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REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURSIDICTION

CIVIL APPEAL NO. 3422 OF 2017 (Arising out of Special Leave Petition (Civil )No.23241 of 2016)

JSW Infrastructure Limited and Anr.       ..  Appellant(s)

Versus

Kakinada Seaports Limited and Ors.     ..Respondent(s)

With

CIVIL APPEAL NO. 3424 OF 2017 (Arising out of Special Leave Petition (Civil)No. 23695 of 2016)

J U D G M E N T

DEEPAK GUPTA, J.

Leave granted.

2. These two Civil Appeals are directed against the judgment of

the  Division  Bench of  the  Orissa  High  Court  dated  14th July,

2016,  whereby  Writ  Petition  No.4895  of  2016,  filed  by  the

consortium comprising of  M/s Kakinada Seaports Limited, M/s

Bothra  Shipping  Service  Pvt.  Ltd.,M/s  MBG Commodities  Pvt.

Ltd.,  (hereinafter  referred  to  as  the  second  consortium)

Respondent  Nos.  1-3 herein,  was allowed and the  High Court

held that the consortium of  the appellants JSW Infrastructure

Limited and South West Port Limited, (hereinafter referred to as

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the first consortium) was not entitled to take part in the bid and,

therefore, the acceptance of its bid was also held to be illegal and

set aside.

3. The facts necessary for decision of these appeals are that

the Paradip Port Trust, issued Request For Qualification (RFQ) on

31.10.2015  inviting  global  invitations  for  Mechanisation  of

EQ-1-2  and  EQ-3  berths  at  Paradip  Port  Trust  of  30  MTPS

Capacity on BOT basis under PPP mode for concession period of

Thirty (30) years.  It is not disputed that in response to the said

RFQ,  4  parties  including  the  first  and  second  consortium,

submitted their bids.  All the four parties were duly qualified and

were asked to participate in the next stage of bid, that is, Request

For Proposal (RFP) and submit their offers with regard to revenue

sharing.   Only  two  parties,  i.e.,  the  first  consortium and  the

second consortium submitted the RFP.  The bid quoted by the

first consortium was 31.70% as against 28.70% bid quoted by

the  second  consortium.   Since  the  first  consortium  were  the

highest bidders their proposal was recommended for acceptance

by the tender committee of the Paradip Port Trust on 26.02.2016.

At  this  stage,  on  27.02.16  the  second  consortium  submitted

objections  to  the  consideration  of  the  application  of  the  first

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consortium on  the  ground  that  in  terms  of  the  Policy  Clause

against creation of monopoly the appellants were not entitled to

take part in this entire bidding process since they were already

operating one berth for dry cargo.  The Clause which is subject

matter of interpretation reads as follows :-

“Policy If there is only one private terminal/berth operator in a port for a specific cargo, the operator of that berth or his associates shall not be allowed to bid for the next terminal/berth for handling the same cargo in the same port.”

It would also be pertinent to mention that specific cargo in this

very Policy has been defined to be (i) containers, (ii) liquid, (iii)dry

bulk. Letter of Award was issued in favour of the appellant of the

first Consortium by the Paradip Port Trust on 29.02.2016.   

4. Aggrieved by this action, the second consortium filed a writ

petition  before  the  Orissa  High  Court.  The  submission  of

unsuccessful  bidders  was  that  since  the  first  consortium  was

already  operating  a  berth  for  dry  cargo  it  could  not  have

submitted its application to bid for the berth in question which is

also admittedly meant for dry cargo.  It was contended that as per

the policy quoted above, if a private operator is operating a berth

he cannot be allowed to bid for the next berth for handling the

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same cargo in the same port.  This contention of the original writ

petitioners  was  accepted  by  the  Orissa  High  Court  which

interpreted the Policy clause by holding that the word “next” in

the Clause indicated that a private operator cannot take part or

bid for next successive berth for the same cargo.  The High Court,

therefore, held that the application for the first consortium JSW

Infrastructure Limited, was wrongly considered and consequently

set  aside  the  award  of  Letter  of  Award  in  favour  of  the  first

consortium and further directed that the Paradip Port Trust may

either accept the single remaining bid of the second consortium of

Respondent Nos. 1-3 after negotiating the price which should not

be  less  than  the  price  offered  by  the  consortium  of  JSW

Infrastructure,  or  it  may  invite  fresh  bids  for  the  berth  in

question.

5. Aggrieved  by  the  judgment  of  the  High  Court  the  first

consortium and the Paradip Sea Port have filed the two appeals.

6. We  have  heard  learned  senior  counsel  for  the  appearing

parties.  The contention of Mr. Kapil Sibal, learned senior counsel

appearing  for  first  consortium  is  that  the  High  Court  has

misinterpreted the Clause in question. According to him a plain

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and  simple  reading  of  the  Clause  clearly  indicates  that  this

Clause will only apply when a single private berth in port for a

specific cargo is being run by a private operator.  He submitted

that  in  the  present  case  there  are  as  many  as  16  berths  in

Paradip Port Trust, out of which 8 are being run by the Paradip

Port Trust.  One dry cargo berth is being run by the Indian Oil

Corporation,  a  Public  Sector  Undertaking,  5  are  being  run by

private operators and one was being run by the appellant. Letter

of  Award  for  another  berth  was  issued  in  favour  of  the  first

consortium, which is the subject matter of dispute.  He submitted

that  the  purpose  of  this  clause  is  to  avoid  monopoly  and the

judgment of the High Court is erroneous because it does not do

away with the monopoly but only restricts a private operator from

bidding in the next successive berth for the same type of cargo.

Dr. A.M. Singhvi, learned senior counsel appearing on behalf of

Paradip Port Trust submitted that the employer i.e., Paradip Port

Trust is best qualified to interpret the terms and meaning of the

terms of the tender and the High Court should not have interfered

in the decision taken by the Paradip Port Trust.  On the other

hand,  Mr.  Gopal Subramaniam, learned senior  counsel  for  the

second consortium submitted that the word “next” in the Clause

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cannot be treated to be superfluous and, according to him, the

clause which is the subject matter of interpretation in this case

clearly  envisages  that  the  private  operator  operating  a  berth

cannot bid for the next successful berth for similar type of cargo.

7. We have given our careful consideration to the arguments.

This  Court  in  Ramana  Dayaram  Shetty vs.  International

Airport  Authority  of  India1 held  that  the  words  used  in

documents cannot be treated to be surplusage or superfluous or

redundant and must be given some meaning and weightage.  It

was held as follows:-

 “......It  is  a  well-settled  rule  of  interpretation  applicable  alike  to documents as to statutes that, save for compelling necessity,  the Court should be prompt to ascribe superfluity to the language of a document “and should be rather at the outset inclined to suppose every word intended to have some effect or be of some use”.   To reject  words  as  insensible  should  be  the  last  resort  of  judicial interpretation, for it is an elementary rule based on common sense that no author of a formal document intended to be acted upon by the others should be presumed to use words without a meaning. The  court  must,  as  far  as  possible,  avoid  a  construction  which would  render  the  words  used  by  the  author  of  the  document meaningless  and  futile  or  reduce  to  silence  any  part  of  the document and make it altogether inapplicable.”   

1

(1979) 3 SCC 489

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This  view  has  consistently  held  the  field  and  was  recently

reiterated in  Central Coal Fields Limited  and Another  vs.

SLL-SML (Joint Venture Consortium and Others)2.   

8. 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

2  (2016) 8 SCC 622

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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.   

9. We may also add that the law is well settled that superior

courts  while  exercising their  power of  judicial  review must act

with  restraint  while  dealing  with  contractual  matters.  A  Three

Judge Bench of  this  Court  in  Tata Cellular  vs.    Union of

India3 held that (i) there should be judicial restraint in review of

administrative action;  (ii) the court should not act like court of

appeal;  it  cannot  review the  decision  but  can  only  review  the

decision making process (iii) the court does not usually have the

necessary expertise to correct such technical decisions.; (iv) the

employer must have play in the joints i.e., necessary freedom to

take administrative decisions within certain boundaries.

10. In Jagdish Mandal  vs.  State of Orissa4  this Court held

that evaluation of tenders and awarding contracts are essentially 3  (1994) 6 SCC 651 4  (2007) 14 SCC 517

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commercial functions and if the decision is bonafide and taken in

the  public  interest  the  superior  courts  should  refrain  from

exercising their power of judicial review.  In the present case there

are no allegations of mala fides and the appellant consortium has

offered better revenue sharing to the employer.   

11. In  Afcons  Infrastructure Ltd. Vs.  Nagpur  Metro  Rail

Corporation Ltd. & Anr.5  This Court held as follows :-

“14.....a mere disagreement with the decision making process or the decision of the administrative authority is no reason for a constitutional  Court  to  interfere.   The  threshold  of  mala  fides, intention  to  favour  someone  or  arbitrariness,  irrationality  or perversity  must be met before  the constitutional  Court  interferes with the decision making process or the decision.

xxx xxx xxx

16. We may add that the owner or the employer of a project, having  authored  the  tender  documents,  is  the  best  person  to understand  and  appreciate  its  requirements  and  interpret  its documents.   The  constitutional  Courts  must  defer  to  this understanding and appreciation of  the tender  documents,  unless there is mala fide or perversity in the understanding or appreciation or in the application of the terms of the tender conditions.  It  is possible  that  the  owner  or  employer  of  a  project  may  give  an interpretation to the tender documents that is not acceptable to the constitutional Courts but that by itself is not a reason for interfering with the interpretation given.

17. In the present appeals, although there does not appear to  be  any  ambiguity  or  doubt  about  the  interpretation  given  by NMRCL to the tender conditions,  we are of the view that even if there was such an ambiguity or doubt,  the High Court ought to have refrained from giving its own interpretation unless it had come to a clear conclusion that the interpretation given by NMRCL was perverse or mala fide or intended to favour one of the bidders.  This was certainly not the case either before the High Court or before this Court....”

5  2016 SCC Online SC 940

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The view taken in Afcons (supra)  was followed in Monte Carlo

Ltd.  Vs.  NTPC Ltd.6 .  Thus it is apparent that in contractual

matters, the Writ Courts should not interfere unless the decision

taken is totally arbitrary, perverse or mala fide.

12. Strong  reliance  has  been  placed  on  behalf  of  the  second

consortium on the judgment rendered in  APM Terminals B.V.

vs.  Union of India and Another7 .  We are of the considered

view that the said judgment cannot be applied to the present case

because  in  that  case  this  court  considered  the  clauses  of  the

contract. The policy which was applicable in APM Terminal, was

not  the  policy  of  2010 but  the  policy  of  2007,  the  wording  of

which is totally different.  True it is, that in the said judgment

reference has also been made to the new policy but that was not

specifically dealt with by the Court, and the matter was decided

on an interpretation of the terms of the contract and the policy

of 2007.   

13. 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

6  2016 SCC Online SC 1149 7  (2011 ) 6 SCC 756

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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. The decision taken by Paradip Port Trust

could  not  be  termed  to  be  arbitrary,  perverse  or  mala  fide.

Therefore, the High Court was not justified in setting aside the

same.  In  this  view  of  the  matter,  both  the  Civil  Appeals  are

allowed.  The Judgment of the High Court is set aside and the

writ petition filed by the second consortium before the High Court

is dismissed.

....................................J. (MADAN B. LOKUR)

....................................J. (DEEPAK GUPTA)

New Delhi March 01, 2017