Madras High Court
United Labour Federation vs Union Of India Represented By Its ... on 13 November, 2001
Equivalent citations: (2002)1MLJ257
ORDER B. Subhashan Reddy, C.J.
1. 1. Handing over of Container Terminal of Chennai Port Trust to a private party, otherwise than by lender/public auction, has evoked this litigation.
2. The appellant in both the writ appeals is United Labour Federation, represented by its General Secretary Mr. K. Nithyanandam. While W.A. No. 2029 of 2001 is directed against the order in W.P. No. 16845 of 2000, W.A. No. 1921 of 2001 is directed against the order in W.P. No. 12783 of 2001. While the appellant was the petitioner in W.P. No. 12783 of 2001, it was not a party in W.P. No.16845 of 2000. W.A. No. 2029 of 2001 was filed obtaining leave, which was granted by this Court.
3. W.P. No. 16845 of 2000 was filed by Chennai Port and Dock Workers Congress (INTUC) represented by its General Secretary Mr.G.Kalan assailing the order dated 3.7.2000 passed by the Government of India, by which the Chennai Port Trust was permitted to conclude a contract with the private party which is P & O Australia Ports Private Limited. In W.P. No.12783 of 2001, the challenge is made to Circular No. A/43/2000, dated 28.6.2001 and its later clarification Circular dated 29.6.2001 until the Chennai Port Trust implements the benefits that accrue to the members of the petitioner Union employed in the Container Terminal of the Chennai Port Trust. Several other writ petitions were filed along with W.P. No. 16845 of 2000 but we need not refer to all of them, as there are no writ appeals filed relating to those writ petitions.
4. We refer to the parties as arrayed in W.A. No. 2029 of 2001 in which the writ petitioner in W.P. No. 16845 of 2000 is the first respondent, Union of India, represented by its Secretary to Government, Ministry of Surface Transport, is the second respondent, Chennai Port Trust is the third respondent, Madras Dock Labour Board, is the fourth respondent and P & O Australia Ports Pvt. Ltd. is the fifth respondent.
5. The Container Terminal in Chennai Port Trust was constructed with a view to function as a hub port in the South Asian region to have mainline vessels directly calling at this Port to cater to the needs of traders in India, particularly in the Southern Region. That was in the year 1983 and at the same time Colombo Port had also started its operation. Efforts to make Chennai Port Trust as a hub port for container did not materialise for various reasons, the main being the lack of proper technical expertise and the financial resources. Consequently, Chennai Port was only acting as a feeder port to Colombo and Singapore Ports for transhipment to the mainline vessels. To make Container Terminal of the Chennai Port Trust us the hub port, respondents 2 and 3 had started the process. Three bids were received through the sealed tenders. The offer made by the fifth respondent was considered the best and the second respondent chose the fifth respondent for entrusting the development and management of Container Terminal of Chennai Port Trust, which is hereinafter referred to as the 'container terminal'. The 3rd respondent was directed to proceed further to conclude the contract with the 5th respondent.
6. Meanwhile, on 2.8.2000, a Memorandum of Settlement was entered into by the Management of all the Major Ports with the Labour Federations under Section 12(3) of the Industrial Disputes Act, 1947. The tenure of the said statutory agreement is 10 years from 1.1.1997. It was a tripartite settlement covering the following aspects.
1. Revised pay scales
2. Fixation of pay as on the 1st January 1997 in the revised scale.
3. Stagnation increment.
4. Date of next increment in the pay scale.
5. Personal pay for small family norm.
6. Dearness allowance.
7. House Rent Allowance 8. Port Allowance
9. Transport reimbursement
10.Children Education Allowance and reimbursement of Tuition fees.
11. Washing Reimbursement
12. Revision of TA & DA
13. Overtime Allowance
14. Conveyance Advance
15. Festival Advance
16. Leave Travel Concession
17. Holiday wages
18. Purchase of computer.
19. Outstation allowance.
20. Leave entitlement.
21 Assured Career Progression.
22.Pension.
23. Productivity and Economy measure.
24. Protection of Existing benefits.
25. Classification and Categorisation of employees etc.
7. The concern of the First respondent was that handing over the development and management of Container Terminal will adversely affect the interest of its workers, that without consulting with the Union and without taking them into confidence and surreptitiously, the agreement was entered, into with the fifth respondent and that will result in the deprivation of the rights of the workers secured under the above settlement dated 2.8.2000, and that such an action of the respondents 2 and 3 is an unfair labour practice, which is prohibited by the Industrial Disputes Act. It was also alleged that the respondents 2 and 3 did not adopt any of the known modalities or procedure while seeking to hand over the container terminal to the fifth respondent, It was also alleged that there was no necessity of handing over the container terminal to the fifth respondent as the Chennai Port was earning sufficient income and there is no gain in handing it over to the fifth respondent. Concisely speaking, the concern of the first respondent was the welfare of its workers and it apprehended the adverse effects of the privatisation of the container terminal depriving their rights secured under the statutory settlement dated 2.8.2000, that several workers, who had been in employment ever since the container terminal was established in 1983 would be deprived of their jobs or in any event would be subjected to alteration of their service conditions and benefits attached thereto.
8. The matters were contested by the respondents 2 to 5 by filing their counters and making their stand clear that the transaction with the fifth respondent was in public interest, that the deal was not veiled by any secrecy but transparency was followed, that in the facts and circumstances, the ordinary recourse to tender/public auction method was neither desirable nor feasible, that there was absolutely no basis for apprehension for the first respondent Union regarding the adverse effects of entrustment of development and management to the fifth respondent and that was done pursuant to the policy of globalisation and for developing the Chennai Port as a hub port in the South Eastern coast of India and to make it a full fledged container terminal to have varied activities and not to lose business to other countries and other ports like Colombo and Singapore, and to reduce the cost as the development into self-contained terminal at Madras will not only be beneficial for the large export and import activities at reduced costs but also to augment finances and that what was being done was only to hand over the container terminal consisting of three terminals out of 21 and that too only for a period of 30 years and then obligating the fifth respondent to leave with all the developmental activities and improvements done till that period without claiming any improvement cost. It was pointed out that to have a technical expertise and because of the Financial crunch, it was necessary to hand over the container terminal without losing the ownership thereon but only by way of lease for 30 years, with attractive lease amount. It was specifically pointed out that there is absolutely no adverse conditions being created in the transaction struck with the fifth respondent and no part of the settlement reached on 2.8,2000 would be affected and no service conditions would be altered and there would be no reduction in the benefits secured under the statutory settlement dated 2.8.2000.
9. On hearing all the parties, the learned single Judge by his order dated 22.2.2001 dismissed all the writ petitions upholding the action of the second respondent and the consequential action of the third respondent to go ahead with the transaction further in handing over the container terminal to the fifth respondent.
10. It is pertinent to mention at this point that the said order of the learned single Judge has not been appealed against, as the parties thereto were satisfied with the adjudication thereto. What is more, the further process in finalising the contract with the 5th respondent proceeded. As already stated above, the 2nd respondent had given the letter of acceptance on 3.7.2000, empowering the 3rd respondent to enter into contract with the 5th respondent, which was affirmed by the learned single Judge. Pursuant thereto, 3rd respondent circulated to the workmen of all the 5 unions, namely., Chennai Port Dock Workers' Congress, Madras Labour Workers Union, Madras Port Trust Railway Men's Union, Madras Port Trust Employees' Union, and Madras Port United Labour Union, on 9.3.2001 depicting the terms and conditions of employment under the 5th respondent. Thereafter, several meetings were held and the proceedings for conciliation between the port management and the union leaders were held before the conciliation authority on several dates between 14.5.2001 and 28.6.2001, and ultimately the settlement was arrived at on 28.6.2001, culminating into a statutory settlement under Section 12(3) read with Section 18(3) of the Industrial Disputes Act, 1947, between the 3rd respondent and the representatives of the above 5 recognised unions, in the presence of the Conciliation Officer. In pursuance of the said settlement circular dated 28.6.2001 was issued by the 3rd respondent calling the willingness of the employees to join the 5th respondent, and also to such of the employees who wanted to avail special Voluntary Retirement Scheme (VRS) on or before 30.6.2001. The general terms and conditions of employment offered by the 5th respondent were enclosed. Again on 29.6.2001, the circular dated 28.6.2001 was modified to the extent that the employees who are willing to go over to 5th respondent should submit their application form by 30.6.2001, and that as per the procedure they would be relieved after three months notice period, i.e., on or before 30.9.2001, giving option to the employee/s to withdraw the application form within the said period. It was also indicated that upon the approval of the Government an agreement would be entered into with the 5th respondent for handing over the container terminal, and upon the conclusion of the agreement, the officers of the 5th respondent would meet the employees working in the container terminal numbering 572, and apprise them of the terms and conditions of employment, and then the employees can exercise their option within 15 days thereof. Meanwhile, on 11.7.2001, W.P.No. 12783 of 2001 was filed by the appellant seeking a mandamus against the 2nd and 3rd respondents, not to implement the circular and the amended circular dated 28th and 29th June 2001 respectively. The premise on which the writ petition was filed was that V.R.S. should not be invoked without first implementing certain benefits that accrued to the affected workmen by virtue of the settlements dated 15.11.1977 and 2.8.2000, as the implementation of the said benefits would mean better compensation for the workers under the V.R.S., and setting the limit of one day for giving acceptance for V.R.S. was unreasonable. It was also contended that the workers were aggrieved by the Port Trust announcing the V.R.S. without discharging its obligations under the above settlements/awards. After hearing both sides, the learned single Judge by his order dated 13.09.2001 held that there were no undue hurry shown by the 2nd and 3rd respondents in issuing the circulars kind setting the time for option of V.R.S. But, however, time to exercise in option was given till 28th September 2001 and to withdraw such V.R.S. application forms, if any employee desires otherwise, before 30.9.2001. In fact, from the reading of the order of the learned single Judge, it is obvious that the said dates were agreed by either counsel representing the parties.
11. Meanwhile, on 9.8.2001 licence agreement was entered into between the 3rd respondent and the Chennai Container Terminal Limited, which was incorporated under the Companies Act on 12.9.2000, as a consortium of 5th respondent. An amount of Rs. 10 Crores was deposited with the 3rd respondent, and in addition an investment of Rs. 188 Crores was made by the 5th respondent by way of equity after obtaining a short term funding of US Dollars 25 Millions.
12. W.A.No. 2029 of 2001 was filed on 6.9.2001 with petitions to grant leave to appeal, as also condone the delay in filing the same. Delay was condoned and leave was granted on 9.10.2001, and the writ appeal was admitted thereafter. Meanwhile, W.A.No. 1921 of 2001 was filed against the order in W.P.No. 12783 of 2001, and by order dated 24.9.2001, the 3rd respondent was enabled to go ahead to make the exercise of modalities of V.R.S in terms of Clause-9 of the statutory settlement dated 28.6.2001, but not to give effect to the same until further orders. Both the writ appeals were then clubbed and heard together, and are being disposed of by this common judgment.
13. Mr.V. Prakash, learned counsel for the appellant has vehemently submitted that workers are the part of the industry, that the 3rd respondent-Port Trust cannot take unilateral decision, that it is duly bound by the provisions of the Industrial Disputes Act, 1947 and the allied legal provisions, and without realising the full effect of the scheme of skilled categories, who have had the benefit of arbitration award of Mr. T.S. Sankaran, and of the settlement dated 2.8.2000, having regard to the Assured Career Progression Scheme, the matter relating to the transaction in favour of the 5th respondent ought not be hustled through and that such hurry has caused detriment to the interest of the workmen. He further submitted that even the transaction is clouded with mist and ought not to have entered in the manner it was processed, and being a public contract involving public interest, even if privatisation has to be done necessitating the entrustment of development and management of container terminal, in favour of a private party, the same ought to have been done only by inviting tenders and more preferably by holding a public auction, so as to attract more number of competitors and the resultant competitive prices, to augment more economic resources. His further submission was that even if the contract was to be given to a private party, otherwise than tender/auction method, norms ought to have been followed, and as the awarding of contract in favour of the 5th respondent is contrary to the 3 norms set up by the 2nd respondent, the later action of the 2nd respondent in deviating from the earlier act and then awarding contract in favour of the 5th respondent as a specialised solution, is not only illegal but also arbitrary, infracting Article 14 of the Indian constitution. It is also the learned counsel's plea that non-invitation of the workers in the decision making process relating to the awarding of contract in favour of the 5th respondent is violative of principles of natural justice, and there is infraction of Article 14 of the Indian Constitution on that count also. Lastly, he submitted that the 3rd respondent-Port Trust is a body corporate and is entitled to enter into transactions by its own assessment and application of mind, and that in the instant case, there is total non-application of mind on the part of the 3rd respondent, as it was only guided by the 2nd respondent-Government, and that in fact, it was an imposition of the 2nd respondent on the 3rd respondent, thus infracting the provisions of Major Port Trusts Act, 1963.
14. Mr.V.T. Gopalan, learned Additional Solicitor General appearing for the 2nd respondent-Union of India; Mr. A.L. Somayaji, learned Senior Counsel appearing for the 3rd respondent-Chennai Port Trust; Mr. C.A. Sundaram, learned Senior Counsel appearing for the 4th respondent-Dock Board; and Mr.R. Krishnamoorthy, learned Senior Counsel appearing for the 5th respondent - P & O Ports India Private Limited have countered the arguments of the appellant's counsel submitting that development of Chennai Port Trust and expansion of container terminal has been pending since last several years, particularly, from 1996 and because of the necessity of technological expertise, as also investment of large amounts of money, and alter several deliberations and considering all pros and cons.
eventually a decision was taken not to go by way of open tender/auction method, as such method was neither found to be advantageous nor beneficial in the overall circumstances of fact situation, and that is why, 3 exponents having technical expertise and financial capacity were invited to bid, and having evaluated in all aspects, the bid of 5th respondent was accepted, and such bid is in public interest, as it is found to be economically viable, and that privatisation had become imperative, as the Port Trust or the Government, as the case may be, were in no position to take up the work of development and management of the container terminal, and the business as such is not conducive for open tender/auction method, as in such conventional method the evaluation of expertise needed for the project, as also the financial capacity, not only the present but also the future, cannot be gone into, and it was only possible in the method of negotiation followed in the instant case. It is also contended by the learned Senior Counsel appearing for respondents 2 to 5 that the writ appeals are not maintainable for the reason that the appellant-association has been formed only for the purpose of fighting this litigation by back door methods under different name and style, while in substance all the members of the association who were members of the unions which have filed writ petitions had reconciled with the result in the said writ petitions, and then submitting to the-Statutory settlement dated 28.6.2001. According to the learned Senior Counsel, no cause of action subsisted for filing the writ appeals, and that writ appeals are an after thought, to nullify the statutory settlement, which is otherwise valid and binding on the members of the appellant-union, and that the members of the appellant-union cannot achieve anything by filing these writ appeals, which they cannot do it in accordance with the provisions of the relevant law i.e., Industrial Disputes Act, 1947, and that such an attempt by the appellant, taking up the cause of its members bound by the statutory settlement dated 28.6.2001, is abuse of the process of court. Ultimately, it is submitted by all the learned Senior Counsel that the contract which is awarded in favour of the 5th respondent is beneficial in public interest, and that it is not at all detrimental to the employees, and in fact, there is no force applied on any employee to compulsorily opt the services under 5th respondent, and that such employee/s is/are entitled not to opt services under 5th respondent, and continue to remain under the services of the 3rd respondent. With regard to the non-application of mind and illegality of the transaction Mr.V.T. Gopalan, learned Additional Solicitor General, as also Mr.A.L. Somayaji, learned Senior Counsel appearing for the 3rd respondent-Port Trust submitted that there was no imposition by the Central Government, and the proposal has emanated from the Port Trust and the Port Trust has participated in every deliberation, and the Government of India as the supervisory authority had every right to give guidance, and that neither there is any illegality committed by the 2nd respondent nor there is any non-application of mind by the 3rd respondent.
15. Mr.V. Prakash, learned counsel for the appellant in reply has submitted that the challenge to award of contract to the 5th respondent need to be looked into in the context of national economy, and cannot be treated as truncated issues dealing with narrower aspect of welfare of the port trust employees.
16. From the facts stated and the rival contentions urged by the respective learned counsel, the following points emerge for our consideration:
(i) Whether the transaction is illegal.
(ii) Whether the transaction is arbilrary.
(iii) Whether the writ appeals are barred by estoppel.
17. The learned counsel appearing for the respective parties had drawn our attention to the factual aspects with reference to the documents, and cited several judgments of the Apex Court touching upon the issues.
18. The third respondent is governed by the Major Port Trusts Act, 1963, enacted by the Parliament (Central Act 38 of 1963), hereinafter referred to as the 'Act'. For adjudication of this case regarding the control and supervision of the Central Government over the Board of Trustees to manage the administration of the third respondent Port Trust constituted under the Act, we need not make a survey of all the provisions of the Act. We would make reference only to relevant provisions concerning the transaction. The Board consisting of the Chairman, Deputy Chairman and other Trustees, is constituted by the Central Government. Only some category, as has been specified by the Central Government, are electees. A reading of Section 3 of the Act makes it obvious. Under Section 5 of the Act, the Board shall be a body corporate having perpetual succession and a common seal with power, subject to the provisions of this Act, to acquire, hold or dispose of property and may by the name by which it is constituted, sue or be sued. Section 33 of the Act empowers the Board to enter and perform any contract necessary for the performance of its functions under the Act. But the same is controlled by Section 34.
19. As seen from the above, the above provisions make it clear that the Act gives the Board a limited field to deal with the property of any Port as no contract can be concluded unless approved by the Central Government. The Central Government is invested with the overall control over the functions and transactions of the Board. Further, the Board is not the authority to lay down any policy and such policy' decision is left by the Act to the Central Government under Section 111 of the Act which reads as follows:
"111. Power of Central Government to issue directions to Board - (1) Without prejudice to the foregoing provisions of this Chapter, the Authority and every Board shall, in the discharge of its functions under this Act, be bound by such directions on questions of policy as the Central Government may give in writing from time to time."
Provided that the Authority or the Board, as the case may be, shall be given opportunity to express its views before any direction is given under this sub-section.
(2) The decision of the Central Government whether a question is one of policy or not shall be final".
20. The Central Government, i.e. the second respondent, took a policy decision for innovation of the existing Container Terminal for improving its profitability to handle the projected tariff volume of 4.75 Lakh TEUs. by the end of 9th Plan (2001 - 02). Pursuant to the policy decision, the third respondent went ahead with the process and from time to time, the second respondent was guiding the third respondent as sought for by the latter. Correspondence on several dates makes obvious the said live process. The blowing correspondence inter se 2nd and 3rd respondents and the Board resolutions of the 3rd respondent are more pertinent.
CHENNAI PORT TRUST A/474/99/T(M&S) 25.01.2000.
From The Chairman, Chennai Port Trust, Chennai-600001.
To The Secretary to Govt. of India, Ministry of Surface Transport, Department of Shipping, "Transport Bhavan", No. 1, Parliament Street, New Delhi-110001.
Sir, Sub: Development and Operation of the 290m berth under construction as Container Terminal on BOT basis -Forwarding of proposal - Reg.
The Container Terminal of 600m in length equipped with four Rail-mounted Gantry Cranes and ten Rubber-tyred Gantry Cranes is under operation. During the last year the Terminal has handled 2.83 lakhs TEUs and this year the container volume is likely to exceed 3.20 lakh TEUs. The extension of the existing 600m Container Terminal by another 290m is under execution and it is expected to be completed by October 2000. The new berth would be continuous to the north of the existing 600m quay length. The sanctioned project estimate does not include provision for the supply and installation of modern container handling equipment like Gantry crane, RTG, etc. During the PIB deliberations in the process of sanctioning the project, it was indicated that Most may explore the feasibility of private sector participation for providing the equipment and for operation of the terminal on a long term basis. PIE had also observed that keeping in mind the needs of privatisation, it would be advisable for the Chennai Port Trust to go ahead with the civil works and simultaneously invite offers from private parties for providing equipment and for operating the terminal on a long term basis. Most agreed that this was the best option.
2. During the Progress Review Meeting taken by the Secretary to Govt. of India, at Chennai on 4.12.1999, he suggested to finalise the proposal for development of the extended portion as a modem Container Terminal on BOT basis and forward the same for Ministry's 'in principle' approval.
3. Keeping the above in view and taking into consideration the long time demand of the Trade-to attract the mainline vessels to call at Chennai Port, it is proposed to allot the 290m extension of the container quay to private agency to develop and operate it as a Container Terminal on modern lines on BOT basis. The proposal will cover the following aspects:
(a) Only the 290 m. length of quay, under execution, will be allotted for development and operation of the berth as a Container Terminal.
As for the existing 600 m. berth length, Most has already received innovative proposals from M/s.PSA, P&O and Hutchison Port Holdings. The length of the new berth can be increased by 350 m. or so if need be to make it a terminal to handle post-panamax vessels, when the proposed 60 m. extension on the southern side is over.
(b) The newly constructed berth will be allotted to the successful bidder on tender basis and it is for him to develop the berth as a container terminal by equipping it with Rail-mounted Gantry cranes (RMGC), Transfer Cranes (RTGs), Trailers, Straddle carriers, TLTs, Reach stackers, etc. on modern lines and operate it on EOT basis for a concession period of 30 years.
(c) The terms & conditions to be adopted, the format of documents, format of agreement, procedures for bidding and evaluation of bids, etc. will be in accordance with the guidelines of the Ministry for privatisation and read with the recommendations of the Infrastructure Development Finance Company Ltd. (IDFC). The document adopted by Tuticorin Port will also be referred to wherever relevant.
(d) Terms and conditions and other related details will be framed by constituting a Committee comprising of DC / TM / CME / CE / FA&CAO of Chennai Port and one senior level officer from another Major Port, who was involved in framing documents, processing of bids etc.
(e) Bids will be invited based on two cover system consisting of technical and financial bids. Financial bids of only those bidders who have been technically qualified will be opened.
(f) The technical qualifying criteria will include the following important parameters among other things:
(i) Shall be a Container terminal operator as an individual firm/ Company/Consortium/Joint Venture etc. and should have handled at least 5,00,000 TEUs in a year in a container terminal.
(ii) Capability of handling 25 moves per hour per Gantry crane,
(iii) Capability of the bidder who brings more equipment at least 3 Quayside Gantry Cranes and the matching back-up equipment.
(iv) The bidders who guarantee to bring mainline vessels will be given preference.
(v) (g) Under the BOT arrangement, the bidders will be asked to quote in their financial bids (i) an up-front fee, (ii) royalty per container (TEU) to be handled (iii) minimum guaranteed throughput of containers for each year of operation under the Licence, etc.
(h) The Licensee will also do parallel marketing to achieve the guaranteed throughput.
(i) Flexibility in fixing tariff within the prescribed ceiling amount depending on the volume and other factors mainly to attract more export containers through Chennai Port and also to attract main line vessels.
4. The above proposal was placed before the Board in the meeting held on 29.12.1999 for approval. After discussions, the Board has approved the proposal vide Resolution No. 20. A copy of the Agenda Note placed before the Board and the extract of Resolution No.20 thereon, are enclosed.
5. In the light of the above, it is requested that Government may kindly accord 'in principle' approval for Port's proposal to offer the 290m/350m berth under construction as Container Terminal on BOT basis at an early date. In anticipation of Government's approval, advance action is being taken to frame the bid documents with the terms and conditions and other related details for inviting the bids.
Yours faithfully, (CHAIRMAN) ":';
In response to the above letter of the third respondent, the second respondent by its letter dated 15.2.2000 has apprised the third respondent of its policy taken on 1.2.2000 for development and management of Chennai Container Terminal through private sector participation as specialised solutions and the same is extracted below:
"Government of India Ministry of Surface Transport Department of Shipping (Ports Wing) No.PD/25021/21/97-MPT New Delhi, the 15/16th February 2000 To The Chairman Chennai Port Trust Rajaji Salai Chennai Sub: Development and Operation of the 290M berth under construction as Container Terminal on BOT basis. Sir, I am directed to refer to your letter No. A/474/99/T( M & S), dated 25.1.2000 on the above mentioned subject.
2. I may like to inform you that the Cabinet Committee on Economic Affairs, in its meeting held on 1.2.2000, has approved the proposal of this Ministry for Development and Management of Container Terminal through Private Sector Participation as 'Specialised Solutions'. The Ministry is taking further necessary action in the matter.
3. In view of the above, the Chennai Port Trust is advised not to go for a separate proposal for Development and Operation of 290 M berth under construction as Container Terminal on BOT basis.
Yours faithfully Sd/-
(Dr.Harmeet S. Grewal) Desk Officer (Ports Development)"
After further correspondence and considering all aspects, proceedings dated 3.7.2000 were issued by the second respondent which reads as follows:
Ministry of Surface Transport Transport Bhawan 1, Parliament Street, NEW DELHI-110001 No.PD-25021/21/97-MPT Dated 3rd July 2000.
Subject: Development and management of Chennai Container Terminal through Private Sector participation. Please refer to the Financial bid for the development and management of Chennai Container Terminal through private sector participation as contained in your letter dated 21.6.2000.
2. We are pleased to inform you that your offer has been accepted.
3. You are requested to have negotiations with the Chennai Port Trust on the licence agreement to be entered into by you. On coming to an agreement, a Letter of Intent (LOI) will be issued. Within 7 days of the receipt of the LOI, you are required to pay an upfront fee of Rs. 100 million and sign the agreement with the Chennai Port Trust.
(M.L. Gusis) Director (Port Development) Mr. Jimmy Sarbh Regional Director Liaison Representative Office, P & O Australia Ports Pvt. Ltd.
Hamilton House, N.N. Heredia Marg, Ballard Marg, Mumbai - 400 038."
From the above, it is clear that there was proper exercise made by the third respondent before finalising the transaction with the fifth respondent and the contention that there was non-application of mind on the part of the third respondent is untenable. There was proper application of mind by the third respondent as also the sanction of the second respondent pursuant to its policy decision, which it is entitled to take under Section 111 of the Act and as such, the transaction is clothed with legal sanction.
21. Unlike in private contracts, the public contracts of the works relating to Government and Governmental Corporations should ordinarily be awarded by way of inviting tenders or public auction, i.e. with a view to give opportunity to all eligible persons to compete and also to fetch competitive price to the Government and the Governmental Corporations. Such process also ensures transparency. But that may not be possible in all types of works relating to Government or its Corporations. There may be circumstances to make an exception to the normal rule of tender/auction method. But the validity of such exemptions/exceptions has to be considered in the context of facts of each case. Such exemption should not be arbitrary and must be justifiable on the basis of some policy or valid principles, which, by themselves, are reasonable and not discriminatory.
Such policy evolved in each case of exemption should be done on some rational and reasonable grounds. While considering such aspects, the public interest should be at the forefront and if the public interest outweighs the individual interest, the policy evolved by the Government in a particular case in awarding contract otherwise than by tender/auction system, cannot be found fault with. Once a policy decision is taken on relevant considerations, it is held by the Supreme Court that it is not for the Courts to meddle with the said policy. It is also held emphatically that the Court cannot also substitute its opinion for the opinion arrived at by the authorities while taking decision to award the contract otherwise than by usual tender/auction system. There are catena of decisions throwing light on this aspect but more closer to the case on hand are the judgments of the Supreme Court rendered in
(a) Kasturi Lal Lakshmi Reddy v. State of Jammu & Kashmir, , ; (b) Premium Granites and Anr. v. State of Tamil Nadu and Ors., , ; c) G.D. Zalani v. Union of India, ,; d)Krishnan Kakkanth v. Government of Kerala, .; e) Air India Ltd v. Cochin International Airport Ltd and Ors., . (f) Netai Bag v. State of West Bengal, ; g) Zippers Karamchari Union v. Union Of India and Ors., ; h) Shri Sitaram Sugar Company Ltd. v. Union of India, , i) Sterling Computers Ltd v. M & N. Publications Ltd, .
(a) In Kasturi Lal Lakshmi Reddy v. State of Jammu & Kashmir , the question involved was whether award of contract by Jammu & Kashmir Government to a private entrepreneur for tapping 10 to 12 Lakhs blazes annually for extraction of resin from the inaccessible chir forests in the State for a period of 10 years, was invalid. The contentions as are raised in the instant case, were raised there when pursuant to Governmental policy of industrialisation of State, it was agreed that a part of resin so extracted, would be delivered to the State for running a State-owned industry and the rest would be retained by the private entrepreneur for establishing and running its own factory in the State. The Supreme Court repelled the contentions by holding that the Government can frame a policy while awarding contracts and there may be infinite variety of considerations, which may have to be taken into account by the Government in formulating its policies and it is on a total evaluation of various considerations,, which have weighed with the Government in taking a particular action that the Court would have to decide, whether the action of the Government is reasonable and in public interest. It was also held that there is always a presumption that the Government action is reasonable and in public interest and it is for the party challenging its validity to show that it is wanting in reasonableness or is not informed with public interest and the said burden is a heavy one and has to be discharged to the satisfaction of the Court by proper and adequate material. In the said case, it was held that the State of Jammu & Kashmir acted in accordance with its policy of industrialisation of the State as the State, as a matter of policy, stopped selling resin to outsiders and decided to allot it only to industries set up within the States for the purpose of encouraging industrialisation. It was held by the Supreme Court, having scanned through the particulars of the said transaction, that the pre-dominant purpose of the transaction was to ensure setting up of a factory by the private entrepreneur (second respondent in the said case) as part of the process of industrialisation in the State and since the entrepreneur wanted assurance of a definite supply of resin as a condition of putting up the factory, the State awarded the tapping contract to the said private entrepreneur. The Supreme Court affirmed the said policy of the State as the State was allocating resources such as water, power, raw materials etc. for the purpose of encouraging setting up of industries within the State and as such, the State was not bound to advertise and tell the people that it wants a particular industry to be set up within the State and to invite those interested to come up with proposals for that purpose and as the private entrepreneur approached the State for setting up a modern factory for manufacture of resin, turpentine oil and other derivatives and asked for allocation of resin, the State, with a view to offering an incentive to the said private entrepreneur to set up the factory, awarded the tapping contract in respect of the blazes as a part of package deal and thus the State action was reasonable and should not be assumed as invalid merely because no advertisements were issued inviting offers for setting up a factory and taking the tapping contract as an integral part of the transaction. The Supreme Court has also taken note of the fact that even though the State did not issue any advertisement, yet such incentives were not kept secret and everybody knew about it and nobody made any bid excepting the second respondent.
(b) In Premium Granites and Anr. v. State of Tamil Nadu, the Supreme Court was dealing with vires of Rule 39 of the Tamil Nadu Mineral Concession Rules, 1959, which enables the State Government to grant/renew quarry leases to private parties for reasons to be recorded in the interest of mineral development and in public interest. It was held that it was not arbitrary on ground of conferring unguided and uncanalised power on the Government and that interest of mineral development and the public interest are expressions of definite concepts and provide sufficient guideline. Initially, this Court struck down the said Rule on the ground that it provides and uncanalised power and do not provide any objective standard. The said decision was set aside by the Supreme Court holding that it cannot be validly contended that in no case, departure from a prescribed is not possible and consequently, if a provision empowers such departure from the prescribed norm by invoking discretionary power of relaxation or exemption, per se it cannot be held to be discriminatory and unfair State action. It was also held whether in a given case, such departure from the prescribed norm is based on some principle, which is in itself irrational, unreasonable or discriminatory, needs to be demonstrated before a court of law if any challenge of unfair and discriminatory action is made. In the above case, there was already a Rule framed under Section 15(1) of the Mines and Minerals (Regulation and Development) Act, 1957. But Rule 39 was framed as an exception to Rule 8 of Mineral Concession Rules. Rule 39 provides for grant of leases in special circumstances in the interest of mineral development and in public interest otherwise than in accordance with the Mineral Concession Rules.
(c) In G.D. Zalani v. Union of India, the Supreme Court was dealing with the contract entered into by Hindustan Antibiotics Limited (H.A.L.) with Max-GB, by negotiations. The petitioner therein as also two others had also offered to collaborate with H.A.L. for the purpose of improving the quality and yield of Pencillin-G (Penn-G) and to achieve the full installed capacity and each of them had also offered to bring foreign technology through their foreign collaborators but their offers were not accepted by the H.A.L. In the said case, though the Board of Directors were favourable for the petitioners and others, the Managing Director felt otherwise and thought that in the facts and circumstances, the deal with Max GB was in public interest even though Max GB had agreed to pay less amount for using the plant and other facilities at Rs. 17 crores and the appellant therein were prepared to pay more and even-though the Board of Directors had stipulated a minimum lease amount of Rs. 31.68 crores. The High Court repelled all the contentions including the prime contention that the Government ought to have followed the practice of inviting tenders. The High Court held that such a procedure was just not possible in the circumstances and that was not a case of awarding a contract or a simple-case of granting lease but was a case where H.A.L., was trying to import the best technology in the world to achieve its installed production and to improve its quality and yield while at the same time reducing the cost of production so as to compete in the world market. H.A.L., has found that G.B. is the world leader in the field, that it has the best technology in the world and has a share of 20% in the world market and a tie up with such market leader is bound to prove beneficial to H.A.L. The minute details were gone into with regard to quality of technology provided by M.G.B. and it was found to be superior than the appellants. The principle laid down in the above case is that in a simple case of granting lease of a Government company, normally tenders have to be called for or auction has to be held providing intending purchasers/licensees an equal opportunity of submitting their bids/tenders. But in a special case, there can be deviation and unless that deviation is found to be unfair or unreasonable or arbitrary, the same is not liable to be interfered with even if the price fetched is low when it is made out that overall, the transaction is beneficial to the public interest. It was contended that power to give directive is vested by Article 117 in the President alone and that no such directive could be given by the Government of India. It was held that H.A.L, is a Government Company and it was really an agency, an instrumentality of Government of India though given a corporate shape and that Article 117 is one form of control the Government has over these corporate bodies and that the directive was binding upon H.A.L. It was also held that it could not be stipulated that before giving directive, the appellants ought to have been heard and that giving of directive is only an internal matter between the H.A.L. and the Government and there was no point in giving notice to the appellants.
(d) In Krishnan Kakkanth v. Government of Kerala and Ors., , the Supreme Court was dealing with the circular wherein the Government of Kerala, to avail the scheme for purchase of pump-sets with the financial assistance given by it, obligated the farmers to purchase the pump-sets from the approved dealers of the Government. The circular was questioned. But it was held by the Supreme Court that unless the Government's policy is demonstrably arbitrary, capricious, irrational, discriminatory or violative of Constitutional or statutory provisions, it cannot be struck down by Court and the wisdom of the public policy is irrelevant. It was held by the Supreme Court, on the touchstone of Articles 14 and 298 of the Constitution, that while distributing the State largesse, the Government can depart from the set norm in favour of a particular group of persons provided the same is not irrational, unreasonable, discriminatory or arbitratory. In the said case, so far as 8 districts arc concerned, the direction was that pump-sets should be purchased only from M/s. Kerala Agro Industries Corporation and Regional Agro Industries Development Corporation and in other districts, the above two Corporations along with private dealers, would arrange the distribution of such pump-sets.
(e) In Air India Ltd v. Cochin International Airport Ltd and Ors. , the Supreme Court was dealing with the award of contract given by the State in favour of Air India even contrary to the decision of the High Level Committee. While the Committee recommended Cambatta Aviation Limited, the Cochin International Airport Limited (CIAL), a public sector undertaking, through its Evaluation Committee, granted it to Air India even though Cambatta Aviation's offer was the highest. The High Court has set aside the award of contract to Air India, but on appeal, the Supreme Court has reversed the said judgment, upholding the award of contract in favour of Air India. It was held that as regards the merits of the rival offers, it was not proper to look at only the financial aspects. It was held that in a commercial transaction of a complex nature, what may not appear to be better on face of it, may not be considered so when an overall view is taken and in such matters, that the Court cannot substitute its decision for the decision of the party awarding the contract. It was held that the State can choose its own method to arrive at a decision, that the terms of invitation to tender are not open to judicial scrutiny, that the price need not always be the sole criterion for awarding the contract and the State is free to grant any relaxation, for bona fide reasons, if the tender conditions permit such a relaxation and it may not accept the offer even though it happens to be the highest or the lowest. The Supreme Court has also cautioned that even if some defect is found in the decision making process, the Court must exercise its discretionary power under Article 226 of the Constitution with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point and that the Court should always keep the larger interest in mind to decide whether its intervention is called for or not and only when it comes to a conclusion that overwhelming public interest requires interference, the Court should intervene.
(f) In Netai Bag v. State Of West Bengal, it was held that facts, which are not pleaded at the first instance, cannot be raised later. It was also held that though the tender or public auction is desirable, yet when such procedure was not followed, arbitrariness can not be presumed in all cases. It was also held that non floating of tenders or not holding of public auction would not in all cases be deemed to be the result of exercise of the executive power in an arbitrary manner and making an exception to the general Rule could be justified by the State executive if challenged in appropriate proceedings and that the Constitutional Courts cannot be expected to presume the alleged irregularities, illegalities or unconstitutionally nor the Courts can substitute their opinion for the bona fide opinion of the State executive. It was held by the Supreme Court emphatically that the Courts are not concerned with the ultimate decision but only with the fairness of the decision making process and that the Government is entitled to make pragmatic adjustments and policy decision which may be necessary or called for under the prevalent peculiar circumstances. It was also held by the Supreme Court that the Court cannot strike down a policy decision taken by the Government merely because it feels that another decision would have been fairer or wiser or more scientific or more logical and that the policy decision can be interfered with by the Court only if such decision is shown to be patently arbitrary, discriminatory or mala fide.
(g) In Zippers Karamchari Union v. Union Of India and Ors. , the Supreme Court was dealing with awarding of contract to one Y.K.K. Corporation, Japan, an international group company, to set up an integrated plant for manufacturing zip fasteners with 100% owned capital investment with no export obligation. The petitioners, who were the members of various trade unions, challenged the grant of said permission. Their case was that by Central Government notification dated 16.2.1973, zip fastener industry was exclusively reserved for the small scale sector and by a later notification dated 30.5.1986, a change was brought making an exception in respect of integrated plant manufacturing zip fasteners and that the permission granted to Y.K.K. under the said notification was ultra vires Section 29-B(2-B) of Industries (Regulation and Development) Act, 1951. It was also pleaded that such contract with Y.K.K. was not in the public interest. It was held by the Supreme Court that an integrated plant is a class by itself and that there was a basis for grant of permission. It was observed by the Supreme Court that in order to make India compete with other countries engaged in the said business, it will have to improve upon the quality of its goods and a study team was convened and basing upon the report of the said study team and having regard to the fact that if all components of zip fasteners are manufactured in an integrated plant, the same will have a quality control, which will compete with the world market. The report of the study team was accepted and permission was given to Y.K.K. Repelling the contention of the petitioner that the grant of permission to Y.K.K. was detrimental to the interest of the country, it was held that in matters of trade and commerce or economic policy, the wisdom of the Government must be respected and Court cannot lightly interfere with the same unless such policy is contrary to the provisions of the Constitution or any law or such policy ilself is wholly arbitrary.
(h) In Shri Sitaram Sugar Company Ltd v. Union of India, , the Constitutional Bench of the Supreme Court was considering the validity of fixation of price of levy sugar for calculating the amounts payable to seller. It was held that the fixation of price of levy sugar for sugar industry was an economic policy of the Government and that the Court cannot interfere with the said policy. Surveying several decisions on the point, it was held that judicial review is not concerned with matters of economic policy and the Court does not substitute its judgment to that of the Legislature or its agents as to matters within the province of either.
(i) In Sterling Computers Ltd v. M & N Publications Ltd, . the scope of the judicial review of the Government contracts vis-a-vis Articles 14 and 299 of the Constitution of India has been considered. It was held that while exercising the power of judicial review in respect of contracts entered into on behalf of the State, the Court is concerned primarily as to whether there has been any infirmity in the decision making process and that by way of judicial review, the Court cannot examine the details of the terms of the contract, which have been entered into by the public bodies or the State. It was also held that the Courts have inherent limitations on the scope of any such enquiry but it was held that the Courts can certainly examine whether the decision making process was reasonable, rational, not arbitrary and violative of Indian Constitution.
22. Applying the above principles stated that exceptions can be carved out and the transaction can be entrusted by negotiations in the facts and circumstances of the case, let us now consider as to whether the action of the respondents 2 and 3 in entrusting the contract to the 5th respondent is hit by arbitrariness or unreasonableness and as to whether in not following the tender/auction method, there is any illegality in the transaction. There was a decision taken by the second respondent to develop the Container Terminal at Chennai Port as a main terminal to handle the projected volume of 4.75 Lakh TEUs. by the end of 9th Plan (2001 - 2002). The Central Cabinet had considered the proposal made by the second respondent and approved the proposals of its Surface Ministry to encourage innovative unsolicited proposals and the Port sector put forward by private entrepreneurs and to set up a committee(s) to evaluate such innovative proposals as well as to decide whether the Port Trust should purchase the concept and thereafter put it to bid or allow creation of facilities of the entrepreneur making innovative offers. Basing on the said approval, the second respondent had considered three offers for the development and management of the Chennai Container Terminal, deeming them to be innovative proposals. However, Ministry of Finance has taken the view that these proposals do not fall in the category of being innovative proposals and that the second respondent should go in for International Competitive Bidding. The same was again considered by the Committee of Secretaries constituted by the second respondent and after considering the matter again and weighing all pros and cons and having regard to the fact that M/s. Hutchison Port Holding Ltd., Hong Kong, P & O Australia Ports, the fifth respondent, and PSA Corporation, Singapore, who were considered to be the best in the world, had shown interest, had come to the conclusion that no other firm had the necessary experience or expertise to provide the required services and the offer of the above firms could be categorised as 'specialised solutions' rather than 'innovative proposals'. The disadvantages of the Competitive Bidding were also taken into-consideration on the wound that even if the Competitive Bidding has the advantage of getting lowest offers, it also runs the risk of getting offers from less qualified operators, offering sub-optimal solutions and as Chennai Port had been identified as the Port on Eastern Coast that would receive mother vessels, it was essential to attract only the best technologies for the said Port. It was also opined that inviting open bids delays matter considerably. As such, the said Committee had recommended to the second respondent to seek approval of the Cabinet Committee to go ahead with these specialised solutions as a special case, in preference over inviting open tenders. There were two committees to go into both technical and financial aspects of the proposals. In fact on the aspect of bypassing the usual conventional bidding, lot of exercise was made as seen from several discussions and meetings held by the Committees constituted in that regard. It is apt to extract that part of discussion.
"Even if the conventional bidding route is followed, its outcome may, at best, be addition of one or two more Operators to participate in the bidding over and above the world's three top Operators already identified. Despite this, it is not certain that the port will get a better offer than what may be expected from the identified three Operators. Also, there is no guarantee that a best Operator will be selected by following a conventional bidding route. Moreover, Ihe project cost is likely to increase and consequently, the revenue to the port may be on the lower side and tariff may be higher. In this way, the Port as well as the users may be losers. Further, there is a possibility of these 3 best parties backing out if tender route is followed afresh."
It is pertinent to mention that the Empowered Committee need not and would not have been constituted if the conventional route of bidding were to be followed. Another part of the discussion as to why open tender route need not be followed in the instant transaction, is also worth extracting, " In any proposal of this magnitude, it will be necessary to shortlist the DOT operators even if the Open Tender Route is followed, as we cannot obviously permit all sorts of sundry players to bid for the operation of container berths. The apprehension that we may not get the best offer by not following Open Tender Route is not justified because all the three firms are top players in global container handling. There will be sufficient competition as we are going to award the contract to only one of the three and obviously all of them will try to give us their best offer."
As such decision was taken by following the procedure mentioned below "(i) The Empowered Committee will finalise and offer to all the three parties non-negotiable conditions, inter-alia, indicating minimum level of investment, conditions of attracting main line vessel to Chennai, threshold traffic at various stages, taking over the labour etc. and the guarantee package.
(ii) All the three parties will be given an opportunity to revise their financial offer (Cover 2) in the light of above conditions, at their option.
(iii) The selection of the party will be held on the basis of maximum financial return to the port."
Ultimately, the decision of the Cabinet Committee on Economic Affairs was sought for to finalise the proposals at the level of the Surface Ministry and to select the operator for development and management of Chennai Container Terminal as a Specialised Solution in preference to inviting Open Tender.
The said proposal of the Surface Ministry was placed before the Cabinet Committee on Economic Affairs, which met on 1.2.2000 and approved the proposal and the same was communicated to the third respondent by letter dated 15.2.2000. The Chairman of the third respondent has placed the same before the Board by his letter dated 16.3.2000 and the Board met on 24.3.2000 and approved the same. Pursuant thereto and deliberations with the 5th respondent, the bid of the latter was accepted, which had ultimately resulted in the impugned proceedings dated 3.7.2000.
23. As seen from the above, the second and third respondents have made every effort to see that the best bid is offered and such action and decision of the respondents 2 and 3 are in public interest and there is neither arbitrariness nor unreasonabless in such actions/decisions. Overall situation was taken into consideration and the decision was arrived at and the actions were taken in accordance with the said decision. The said decision is neither arbitrary nor unreasonable and is well within the parameters stated by the Apex Court in the aforesaid decisions.
24. It is pertinent to mention that there is no other bidder in the field and apart from the three, no other person or body had ever come forward to participate in the bid or even to make proposals. The transaction was not kept as a secret and every body knew about the same. It was not done in hush-hush manner. Every thing was made public. What is more, the Port authorities made every effort to see that the employees do not suffer and that no adverse service conditions are created for them and that their service conditions are safeguarded. Several negotiations held by the Port authorities with the employees Union at several dates, both preceding the filing of the writ petitions and also after the writ petitions were disposed of, speak about the concern of the third respondent for the welfare of its employees, further, there is no compulsion imposed on the employees to opt for the services under the fifth respondent. Under Clause 1 of the Settlement dated 28.6.2001, the employees can make a decision whether to opt to go over to the fifth respondent or to stay back with the third respondent. Under Clause 2, the terms and conditions of employment of the fifth respondent shall be commensurate with their new job descriptions and shall not be less favourable to the workmen than those applicable to them before the transfer. The level of emoluments offered by the licensee under Basic and DA will be equal or more to what is being received by the workers presently. The accounts of the employees, who opt to go to the fifth respondent will be settled as per Rules, eligibility and available Scheme taking into account all the duties payable to the third respondent. In the event of any outstanding still left, the employee should give an undertaking to the third and fifth respondents that the fifth respondent could recover the dues on the same instalment basis from their salary or any other payments which the fifth, respondent would be making to the employees alter their joining its company (Chennai Container Terminal Limited) and he repaid to the third respondent. The employees, who opt to go to the fifth respondent will be allowed to continue to occupy the Port's quarters where they were residing before transfer to the fifth respondent on the undertaking given by the employee that they would pay the rental amounts as per the existing or the revised rates as per the Rules, through the licensee, until such time the Port requires the quarters for its own employees. The Voluntary Retirement Scheme was also kept intact and time to avail of the same was granted till 30.6.2001, which was extended by the learned single Judge in W.P. No. 12783 of 2001 till 30.9.2001. In so far as the option to be exercised by such employees to join the services of the fifth respondent is concerned, time of 15 days was stipulated after the offer is communicated by the fifth respondent. From the above, there is no scope to say that the third respondent has acted in detriment to its employees and has been fair and did not adopt any unfair trade practices.
25. The members of the appellant Union had been the members of the Unions, who represented in the discussions with the third respondent and after being satisfied that there was no adversity in the conditions of service of the employees, entered into the statutory settlement dated 28.6.2001. Obviously, the employees cannot wriggle out of the said settlement and that is why, the appellant Union was formed and indisputably, the appellant Union was formed only to fight this litigation. In fact, the appellant's attempt was to scuttle the circular dated 28.6.2001 and the amended circular dated 29.6.2001 and that is so obvious in their filing W.P. No. 12783 of 2001. Even filing of W.A. No. 2029 of 2001 is an after-thought. By changing the Union, the employees cannol nullify the statutory settlement dated 28.6.2001.
26. There is a sanctity for the statutory settlement entered under the Industrial Disputes Act. Such statutory settlement is binding on the parties thereto. Neither party can wriggle out of the settlement so long as the settlement is in force. In Tata Engineering and Locomotive Company Ltd v. Their Workmen , there was a settlement between the labour and the management and that was reduced to writing. Some workmen who were not parties to the settlement had ratified the same by their individual letters. Under the settlement wage structure was arrived at. Some of the workmen who were parties to the settlement turned back and questioned the settlement on the ground that wage structure was not reasonable, and it could have been on the higher side, and that in any event such workmen who were not originally parties to the settlement, but later on ratified the same were not bound by the settlement. Both the said contentions found favour by the Labour Court, and accordingly, the settlement was set aside. The matter finally reached the Supreme Court, and it was held that merely because some workers have resented later, the settlement cannot be vitiated and that it was binding on all the workers, both the members of the union on the date of settlement, as also the workmen who had ratified the settlement later. It was held by the Supreme Court that the settlement cannot be weighed in any golden scales and the question whether it is just and fair has to be answered on the basis of principles different from those which come into play when an industrial dispute is under adjudication. If the settlement had been arrived at by a vast majority of the concerned workers with their eyes open and was also accepted by them in its totality, it must be presumed to be just and fair and not liable to be ignored while deciding the reference merely because a small number of workers were not parties to it or refused to accept it or because the Tribunal was of the opinion that the workers deserved marginally higher emoluments than they themselves thought they did. It was also held that the settlement has to be accepted or rejected as a whole and it should not be scanned in bits and pieces and hold that some parts arc good and acceptable and others bad unless it can be demonstrated that the objectionable portion is such that it completely outweighs all other advantages gained. In Barauni Refinery Pragatisheel Shramik Parish Ad v. Indian Oil Corporation Ltd and Ors., , it was held that a settlement under Section 18 of the Industrial Disputes Act arrived in the course of conciliation proceedings with a recognised trade union, wilt be binding on all workmen of the establishment, even those who belong to minority union, which had objected to the same and to that extent, it departs from the ordinary law of contract. It was held that the object obviously is to uphold the sanctity of settlement reached with the active assistance of the Conciliation Officer and to discourage an individual employee or a minority Union from scuttling the settlement and that there is an underlying assumption that a settlement reached with the help of the Conciliation Officer must be fair and reasonable and can, therefore, safely be made binding not only on the workmen belonging to the Union signing the settlement but also on others. It was also held that a settlement arrived at in the course of conciliation proceedings is put on par with the award made by an adjudicatory authority. In the said case, a settlement was arrived at and one of the terms agreed with is the superannuation age at 58 years but later on, the Union had applied for modification of the same to make it 60 years and the Regional Labour Commissioner has allowed the same, against which an appeal was filed and the appeal was also dismissed with slight modification and then Indian Oil Corporation preferred writ petition and the Union also had filed writ petition so far as the modification of the order by ihe Appellate Authority is concerned and the Delhi High Court had allowed the writ petition of Indian Oil Corporation dismissing the one filed by the Union. The High Court's finding that when the settlement had been arrived at between the workmen and the company and which is still in force, the parties are bound to remain bound by the terms of the said settlement and it is only after the settlement is terminated that the parties can raise any dispute for fresh adjudication, was upheld by the Supreme Court.)
27. In view of the said authoritative pronouncement of the Supreme Court, we hold that the settlement, which has been arrived at on 28.6.2001 is binding on the third and fifth respondents and the employees.
28. In view of what is stated supra, both the writ appeals are devoid of merits and are accordingly dismissed. In the facts and circumstances, the time for option to be exercised by such employees to be under the services of the fifth respondent i.e. Chennai Container Terminal Limited is extended till 10.12.2001. It is a case for awarding costs against the appellants but having regard to the fact that it is a Labour Union, we do not propose to award any cost against them and direct the parties to bear their own costs. Consequently, connected C.M.P. and W.A.M.Ps. are closed.