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TMI Blog2009 (7) TMI 1320X X X X Extracts X X X X X X X X Extracts X X X X ..... thority, South India Corporation (Agencies) Limited,, and Nur Investment And Trading PTE Ltd. It entered into the Build, Operate and Transfer License Agreement (Lease Agreement), dated 15.07.1998, with the second respondent, to design, engineer, finance, erect, operate, replace container handling equipment and to maintain and repair the container terminal at Tuticorin Port. Pursuant to the licence agreement, it commenced development of the 7th berth as a container terminal at Tuticorin and has been operating and maintaining the same as on date. 2.2. As per Clause 2.3 of the Licence Agreement, the petitioner is permitted to bid for any other new additional facility or for operating any other berth at the port. 2.3. The second respondent issued a notice inviting tender in No.E(M) P M/AEE (M)/F.13/2005 for development of the second container terminal at existing berth No.8 at Tuticorin Port and its operation, management and maintenance on BOT basis for 30 years. The total value of the work was approximately ₹ 150 crores. Eleven prospective bidders, including the petitioner, procured the RFQ documents for developing the 8th berth as the second container terminal. 2.4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner lose their force and validity and can be of no avail to the petitioner and the change in law came to be effected as a direct sequel. 3.3. If the petitioner is allowed to participate in the subject project, the policy decision consciously taken by the Government of India would be whittled down, thereby leading to fresh litigations by various other companies, which were denied permission to participate in the tender process of various such projects in the port sector in pursuance of the Government policy. 3.4. Only impelled by the policy decision taken by the Union of India, the second respondent could not allow the petitioner to further participate in the tender in respect of 8th berth. 4. Second respondent has filed a counter, which reads as under: Writ Petition is liable to be dismissed in limine for want of territorial jurisdiction. The first respondent had taken a policy decision and the said policy decision is binding on every Board of Major Ports in discharge of its functions under the Major Port Trusts Act,1963. The rejection of the application of the petitioner had been made pursuant to the valid statutory policy which itself was put into effect for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jasthan State Electricity Board, (1986) 2 SCC 431 : 34. On a plain construction of the terms of the agreement, the appellants were no doubt guaranteed the supply of electricity for a period of 20 years but the right to get the supply at the concessional rate was subject to the power of the Board to effect a revision of the rate of supply every fifth year starting from the date of first supply subject to the only restriction that such revision could not be effected before January 1, 1971. The Boards contention that the right of the appellants to the supply of electricity at a concessional rate under the agreement entered into by the Board with them under Section 49 of the Act was defeasible, is clearly well-founded and must be given effect to. It follows that the rights derived by the appellants under the contract were subject to the stipulation contained in clause 34(b) which made the mutual rights and obligations of the parties subject to any legislation relating to supply and consumption of electricity enacted during the period of the agreement. 37. On a fair construction of the terms of clause 34(b) taken in conjunction with the conduct of the parties, the conclusion i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at, precedents sub-silentio and without argument are of no moment. The courts thus have taken recourse to this principle for relieving from injustice perpetrated by unjust precedents. A decision which is not express and is not founded on reasons nor it proceeds on consideration of issue cannot be deemed to be a law declared to have a binding effect as is contemplated by Article 141. Uniformity and consistency are core of judicial discipline. But that which escapes in the judgment without any occasion is not ratio decidendi. In B. Shama Rao v. Union Territory of Pondicherry 15 it was observed, it is trite to say that a decision is binding not because of its conclusions but in regard to its ratio and the principles, laid down therein. Any declaration or conclusion arrived without application of mind or preceded without any reason cannot be deemed to be declaration of law or authority of a general nature binding as a precedent. Restraint in dissenting or overruling is for sake of stability and uniformity but rigidity beyond reasonable limits is inimical to the growth of law. Neither there was any occasion nor there is any constitutional inhibition or statutory restriction under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainable; the petitioner has not challenged the policy decision of the Government of India; Section 42 of the Act merely confers powers on the Board to undertake the services described therein, but the actual contract to be entered into by the Port Trust with any party including its terms has not been provided for under the Act or in the Rules framed thereunder; merely because statutory bodies have been given the power to enter into contracts will not make such contracts statutory and Article 226 in respect of such contracts cannot be an appropriate remedy, for which the remedy is only before the Civil Court or Arbitration, provided under the contract; the contract dated 15.07.1998 is only a non-statutory contract and the contract itself provides the machinery for resolution of disputes; policy is a high public policy formulated by the Government in public interest and there cannot be any question of principle of estoppel being involved in the application of such policy; the policy can be executive as well as legislative and that the Government is free to decide upon its policy and the Courts will not interfere in such policy matters; there can be no question of legitimate expectati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licences and therefore the reasoning that acceptance of bids brought into existence a concluded contract between the successful bidders and the Government will not apply to the cases of these appellants. But they also accepted the licences subject to the provisions of the Punjab Excise Act, 1914 and the Punjab Liquor Licence Rules, 1956. By Section 34 of the Act a licence under the Act has to be granted, inter alia, on payment of such fees and subject to such restrictions and on such conditions as the Financial Commissioner may direct. Section 59(d) of the Act confers power on the Financial Commissioner to make rules prescribing the scale of fees in respect of any licence. Rule 24 provides that the fees payable in respect of licences shall be either (a) fixed fees or (b) assessed fees, or (c) auction fees. By amendments made on February 22, 1968 and March 30, 1968, the fixed fees were substantially enhanced and the appellants were called upon to pay those fees. Just as country liquor contractors offered bids voluntarily on terms and conditions governing the auctions, so in these two appeals the appellants voluntarily applied for and accepted the licences knowing fully well that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n at an auction sale is accepted by the authority competent, a completed contract comes into existence and all that is required is the grant of a licence to the person whose bid has been accepted. It is settled law that contracts made in exercise of statutory powers are not covered by Article 299(1) and once this distinction is kept in view, it will be manifest that the principles laid down in K.P. Chowdhary10, Mulamchand11, Rattan Lal12 and Firm Gobardhan Dass13 cases are not applicable to a statutory contract e.g. an excise contract. In such a case, the Collector acting as the Deputy Excise and Taxation Commissioner conducting the auction under Rule 36(22) and the Excise Commissioner exercising the functions of the Financial Commissioner accepting the bid under Rule 36(22-A) although they undoubtedly act for and on behalf of the State Government for raising public revenue, they have the requisite authority to do so under the Act and the rules framed thereunder and therefore such a contract which comes into being on acceptance of the bid, is a statutory contract falling outside the purview of Article 299(1) of the Constitution. 12. We are clearly of the opinion that in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich made the mutual rights and obligations of the parties subject to any legislation relating to supply and consumption of electricity enacted during the period of the agreement. 37. On a fair construction of the terms of clause 34(b) taken in conjunction with the conduct of the parties, the conclusion is irresistible that the parties had contemplated that the mutual rights and obligations under the contract would be subject to alteration by future legislation. That being so, Sections 49-A and 49-B of the Act have to be read into the contract and these provisions by virtue of clause 34(b) became a contractual stipulation. Whether the raising of demand for payment of difference between the uniform tariffs and the agreed rate was in disregard of the guiding principles contained in Section 49(3) contrary to the mandate of Section 49-A(2) of the Act. (iv) D. Navinchandra Co. v. Union of India, (1987) 3 SCC 66 : 20. One of the points on which an argument was sought to be built up was that the Bench of two Judges of this Court in the subsequent decisions had cut down the effect of the decision of this Court dated April 18, 1985 in the case of Union of India v. Rajni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could have given a go-by to canalisation policy. 22. It must be emphasised that in the order dated April 18, 1985, this Court did not do away with canalisation. That was not the issue before this Court. The expression whether canalised or not canalisedwas to include both. This Court did not say that canalised items could be imported directly by the importers ignoring the canalisation process. We are of the opinion that this Court did not say that canalisation could be ignored. That was not the issue. High public policy, it must be emphasised, is involved in the scheme of canalisation. This purpose of canalisation was examined by this Court in Daruka Co. v. Union of India6 where the Constitution Bench of this Court observed that the policies of imports or exports were fashioned not only with reference to internal or international trade, but also on monetary policy, the development of agriculture and industries and even on the political policies of the country and rival theories and views may be held on such policies. If the Government decided an economic policy that import or export should be by a selected channel or through selected agencies the court would proceed on the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and repeatedly by this Court and no principle of estoppel involved in these applications. (v) State of Gujarat v. M.P. Shah Charitable Trust, (1994) 3 SCC 552 : 22. We are unable to see any substance in the argument that the termination of arrangement without observing the principle of natural justice (audi alteram partem) is void. The termination is not a quasi-judicial act by any stretch of imagination; hence it was not necessary to observe the principles of natural justice. It is not also an executive or administrative act to attract the duty to act fairly. It was as has been repeatedly urged by Shri Ramaswamy a matter governed by a contract/agreement between the parties. If the matter is governed by a contract, the writ petition is not maintainable since it is a public law remedy and is not available in private law field, e.g., where the matter is governed by a non-statutory contract* . Be that as it may, in view of our opinion on the main question, it is not necessary to pursue this reasoning further. (vi) Aligarh Muslim University v. Vinay Engineering Enterprises (P) Ltd., (1994) 4 SCC 710 : 2. We are surprised, not a little, that the High Court of Calcut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding justice from Calcutta on learning about the rejection of its offer. The advertisement itself mentioned that the tenders should be submitted to EIL at New Delhi; that those would be scrutinised at New Delhi and that a final decision whether or not to award the contract to the tenderer would be taken at New Delhi. Of course, the execution of the contract work was to be carried out at Hazira in Gujarat. Therefore, merely because it read the advertisement at Calcutta and submitted the offer from Calcutta and made representations from Calcutta would not, in our opinion, constitute facts forming an integral part of the cause of action. So also the mere fact that it sent fax messages from Calcutta and received a reply thereto at Calcutta would not constitute an integral part of the cause of action. Besides the fax message of 15-1-1993, cannot be construed as conveying rejection of the offer as that fact occurred on 27-1-1993. We are, therefore, of the opinion that even if the averments in the writ petition are taken as true, it cannot be said that a part of the cause of action arose within the jurisdiction of the Calcutta High Court. 12. Pointing out that after the issuance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ession gains ground that even in cases which fall outside the territorial jurisdiction of the court, certain members of the court would be willing to exercise jurisdiction on the plea that some event, however trivial and unconnected with the cause of action had occurred within the jurisdiction of the said court, litigants would seek to abuse the process by carrying the cause before such members giving rise to avoidable suspicion. That would lower the dignity of the institution and put the entire system to ridicule. We are greatly pained to say so but if we do not strongly deprecate the growing tendency we will, we are afraid, be failing in our duty to the institution and the system of administration of justice. We do hope that we will not have another occasion to deal with such a situation. (viii) Chandigarh Admn. v. Jagjit Singh, (1995) 1 SCC 745 : 8. We are of the opinion that the basis or the principle, if it can be called one, on which the writ petition has been allowed by the High Court is unsustainable in law and indefensible in principle. Since we have come across many such instances, we think it necessary to deal with such pleas at a little length. Generally speak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r made or action taken in another persons case, which other person is not before the case nor is his case. In our considered opinion, such a course barring exceptional situations would neither be advisable nor desirable. In other words, the High Court cannot ignore the law and the well-accepted norms governing the writ jurisdiction and say that because in one case a particular order has been passed or a particular action has been taken, the same must be repeated irrespective of the fact whether such an order or action is contrary to law or otherwise. Each case must be decided on its own merits, factual and legal, in accordance with relevant legal principles. The orders and actions of the authorities cannot be equated to the judgments of the Supreme Court and High Courts nor can they be elevated to the level of the precedents, as understood in the judicial world. (What is the position in the case of orders passed by authorities in exercise of their quasi-judicial power, we express no opinion. That can be dealt with when a proper case arises.) (ix) State of U.P. v. Bridge Roof Co. (India) Ltd., (1996) 6 SCC 22 : 16. Firstly, the contract between the parties is a contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Union of India, (1996) 5 SCC 268 : 2....It is seen that the change in the policy is as a result of GATT agreement with all contracting countries. The quota system was available to export garments and clothing to European countries, viz., U.S.A., Canada, Norway etc. The Government took the policy that with a view to meet more competitive quality in the foreign markets introduced FCFS system giving 20% of the export. PPE was provided with 80% of the export. The new dynamism in the policy would make the trade more competitive and it will be in the best interest of the country and to boost in export potentiality and foreign exchange, on account thereof MEE and NQE quotas were eliminated and large allocation was issued to PPE system and rest of 20% was marked for FCFS system...... It was also pointed that the Government encountered that MEE system was beset with floods of false declarations of the productive capacity by unscrupulous traders masquerading as exporters. Though action was being taken against persons who committed fraud but it became difficult to stop misutilisation of the scheme completely. Consequently, MEE system was eliminated. Though incentives were provided und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors for formulating the policy for import or export of the goods granting relatively greater priorities to various items in the overall larger interest of the economy of the country. It is, therefore, by exercise of the power given to the executive or as the case may be, the legislature is at liberty to evolve such policies. 5. ..... A prior decision would not bind the Government for all times to come. When the Government is satisfied that change in the policy was necessary in the public interest, it would be entitled to revise the policy and lay down new policy. The court, therefore, would prefer to allow free play to the Government to evolve fiscal policy in the public interest and to act upon the same. Equally, the Government is left free to determine priorities in the matters of allocations or allotments or utilisation of its finances in the public interest. It is equally entitled, therefore, to issue or withdraw or modify the export or import policy in accordance with the scheme evolved. We, therefore, hold that the petitioners have no vested or accrued right for the issuance of permits on the MEE or NQE, nor is the Government bound by its previous policy. .....The High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme Court being the Apex Court of the country. But, this does not amount to saying that the order of the court, tribunal or authority below has stood merged in the order of the Supreme Court rejecting the special leave petition or that the order of the Supreme Court is the only order binding as res judicata in subsequent proceedings between the parties. (xiii) Narmada Bachao Andolan v. Union of India , (2000) 10 SCC 664 : 229. It is well settled that the Courts, in the exercise of their jurisdiction, will not transgress into the field of policy decision. Whether to have an infrastructural project or not and what is the type of project to be undertaken and how it has to be executed, are part of policy-making process and the Courts are ill-equipped to adjudicate on a policy decision so undertaken. The Courts, no doubt, have a duty to see that in the undertaking of a decision, no law is violated and people's fundamental rights are not transgressed upon except to the extent permissible under the Constitution... 233. At the same time, in exercise of its enormous power the court should not be called upon to or undertake governmental duties or functions. The courts ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at High Court. That apart, we must notice that the said judgment is delivered in a matter involving criminal dispute and consequences of such dispute have a direct bearing on the personal freedom of a citizen guaranteed under Article 21 of the Constitution. Therefore, the consideration that arises in deciding the question of territorial jurisdiction in cases involving criminal offences may not always apply to cases involving civil disputes like the special civil applications with which we are concerned. Mr Desai then urged that since the High Court has elaborately dealt with the merits of the case and given a finding in favour of the respondents in the interest of justice, we should not interfere with the said finding and uphold the same. We are not inclined to accept this argument of the learned counsel because the appellants herein had taken objection to the entertainment of the special civil applications by the Gujarat High Court on the ground of lack of territorial jurisdiction in the first instance itself and the same was rejected, according to us, wholly on unsustainable grounds. As a matter of fact, the appellant on the entertainment of the civil application and grant of int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l, which direction, according to the learned Senior Counsel for the petitioner, has affected the business prospects of the petitioner, which has its registered office at Chennai. Mandamus has been sought for in the matter of a policy decision of the Union of India, who is the first respondent herein, and the second respondent is located within the State of Tamil Nadu. The policy in question has been issued by the Union of India and it has got application to the Ports in Chennai as well as Tuticorin. Hence, the Principal Seat at Madras and the Bench at Madurai have jurisdiction to deal with the matter in respect of a part of cause of action, which arose within the jurisdiction of the Principal Bench and the Madurai Bench. 12. The object of amendment of Clause (1-A) of Article 226 of the Constitution and renumbering the same as Clause (2) is to confer jurisdiction on a High Court to entertain a petition under Article 226 against the Union of India or any other body or authority located in the territory, if the cause of action arises wholly or in part within its jurisdiction. The circumstance in which the policy has to be given effect to to the Ports situated in the State of Tamil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority. 14.2. Definition of Change in Law For the purposes of this Agreement Change in Law means any amendment, alteration, modification or repeal of any existing law by Government Authority or through any interpretation thereof by the court of law or enactment of any new law coming into effect after the date of this Agreement, provision for which has not been made elsewhere in this Agreement. 14.3.Relief under Change in Law If, after the date of this Agreement, there is a Change in the Law which substantially and adversely affects the rights of the Licensee under this Agreement, so as to alter the commercial viability of the project, the Licensee may, by written notice, request amendments to the terms of this Agreement. Subject to provisions of Article 14.3, the Licensee shall not be entitled to any compensation whatsoever from the Licensor as a result of Change in Law . 16. In view of Clause 14, Clause 2.3 cannot be read in isolation. A conjoint reading of Clauses 14.1 and 14.2 would make it explicit that the Licence Agreement is subject to change in law, which means, enactment of any new subsequent law by way of any valid act, ordinance, rule, regulation, n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view to provide competition to increase the efficiency in the service and avoid concentration of control in one single party. Unless it is demonstrated that the policy decision is capricious or arbitrary and not informed by any reason whatsoever, it is not permissible for this Court to interfere with the same. Only with a view to avert monopoly and encourage free and fair competition so as to benefit the Port's users and the consumers, availing services of the same, the petitioner could not be allowed to participate, which would be in the longer interest of trade, industry, general port users and the consumers, who are the end users of the services. The petitioner, in his affidavit has also stated that apart from operating the container terminal at 7th berth at Tuticorin Port, is operating the second container terminal at the Chennai Port in the name of Chennai International Terminal Pvt.Ltd. Therefore, applying the policy Two-Terminal-per-Operator cap , the petitioner was rightly injuncted from participating in the subsequent bid. 19. Though Clause 2.3 contemplates not to bar the existing licensee from participating in any subsequent bids, it does not confer any unconditi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. v. Union of India, (1996) 5 SCC 268, the policy can be executive as well as legislative and that the Government is free to decide upon its policy and the Courts will not interfere in such policy matters. It has been further held therein that there can be no question of legitimate expectation with reference to the old policy after the old policy has been changed and the rights of the parties will have to be angulated with regard to the changed policy. In matters of economic policy, the Courts give a large leeway to the executive and the legislature. A prior decision would not bind the Government for all times to come. When the Government is satisfied that change in the policy is necessary in public interest, it would be entitled to revise the policy and lay down a new policy. 22. The Apex Court, in Narmada Bachao Andolan v. Union of India , (2000) 10 SCC 664, has also held that the Courts, in exercise of their jurisdiction, will not transgress into the field of policy decision. Whether to have an infrastructural project or not and what is the type of project to be undertaken and how it has to be executed, are part of policy-making process and the Courts are ill-equipped to adj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the declaration of law, whatever is stated in the order are the findings recorded by the Supreme Court, which would bind the parties thereto and also the court, tribunal or authority in any proceedings subsequent thereto by way of judicial discipline. 27. With regard to rules of sub silentio and per incurium, the contention of the learned Senior Counsel for the petitioner is that a decision, which is not express and is not founded on reasons, cannot be deemed to be a law declared to have a binding effect as is contemplated under Article 141 of the Constitution. 28. On this aspect, it is to be stated that a decision shall be construed to be sub silentio and per incurium, if, in that case, a statute or rule having statutory effect was not brought to the attention of the Court, which means some applicable rule of law was missed by the Court and the Court would have decided the case differently if the material had been argued before the Court. The significance of a judgment having been decided sub silentio and per incurium is that it need not be followed as a precedent by a lower Court. 29. In the case before the Bombay High Court, the petitioner therein, namely, P O Austral ..... X X X X Extracts X X X X X X X X Extracts X X X X
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