitated a full Environmental Impact Assessment, including public hearings. The High Court had already issued directions addressing the environmental concerns, and the Supreme Court found no reason to interfere further.

6. Allegation of Real-Estate Activities Disguised as Port Development:
The Court found that the primary objective of the project was the development of the Pondicherry Port and that certain ancillary facilities necessary for port operations were part of the project. The Court rejected the appellants' allegation that the project was a guise for real-estate development. The feasibility report indicated that the project needed to be commercially viable, and the ancillary facilities were justified.

Conclusion:
The Supreme Court dismissed both appeals, confirming that the process followed by the Government of Pondicherry was transparent, the appellants lacked locus standi, and the environmental and procedural requirements were adequately addressed. The Court upheld the issuance of the Letter of Intent to the respondent for the development of the Pondicherry Port on a Build, Operate, and Transfer (BOT) basis.