J.M.PANCHAL, J. - (1.) LEAVE granted in both the special leave petitions.
(2.) APPEAL arising from Special Leave Petition (C) No. 9988 of 2007 is directed against judgment dated August 10, 2006, rendered by the Division Bench of Judicature at Madras, in Writ Petition No. 3304 of 2006 by which three prayers made by the appellant to quash (1) the Letter of Intent dated June 3, 2005 granted by the Government of Pondicherry to the respondent No. 11 herein, i.e., M/s. Subhash Project and Marketing Limited, for development of port in Pondicherry on Build Operate and Transfer ('BOT' for short) basis, (2) approval dated January 21, 2006 accorded by the Lt. Governor of Pondicherry to the detailed project report dated November 16, 2005 submitted by the respondent No. 11 and its partner M/s. Om Metals Limited for the development of Pondicherry Port on BOT basis as well as to the concession agreement to be entered into between the Government of Pondicherry and the respondent No. 11 with its consortium/partner M/s. Om Metals Limited and with their affiliates for the development of the Pondicherry Port and all related and ancillary/other activities and (3) direction dated January 24, 2006, issued by the Director of Ports, Government of Pondicherry, Port Department, to the officers concerned, to prepare a list of all the existing movable/immovable assets of the Pondicherry Port for handing over to the respondent No. 11 by January 30, 2006, consequent upon the decision taken by the Government of Pondicherry for the development of Pondicherry Port on BOT basis, are rejected. Appeal arising from Special Leave Petition (C) No. 6977 of 2007 is also directed against judgment dated August 10, 2006, mentioned above, rendered in Writ Petition No. 12337 of 2006, by which two prayers made by the appellant to quash (1) the approval dated January, 21,2006 accorded by the Lt, Governor of Pondicherry to the detailed project report dated November 16, 2005, submitted by the respondent No. 11 and its partner M/s. Om Metals Limited, for the development of Pondicherry Port on BOT basis as well as to the concession agreement to be entered into between the Government of Pondicherry and the respondent No. 11 with its consortium/partner M/s. Om Metals Limited and with their affiliates for the development of Pondicherry Port and all related and ancillary/other activities and (2) the direction dated January 24, 2006, issued by the Director of Ports, Government of Pondicherry, Port Department, to the officers concerned to prepare a list of all the existing movable/immovable assets of the Pondicherry Port for handing over the same to the respondent No. 11 by January 30, 2006 pursuant to the decision taken by the Government of Pondicherry for the development of Pondicherry Port on BOT basis, are rejected. As both the appeals arise from the common judgment delivered by the Madras High Court on August 10, 2006 and common question of facts and law arise for consideration of this Court, it is proposed to dispose them of by this common judgment.
(3.) IN order to trace the development of events leading to filing of these appeals, it is necessary to notice certain basic facts. Background The existing Port of Pondicherry is situated in the East Coast of India between two Major Ports of India, i.e., Madras and Tuticorin. It is located at the Ariankuppam River Mouth in Pondicherry. The history of the Pondicherry Port dates back to the tenth century A.D. The Pondicherry Port flourished as a centre for international trade and commerce. However, it could not maintain the pace of augmentation in improving the port facilities with respect to the rapid changes in transport technology. Therefore, the port facilities became obsolete and the Port lost much of its importance. With the objective of developing the port facilities, offers from various Marine Technical Consultancy Firms were invited by the Government of Pondicherry in the year 1973 for the preparation of a Master Plan and a detailed project report. After examining the offers received from various firms, the Port Department of Government of Pondicherry recommended that the project be awarded to M/s. Consulting Engineers Services (India) Pvt. Ltd. By Government order dated September 27, 1973 the said organization was entrusted with the work of preparation of the Master Plan and a detailed project report. The said organization submitted various reports and finally updated its project report in May, 1982. On the basis of the reports, the Ministry of Shipping and Transportation (Ports Wing), Government of India approved the project for the creation of certain facilities at the Pondicherry Port and sanctioned the cost of the project by letter dated June 26, 1984. The Government of Pondicherry entered into an agreement with M/s. Consulting Engineering Services (India) Private Limited on January 22, 1985 for development of the facilities in terms of the approval and sanction granted by the Government of India. During the construction of the facilities, there was a proposal to create additional development facilities for Commercial- cum- Fishing Vessels. The creation of these additional facilities was discussed in a meeting held on March 22, 1989 pursuant to which the Director (Ports), Port Department, Government of Pondicherry vide letter dated March 23, 1989 informed the Development Commissioner, Government of Pondicherry that creation of such additional facilities would require a feasibility report. In the said letter it was also stated that since the Port Department lacked competent personnel in this regard, the same should be got prepared by a body having the requisite expertise. It was also mentioned in the letter that M/s. Consulting Engineering Services (India) Private Limited had no requisite expertise and recommended the appointment of M/s. Rail India Technical and Economic Services India Limited, a Government of India undertaking under the Ministry of Railways ("M/s. RITES India Limited" for short) to conduct the study on the technical feasibility and economic viability of the proposed development facilities. This proposal was examined and approved by various officials including the then Chief Minister of Pondicherry on March 27, 1989 and the then Lt. Governor, Pondicherry on March 28, 1989. In terms of those decisions, a Government order dated May 29, 1989 was issued by the Government of Pondicherry sanctioning a techno- economic survey to be conducted by M/s. RITES India Limited. On June 10, 1991, M/s. RITES India Limited submitted its Techno- Economic Feasibility Study Report pertaining to the Development of the additional facilities at Ariankuppam Port Project. The said report noticed that the proposed development was not only necessary for bridging the gap of technological changes in the sea transport, but was also necessary from the socio-economic point of view. In the report it was mentioned that the investments in the proposed project was justified. By the said report a study to be done on the ways and means of raising the funds for the project was recommended. The report also pointed out that Environmental Impact Assessment for the proposed development indicated that the effect on the environment was not significant and would be well within the acceptable levels specified as per the Indian standards. In spite of the positive Feasibility Study Report submitted by M/s. RITES India Limited, the project could not be carried forward in view of the paucity of funds. Again, some time in March 1996 the Government of Pondicherry made further attempt to develop the Port by inviting the officials of M/s. RITES India Limited to examine and provide consultancy services by privatization of the ports at Pondicherry, Karaikal and Mahe. Accordingly, a meeting was held between the officials of Government and the Company on March 12, 1996. In the said meeting the officials of M/s. RITES India Limited suggested that appropriate approach was to adopt the Build, Own, Share and Transfer mode of privatization. In terms of the said meeting M/s.RITES India Limited, through a letter dated March 12, 1996, submitted a 'Terms of Reference' for offering consultancy assignment for privatization of aforementioned ports. The total consultancy fee for the assignments was initially put as Rs.30 lakhs, which was reduced to Rs.20 lakhs as the proposal for consultancy was subsequently limited to the Pondicherry Port only. The Joint Secretary, Ministry of Surface Transport, Government of India, vide letter dated March 22, 1996 informed the Chief Secretary, Pondicherry Administration about the need to expand the existing capacity of the Pondicherry Port to meet the growth requirement of traffic handled by various major ports. In the said letter it was mentioned that a decision was taken to invite capital participation by private sector and from non-maritime land-locked states. In response to the said letter the Director of Ports, Government of Pondicherry addressed a letter dated April 18, 1996 enclosing therein the material for inviting capital participation by the private sector and non- maritime land-locked states. One company, i.e., Megah Venture Lines (M) SDN BHD vide letter dated March 28, 1996 addressed to the Secretary (Health and Welfare and Port), Government of Pondicherry, referred to the discussion it had on March 28, 1996 and made a proposal to conduct a Feasibility Study relating to the modernization/privatization of the Pondicherry Port. The said company wanted permission to conduct the said Feasibility Study. The said proposal was examined by the Director (Ports), Government of Pondicherry and by letter dated April 19, 1996, the Director (Ports), Government of Pondicherry, recommended that as the entire privatization of port was being examined by M/s. RITES India Limited, the study sought to be conducted by M/s. Megah Ventures Lines should be permitted only after tenders for privatization were invited by M/s. RITES India Limited. The Managing Director of M/s. Mega Ventures Lines along with letter dated January 25, 1997, addressed the then Chief Minister, Pondicherry, enclosed a draft of MOU pursuant to the meeting which had taken place between the then Chief Minister and the officials of M/s. Megah Ventures Lines on January 23, 1997 and claimed that the same was in accordance with the economic policy of the Government of India. The benefits, which were to accrue, were also mentioned in the said letter. The Director of Ports, Government of Pondicherry, by his letter dated June 24, 1997, made a proposal to the Under Secretary (Ports), Pondicherry to examine the issue as to whether it would be preferable to call for competitive tenders. It was also mentioned in the said letter that in the meanwhile M/s. RITES India Limited be approached for consultancy services. By the said letter the Director of Ports also proposed that M/s. RITES India Limited be appointed as the consultant for the assignment of selection of suitable entrepreneurs for 'additional development facilities of Ariankuppam Port Project' by competitive tenders on BOOST basis. The Director also requested for sanction of Rs.14 lakhs as expenditure. On September 19, 1997 a meeting was held between the senior officials of the Government of Pondicherry and the Group General Manager of M/s. RITES India Limited. The minutes of the meeting recorded that due to resource crunch at the Centre and State level, the Government of Pondicherry had decided to invite private participation for the development of Pondicherry Port. The minutes also reflected that a decision was taken to call for pre- qualifications bids in order to ascertain the technical capacity and financial soundness of the entrepreneurs. The minutes also indicated that a decision was taken that in order to invite the best parties, the Government of Pondicherry should grant concessions at par with other maritime States. On November 4, 1997 a meeting was held between the officials of the Government of Pondicherry including the then Lt. Governor and the Group General Manager of M/s. RITES India Limited. At the said meeting the officials of M/s. RITES India Limited gave a detailed presentation relating to various aspects of competitive bidding process. At the said meeting a decision was taken to adopt a transparent open competitive bidding procedure in preference to the MOU Route. The minutes of the said meeting also reflected that a decision relating to the appointment of M/s. RITES India Limited as a consultant for this purpose was also taken. The minutes further recorded that the Pondicherry Port was a minor Port and, therefore, the provisions of Major Ports Trust Act were not applicable. The draft minutes were, thereafter, approved and signed by the officials of the Government of Pondicherry. On November 6, 1997, a Government Order was issued appointing M/s. RITES India Limited as a consultant. The Consultancy Service Agreement between the Government of Pondicherry and M/s. RITES India Limited was signed on December 10, 1997. The Group General Manager (Ports) by letter dated December 22, 1997 forwarded draft advertisement titled "Invitation for Private Investment in Pondicherry Port", a Draft Invitation Document for "Initial Proposals" and the Draft Agreement to be entered into between the Government of Pondicherry and M/s. RITES India Limited. These draft documents and the draft advertisement were forwarded for the purpose of approval by the competent authority. The draft advertisement and the draft initial proposal were examined by various departments of the Government of Pondicherry. The Secretary (Finance), Government of Pondicherry in his noting dated May 18, 1998 noted that there were long term implications of the Draft Advertisement. He, therefore, recommended that the draft initial proposal and the Draft Agreement be placed before the Council of Ministers. These recommendations were approved by the Chief Secretary, Pondicherry on August 3, 1998 and by the then Chief Minister on August 13, 1998. Accordingly, a Cabinet meeting was convened on January 19, 1999 wherein the agenda of the meeting was to discuss and decide amongst other items, the proposal for privatization of Port and calling for advertisements by M/s. RITES India Limited. The Cabinet in the said meeting resolved to defer the discussion on this item till the next meeting. The said agenda was again circulated to the Ministers of the Cabinet on April 7, 1999 and all the Ministers of the Cabinet approved the proposal for privatization of the Port as well as calling for advertisement by M/s. RITES India Limited. The proposals were finally approved by the Cabinet on October 13, 1999. The then Lt. Governor accorded his approval on October 15, 1999. After the said approval, various departments of the Government of Pondicherry examined the Draft Agreement to be entered into between the Government of Pondicherry and M/s. RITES India Limited. After necessary changes, the agreement was entered into between the parties on January 10, 2000.;