2017 (3) TMI 1553 - SC - Indian Laws

Consortium of the appellants JSW Infrastructure Limited and South West Port Limited entitled to take part in the bid - Held that - On a bare reading of the Policy Clause some weightage and meaning has to be given not only to the word next as done by the High Court but also to the words only one private operator appearing in the opening part of the Clause. The words only one private operator cannot be treated as surplusage. The entire clause has to be read as a whole in the context of the purpose of the policy which is to avoid and restrict monopoly. In our opinion this Clause will apply only when there is one single private operator in a port. If this single private operator is operating a berth dealing with one specific cargo then alone will he not be allowed to bid for next berth for handling the same specific cargo. The High Court erred in interpreting the clause only in the context of the word next and ignored the opening part of the Clause which clearly indicates that the Clause is only applicable when there is only one private berth operator. It appears to us that the intention is that when a port is started if the first berth for a specific cargo is awarded in favour of one private operator then he cannot be permitted to bid for the next berth for the same type of cargo. However once there are more than one private operators operating in the port then any one of them can be permitted to bid even for successive berths. In the present case as pointed out above there already 5 private operators other than the first consortium. In view of the above discussion we are clearly of the view that the High Court erred in interpreting the Clause in the manner which it is done. As explained above the Clause will apply only when there is single private operator operating a single berth. Once there are more than one private operators then the Clause will not apply

Summary

Issues:
Interpretation of policy clause regarding bid eligibility for port berths. Judicial review of administrative action in contractual matters.

Analysis:
1. Interpretation of Policy Clause:
The judgment involves a dispute over the interpretation of a policy clause regarding bid eligibility for port berths. The Orissa High Court ruled in favor of the second consortium, holding that the first consortium was not entitled to bid due to a policy against creating a monopoly. The clause in question stated that if only one private operator is handling a specific cargo in a port, they cannot bid for the next berth for the same cargo. The High Court interpreted the term "next" to mean successive berths, restricting a private operator from bidding for similar cargo. However, the Supreme Court disagreed, emphasizing that the clause applies only when there is a single private operator in the port. If multiple private operators exist, the restriction does not apply. The Court highlighted the importance of not rendering any part of the policy clause meaningless and reiterated the need to avoid interference in contractual matters unless the decision is arbitrary, perverse, or mala fide.

2. Judicial Review in Contractual Matters:
The judgment also delves into the principle of judicial review in contractual matters. The Supreme Court cited previous cases emphasizing judicial restraint in reviewing administrative actions, especially in commercial functions like evaluating tenders and awarding contracts. The Court highlighted that unless there are allegations of mala fides or decisions taken against public interest, superior courts should refrain from interfering with administrative decisions. The Court reiterated that the owner or employer of a project understands the tender documents best and should be deferred to in interpreting them, unless there is clear evidence of perversity or mala fides. The judgment emphasized that writ courts should only intervene in contractual matters if the decision is entirely arbitrary, perverse, or mala fide.

In conclusion, the Supreme Court allowed the Civil Appeals, setting aside the High Court's judgment and dismissing the writ petition filed by the second consortium. The Court held that the High Court erred in interpreting the policy clause and that the decision by Paradip Port Trust was not arbitrary, perverse, or mala fide. The judgment reaffirmed the importance of interpreting policy clauses in their entirety and exercising judicial restraint in contractual matters unless there is clear evidence of wrongdoing.