JSW Infrastructure Limited and Anr. v. Kakinada Seaports Limited and Ors. - (Supreme Court) (01 Mar 2017)

Superior courts while exercising their power of judicial review must act with restraint when dealing with contractual matters

MANU/SC/0221/2017

Contract

Instant Civil Appeals are against the judgment of Division Bench of Orissa High Court, whereby Writ Petition, filed by consortium comprising of M/s Kakinada Seaports Limited, M/s Bothra Shipping Service Pvt. Ltd.,M/s MBG Commodities Pvt. Ltd., (second consortium) Respondent Nos. 1-3 herein, was allowed and High Court held that, consortium of the Appellants JSW Infrastructure Limited and South West Port Limited, (first consortium) was not entitled to take part in bid and, therefore, the acceptance of its bid was also held to be illegal and set aside.

This Court in Ramana Dayaram Shetty vs. International Airport Authority of India held that, words used in documents cannot be treated to be surplusage or superfluous or redundant and must be given some meaning and weightage. On a reading of the Policy Clause, some weightage and meaning has to be given not only to the word “next” as done by High Court but also to words “only one private operator” appearing in opening part of the Clause. Words “only one private operator” cannot be treated as surplusage. Entire clause has to be read as a whole in context of purpose of the policy which is to avoid and restrict monopoly. 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 clause only in context of word “next” and ignored opening part of the Clause which clearly indicates that, Clause is only applicable when there is only one private berth operator. 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 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 present case, there are five private operators other than the first consortium.

Law is well settled that superior courts while exercising their power of judicial review must act with restraint while dealing with contractual matters. In Jagdish Mandal vs. State of Orissa, this Court held that evaluation of tenders and awarding contracts are essentially commercial functions and if the decision is bonafide and taken in public interest the superior courts should refrain from exercising their power of judicial review. In present case, there are no allegations of mala fides and Appellant consortium has offered better revenue sharing to the employer.

The view taken in Afcons Infrastructure Ltd. Vs. Nagpur Metro Rail Corporation Ltd. & Anr. was followed in Monte Carlo Ltd. Vs. NTPC Ltd . Thus, it is apparent that in contractual matters, Writ Courts should not interfere unless decision taken is totally arbitrary, perverse or mala fide. High Court erred in interpreting the Clause in the manner which it is done. 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. The decision taken by Paradip Port Trust could not be termed to be arbitrary, perverse or mala fide. Therefore, High Court was not justified in setting aside the same. Supreme Court set aside Judgment of High Court and allowed civil appeals.

Relevant : Ramana Dayaram Shetty vs. International Airport Authority of India, Afcons Infrastructure Ltd. Vs. Nagpur Metro Rail Corporation Ltd. & Anr., Monte Carlo Ltd. Vs. NTPC Ltd .

Tags : BIDDING ACCEPTANCE VALIDITY