Madras High Court
Seaways Shipping Ltd. Having Its Office ... vs The Board Of Trustees Of The Port Of ... on 13 November, 1998
Equivalent citations: 1998(3)CTC318
ORDER
1. This judgment shall govern writ petition Nos.9469 and 9470 of 1998 as the parties are common and also the controversy involved. Common petitioner herein is a company registered under the Companies Act which carries its business as steamer agents, stevedores as also clearing and forwarding agents. Though the petitioner carries on its business all over India through its branches, the present controversy relates only to the Port of Madras and the Board of Trustees of Port of Madras is the first respondent herein. Second and third respondents are also more or less in the same business as that of the petitioner and can be conveniently called as the business rivals. It is an undisputed position that the first respondent is a statutory body and is governed by the provisions of the Major Port Trusts Act, 1963 (hereinafter called '1963 Act' for the sake of brevity). The whole controversy in the petitions revolves around two berths out of the total six berths at Jawahar Docks in Chennai Port. These six berths are for handling deep drafted vessels with a draft of 33 feet and a beam of 105 feet. In short, bigger vessels which carry large quantities of cargo can be berthed at these berths only. Out of these six berths one berth which is JD V is licensed to the second respondent, while stilt another berth which is JD I has been licensed to the third respondent by two different agreements. The agreements are common though they have been executed on two different dates. First in point of time is the agreement in favour of the second respondent executed on 26.2.1998 in respect of JD V while the second agreement is in favour of the third respondent executed on 4.3.1998 in respect of JD I berth. The whole controversy revolves around firstly the validity of the action on the part of the first respondent to license these berths and secondly the manner in which these licensed berths would be worked more particularly whether respondents 2 and 3 who can be even referred to as the licensees would be bound to berth all ships and vessels at these licensed docks strictly on "first come first served" basis. It will be better to provide a factual lay-out first in order to appreciate the controversies involved in their full perspective.
2. The Government of India, Ministry of Surface Transport assessed that major expansion was required in the Port Infrastrucure Sector of this Country for handling sea-borne traffic on account of increasing Foreign and Coastal Trade for mobilising substantial resources and for improving the efficiency, productivity and quality of service as also to introduce competition in the port services. A policy decision was taken to throw open Port Sector for private participation. This was the result of the liberalisation/globalisation of economy and it was felt that the Private Sector's participation in the Port Management would result in reducing the gestation period for setting up new facilities and would also arm the port with the latest technology and improved management techniques. The areas for such participation by the Private Sector were identified, one of them being leasing out the facilities of the Port. Guidelines were fixed for engaging private sector for enhancing Port's capacities and mobilising the Port's equipments. A sub-committee was formed consisting of six Trustees of Chennai Port for examining the berth reservation scheme. A detailed study was made and a notification No.A/742/95/T (M&S) dated 1.8.1995 was issued for inviting proposals in a sealed cover for taking on lease the berths in Jawahar Docks with attached transit sheds on 'as is where is basis condition'. It is seems that the proposal to lease out the property including land, existing berths, superstructure, equipments, etc., was in keeping with the provisions of Section 34(1) and Section 42(3) of the 1963 Act which is the governing enactment. Section 34 provides the modalities of executing contracts on behalf of the Board, while Section 42(3) provides that the Board may, with the previous sanction of the Central Government, authorise any person to perform any of the services mentioned in sub-section (1) on such terms and conditions as may be agreed upon. It is significant to note that all services enumerated in Section 42(1) are covered and could be authorised to be performed by any other person under sub-section (3). It seems that the second and third respondents amongst others, sent their offers. The terms and conditions of the tender are extremely significant. Under the terms and conditions of tender, the applicant should generate 0.5 million tonnes of cargo handling in each berth notwithstanding the weather conditions from the middle of October to middle of December on account of which there would be a stoppage of work and the applicant was also expected to furnish a bank guarantee for the above guaranteed throughput. It was also the condition of the tender that the applicant should bring additional shore based equipments for loading and unloading and should also ensure that there is matching delivery of Cargo from the Port in tune with the discharge rate. The appellant was also supposed to deploy labour as per the norms of the Madras Port Trust. Amongst the offers received, the offers of the second and third respondents were found to be the best and it was decided to license out JD V berth to the second respondent and JD I berth to the third respondent. It is pleaded and not disputed by the parties that all these were done as per the guidelines given by the Central Government and Draft Agreements were also approved by the Board of Trustees and the Central Government. As has already been pointed out, two identical agreements were executed in respect of the two berths, as the offers of second and third respondents were accepted they being the most competitive offer compared to others who had given such offer. The said agreement is on record of these petitions. The salient features of the said agreement are as follows:- The agreement is for licensing of the JD berths. It is significant to note that the earlier concept of lease has been given up and only a license is created. Amongst the definitions, following definitions, are extremely relevant. They are as follows:-
(i) Article I (b): "Licensee's goods" means all cargo mentioned in Item-2 of clause (p) - Other conditions under Article III of this Agreement, carried or to be carried by the Licensee's vessels.
(ii) Article I (c): "Licensee's vessels" means all nominated vessels owned, chartered or operated by the licensee.
(iii) Under Article II, it is suggested that the agreement would be for 20 years and the site would be handed over only after the payment of all the fees/ charges payable by the licensee in advance in accordance with the said agreement.
(iv) Article III of the agreement in favour of the second respondent provides as under: Clause (a): Licensing of J.D.V Berth: The Board hereby license out 218.33 metres berth length of J.D.V berth at the Jawahar Dock, hereinafter referred to as "dedicated berth" for the purpose of handling the licensee's vessels and discharging and loading the licensee's goods hereat, provided the licensee shall have submitted a forward schedule to the Board of impending entry upon and use of the berth by each of the licensee's vessels not later than the time set by the Board from time to time.
(v) Clause (d) provides as under:- The berth allotted shall be permitted to be used only by the licensee's vessels. Whenever the berth is not used by the licensee's vessel, it shall be utilised by the Board as deemed fit. Any idle period due to non-occupancy of licensee's vessels may be utilised by the Board for accommodating vessels other than the licensee's vessels. The berth hire charges shall be collected for such idle period, when the berth is not occupied by any vessel, based on the average of the actual berth hire charges collected during each year of the agreement period from the licensee. In case of the berth being utilised by non-li-censee's vessel, the berth hire charges collected from the licensee for the said period shall be refunded to them at the end of each year. However, the trust reserves the right to collect berth hire charges and other charges separately from non-licensee's vessels and the licensee is not entitled to any share in the same. The Government priority vessels may have to be accommodated in the nominated berth, whether occupied by the licen-see's vessel or vacant giving priority over the licensee's vessels. In such a contingency of the occupancy of the berth by the Government vessels, the Board shall refund the berth hire charges collected from the licensee for the period the berth is occupied by the Government vessels. In the event of the berth being used by a vessel other than that of the licensee, the licensee shall not be liable under this Agreement for any damage to the berth and/or the ancillary facilities at the berth or for any loss, damage or destruction of property or for death or injury of any person at the berth during that period. However, before and after such use/utilisation of the berth by a vessel other than that of the licensee, a joint survey shall be conducted by the representatives of the Board and the licensee to ascertain the damage caused, if any, to the berth, and/or dock or on the . ancillary facilities.
The licensee should be held responsible for the maintenance of the berths and other allied structures and should be in a position to hand over the berth in proper condition as and when required by the trust to berth non-licensee's vessel. Any damage should be rectified immediately and berth should be kept in proper upkeep condition always.
(vi) Under clause (e) of Article III, the agreement provides that the licensee shall pay berth hire charges and such fee is payable in advance before commencement of each year. The berth hire charges were to be worked out on the basis of the average berth hire charges arrived on the actual GRT of each of the nominated vessels berthed as per the scale of rates in force from time to time for the vessels handled under the scheme. The further clauses in Article III provide for the payment of berth reservation charges, dredging maintenance charges also.
(vii) Clause (i) of Article III provides for the equipment which is to be supplied by the Board and the liabilities on the part of the licensee for maintaining the equipment. It also envisages the equipment to be brought by the licensee for loading and unloading and this equipment is to be brought within one year from the date of agreement.
(viii) Under clause (o) of Article III under the caption "Other conditions", the following Clause No.2 is extremely relevant:- Regarding cargo mix expected to be handled in the berth proposed for licence, proposal has been finalised for operation of the berth for handling bulk, break-bulk cargoes. For handling one or two containers up to a maximum of 30 boxes coming in break-bulk cargo vessels, the licensee will have to make their own requirement, viz., spreaders etc., and man power for fixing the spreader with containers. Containers, on landing, shall be taken to the CFS/CPY. The cargo like coal, cooking coal etc. will be permitted to be handled in the berth till such time the new Port at Ennore is ready for operations. Once the Ennore Port commences operations, the above cargo will not be permitted to be handled in the proposed berth.
(ix) Clause (7) under the caption "Other Conditions" is also important which provides that at the end of the license period or as and when demanded by the Board with due notice, all movable and immovable assets in the berth shall revert back to the Board free of cost.
(x) Clause (9) provides as under: The licensee should not depend upon the existing cargo generation through the Port and should generate their own cargo for achieving the minimum guaranteed throughput.
(xi) Under Clause 15, the agreement provides that any other vessel operated by the licensee which is not listed in the nominated vessels to be handled at the dedicated berth could be granted berthing facility, according to the general berthing turns and procedure in vogue.
(xii) Clause 16 provides that if the licensee's vessels are found idling without valid reasons at the dedicated berth for more than 8 hours, the Board would have the prerogative to pull out the vessel from the berth.
(xiii) Clause 17 provides that the licensee would have to give the forwarding sailing schedule for all their nominated vessels to be handled at the dedicated berth, a month in advance.
(xiv) Clause 19 provides that the licensee would have to agree to berth and handle the Government priority vessels as per the Board's instructions with 8 days notice.
(xv) Condition No.32 provides that the lease property could be resumed at any tune before the expiry of the licence period if required by the Government in the national interest or by the Port for its own use with 6 months notice on payment of compensation in accordance with the formulations as may be approved by the Government. However, if the licence is cancelled for not complying with the conditions of the lease, such compensation shall not be payable.
(xvi) Under Article IV, the licensee has guaranteed a minimum throughput of 8.2 lakhs tonnes of cargo per annum for the first five years, while from the sixth year onwards, the said throughput would be 9 lakhs. In this article, there is also scope for monitoring the guaranteed throughput, as indicated in Condition No.8 of Article III.
(xvii) Article VII specifically provides that the licensee shall observe all provisions covered in the Major Port Trusts Act, Indian Ports Act, Port Laws Amendment Act, Customs Act, Dock Safety Regulations, Indian Electricity Rules, ILO Regulations and other laws, Bye-laws, other Rules in force as amended from time to time and practices applicable for allotment and working of vessels at the berths in Chennai Port which would apply to the licensee's vessel.
(xviii) Schedule I is the statement of licence fees payable by the licensee.
(xix) Schedule II provides for the licensee's commitment on equipment, maintenance and investment. Clause (5) of Schedule II provides for the machinery which is to be made available by the licensee which machin-ery would ultimately remain with the Board till the termination of the licence.
3. The agreement is more or less common in respect of both the second and third respondents excepting of course the details regarding the machinery or the costs. As has already been mentioned, the said agreement was executed between the second respondent and the first respondent on 26.2.1998, while in case of third respondent on 4.3.1998. When these petitions came to be filed, JD V berth was already handed over to the second respondent and it was during the pendency of these writ petitions that JD I berth was handed over to the third respondent on 13.7.1998.
4. As has already been indicated earlier, the two writ petitions challenge firstly the validity of the action on the part of the first respondent to create the exclusive licence in favour of the respondents 2 and 3. The writ petitions further challenge the validity of the agreement as also the manner in which the agreements are being implemented by the respondents. It would be, therefore, better to refer to the pleading of the petitioner as also the prayers made therein. In Writ Petition No.9470 of 1998, the petitioner claims that under Section 42 of the "1963 Act" it is only the first respondent which is vested with the powers to undertake the services in the Port area such as landing and shipping of cargo as also receiving, removing, storing and delivery of cargo to the various consignees. It is then pointed out that there are only six berths available at Jawahar Docks for handling deep drafted vessels out of which three berths have already been exclusively allotted to the Tamil Nadu Electricity Board for the discharge of bulk consignment of coal. It is pointed out that out of these three remaining berths, when two berths are licensed out exclusively to the second and third respondents, only one berth will be available to the Port for giving the services which would hamper the interests of the vessels which are not the licensees' vessels. It is then pleaded that it has always been the custom and practice for the past several years that the berthing of vessels is on the "first come first served" basis. It is pointed out that the first respondent convenes a berth meeting every morning in which all the Port users including the steamer agents and the. receiver's agents participate and during such meeting, allotment of berths to various vessels which are waiting at the outer anchorage of the Chennai Port is made taking into consideration the date of arrival of the vessel and the nature of cargo carried by such vessels. It is in such meeting that the priority allotment of berths is also decided upon in respect of vessels carrying essential cargoes, like foodgrains, fertilisers, coal, etc., for various Government Agencies. The petitioner in paragraph 7 has proceeded to give the waiting period for the bulk cargo vessels for the year 1997 and upto May, 1998 and has pointed out that the waiting period for being berthed for the vessels ranges between 0.75 days and 12.5 days. It is the claim of the petitioner that the occupancy rate of the berths has been in the region of 90% to 95% and, therefore, the vessels which call at Chennai Port have to wait for considerable length of time for being allotted a berth. It is pointed out in paragraph 8 that with a view to provide better infrastructural facilities as also to comply with the Pollution Control norms, the first respondent had decided to construct a satellite Port at Ennore which port was to be made ready and operational by 1998. This Ennore Port was to accommodate the coal imports of Tamil Nadu Electricity Board which would have reduced the pressure on the present Chennai Port and could have made available more berths for berthing the vessels, in effect reducing the congestion in the port and avoiding the berthing delays. It is then pointed out that though the Ennore Port is not ready as yet as contemplated in the schedule announced in 1995, yet the first respondent invited tenders from the private parties for grant of licence for the exclusive user of the two berths. In paragraph 9, the petitioner fairly states that the second and third respondents were the highest bidders in response to the tenders and that it was after about 3 years of the floating of the tenders that their offers have been accepted in the year 1998. The petitioner has adverted to the various aspects of the agreement executed between the second respondent and the first respondent and points out that if the berth is handed over as per the agreement to the second respondent and if another berth is handed over to the third respondent, a situation may arise where all the incoming vessels excepting those which are licensees' vessels would have only one berth available for being accommodated. It is then pointed out that the remaining berth, i.e., JD VI was undergoing repairs and was also not available and thus there was no berth available to the vessels which are not contemplated as licensees' vessels. It is suggested in paragraph 11 that the allotment by licence of the two berths was on the basis that on commissioning of the two new berths at Ennore Port, the berths at Chennai Port would be fully utilised and that would affect the Port's earnings. The petitioner, therefore, poses a challenge that if the basic premise of allotment of berth i.e., construction of Ennore Port was not available even in 1998 then there could be no justification in allotment of the two berths to the second and third respondents thereby depriving the general shipping public of the availability of the berths and increasing their berthing time enormously. It is suggested that the scheme which is contemplated in 1995 has been revived in the year 1998 without any reason or application of mind when the Ennore Port is not expected to be commissioned until the year 2002. It is, therefore, suggested in this paragraph that the very purpose of the scheme no longer holds good and in the absence of such purpose and public interest, private allotment of two berths would be arbitrary and discriminatory, grant of largesse and/or privilege by the first respondent violative of Article 14. It is also suggested that the petitioner's trade would also suffer and thereby there would be a violation of the petitioner's fundamental right under Article 19(1)(g).
5. The petitioner has then further suggested that even otherwise the second respondent had started violating the agreement by allotting the berths to the vessels which were not owned, chartered or operated by the second respondent. Seven examples have been given to suggest that the second respondent had berthed those vessels which were neither owned, chartered or operated by the second respondent. A comparative table has also been given where it has been suggested that every vessel had to wait for 15 days and more for securing a berth, though earlier the waiting period for such vessels was much less ranging between 2 and 4.5. days on an average: It is suggested that the second respondent has started giving out of turn allotment to the vessels which are not owned, chartered or operated by the second respondent. The waiting time for the other vessels which are hot owned, chartered or operated by the second respondent has enormously increased and this would cause enormous financial loss and undue hardships to the various ship owners, charterers and port users including the petitioner. It is pointed out in paragraph 14 that the second respondent was not following the practice of "first come first served". An example is given that a vessel called "Jagkanti" was allotted a berth on the very next day by its arrival, while a vessel handled by the petitioner which had arrived earlier to 'Jagkanti' was made to wait for 20 days before being allotted a berth. It is pointed out that the second respondent was giving priority berthing only to such vessels which engaged the second respondent as the stevedores and clearing and forwarding agents. According to the petitioner, merely because a vessel was stevedored by the second respondent does not make it a licensee's vessel and the second respondent cannot give a priority to such vessel only on that ground. According to the petitioner, a vessel in respect of which there was a stevedoring contract does not necessarily become a licensee's vessel as contemplated in the agreement, because such vessel in respect of which there is contract of stevedoring with the second respondent does not become a vessel owned, chartered or operated by the second respondent nor the cargo carried in such vessel becomes the licensee's goods as contemplated in the definition given in the agreement. The petitioner, therefore, asserts that the second respondent and\or the third respondent cannot treat the vessels stevedored by them as the vessels owned, chartered or operated by them and cannot claim that such vessels would be given an exclusive treatment by providing the licensed docks for their berthing. The petitioner, therefore, asserts that if such is the interpretation of the terms "licensee's vessels" and "licensee's goods" as is being made by the second and third respondents, the agreements themselves would militate against the spirit of Article 14. The petitioner then asserts that since the second and third respondents have been given an unfair advantage of exclusive rights in respect of the two berths, the second respondent had been approaching the various shippers and receivers assuring them of immediate berthing of their vessels on condition that the stevedoring, clearing and forwarding works in respect of such vessels should be given only to the second respondent. It is then asserted that though such malpractices and irregularities have been brought to the notice of the first respondent, the first respondent has not taken any action and has remained a mute spectator. The petitioner has also asserted that the third respondent would also follow a similar practice, while berthing the vessels at JD I and consequently the other ship owners/charterers who have not engaged the second and third respondents as the stevedores would suffer irreparable loss, hardship and prejudice inasmuch as their vessels would be required to wait at the outer anchorage for much more time. It is also asserted that because of this, the second and third respondents would take unfair advantage over the petitioner and all others engaged in stevedoring, clearing and forwarding work and they would be required to close down their operations resulting in enormous losses to them. It is also expressed that should the present situation continue, the ship owners and charterers would divert their ships to other ports instead of unloading their cargo at Chennai Port and in the process, even the first respondent would be put to enormous loss, that would be against the public interest.
6. The petitioner prays for the following reliefs which are common in both the writ petitions:-
Firstly forbearing the first respondent from making or continuing with any arrangement for the private allotment of berths in the Chennai Port and in particular JD I and JD V to the second and third respondents in terms of the arrangements entered into pursuant to the Tender Notification No. A/742/94/T (M&S) dated 1.8.1995 and revert to the practice of allotment of the said berths by the first respondent themselves in turn to all vessels calling at the Port of Chennai in accordance with the priority of their arrival at the Port.
7. The petitioner secondly prays that in the event, this Court is inclined to permit the private allotment of berths to continue, then the petitioner prays for a mandamus, directing the first respondent to ensure that the allotment of berths to vessels at JD-I and JD-V other than those owned, chartered and operated by the second and third respondents for which the requisite nomination has been duly made, be done strictly in turns and in accordance with the priority of their arrival at the Port of Chennai as per the direction of the first respondent.
8. The petitioner then claims an interim injunction, restraining the first respondent from allotting or permitting berthing of vessels other than those owned, chartered or operated by the second and third respondents, otherwise than strictly in turn and in accordance with the priority of their arrival at the Port of Chennai.
9. The petitioner also claims an interim injunction, restraining the first respondent from making or continuing any arrangement for the private allotment of berths in Chennai Port and in particular JD-I and JD-V berths to the second and third respondents in terms of the arrangements entered into pursuant to the Tender Notification No.A/742/94/T (M&S) dated 1.8.1995 or otherwise and revert to the practice of allotment of the said berths by the first respondent themselves in turn to all vessels, calling at the Port of Chennai in accordance with the priority of their arrival at the Port as per the established custom and practice.
10. During the course of argument, the petitioner made it clear that by the first writ petition, it was challenging the very action on the part of the first respondent to enter into an agreement for private exclusive berth with the second and third respondents in respect of JDI and JD-V berths, while the second writ petition challenges the agreement itself as contrary to Article 14.
11. The respondents have opposed the petitions by filing separate counters. The first respondent has filed a common counter and has contradicted number of factual assertions made by the petitioner especially on the question of construction of Ennore Port as also the non-availability of the berths because of the agreements. It has been pointed out that the question of construction of Ennore Port has very little to do with the said action of privatisation and the two are separate questions altogether. The first respondent refutes that the decision to allot the berths by privatising the same was as a result of the decision to construct the Ennore Port. It is pointed out that this decision is based on the decision of the Central Government to privatise the Sector of Port services under Section 34(1) and Section 42(3) of the '1963 Act'. The first respondent pointed out that for this purpose, a Committee was formed and the tenders were invited from the private parties strictly in keeping with the guidelines provided by the Central Government. It is further pointed out that it was because of that policy that the said agreements came to be executed which ultimately have been approved by the Central Government.
11 (a). The first respondent further strongly refutes the factual assertions that Ennore Port would not be ready till 2002 and that unless Ennore Port was made ready, it was not feasible or reasonable to allot the berths and privatise the same. In that behalf, the Port has taken refuge in the decision taken by the Central Government to privatise the Port services as also the guidelines provided for the same.
(b) The first respondent further asserts that merely because the Ennore Port was not made ready, there is no question of the traffic of Chennai Port being affected. It is pointed out that the Ennore Port would be ready up to the year 2000. That apart, the Port Trust points out that there was undoubtedly certain increase in the traffic and there were only six deep drafted berths and the Port was not in a position to cope up with the handling of the dry bulk cargo vessels. According to the first respondent, the decision to privatise has been taken to increase the capacity of the cargo handling which the Port would not be in a position to do if there is no privatisation. The Port Trust also denies the claim of the petitioner that the VI berth was not available as it was under repairs and has pointed out that the VI berth was fully operational. Thus it is pointed out that apart from the two berths which have been licensed, the third berth is always available at the disposal of the Port which can take care of the traffic of the vessels which are not the licensee's vessels. It is also pointed out that under the Agreement, in case of emergencies, the Port can always use even the dedicated or licensed berths.
(c) It is further pointed out that the vessels operated by the licensee would include those who are authorised to handle functions relating to the loading and unloading of cargo into and from the ships like stevedores, steamer agents and clearing and forwarding agents. The first respondent, therefore asserts that even the vessels which are neither owned and chartered by respondents 2 and 3 but are provided with stevedoring services or services as steamer agents or clearing and forwarding agents would become the licensee's vessels and the licensee would be able to give them the priority under the terms of the agreement. It is also pointed out that because of the agreement, the efficiency has increased and the second respondent has been able to handle much more cargo than what was contemplated in the agreement in a short period of one month. The first respondent has also pointed out that the seven vessels which have been pointed out in paragraph 12 of the petition were all the vessels in respect of which the second respondent had entered into agreements to handle the cargo and, therefore, the second respondent was well justified in giving them priority berthing. According to the first respondent, the second respondent had not flouted any of the conditions in giving priority to the vessels which were stevedored by them. In short, the first respondent has raised a defence that it has acted under the directions of the Central Government and according to the policy of privatisation chartered out by the Central Government and that it had the authority in law to do so. It is also asserted by the first respondent that the interpretation given to the term 'licensee's vessels' by the petitioner is not correct and even the vessels which are given the stevedoring services or the services as steamer agents or clearing and forwarding agents by the respondents 2 and 3 can be termed as the 'licensee's vessels' and under the agreement, they would be entitled to be given a priority in comparison with the other vessels which would have come in a general queue.
12. Respondents 2 and 3 have also more or less taken the same stand. Apart from the common defences as has been raised by the first respondent, the second respondent has raised a defence that the petitioner does not have any locus standi that there could not be any infringement of any fundamental right of the petitioner and that the petitioner is not a citizen and being a company, there was breach of Article 19(1)(g). It is also pointed out that the petitioner was guilty of laches as it knew about the tender as early as 1995 and still failed to raise any challenge to the action of the first respondent to allot the berth under the agreements. It is pointed out that the writ petition does not espouse any public interest and merely espouses the narrow commercial interest and is an outcome of business rivalry. It is the stand that once there is an agreement between the first respondent and the second respondent or as the case may be the third respondent, there cannot be a challenge to the agreement from an outsider like the petitioner. A question is also raised that it would be outside the jurisdiction of this Court to interfere on the question of interpretation of the agreement as it would be only for the parties to the contract or agreement to understand the same and the agreement has to be worked strictly in terms of the understanding parties to the agreement and not the outsiders. The second respondent points out that it has already paid a huge sum of Rs.5 crores being the annual charges collected in advance towards the berth hire charges, berth reservation charges, dredging maintenance, transit shed and backup area rent and other port dues. It is also pointed out that they have further committed investment to the first respondent to the tune of 21 crores of rupees towards machinery and equipment. It is their contention, even the third party interest would be affected if the interference at this stage is done as they have already made arrangements with bulk cargo importers and exporters. The second respondent has questioned the correctness of the factual statements made in the petition regarding the waiting period of the vessels and the same having been affected or being likely to be affected because of the agreements. According to the second respondent, the agreement provides for stringent conditions like the payment of hire charges for the entire year in advance, payment of berth reservation charges and payment of dredging maintenance would be estimated at Rs.11 lakhs payable in advance before the commencement of each year and the commitment which is required to be given in respect of the equipment, maintenance and investment. It is also pointed out that it had to pay the maintenance charges of Rs. 5 lakhs per annum in advance and approximately 46 lakhs of rupees as the licensing fees. The second respondent pointed out that it had already paid about Rs.4,53,00,000 approximately. It is also pointed out that a number of advantages would be available to the Port because of the agreement and that the agreement, in fact, has increased the utility of the said dedicated berths. It points out that in carrying the throughputs of 8.2 lakhs to begin with, a great risk has been taken by the second respondent and it has put in huge amount at stake. It has supported the first respondent's counter on the question of privatisation policy and has further averred that the petition is a resultant of the business rivalry and more particularly because the petitioner did not even participate in the tender proceedings when he had every opportunity to do so. They also raise a point that the petitioner being not a party to the contract or agreement, cannot challenge the same. Insofar as the interpretation of the term "licensee's vessels" and "licensee's goods" is concerned, the second respondent has taken the same line of defence as that of the first respondent.
13. The stand taken by the third respondent is that even in the petition, the petitioner has accepted the second and third respondents to be the operators. It is the stand of the third respondent that the term "operators" would include the second and third respondents who held the stevedoring contracts for the said vessels. The third respondent has also pointed out that it has invested by making the payment of about Rs.4,45,00,000 approximately. It is pointed out further that it has already spent 15 crores of rupees for the purchase of various machineries as per its commitment to the first respondent. Rest of the defences raised by the third respondent are more or less common with the first and second respondents. It is on this backdrop that the following questions would emerge for consideration:-
(1) Whether the first respondent's decision to privatise the berths is arbitrary and in contravention of Article 14 as it suffers the non-consideration of essential factors?
(2) What would be the true interpretation of the terms "licensee's vessels" and "licensee's goods" in the agreements and whether respondents 2 and 3 would be justified in giving priority to the vessels to which they are giving stevedoring services as the steamer agents?
(2.a) Whether there is any scope in the agreements for creating monopoly in favour of the second and third respondents because of the interpretation put forward by the respondents of the agreements and whether on that account the agreements are opposed to and in breach of the guidelines provided by the Central Government and therefore in breach of Articles 14 and 19(1)(g)?
(2.b) Whether the interpretation put forward by the respondents of the agreements would make it arbitrary and opposed to the public policy as also the spirit of Section 42(3) of " 1963 Act"?
14. These questions are the direct fallout of the submissions by the learned counsel to which I shall now advert.
Question No.1:
15. A question of admissibility of privatisation of the berths has been raised firstly on the two basic factual premises. It is argued by the learned Senior Counsel Mr. C.A. Sundaram for the petitioner that the decision to privatise these berths was a direct fallout of the decision to construct the Ennore Port. The learned counsel argues that it was felt that after Ennore Port is ready, it would provide three additional berths for the deep drafted vessels in addition to the six available in Chennai Port. It was, therefore, felt that there would be a surplus of deep drafted berths and, therefore, it was thought better to privatise the berths and to ensure the income of the Chennai Port. The learned counsel argued that since the Ennore Port was not likely to be ready till the year 2002, there was no justification in taking a hasty decision of privatisation. It has been countered by the affidavit on the part of the first respondent that the decision to privatise the berth was taken only because the Ennore Port was to be constructed. It has been clarified in the counter and has also been argued by the teamed senior counsel Mr. A.L. Somayaji for the first respondent that though construction of the Ennore Port was one of the relevant factors, it was not the only factor, because of which the need to privatise the berth was felt. It has been clarified by the learned counsel that the assertion by the petitioner that the Ennore Port would not be ready till 2002 is also factually incorrect as it is likely to be ready by 2000. This is the assertion on affidavit on behalf of the first respondent and there is no reason to disbelieve the same. It has been seriously disputed that the decision to privatise the berth was only on account of the proposed Ennore Port. In this behalf, it was pointed out that there was a policy by the Central Government for privatising the various sectors and providing port services was one of the avenues contemplated in the policy of the Central Government. The said Central Government Policy has been placed before the Court by the first respondent. A letter sent by the Central Government dated 26.10.1996 has been placed on record which makes a mention of the said guidelines approved by the Central Government for encouraging private sector participation in enhancing port capacities and modernisation of port equipments. By this letter, it is clarified that the Port Trusts are expected to prepare the feasibility report on the basis of which offers were to be invited from the private sector for investment. It is also mentioned in that letter that the Chennai Port Trust had already identified the additional facilities required in terms of the Master Plan for development. There is also a mention in the said letter that the first respondent has also placed on record the guidelines by the Government for major expansion in the port infrastructure for handling the sea-borne traffic on account of increasing foreign and coastal trade. It clearly suggests that the Port Sector had been thrown open to private sector participation for meeting the efficiency, productivity and quality of service as also to bring in competitiveness in the port services. It was expected that private sector participation would result in reducing the gestation period for setting up new facilities and would bring in the latest technology and improved management techniques. In paragraph 2 of these guidelines leasing out existing assets of the Port and construction and operation of bulk, break bulk multipurpose and specialised cargo berths are contemplated. There is a reference in the last paragraph to the guidelines dated 1.4.1993 as also issued on 1.4.1995. Considering the fact that these guidelines started coining at the advent of the year 1993, it cannot be said that the decision to privatise for which a tender was floated in the year 1995 was only as a result of the construction of Ennore Port. It, therefore, cannot be said that there was anything wrong in floating the tenders for privatising the berths in the year 1995 and that it was solely because the Ennore Port was to be constructed. The explanation given by the respondents and more particularly the first respondent and the correspondence placed on record would clearly go to show that there was a definite decision taken to privatise the berths and it was in pursuance of that policy that the decision to privatise the berth was taken.
15 (a) Under the Major Port Trust Act, there is a power created via Section 111 to issue directions to the Port. The decisions to privatise the berths seems more as a result of the directions issued by the Central Government than on account of the construction of Ennore Port. The said decision also is in keeping with the spirit of Section 42(3) which runs as under: -
"Notwithstanding anything contained in this Section, the Board may, with the previous sanction of the Central Government, authorise any person to perform any of the services mentioned in sub-section (1) on such terms and conditions as may be agreed upon."
The services in sub-section (1) of Section 42 as contemplated in sub-section (3) include landing, shipping or transshipping passengers and goods between vessels in the port and the wharves, piers, quays or docks belonging to or in the possession of the Board. They also include receiving, removing, shifting, transporting, storing or delivering goods brought within the Board's premises; Sub-section (1) further provides for the services of piloting, hauling, mooring, remooring, hooking, or measuring of vessels or any other service in respect of vessels. It cannot be and it was not disputed by the Bar that the services mentioned above are not covered by sub-section (1) of Section 42 of the '1963 Act'. Even otherwise, if the construction of Ennore Port was not completed, it cannot be said that the decision to privatise would be hasty or unreasonable. After all, as has been rightly contended by the learned counsel Mr. Somayaji for the first respondent that the first respondent had to provide and ensure its income for a wider period of 20 years which is the period covered in the agreements. A question of one year or two years would be insignificant on the backdrop of the scenario.
15. (b). It cannot be forgotten again that it took almost three years for the first respondent to finalise these agreements, the tender notices were floated in the year 1995, while the actual agreements have been executed in July and August, 1998. It would be quite reasonable to accept that the first respondent would have to scrutinise the proposals closely and then alone act after getting the approval of the Central Government which would naturally take substantial time. Considering all these, it cannot be said that the floating of the tenders in the year 1995 was a hasty action on the part of the first respondent and was unreasonable on that account. For the same reason, it cannot be said that ultimately the action of awarding the tender licence in favour of second and third respondents was bad on this account. Mr. C.A. Sundaram, learned Senior Counsel for petitioner very fairly stated that it was not the intention of the petitioner to challenge the contract on the ground of merits as the petitioner had never competed against respondents 2 and 3. The challenge to the agreement on this account, therefore, fails.
15 (c). The other challenge that before executing the agreement, it was ignored that JD-VI berth was under repairs and there would be no berth available to the vessels (which were not licensee's vessels) was also factually incorrect. It has been pointed out in the counter that the VI berth was already operational in the month of July itself, its repairs having been completed before that. The petitioner would not, therefore, be allowed to infer the unreasonableness on the part of the first respondent in awarding the licence in the month of July, 1998. That fact has been asserted in the counter filed by the first respondent and has not been further disputed. Therefore, even this contention of the petitioner has to fail.
16. During the arguments, the learned Senior Counsel Mr. Sundaram for the petitioner very fairly stated that he was not challenging the policy of the Central Government. The whole thrust was on the implementation of that policy and the interpretation of the agreements which amounted to a direct outcome of the policy. It was however tried to suggest by the learned counsel that the award of the two berths out of the totally available three berths would itself be unreasonable particularly because the other vessels would suffer on account of that policy. Once the privatisation policy is not chosen to be challenged and indeed, it could not have been so challenged, the challenge to the merits of the action thereunder would more or less become meaningless. It is significant here to note that the Central Government has not been made a party to this petition. It has been reiterated by the counsel of the Port Trust and has also been asserted in the counter that all the possible pros and cons have been considered while taking the decision to privatise the two berths. It is asserted by the learned counsel that the Port could not think only in terms of the present situation but had to have a telescopic vision and if that was so, then it could not be said that the decision to privatise the berths was unreasonable on the counts suggested by the petitioner or that it suffered of non-application of mind and non- consideration of material facts. A feeble attempt was made by the learned counsel to suggest that there would be congestion in the Port on account of the privatisation of the two berths and that would divert the vessels to the other Ports and thus the Chennai Port would be put to losses. This has been countered by the Port Trust as also the respondents by giving some statistics. It has been asserted that there is no substantial increase in the waiting period of the vessels after the berths have been licensed out in favour of respondents 2 and 3. On the other hand, it has been pointed out that the second respondent had cleared much more cargo than what was fixed by the stiff standards of the agreement. It has been further clarified that the statistics given by the petitioner in the additional affidavit dated 14th September, 1998 could not be stated to be the result of the licensing of the berths alone. In that affidavit, the petitioner had complained that the vessels whose stevedoring function have been undertaken by respondents 2 and 3 had the average waiting period of 2.38 days and vessels whose stevedoring functions were not so undertaken by respondents 2 and 3 had the average waiting period of 8.10 days. This subject would be considered in more detail when the question of interpretation of the agreement is considered. However, from the data which has been made available, it cannot be said generally that the Port has become congested on account of the agreements and that this possibility was not considered by the first respondent before deciding to privatise and license out the two berths. The fear expressed by the petitioner regarding the first respondent suffering adversely on account of the decision to allot the berths lacks factual basis and there is much scope to hold that the efficiency of the Port Trust generally in terms of handling the cargo has increased than decreased. That being the main purpose behind the decision to allot the berth, it cannot be said that the decision to allot the berth is in any manner unreasonable for the reasons stated by the petitioner.
17. As has already been stated, the petitioner has not challenged the policy of the Central Government at all and for that matter, the Central Government is not even a party to these petitions. The petitioner also has not averred that the decision to privatise the berth is not a fall-out of the said policy. The petitioner could have challenged the policy as unreasonable or could have asserted that the decision to privatise the berths was not as a result of the said policy but, because of some oblique reasons not germane to the policy. That is not tile challenge in these petitions nor was it argued during argument. On the other hand, the learned counsel has very specifically chosen to be silent about the wisdom of the policy and has restricted himself to the faulty implementation thereof. It has already been shown that considering the overall facts which have been discussed earlier, it cannot be said that the decision to privatise smacked of arbitrariness.
18. It will not be for this Court and that too in these petitions to examine the wisdom of the policy of the Central Government more particularly when the said policy is not even challenged. The Supreme Court has already given a word of caution in the decision of Premium Granites v. State of Tamil Nadu, in the following words:-
"It is not the domain of the Court to embark upon unchartered ocean of public policy in an exercise to consider as to whether a particular public policy is wise or a better public policy can be evolved. Such exercise must be left to the discretion of the executive and legislative authorities as the case may be. The Court is called upon to consider the validity of a public policy only when a challenge is made that such policy decision infringes fundamental rights guaranteed by the Constitution of India or any other statutory right."
The caution is loud and clear. Here also, the policy of the Central Government under which refuge is being taken by the respondents is not under challenge on the ground that it infringes any constitutional right of the petitioner. All that the petitioner says is that the policy is being implemented in a faulty manner. That Would be another subject and would be considered later on in this judgment. Presently, however, it will have to be deduced that the decision of privatisation being a direct fall-out of the policy of the Central Government, which fact remains undisputed, cannot be said to be arbitrary for the factual reasons stated by the petitioner,
19. One more attack on the decision of privatisation of the berths that when there was already a congestion in the Port, the decision to allot the berths exclusively to the respondents could be unreasonable. The learned counsel argued that the avowed purpose in privatisation was for increasing the trade and commerce and to improve the actual utilisation of the berth through increased cargo coming in. According to the learned counsel, if there was already congestion in the port, then there could be no justification in adding to the congestion as because of the decision to allot berths, only one berth could be available for the user of the general public meaning those ships which were not owned, chartered or operated by the respondents. The learned counsel also pointed out that the counter affidavit on behalf of the first respondent mentions that there was a large increase in the cargo coming into the Port and that there was congestion in the Port because of the non-availability of the berths. On this basis, the learned counsel suggests that this militates against one of the avowed purposes of privatisation i.e., to ensure that there is no under utilisation of the berths.
20. It is obvious that the purpose of privatisation has been wholly misunderstood. When there was a congestion in the Port and the vessels wanting to unload the cargo or getting loaded with the cargo at the Port in order that there should be a better utilisation, it would be necessary that the loading and unloading operation of the cargo should be quick and should be efficiently managed so as not to take unnecessary time. If a vessel takes more time for unloading, then what is reasonable? There would mean that the berth would remain engaged for that much time and would not be available to the other vessels wanting to unload their cargo or wanting to load the cargo onto the ship. If the policy to privatise the berth is for lessening the loading and unloading operation time, then it cannot be said that it is an unreasonable policy. A look at the agreement would suggest that the respondents were to equip their berths with machinery worth crores of rupees to handle the loading and unloading operation as also the allied operations which machinery was obviously not available with the Port. Obviously, therefore, if such machinery is made available by the respondents for handling the ships efficiently when they are berthed, the berthing time would be drastically reduced and thereby the berth would be available to the other waiting vessels. It is with this idea that the theory of "privatisation" seems to have been introduced. It has been candidly admitted by the learned counsel for the Port Trust that the handling of the ships by the respondents would be much more effective and efficient, than that of the Port Trust obviously because of the availability of the latest machinery. Indeed it has come on record that in the very first quarter of the agreement, the second respondent has very efficiently worked in the berth by discharging much more cargo than what have been discharged by the Port Trust. It, therefore, cannot be said that merely because there was congestion, the decision to privatise would be rendered unreasonable. By taking this decision to privatise, what was sought to be achieved was the efficient working of the berth which would be possible only by introduction of the latest machinery which was part and parcel of the terms and conditions of the agreement. A better administration of the berth with the aid of latest machinery was the insistence behind the policy to privatise. It cannot, therefore, be said that merely because of the two berths were decided to be privatised that would militate against the object of the policy i.e., to increase the efficiency of the running of the Port facilities. It cannot, therefore, be said that the policy decision to privatise the berths and to allot the berths was arbitrary on account of this reason.
21. In view of the above discussion, it has to be held that there is no vice of unreasonableness to the first respondent's decision to privatise the berths; nor it can be said that the first respondent had omitted to consider the essential facts while privatising the berths. The first question, therefore, has to be answered in negative.
Question Nos.2, 2 (a) and 2 (b):
22. These questions can be considered together as they are intermingled. The second and the alternative argument of the counsel for the petitioner is more interesting. According to the petitioner, even if the decision to privatise is upheld, the uncontrolled user of the licensed berths would militate against the spirit of Article 14. To bring home this aspect, the learned counsel invites the attention of this Court to the definitions in the Agreement more particularly "licensee's vessels" and "licensee's goods". I have already reproduced the said definitions in this judgment. According to the definition, the "licensee's vessels" would be all the nominated vessels owned, chartered or operated by the licensees. It has to be borne in mind that the licensee has to give a schedule of all the vessels which are to be entertained by him by giving a prior notice to the first respondent. Thus, the vessels in respect of which a notice is given by the licensees become the nominated vessels. There is no dispute so far as this is concerned. The dispute arises further as to which vessels could be called the vessels owned, chartered or operated by the licensees, because it is only these vessels which have the priority at the dedicated berths. Clause (d) of Article III of the Agreement provides that the allotted berths shall be permitted to be used only by the licensee's vessels and when the berth is not used by the licensee's vessels, it could be utilised by the Port Trust. The contention of the petitioner is that the respondents were giving priority even to those vessels which are not owned, chartered or operated by them and were providing the facility of priority even to those vessels with which they had merely stevedoring contract or handling contract. In short, the petitioner insists that the second the third respondents could offer the berthing on priority basis only to the vessels owned, chartered or operated by them and that this definition would not include the vessels with which they have merely a stevedoring or handling contract. The petitioner avers that the first respondent is duty bound to see that the priority is given on the dedicated berths only to the vessels owned, chartered or operated by the licensees and the term "operated" would not include any vessel merely stevedored or handled by the licensees. As the necessary sequel of the argument, the counsel for the petitioner argues that even the vessels which do not have the stevedoring or handling contract with the respondents will have to be accommodated strictly in terms of the principle of "First come first served" which was the practice hitherto of the first respondent. The petitioner has factually averred that the respondents were entertaining and giving a priority to the berths only to the vessels with which they had a stevedoring or handling contract treating such vessels as the vessels operated by the licensees. According to the petitioner, this militates against the very language of the agreement. The second limb of the argument of the petitioner was that the agreement will have to be so interpreted in the manner as would not defeat the very policy under which it has come and strictly in keeping with the spirit of Article 14. According to the petitioner, if the agreement is interpreted in the manner that the respondent wants then that interpretation would destroy the very purpose of the agreement and its objective and in the process would militate against the spirit of Article 14 as also Article 19(1)(g). The petitioner points out that such an interpretation would create a monopoly in the licensees who are also in the stevedoring business like the petitioner and the respondent would have an unfair advantage of a complete and unchanneled monopoly and thereby the other competitors in the business of stevedoring and handling like the petitioner would be prejudiced and completely destroyed.
23. In order to display the prejudice, the counsel for the petitioner, during the course of arguments, provided some data to show that while the vessels with which the licensees/respondents had the stevedoring or handling contract were provided with the berthing facilities on priority basis, the vessels which did not have such contracts with the concerned respondents were denied the priority and took more time for being berthed. The learned counsel points out that thus, there was a clear discrimination against the vessel owners who did not have the stevedoring contracts with the concerned respondents. According to the learned counsel, this amounted to a clear breach of the spirit of Article 14. It was pointed out and argued that because of this, the business of the petitioner was going to suffer as the vessels which have the stevedoring contract with the petitioner could not get the priority berthing as compared to the vessels which had such contracts with the petitioner. It was, therefore, averred that the petitioner's fundamental rights under Article 19(1)(g) was also breached.
24. During the course of the argument, the learned counsel also averred that considering the agreement in the backdrop of the definite policy of the Central Government, a proper care has been taken to create exclusivity in respect of only the vessels owned, chartered or operated by the licensee and further considering that the policy shunned the monopoly, it would not be correct to give an extended meaning to the term "operated" so as to include the vessels which merely had the stevedoring on handling contracts with the respondents. The learned counsel has laid great stress on the term "operated" and pointed out that a strict meaning to the said term will have to be given as per the accepted norms of interpretation of the agreements and contracts.
25. The learned counsel for the petitioner also relied upon Section 42(3) of the '1963 Act' and pointed out that the duties which had passed to the respondents were the duties of the Board and they being the statutory dudes, a strict adherence to the Port Trust's regulations was a must. The learned counsel has relied upon the Port Trust's Regulations and has pointed out that the Board had strictly adhered to the principle of "first come first served" meaning thereby a vessel which was sighted first at the outer anchorage had to be accommodated first. The counsel argued that the licensees had in effect stepped into the shoes of the Board and, therefore, they were also bound by the Port Trust's Regulations and in effect, they were also bound to follow the principle of "first come first served" subject, ofcourse, to the control of the Port Trust.
26. As against this, Mr. Somayaji, learned Senior Counsel appearing for the first respondent, contended that the agreement was extremely clear and the term "operated" was only meant to include the vessels which were dealt with for stevedoring or handling by the licensees. The learned counsel took me through the policy and various other documents as also the provisions of law to show that the avowed object of the policy was to increase the efficiency of the Port Trust in terms of the cargo. The learned counsel argued that if such a restricted meaning is given to the term "operated", then the agreement itself would be unworkable. It was pointed out by the learned counsel that the agreement could not be read in isolation as has been tried to be insisted upon by the petitioner and had to be read in the backdrop of the policy and the directions by the Central Government. The learned counsel was at pains to point out that in fact the Port Trust's Regulations were meant only for the working of the Port and in effect, they have been ceased to operate because of the operation of law. At any rate, they could not be used. It was also pointed out by the learned counsel that the regulations as they appear do not propagate the principle of "first come first served" as an absolute rule. The learned counsel insisted that in the absence of any challenge to the policy, the petitioner could not challenge the agreement and that such a challenge at the instance of an outsider was not possible. According to the learned counsel, the meanings were clear to the parties of the agreement and, therefore, there would be no question of the agreement being interpreted at the instance of the petitioner who was not a party to the agreement. Mr.R. Krishnamoorthy, learned Senior Counsel, appearing for the second respondent, also pointed out that the second respondent under the agreement was expected to invest enormous amounts and the whole agreement would be unworkable, if the restricted meaning is given to the agreement. The learned counsel also went on to point out by actual statistics that the efficiency of the Port Trust as contemplated in the policy had increased manifold because of the exclusivity as contemplated in the agreement. The learned counsel strongly argued that "first come first served" principle was not by itself the sole test for Article 14 and it could be given a go-bye in the larger national interest. The learned counsel argued that in the Shipping Law, the only concepts known were the Ship Owner or Charterer. The concept of operator was not a universal concept so as to be commonly understood in a restricted sense as per the prayer of the petitioner. The same argument was advanced by Mr. Habibullah Badsha, learned Senior Counsel, appearing for the third respondent. According to both the learned Senior Counsel, the whole agreement would become unworkable as the very purpose of this agreement was to create an exclusivity in a restricted sense in favour of the licensees. Both the counsel painstakingly took me through not only the documents displaying the Central Government's Policy, but also the tender documents such as tender notice as also relied upon the treatises on Shipping Law and on the Shipping Dictionaries to urge the word "operated". The learned Senior Counsel Mr. Habibullah Badsha, appearing for the third respondent, also urged on the provisions of the various enactments to suggest that the word "operated" was not in the common parlance of the Shipping Law and he more particularly relied on the provisions of the Carriage of Goods by Sea Act. Both the learned Senior Counsel very strongly urged that a stevedore acts as an agent of the owner or as the case may be the charterer and practically becomes the alter ego and in that view, the term "operator" as introduced in the agreement has to be read.
27. As regards the breach of Article 19(1)(g), both the Counsel pointed out that the fundamental right under Article 19(1)(g) was available only to a citizen and not to a company and as such the petitioner could not call in aid the provisions of Article 19(1)(g). As regards Article 14, both the learned counsel relied on number of Apex Court Judgments that Article 14 could not be taken resort to in a situation like this where there was an exclusivity created under the agreement which was a direct fall-out of an avowed State Policy which policy was not in challenge. According to the learned counsel, if the policy of privatisation was not challenged by the petitioner, then the petitioner could also not challenge the exclusivity created and if such exclusively was guaranteed by the agreement, then there would be no question of application of the principle of "first come first served" as it would be the sole prerogative of the licensees to decide as to which vessels should be entertained first. It is on the backdrop of these conflicting contentions that the questions involved, as have been crystallized earlier in this judgment, have to be decided.
28. Considering the rival contentions raised by the parties on this question, ultimately the controversy would boil down to the true interpretation of the term "licensee's vessels" and further to the proper interpretation of the term "operator". Before the task of interpreting the agreement is taken up, it has to be borne in mind that there is a unique situation in the sense that the interpretation is being sought by the petitioner who is a complete outsider to the said agreement, while the parties to the agreement have no disputes or doubts about the same. Strictly speaking, the Port Trust is the first party to the agreement while the second and third respondents are the second party respectively in both the agreements and they are all unanimous in so far as the meaning of the term "operator" is concerned. All of them have a unanimous view that the term "operator" would include persons who hold the stevedoring and handling contract. It is only the petitioner who insists on the said interpretation in his own term so as to mean that the term "operator" would not include a person having stevedoring and handling contract as regards ships and as such the term "Licensee's vessels" would not include such vessels. Ordinarily, the petitioner could not be allowed to insist upon an interpretation of a contract between the Port Trust and the respondents 2 and 3, he being a total outsider to the same. The interpretation of the agreement as between the Port Trust and the licensees is undoubtedly a matter strictly between them. Once the parties to the contract have agreed as to the interpretation and have understood the terms in the said agreement, there would be hardly any necessity to interpret the same afresh particularly at the instance of the outsider. However, the learned Senior Counsel Mr. Sundaram, appearing for the petitioner, seeks to get out of this difficult position by contending that such interpretation would also affect the rights of the petitioner indirectly, if not directly. His contention is that such interpretation would be necessary as the exclusive user of the berths of the Port Trust as per the agreement and further uncontrolled discretion on the part of the respondents/licensees would militate against the very spirit of Article 14. It is because that the exercise of interpretation would become necessary in the present case.
29. There are predominantly two terms on which depends the so called exclusivity and the so called uncontrolled discretion, those terms being "licensee's vessels" and "licensee's goods". While interpreting the particular terms of the agreement, the whole agreement will have necessarily to be considered and it will be essential to see as to how the two terms have been understood in the whole agreement. The two clauses which define the terms "licensee's vessels" and the term "licensee's goods" cannot be defined in isolation and have to be read in the light of the whole agreement. There can be no doubt that if the clause "licensee's vessels" is to be read literally it would mean the vessels owned by the licensee or chattered by the licensee or operated by the licensee. Now, insofar as the terms "owned" or "chartered" are concerned, there can hardly be any doubt for the concept of "ownership" is more than clear. It would be the vessels owned by the respondents. Insofar as the other term "chartered" is concerned, also there is very little scope for any confusion. A party, who charters the ship or vessel from the owner, would be a party, who can legitimately be called a charterer. There is no difficulty about these two terms. The real difficulty is only about the third aspect "operated". The petitioner says that if the only task performed by the licensees/respondents is stevedoring of the ship meaning discharging or loading the cargo, they could not be said to be operating that particular vessel. So also if the petitioner had a mere handling contract, then also they could not be said to be operating a ship. According to the learned senior counsel, for interpreting the term "operating", the Dictionary meaning would have to be taken into consideration and for that purpose, the learned senior Counsel relies on the definition of the term "operate" as given in the Dictionary of Shipping terms by Peter R. Brodie. The Dictionary meaning of the term "operate a ship (to)" is as follows:-
"To run a ship. There are two principal aspects of operating a ship; technical and commercial. Technical operation includes crewing and supplying the ship, keeping her machinery and equipment in working order and stowing cargoes safely and efficiently. Commercial operation is concerned more with booking cargoes, negotiating freight rates and bunker prices and appointing ship's agents at the ports of call."
The learned Senior Counsel also relies on a treatise "Managing Ships" by John M. Downard and particularly relies on the definition of "operations" which is as under"
"The functions associated with the earnings of a ship, i.e., responsibility for obtaining cargoes, scheduling, stemming or ordering bunkers, making arrangements for the loading and discharge of cargoes and associated port activities and the lay of ships. The term also includes the sale and purchase and chartering of ships."
Relying heavily on these two definitions in the above mentioned books, the learned Senior Counsel suggests that stevedoring of the ship or handling of the ship could not be equated to operating a ship and, therefore, a party who is a mere stevedore or a ship handler can never be said to be an "operator" and, therefore, the respondent would not be in a position to provide any priority of berthing to the ships stevedored or handled by them. Now, in order to see, whether this stevedoring activity can be equated to the operating of the ship, it will be useful at this juncture to see what stevedoring means. It must be made clear that the respondents are really restricting to the position that if they have a stevedoring contract with the ship contract of a vessel, then they would be in a position to provide priority berthing to the ship. The term "Stevedore" as it appears in Black's Law Dictionary is as follows:-
"A person employed in loading and unloading vessels."
In wharton's Law Lexicon the term "Stevedore" is as follows:-
"A person employed to stow a cargo on board in a ship."
In a treatise "Law Lexicon with Legal Maxims" by Venkataramaiya, the term "stevedore" has been described as under:-
"(i) A stevedore is a workman employed either as an overseer or as a labourer in the loading and unloading of the cargoes of merchant vessels.
(ii) The employment of stevedores has grown out of the duty of the owner to load and unload the ship. This duty used formerly to be executed by the crew; but, in dealing with large cargoes, the exigencies of modern commerce have created a necessity for the employment of persons skilled in the particular work of stowing cargo.
(iii) Where the actual work of the loading is delegated to a stevedore, the stevedore is, as a general rule, to be regarded as the servant of the ship owner; who, as being the person primarily responsible for the loading, is liable to the shipper, in the absence of an exception covering the stevedore's negligence, for the manner in which the stevedore performs his work, and also to the stevedore for his charges."
30. From all these definitions, the learned Senior Counsel appearing for the petitioner, suggests that the activity of stevedoring the ships can never be equated to the activity of operating the ship or vessel. As against this, the learned Senior Counsel appearing for respondents 2 and 3 very vociferously . pointed out that even from the Dictionary meanings of the term "operator" and "stevedore", it can be said that the stevedores could be reasonably called "operators". Ofcourse, this argument by the learned Senior counsel for the second and third respondents is apart and independent of their other arguments for opposing to accept the interpretation suggested by the petitioner. The term "operations" as suggested in the treatise of John M. Downard undoubtedly includes the task of making arrangements for the loading and discharge of cargoes and associated port activities and lay of ships. The definition given by the learned author is inclusive and indeed it cannot be exhaustive as various functions as regards the vessel could be termed as "operations" of the ship or vessel. Even the definition given by Peter R. Brodie is a sort of descriptive definition. Thus, both the authors however, undoubtedly point out that to operate a ship would not be restricted to a particular singular activity. While John M. Downard describes the term "operations" as the functions associated with the earnings of ships, Peter R. Brodie is more specific in pointing out that there are two principal aspects of operating a ship, they being (i) technical; and (ii) commercial. The learned author proceeds to point out that the technical operation includes crewing and supplying the ship and maintaining her machinery and equipment. The technical operation also includes stowing cargoes safely and efficiently. According to the learned author, the commercial operation of the ship is concerned more with booking cargoes, negotiating freight rates and bunker prices and appointing ship's agents at the ports of call. One common aspect in both the definitions is that the loading and unloading operations or stowing of cargoes is shown to be one of the activities for operating a ship. Considering the Dictionary meanings of the terms "stevedore" and "stevedoring" which have been extracted earlier, it has to be said that the stevedore, who is primarily concerned with loading and unloading of the ship, becomes a part of the operational functions of the vessel. It is pointed out that previously the duty of the loading and unloading of the ship was the task of the crew itself. However, due to the necessity of dealing with targe cargoes as also the necessity of saving time and for the task of loading and unloading and thereby save the expenditure, this institution of "steverdore" has come in existence. The stevedores are necessarily the persons skilled in the particular work of stowing cargoes. The following passage from the judgment in Murray v.
Currie, L.R. 6 CP 27 would highlight the importance of the institution of the stevedores:-
"Formerly the loading and unloading a ship was done by the master, but it has been found necessary, particularly with regard to large cargoes, that some person should be employed to load and unload who is especially accustomed to that business. Hence, has arisen the use of stevedores who are in the position of persons exercising an independent employment. In one sense the stevedore is the agent of the ship-owner because he is set in motion by him but still he is not such agent for whose acts the ship-owner is liable." (Italics supplied).
A Division Bench of the Kerala High Court in Provident Fund Inspector v. B. Paul Abrao, has relied on the above observation of Willes, J. as also the following observations in Halsbury Laws of England 3rd Edition, Volume 35, page 395:-
"Where the actual work of the loading is delegated to a stevedore, the stevedore is, as a general rule, to be regarded as the servant of the shipowner, who, as being the person primarily responsible for the loading, is liable to the shipper, in the absence of an exception covering the stevedore's negligence, for the manner in which the stevedore performs his work, and also to the stevedore for his charges."
The Kerala High Court was considering the role of a stevedore in a different context and the question there was whether a stevedore could be termed as an exporter or importer of goods and as such could be covered in the notification issued under the Employees' Provident Funds Act making him liable to the duties under the Act. The Kerala High Court has answered the question in negative. "However, that is not the controversy here. The two passages extracted above from the Judgment of Willes, J. as also from the Halsbury's Laws of England invariably show that stevedoring is an integral part of the operational functions of the vessel at times a stevedore can also be considered to be an agent, ship owner depending upon the contract that he has with the ship owner or a charterer or the shipper.
31. The learned Senior Counsel appearing on behalf of the third respondent Mr. Habibullah Badsha pointed out that in fact, the stevedore has to be considered as an alter ego of the ship owner because, it is the stevedore who is responsible for the interest of the ship owner in respect of his essential task of stowing the cargo. On this back-drop, it will be interesting to see that this institution is one of the most important of the component of the Port Trust's machinery. A stevedore has to have a licence. Regulation 39 of the Port of Madras suggests that a stevedoring concern has to have its own permanent minimum staff as has been specified by the Board and is responsible for the due observance by his staff and labour during the operations of loading and unloading vessels of all safety provisions laid down by the rules and regulations by the Board. The stevedore has to also compensate the Board for any damage to the property of the Board by its workmen. The Fort Trust has also trained rules for licensing of stevedore at the Port of Madras and one such condition is that the licence of the stevedore shall not be ordinarily renewed unless the licensee has handled not less than one lakh tonnes annually, which limit could be waived at the discretion of the Chairman of the Port Trust. All these would go to show, the role of a stevedore is in running the Port smoothly. It is thus clear that the Dictionary meanings of the terms "operator" and "stevedore" would not help the petitioner.
32. Mr. Sundaram, learned Senior Counsel appearing for the petitioner, then drew my attention to suggest that in the Shipping World, the word "operators" and "stevedores" are understood distinctly and separately. The paragraph from Chapter Sixteen of Dictionary of Shipping terms "Appointment of agents and stevedores" suggests unless the operators have their own offices at the loading and discharging ports, they will appoint agents to take care of their interests and to act for them as appropriate. At times the contract of carriage may call for the use of the shipper's or receiver's agents, although the operators may still appoint their own "protecting" agents if any conflict of interest is perceived. Similarly, the operator may appoint the stevedores through their agents although, again, the terms of carriage of the cargo may dictate otherwise. From this, the learned Senior Counsel urges that the terms "operators" and "stevedores" are to be understood distinctly separate and necessarily not the stevedores and vice-versa. I am afraid, I cannot agree with the contention of the learned Senior Counsel for the simple reason that" the observation made is too general and completely out of context with the present controversy.
33. As has already been stated, in this part of this judgment, here is a task of interpreting the terms in an agreement at the instance of an outsider like the petitioner, while the parties to the agreement have absolutely no quarrel with the meaning of the said terms. The dictionary meanings relied upon by the petitioner, therefore, would not help the petitioner necessarily.
34. The learned Senior Counsel appearing for the petitioner then urged that considering the agreement generally, the term "operator" would not include a stevedore. As has already been observed, the terms will have to be interpreted not in isolation but in the light of the agreement as a whole. The other term, which would help us to understand as to what "licensee's vessels" really means, is the term "licensee's goods". In this agreement, the term "licensee's goods" are defined at clause l(b) to mean all cargo mentioned in Item-2 of clause (p) other conditions under Article III of this agreement, carried or to be carried by the licensee's vessels. Unfortunately, there appears to be a mistake, as has already been pointed out because there is no clause (p) in Article III. The said other conditions under Article III are instead covered by clause (o). This mistake is apparent as clause (e) of Article III is repeated. While the caption "Berth Hire Charges" is covered by clause (e), so also the caption "Berth Reservation Charges". If this mistake is corrected then obviously the mistake regarding clause (o) would also stand corrected and clause (o) would naturally become clause (p). It is unfortunate that such mistake should have crept in. Be that as it may, clause 1 (b) "licensee's goods", therefore, is a reference to all the cargo mentioned in Item (2) of clause (o) which should have been clause (p). Condition No.2 therein makes an interesting reading. It reads:
"Regarding cargo mix expected to be handled in the berth proposed for licence, proposal has been finalised for operation of the berth for handling bulk, break-bulk cargoes."
Considering the definitions together, it is clear that the licensee's goods are the goods which are carried or to be carried by the licensee's vessels, while licensee's vessels mean all nominated vessels owned, chartered or operated by the licensee. The goods which are expected to be handled are to be found in Condition No.2 of clause (o) (which should be clause (p)) of Article III. The specific language of Condition No.2 which describes the proposal which is finalised speaks in term of "handling the cargo" in the berth which may be of bulk and break-bulk nature. The said condition further provides that for "handling the break bulk cargo" consisting upto 30 boxes, the licensee will have to make their own equipment requirement viz., spreaders, etc., and also would have to use their man-power, while cargo like coal, cooking coal etc., which can be described as bulk cargo would be permitted to be handled in the berth, till such time the new Port at Ennore is ready for operations. In my opinion, while considering as to what vessels are said to be licensee's vessels, the definition of "licensee's goods" which has been more particularly elucidated in Condition No.2 of clause (o) will also have to be read and considered and this definition only speaks in terms of handling the cargo and makes a direct reference to the fact that the proposal has been finalised for "handling the bulk and break-bulk cargoes." In this above, it would be seen that clause (a) of Article III suggests that the Board has created a licence of dedicated berth for the purpose of "handling the licensee's vessels and discharging and loading the licensee's goods" thereat provided the licensee shall have submitted a forward schedule to the Board of the impending entry upon and use of the berth by each of the licensee's vessels within the prescribed period. Thus, the agreement is not only for handling the licensee's vessels, but also for discharging and loading the licensee's goods which goods are the goods carried by the licensee's vessels and for handling it, the proposal has been finalised. The entire thrust, therefore, is to increase the efficiency of the Port in handling the cargo and that could be done only by seeing that the licensee handles more cargo. According to the learned Senior Counsel for the Port Trust Mr. Somayaji, the entire object in creating these licences was to increase the Port's efficiency by handling more and more cargoes and indeed that was the policy of the Central Government too. The learned Senior Counsel appearing for the second respondent Mr.R. Krishnamoorthy was at pains to point out that as per clause (d) of Article III, the berths allotted were permitted to be used only by the licensee's vessels and whenever the berth was not used by the licensee's vessels, it could be utilised by the Board as deemed fit. All the learned Senior Counsel for the respondents were unanimous in pointing out that the whole object of these agreements, which were the direct fall-out of the policy of privatisation and liberalisation, was to increase the efficiency of the Port Trust. The learned Senior Counsel, therefore, rightly argued that if this be so, then the interpretation given to the term "licensee's vessels" should be such as would be in consonance with that policy of increasing the efficiency of the Port. It is undoubtedly true that the agreement was solely a fall-out of the policy of the Central Government. If, therefore, the interpretation is to be made of the terms in the agreement, then, it would be certainly in such a manner as would further the object of the policy. If the petitioner's interpretation is accepted, then, the term "operated" will have to be given a restricted meaning. In fact, the petitioner has not given any such independent interpretation as to what the term "operated" would mean and as to which vessel would be the vessel which has been operated by the licensee. The petitioner only takes an exception to the vessels which are stevedored by the licensees to be treated as the vessels operated by the licensee. Therefore, it is the petitioner who is trying to attribute a restricted meaning to the term "operated". As has already been pointed out, the said term has been widely understood. It takes into its folds various kinds of operations. It has also been pointed out that stowing of the cargo is also one of the essential operations of the ship for which previously the ship owner was to be responsible. It is only by passage of time and the demands of modern commercial attitudes that an institution of stevedores has been brought into existence. In English law, unless the agreements otherwise provided, the stevedores could be said to be the agents of the ship owners. Thus, it is obvious that if the policies are to be furthered, then the restricted meaning could not be given to the term "operated" as is being insisted upon by the petitioner. Again, even at the point of repetition, it is pointed out that the interpretation is being sought not by a party to the agreement but by an outsider, on the special grounds that the rights of such outsider are jeopardized because of such interpretation. Whether the rights are really jeopardized would be seen in the late part of this judgment. But, at this juncture, we will have to understand the very purpose of this agreement which was to generate more and more cargo. In fact, Condition No.9 of Clause (o) of the agreement specifically suggests as under:
"The licensee should not depend on the existing cargo generation through the Port and should generate their own cargo for achieving the minimum guaranteed throughput."
It is obvious that the licensees were not expected to increase the general imports of Madras Port Trust. That is not their area of operation nor is it their task. What was meant by this clause was that the licensee should make all out efforts to see that otherwise lingering vessels in Madras Port are disposed of early by the efficient handling of the cargo so that the licensees could deal with more and more cargo. A positive thrust is expected from the licensees not to solely sit idly taking a complacent attitude and to draw and reach out to handle more and more vessels. If this be the thrust of the agreement, then it would be wholly incorrect to give a restrictive meaning to the word "operated" and thereby restrict the scope of the term "licensee's vessels", the goods carried in which were expected to be handled at the dedicated berth. In the earlier part of this judgment, while stating the facts, I have already referred to the policy of the Government of India which was taken to throw open the Port Sector for private participation which was the result of the liberalisation/globalisation of economy. It was an avowed object of that policy to reduce the gestation period for setting up new facilities and to further arm the Port with latest technology and improved management techniques. The learned counsel for the respondents solely relied on that policy to suggest that the cargo generation was the raison d'etre for the said agreements. If, therefore, the term licensee's vessel is interpreted in the terms as suggested by the petitioner, then the very object of the policy in the agreement would suffer and the interpretation of the term in an agreement cannot be made so as to defeat or at any rate, restrict the scope of the agreement. Therefore, considering the agreement generally also, the petitioner cannot insist upon the restrictive interpretation suggested by the petitioner.
35. While this is clear, then the further task of the petitioner becomes all the more arduous. The learned Senior Counsel, however, suggests that in giving this meaning, the very policy is being defeated. The learned Senior Counsel invites my attention to a paragraph in the Guidelines meant to be followed by the Major Port Trusts for private sector participation in the Major Ports issued by the Ministry of Surface Transport. I have already referred to this document generally. Paragraph 4 which was very heavily relied upon by Mr. Sundaram, learned Senior Counsel, appearing for the petitioner, is as under:
"The Port should ensure that private investment does not result in the creation of private monopolies and that private facilities are available to all users on equal and competitive terms. However, in the case of berths constructed or taken on lease by private entrepreneurs they would be permitted to give priority berthing to their own ships and they would service other ships on a "first come first served" basis."
According to the learned Senior Counsel, if the interpretation of the term "licensee's vessel" is not restricted, then in so far as the stevedoring activity at Madras Port Trust is concerned, there would be a monopoly in favour of the licensees/respondents as the other competing stevedoring companies would not be able to face the competition. Considering that the ships stevedored by them would not get a preferential berthing and thus such competing stevedoring concerns would be completely out of business thereby creating a total monopoly in favour of the respondents. The argument though attractive at the first blush, lacks the substance. In the first place, though there is an exclusivity created in favour of the licensees/respondents in respect of their vessels, it is not as if the Port Trust is not left with any other berth to cater to such other vessels which are not having the stevedoring contracts with the licensees. The facts show that out of the three berths available, only two berths have been licenced out. There is one berth available for the general public.
Apart from this, it is not as if there is a total exclusivity in favour of the licensees. The Board has reserved to itself a right to use the berths which is apparent from clause (d) of Article III of the agreement. The said clause is as under:-
"The berth allotted shall be permitted to be used only by the licensee's vessels. Whenever the berth is not used by the Licensee's vessel, it shall be utilised by the Board as deemed fit. Any idle period due to non-occupancy of Licensee's vessels may be utilised by the Board for accommodating vessels other than the Licensee's vessels. The Berth Hire Charges shall be collected for such idle period, when the berth is not occupied by any vessel, based on the average of the actual Berth Hire Charges collected during each year of the agreement period from the Licensee. In case of the Berth being utilised by non-licensee's vessel, the berth hire charges collected from the Licensee for the said period shall be refunded to them at the end of each year. However, the trust reserves the right to collect Berth hire charges and other charges separately from Non-Licensee's vessels and the Licensees are not entitled to any share in the same. The Government priority vessels may have to be accommodated in the nominated berth, whether occupied by the licensee's vessel or vacant giving priority over the licensee's vessels. In such a contingency of the occupancy of the berth by Government vessels, the Board shall refund the Berth Hire Charges collected from the Licensee for the period the berth is occupied by the Government vessels. In the event of the berth used by a vessel other than that of the Licensee, the Licensee shall not be liable under this Agreement for any damage to the berth and/or ancillary facilities at the berth or for any loss, damage or destruction of property or for death or injury of any person at the berth, during that period. However, before and after such use/utilisation of the berth by a vessel other than that of the Licensee, a joint survey shall be conducted by the representatives of the Board and the Licensee, to ascertain the damage caused, if any, to the berth, and/or dock or on the ancillary facilities."
A glance at this clause would suggest that the Board has a right to step in whenever it finds that the berth is not being utilised by the licensee. In addition to this, the Board has also a right in respect of the Government priority vessels, even when such berth is occupied by the licensee's vessels or vacant. The only condition is that the Board has to refund the advance charges collected from the licensee for that period. This would completely shatter the so-called theory of monopoly. Mr. Sundaram, learned Senior Counsel, appearing for the petitioner, has pointed out that the agreements, run contrary to the policy because under the policy, the priority berthing could be given by the licensees only to their own ships. The learned Senior Counsel suggests that the agreement has gone beyond this policy by extending the meaning of own ships. The learned Senior Counsel appearing on behalf of the respondents were at pains to point out that though the respondents-companies factually owned some ships, the agreement could not be restricted to the ships owned by the licensees and such could never be the intent of the policy which was for generation and handling of more and more cargo. The learned Senior Counsel appearing for the first respondent-Port Trust Mr. Somayaji drew my attention to the definition of the term "owner" as given in Glossary of "The Steamship Mutual Underwriting Association (Bermuda) Limited" which is as under:
"Owner means an owner, owners in partnership, owners holding separate shares in severalty, part owner, mortgagee, trustee, charterer, operator or manager of a ship."
The learned Senior Counsel has also taken me to the definition of the term "owner" in Major Port Trust Act, 1963 which definition is as under: -
"Owner" (i) relation to goods, includes any consignor, consignee, shipper or agent for the sale, custody, loading or unloading of such goods; and (ii) in relation to any vessel or any aircraft making use of any port, includes any part-owner, charterer, consignee, or mortgagee in possession thereof."
The learned Senior Counsel argues that the term "owner" even under the Act would include an agent for the sale, custody, loading or unloading of such goods and the licensee would undoubtedly be a licensee who is having a stevedoring contract would undoubtedly be an agent for loading and unloading of the goods. Thus, the term "owner" itself would take into its sweep the concerns like the licensees/respondents. Mr. Sundaram, learned Senior Counsel appearing for the petitioner, however, tries to counter this by suggesting that if the term "owner" by itself was sufficient to suggest a charterer or a stevedoring agent, then there was no necessity in the agreement to put the two additional words in the definition of licensee's vessels. As has already been pointed out, the definition will have to be understood strictly on the back-drop of the whole agreement and the understanding thereof of the parties thereto. It must be made clear that the present is not the task of interpreting a statute so as to invent the argument of legislative surplusage. An agreement is not and cannot be kept on the high pedestal of the statute while considering its language. Even if the term "owner" was inclusive and even if two other words are used in the agreement in addition to the word "owned" it cannot be said that the two other words are meaningless or had a restricted meaning. It has to be understood that the agreement as a whole was a fall-out of the policy. It was with the sole idea of generating and handling more and more cargo so as to increase the efficiency of the Port. Again it has to be understood that the whole sentiment behind the policy and the agreement was for the betterment of the Port facilities. Under such circumstances, it cannot be said that the agreement has travelled away from or beyond the precincts of the Central Government's policy. In support of his theory of monopoly, the learned Senior Counsel for the petitioner produced a document in the nature of a communication sent out by the first respondent.
36. The document is a letter dated 7th July, 1998 wherein a Company called "The India Cements Limited" has informed the South India Corporation (Agencies) Ltd., Chennai-1 (probably a sister concern of Respondent No.2) about a vessel reaching Chennai Port on 10th July. The letter further goes to suggest that contract of stevedoring, handling and unloading of coal from the said vessel was awarded in favour of the South India Corporation (Agencies) Ltd., on condition that firstly, the vessel should be berthed within 24 hours from the time of acceptance of N.O.R. Secondly, that if the berth is delayed beyond 24 hours, then it would be the financial responsibility of the South India Corporation till such time the berth is provided to the vessel. Thirdly, that a minimum discharge rate of 6,000 MTs. per working day should be assured and lastly that for berthing the vessel in the dedicated berth, the South India Corporation would get Rs.12 per MT as special service charges. The learned Senior Counsel pointed out that relying on this, the respondents were actually reaching out the various companies by unfairly charging for giving priority berthing to the vessels and thus were getting unfair advantage. The - learned Senior Counsel further submits that such unfair advantage cannot be taken by the respondents 2 and 3, because they are not supposed to charge any extra rate for berthing and have to provide the berth at the charges fixed by the Port Trust. The learned Senior Counsel, therefore, says that the charging of the extra rate for berthing, which is totally illegal, has become possible only because there has been a total monopoly in the market of respondents 2 and 3 which is nothing but a direct fall- out of the agreement.
37. I have already dealt with the monopoly aspect and pointed out that it cannot be said that any monopoly was created in the sense that is understood by the petitioner. It has also been pointed out that the Port Trust has the control and the Board is not powerless in the matter of berthing. Merely because one other company has been approached by the respondents and merely because such company has accepted the terms of the respondents for obtaining priority in berthing its vessels, it cannot be said that this is all because of the monopoly created by the agreement. It will be for the authorities of the first respondent-Port Trust to see that berthing is not done illegally. For that purpose, there is enough scope in the agreement and on that account alone, the agreement cannot be faulted.
38. It was also agreed by the learned Senior Counsel for the petitioner that at times, the respondents had ignored their own ships and had provided the berthing facility to the ships stevedored by them.
It will be for the respondents to conduct their business in the manner that they want so long as they do not exceed the limits created by the agreement. All these would be strictly the matters to be considered by the first respondent on the basis of the actual proven facts. It will not be possible to go into these facts which may be the disputed facts.
39. Thus to conclude, it will have to be held that the agreement and more particularly the terms "licensee's goods" and "licensee's vessels" cannot be given a restrictive meaning. As suggested by the petitioner, the agreement will have to be interpreted on the back-drop of the situation under which it has come to be. The following words of Benjamin N. Cardozo in his famous Treatise "The Nature of the Judicial Process" would aptly apply to the situation:-
"Rules derived by a process of logical deduction from pre-established conceptions of contract and obligation have broken down before the slow and steady and erosive action of utility and justice.
We see the same process at work in other fields. We no longer interpret contracts with meticulous adherence to the letter when in conflict with the spirit. We read covenants into them by implication when we find them "instinct with an obligation" imperfectly expressed. The law has outgrown its primitive stage of formalism when the precise word was the sovereign talisman, and every slip was fatal."
The above quotation is a perfect answer to the criticism levelled by the learned Senior Counsel for the petitioner that the agreement is not properly drafted and clear cut definition could have been given and a more precise definition could have been provided in the same so that the task of interpreting the same could have been avoided. As has already been pointed, in the back-drop of the policy, it would be essential to give the unrestrictive meanings to the definition. The learned Senior Counsel for the respondents suggested that if such restrictive meanings are given, the whole contract would be unworkable in the sense that nothing would be left for the respondents to do in terms of increasing the efficiency of the Port and thus, the main purpose of the agreement would fail. As has already been seen, the main sentiment behind the agreement is to increase the cargo handling. If this be the spirit behind the agreement, there cannot be a restrictive meaning and it will have to be held that the respondents 2 and 3 would be justified in giving priority to the vessels with which they have stevedoring contracts.
40. This takes me to the other argument that such interpretation would militate against Articles 14 and 19(1)(g) of the Constitution as also would militate against the spirit of Section 42(3) of the '1963 Act'. The basic argument in support of the proposition that the agreement militates against Article 14 is based on the principle of "first come first served". According to the learned Senior Counsel for the petitioner, the respondents were empowered to do the very same functions of the Port Trust which have been described in Section 42(3) of the '1963 Act' and thus the respondents, armed with the agreements, are doing a statutory duty only. It is pointed out by the learned Senior Counsel that under the Agreement, the respondents had very specifically undertaken to observe all the provisions covered in the Major Port Trusts Act, Indian Ports Act, Port Laws Amendment Act, Customs Act and also other Laws, Regulations, Bye-Laws and other rules in force as amended from time to time and also the practices applicable for allotment and working of vessels at the berths in Chennai Port. For this purpose, the learned Senior Counsel relies on Article VII in the Agreement. The further argument of the learned Senior Counsel is that in Madras Port Trust, the berthing of the vessels was to be governed by the rule of "first come first served" meaning thereby a ship which is sighted first would be given a priority berthing as compared to the ship which is sighted later on. The learned Senior Counsel for the petitioner also very heavily relied upon the term "Regulations" and more particularly Regulation No.15 to press its point that the principle of first come first served was available. The learned counsel now says that the agreement which gives scope to ignore this principle would naturally militate against Article 14 inasmuch as the licensees who are doing these statutory duties would be having a discretion to give a priority berthing to the licensee's vessels irrespective of the fact that such vessels as sighted later on, others who could be denied the priority in berthing by the licensees. According to the learned Senior Counsel for the petitioner, this could clearly mean a discrimination in favour of the licensee's vessels which should be hostile discrimination with the other vessels. It is for this reason that the learned Senior Counsel for the petitioner suggests that even under the policy and the guidelines issued by the Central Government, it was provided that the priority berthing should be given by the licensee only to his own vessels and in respect of the others, the principle of first come first served should be observed. While dealing with the interpretation of the agreement and more particularly the term "licensee's vessels", I have already dealt with these aspects and I have already held that the term "licensee's vessels" could not be given a restrictive meaning. The learned Senior Counsel for the petitioner further argues that giving of such a priority would itself militate against Article 14 and, therefore, only such meaning should be given to the licensee's vessels which would not militate against the principle of first come first served and eventnally against Article 14. In short, the learned Senior Counsel suggests that the principle of first come first served is the basis of Article 14.
41. The learned Senior Counsel for the Port Trust Mr. Somayaji has taken an exception to this argument by suggesting that there is no absolute principle of first come first served, though there is no serious dispute to the fact that prior to the execution of the agreement the principle of first come first served was being observed. The learned Senior Counsel points out that this principle was not being followed absolutely inasmuch as the Port Trust used to hold a berth meeting every morning where the question of berthing each vessel was dealt with in keeping with the various considerations such as the priority berthing offered to the Government vessels or priority berthing offered to vessels containing essential supplies like food or for that matter, the vessels carrying perishable goods. The learned Senior Counsel took me through the Regulations for berthing and working of vessels. The learned Senior Counsel was at pains to point out that even under Regulation 15, there was no strict principle of "first come first served". For that matter, the learned Senior Counsel relies on Regulation 15(v) which provided that the allotment of berths shall be within the discretion of the Traffic Manager and it is only when other things are equal and subject to the exigencies it would be the vessel first sighted and identified by the Signal Station would be given priority. The learned Senior Counsel points out that the regulation provides a number of exceptions such as Government vessels embarking or disembarking troops, passenger vessels and any other class of vessels which the Chairman may from time to time declare to be eligible for a degree of priority of berthing. The learned Senior Counsel for the Port Trust even went to the extent of arguing that these regulations do not any more exist in view of the provisions of the Major Port Trust Act, 1963. The learned Senior Counsel points out that Section 133 of the Major Port Trusts Act, 1963 has repealed the Indian Ports Act, 1908 as also the Madras Port Trust Act, 1905 and, therefore, the regulations thereunder must be deemed to have been repealed. Now it is difficult to accept the extreme argument that the regulations do not exist any more, for as sub-section (2D) (c) saves the regulations framed under Indian Ports Act, 1908 and Madras Port Trust Act 1905.
The specific language of that provision is under:
"Anything done or any action taken or purported to have been done or taken (including any rule, regulation, bye-law, notification, order or notice made or issued or any resolution passed or any appointment or declaration made or any licence, permission or exemption granted or any rates, charges or duties levied or any penalty or fine imposed) under the Acts referred to in sub-section (2A), (2B) and (2C) shall, insofar as it is not inconsistent with the provisions of this Act, be deemed to have been done or taken under the corresponding provisions of this Act."
Section 123 of the Major Port Trusts Act, 1963 specifically empowers the Board to make Regulations consistent with the Act for various purposes which includes: (f) for the safe, efficient and convenient use, management and control of the docks, wharves, quays, jetties, railways, tramways, buildings and other works constructed or acquired by, or vested in, the Board, or of any land or foreshore acquired by, or vested in, the Board under this Act; (j) for regulating, declaring and defining the docks, wharves, quays, jetties, stages, and piers vested in the Board on which goods shall be landed from vessels and shipped on board vessels; (k) for regulating the manner in which, and the conditions under which, the loading and unloading of all vessels within the port or port approaches shall be carried out. All these would cover the subject of the berthing of the vessels. Therefore, unless and until it is shown that these regulations in any way are contrary to the regulations framed under the '1963 Act' or to any provision thereof, these regulations would hold the field. There is a power under Section 28 also to make the regulations. However, that Section is not relevant for the purpose of the present discussion. In short, it has to be held that the Port Regulations would certainly hold the field. However, the further question is whether there is absolute principle of first come first served. Once it is conceded that even under Regulation 15, the Chairman has the power to give priority to certain vessels, it cannot be held that the principle of first come first served would apply absolutely. Creation of an agreement providing for the exclusive control of two berths under the unchallenged policy by the Central Government can also be deemed to be an exigency, which would be able to successfully block the principle of first come first served in cases of general vessels. It cannot be forgotten that the Chairman has such power under Regulation 15 (v). The following language of that clause would be interesting to be seen:
"The exceptions to this rule are Government vessels, embarking or disembarking troops, passenger vessels and any other class of vessels which the Chairman may from time to time declare to be eligible for a decree of priority of berthing." (Italics supplied) The vessels which have been described as "licensee's vessels" would form a class by themselves and, therefore, a priority of berthing given to them cannot be deemed to be a discrimination particularly when a creation of this clause is in direct consonance with the object of the agreement viz., to increase the efficiency of the port in terms of handling of the cargo. -As it is, it has been shown that the policy of the Central Government to privatise the berths has yielded results. It has been pointed out by the learned Senior Counsel appearing for the second respondent Mr.R. Krishnamoorthy that in the very first month of the working of the agreement, the second respondent has exceeded the average of the cargo which is normally handled by the Port Trust.
42. It cannot be forgotten that the agreements have been created in pursuance of a policy to privatise the Port services which policy has not been challenged herein. It has already been shown that the agreement creates exclusive rights in the licensees in respect of the licensee's vessels thereby spelling a limited exclusivity in favour of the respondents. Once this exclusivity can be spelt out from the language of the agreement, then the non-observance of the principle of first come first served could not be viewed as a breach of the principle of equality under Article 14. It must be borne in mind that the exclusivity is also subject to the control of the Port Trust and it is not as if the two dedicated berths have been parted with permanently and completely in favour of the licensees. It has already been shown earlier that the Board has retained the rights in respect of even the dedicated berths, though to a limited extent. Once there is a creation of exclusivity in favour of the licensees under an unchallenged Central Government policy, it would be difficult to insist upon the observance of the principle of first come first served or to say that the non-observance of such principle would militate against the spirit of Article 14. Creation of limited exclusivity in favour of the licensees by itself cannot be said to be arbitrary as the said creation here is in pursuance of a policy which has sufficient guidelines therein and secondly such creation cannot be said to be discriminatory either. It cannot be forgotten at this juncture that a proper tender was floated as back as in 1995 and the offers were invited from all. It was only thereafter that the best two offers were accepted. It is not, therefore, that an opportunity was not given to the petitioner or the concerns like the petitioner to compete for the exclusive rights. It is not even whispered in the petition that offers of the second and third respondents were not the best offers or that there was any taint attached to the award of the licence in favour of the second and third respondents; in that sense, there was an equal opportunity given to all for obtaining these exclusive rights in respect of the dedicated berths. If that be so, then it cannot be said that the second and third respondents are being favourably treated as compared to others. It cannot be forgotten that respondents 2 and 3. would be investing very substantially for these exclusive rights. Now once it is seen that the decision to privatise itself has not been challenged and further there is no taint attached to the acceptance of the tender offers of the second and third respondents, the contention of the petitioner as regards the breach of Article 14 or as the case may be, the Spirit of Section 42(3) of '1963 Act' loses all its significance. The learned Senior Counsel appearing for the petitioner very heavily relied upon a decision reported in M.P. Oil Extraction and another v. State of M.P. and others, and more particularly on the observations in paragraph 44 to the effect that where the Government decision is per se irrational, arbitrary or capricious, the judicial review of such policy decision shall be warranted. It has already been shown that the policy decision has not been challenged. What is challenged is the implementation of that policy here. According to the petitioner, the implementation of the policy is faulted inasmuch as the policy is wrongly read. The petitioner's contention is not sound in law for the reasons shown earlier. It could not be said, therefore, that the decision to privatise the berth and to create the exclusive rights is in any way irrational and arbitrary. This was a case where the agreements made by the State Governments with M/s. Bastar Oil Mills and Industries and another Industry for the supply of sal seeds were challenged on the ground that the parties with whom the said agreements were entered into were being treated favourably as to the detriment of the petitioners affecting their economic viability. The Apex Court found that the policy of the State Government to give a boost to the industrially distant and tribal areas could not be faulted with. It further observed that unless the policy framed is absolutely capricious and unless it is founded on mere ipse dixit of the executive functionaries and thus comes into conflict with any statutory provision, the Court cannot and should not outstep its limit and tinker with the policy decision of the executive functionary of the State. Now in fact in the present case, the said policy of privatisation and liberalisation has not even been challenged. What is challenged is the implementation thereof which has not been shown to be arbitrary. In fact, the learned Senior Counsel appearing on behalf of the second respondent Mr.R. Krishnamoorthy has himself relied upon the observations in this judgment which have been referred to above. The learned Senior Counsel for the petitioner also heavily relied upon the reported decision of the Apex Court in Peerless General Finance and Investments Co. Limited v. Reserve Bank of India, and more particularly on paragraphs 48 to 51 therein, in the judgment of Ramaswamy, J. The learned Senior Counsel submitted that though the observations were made on the back-drop of entirely different set of facts, yet they would be extremely relevant in the present circumstances. The Apex Court has observed that it is the duty of the Court to be watchful to protect the constitutional rights of a citizen as against any encroachment gradually or stealthily thereon and when the law imposes any restriction on the fundamental rights, the Court has to examine the substance of the legislation without being beguiled by the mere appearance of the legislation.
The legislature cannot disobey the constitutional mandate by employing an indirect method. The Court must consider not merely the purpose of the law but also the means how it is sought to be secured or how it is to be administered. The object of the legislation is not conclusive as to the validity of the legislation. The learned Senior Counsel points out that even if the policy is faultless, yet it is up to the Court to examine its administration. The Apex Court has further observed as follows:-
"But the Court is entitled to consider whether the degree and mode of the regulation is in excess of the requirement or is imposed in an arbitrary manner. The Court has to see whether the measure adopted is relevant or appropriate to the power exercised by the authority or whether it overstepped the limits of social legislation. Smaller inroads may lead to larger inroads and ultimately result in total prohibition by indirect method. If it directly transgresses or substantially and inevitably affects the fundamental right, it becomes unconstitutional, but not where the impact is only remotely possible or incidental. The Court must lift the veil of the form and appearance to discover the true character and the nature of the legislation, and every endeavour should be made to have the efficacy of fundamental right maintained and the legislature is not invested with unbounded power. The Court, has, therefore, always to guard against the gradual encroachments and strike down a restriction as soon as it reaches that magnitude of total annihilation of the right."
Relying heavily on this observation, the learned Senior Counsel points out that the implementation of the policy has been entirely faulted in creating an exclusivity in favour of the licensee which precisely was to be avoided even as per the said policy and the guidelines. The learned Senior Counsel then further relies on the following observations in paragraph 51:-
"The Court has to maintain delicate balance between the public interest envisaged in the impugned provision and the individual's right; taking into account, the nature of his right said to be infringed; the underlying purpose of the impugned restriction; the extent and urgency of the evil sought to be remedied thereby; the disproportion of the restriction imposed, the prevailing conditions at the time, the surrounding circumstances; the larger public interest which the law seeks to achieve and all other relevant factors germane for the purpose. All these factors should enter into the zone of consideration to find the reasonableness of the impugned restriction. The Court weighs in each case which of the two conflicting public or private interest demands greater protection and if it finds that the restriction imposed is appropriate, fair and reasonable, it would uphold the restriction. The Court would not uphold a restriction which is not germane to achieve the purpose of the statute or is arbitrary or out of its limits."
Thus, the learned Senior Counsel for the petitioner contends that on the basis of these observations, in the present case, there was no justification for creating any exclusivity in favour of respondents 2 and 3. It has already been shown that the exclusivity created is not in the unlimited sense. The very purpose of privatisation was for increasing the efficiency of the port services. Again there is an overwhelming sentiment in the whole agreement for increasing the efficiency of the Port Trust by handling more cargo. It is apparent that the user of the words "licensee's own ships" in the guidelines cannot be held to be in a restrictive sense and further the very purpose of the agreement would be defeated, if the restrictive meaning is given to the terms in the agreement. On such back-drop, it cannot be said that the implementation of the agreement is in any way faulty or bristles against the sentiments of Article 14. The Supreme Court has dealt with the scope of Article 14, particularly in the matters pertaining to the economic policy of the State and its implementation in the reported decision in State of M.P. and others v. Nandlal Jaiswal and others, . In the instant case, the Apex Court was considering the policy of the State of Madhya Pradesh as regards the liquor licence for distillery. The challenge posed was that the whole policy was faulty and irrational as it created a monopoly in favour of respondents 5 to 11 therein for manufacturing liquors in the distilleries respectively set up by them by granting D2 licence which was renewable every year after expiry of initial period of 5 years without any limitation time. The contention raised by the petitioner in that case was that the policy of the State Government created exclusive rights. It was contended that under the policy, a decision was taken that licence to construct new distilleries should be given only to the existing contractors D1 and D2 licensees without holding auction or inviting offers. Such policy would deprive all the other liquor contractors interested in setting up the distilleries and manufacturing and supplying liquor of the opportunity to compete for the grant of such licence. It was also suggested by the petitioner therein that there was no valid justification for selectively preferring the existing contractors to other liquor contractors for grant of such licence. In this above, the Apex Court observed in paragraph 33 as under:-
"But, while considering the applicability of Article 14 in such a case, we must bear in mind that, having regard to the nature of the trade or business, the Court would be slow to interfere with the policy laid down by the state Government for manufacture and sale of liquor. The Court would, in view of the inherently pernicious nature of the Commodity allow a large measure of latitude to the State Government in determining its Policy of regulating, manufacture and trade in liquor. Moreover, the grant of licences for manufacture and sale of liquor would essentially be a matter of economic policy where the Court would hesitate to intervene and strike down what the state Government had done, unless it appears to be plainly arbitrary, irrational or mala fide. We had occasion to consider the scope of interference by the court under Article 14 while dealing with laws relating to economic activities in R.K.Garg v. Union of India, 1982 (1) SCR 947: AIR 1981 SC 2138. We pointed out in that case that laws relating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, religion, etc. We observed that the legislature should be allowed some play in the joints because it has to deal with complex problems which do not admit of solution through any doctrinaire or strait jacket formula and this is particularly true in case of legislation dealing with economic matters, where, having regard to the nature of the problems required to be dealt with, greater play in the joints has to be allowed to the legislature. We quoted with approval the following admonition given by Frankfurter, J. in Morey v. Doud, 1957 354 US 457:
"In the utilities, tax and economic regulation cases, there are good reasons for judicial self-restraint if not judicial deference to legislative judgment. The legislature after all has the affirmative responsibility. The Courts have only the power to destroy, not to reconstruct. When these are added to the complexity of economic regulation, the uncertainty, the liability to error, the bewildering conflict of the experts, and the number of times the judges have been overruled by events -- self limitation can be seen to be the path to judicial wisdom and institutional prestige and stability."
What we said in that case in regard to legislation relating to economic matters must apply equally in regard to executive action in the field of economic activities, though the executive decision may not be placed on as high a pedestal as legislative judgment in so far as judicial deference is concerned. We must not forget that in complex economic matters every decision is necessarily empiric and it is based on experimentation or what one may call 'trial and error method' and, therefore, its validity cannot be tested on any rigid 'a priori' considerations or on the application of any strait jacket formula. The Court must while adjudging the constitutional validity of an executive decision relating to economic matters grant a certain measure of freedom or 'play' in the 'joints' to the executive."
The Apex Court further goes on to hold as follows:-
"Mere errors of Government are not subject to our judicial review. It is only its palpably arbitrary exercise which can be declared void." The Government, as was said in Permian Basin Area Rate Cases, 1968 (20) L ed (2d) 312 is entitled to make pragmatic adjustments which may be called for by particular circumstances. The Court cannot strike down a policy decision taken by the State Government merely because it feels that another policy decision would have been fairer or wiser or more scientific or logical. The Court can interfere only if the policy decision is patently arbitrary, discriminatory or mala fide."
The above quoted observations would undoubtedly highlight the position that in the economic matters, such as the present matter, there has to be given a broader scope and the restricted interpretation of Article 14 should be avoided. Present situation is no different. The present decision has been taken to privatise the berths in pursuance of the policy of liberalisation of economy, in that the participation by the private sector was not only approved but was shown as a welcome gesture. A well balanced policy laced with guidelines was thrust out and it is then that the tenders were invited giving an opportunity to all to compete for the exclusive rights regarding the berth. It goes unchallenged and the best of the offers were accepted and the agreements entered into which provided for the exclusive rights in a limited sense regarding the dedicated berths. Could the creation of such exclusivity be termed as an arbitrary exercise? Considering the above mentioned observations, the answer has to be in the negative. The further criticism that the implementation was faulty can also not be brooked for the simple reason that where the creation of exclusivity as a result of a contract, then it has to be at the detriment of those who were not covered in the said agreement.
43. Very curiously in the above decision, the Apex Court has also tested the justification of the policy in paragraph 35 of its judgment where it points out that there were good circumstances for justifying the policy decision. Amongst the factors justifying the privatisation of the distilleries, the Apex Court points out the following factors:-
" (i) The plea by the distilleries association for privatisation;
(ii) The existence of the working distilleries was proving threat to the environment;
(iii) The total capacity of the existing distillery was inadequate to meet the State needs;
(iv) The plant and machinery of the distilleries has become antiquated and worn out and there was no incentive to the licensees to replace it by modern plant and machinery. The buildings in which the distilleries were housed had also become old and dilapidated;
(v) The State Government was not in a position to maintain them in a good condition and it was, therefore, essential to construct new distilleries with modern technologically advanced plant and machinery at new sites where there would be no problem of air or water pollution.???
(vi) The decision of privatisation would have saved substantial expenditure on the part of the State Government and that the State Government would also be spared of the expenditure to maintain such distilleries further."
44. Practically all the above aspects are present in the scenario of this case. Firstly, the Port Trust was not in a position to increase the cargo handling capacity because of the absence of modern machinery. Secondly, there was a need to privatise the berth in view of the Global policy of liberal economy, then there was need to maintain the berths and to equip them with modem machineries, and it was for this reason that the decision to privatise the berths was taken. If this was the back- drop of the decision of privatisation of berths, then to deny the exclusivity to the licensees would have been ridiculous. The creation of exclusivity was, therefore, the need of the time felt and reflected in creation of the policy to privatise. Under such circumstances, it cannot be said that merely because there is a creation of exclusivity in favour of the licensees/respondents, the spirit of Article 14 would suffer a jolt.
45. The same sentiment regarding the play in the joint as regards Article 14 was expressed by the Apex Court in Sterling Computers Ltd. v. M/s. M & N Publications Ltd., in the following words:-
"In contracts having commercial element, some more discretion has to be conceded to the authorities so that they may enter into contracts with persons, keeping an eye on the augmentation of the revenue. But even in such matters they have to follow the norms recognised by Courts while dealing with public property. It is not possible for Courts to question and adjudicate every decision taken by an authority, because many of the Government Undertakings which in due course have acquired the monopolist position in matters of sale and purchase of products and with so many ventures in hand, they can come out with a plea that it is not always possible to act like a quasti-judicial authority while awarding contracts. Under some special circumstances, a discretion has to be conceded to the authorities who have to enter into contract giving them liberty to assess the overall situation for purpose of taking a decision as to whom the contract is awarded and at what terms. If the decisions have been taken in bona fide manner although not strictly following the norms laid down by the Courts, such decisions are upheld on the principle laid down by Justice Holmes, that Courts while judging the constitutional validity of executive decisions must grant certain measure of freedom of "play in the joints" to the executive."
In view of this, the issue need not be dilated further and it must be held that there was nothing unreasonable in creating the exclusive rights (though in the limited sense) in favour of respondents/licensees.
46. The learned Senior Counsel for the petitioner Mr. Sundaram very heavily reli??? the Supreme Court decision in L.I.C. of India v. Consumer Education and Research Centre, to suggest that it was perfectly legal for the Courts to test even the contractual agreements on the touchstone of Article 14 of the Constitution and if the Court found something unreasonable about a clause in the agreement, then the said clause if severable from the rest of the agreement could be struck down. There can be absolutely no dispute with the proposition in the aforementioned L.I.C. of India case, . However, it has already been shown that there is no unreasonableness attached to any of the clauses or even the interpretation made by the Port Trust of the clauses regarding the "licensee's goods" and "licensee's vessels". This is also apart from the irrefutable arguments by the learned Senior Counsel for the respondents herein that in the L.I.C. of India case, the agreement was challenged by a party thereto and not by an outsider. The reliance on the aforementioned case is, therefore, of no consequence to the present case.
47. The learned Senior Counsel for the petitioner also heavily relied on the decision of a Division Bench of this court in M/s. Chokhani International Ltd. v. Board of Trustees of the Port of Madras, 1987 W.L.R. 529 for the same reason. As it is already pointed out, even the decision in Chokhani International Ltd., would be of no consequence in view of the finding that the creation of exclusive rights in favour of respondents 2 and 3 is not against the spirit of Article 14 of the Constitution. The learned Senior Counsel appearing for the second respondent also relied on a celebrated judgment reported in Viklad Coal Merchant, Patiala Etc. v. Union of India and others, and pointed out that in that case, the challenge was the denial to the group of coal merchants of the use of the railways for transport of coal from various coalfields and way-side stations to their destinations at the instance of the railway administration. It was also suggested that only certain transporters of coal were accorded priority in the matter of transport of coal such as the Central and the State Governments and the sponsored and recommended transporters and, therefore, the petitioners were refused equal opportunity in the matter of transport of coal by the Railway. There, the decision was challenged both for violation of Article 14 and Article 19(1)(g) as in the present case. The learned Senior Counsel points out that the Apex Court has dismissed the constitutional challenge on both the counts. The contention there was that railway being a common carrier and by Section 28 of the Railways Act being statutorily prohibited from giving undue preference by arbitrarily picking and choosing some out of those seeking to use its services and facilities, its action by giving priority to some transporters of coal denying use of its transport facilities to the petitioners would have some situation was discriminatory in character and hence, violative of Article 14 of the Constitution. The second constitutional challenge was that the impugned orders in their cumulative effect have imposed a total ban on the transport of coal offered by the petitioners by the Railways and thereby imposed unreasonable restrictions on the fundamental freedom of the petitioners to carry on their trade guaranteed by Article 19(1)(g) and hence, the orders were unconstitutional. Thirdly it was suggested that Section 27-A of the Railways Act, which enables the Central Government to impose a total ban on transport of coal was violative of Article 19(1)(g) and hence unconstitutional and lastly it was suggested that the total stoppage of booking Of coal from wayside stations and colliery sidings unless the collieries in their own name book the wagons imposes a total ban on transport of coal offered by the petitioners and, therefore the impugned order was violative of Article 19(1)(g). The Apex Court accepted that the railway being a State monopoly, it has to be subjected to the regulatory measures. However, simultaneously it became necessary to arm the Central Government with power to direct the railway administration to give preference in the matter of transport of goods of the Government Central or State or specified goods to meet the demands of various regions as well as the needs of the Government. The Apex Court also further found that the Central Government was better equipped to know what class of goods were required to be sent to any particular area expeditiously to meet some shortage or for national security and to meet any emergency or natural or man-made catastrophe so as to accord special treatment in the matter of transport. It held that Section 28 of the Railways Act to be a corollary to Section 27-A of the Act and further held that Section 28 was complete guarantee of Article 14 since the equality guaranteed by the Article was translated into that statutory provision. It further went on to hold that under Section 27-A, the Central Government could issue the preferential traffic schedule considering the public interest. It also pointed out that it was not as if a total embargo on the transport of coal by railways at the instance of the private transporters was clamped. It pointed out that there was no such total embargo as against the private transporters. It further pointed out that since there was no total ban as against the private transporters, there could be no breach of Article 19(1)(g) as the restrictions placed by the impugned order could be said to be reasonable restrictions which were imposable in larger public interest. The Apex Court also held that a developing country with mixed economy and economic planning have certain targets to achieve. The targets are planned in advance and the economic activity is geared to the achievement of these targets. If the required resources necessary for achieving targets were readily available, no difficulty would arise. But a developing country has to so distribute its scarce resources as to achieve and accomplish desired targets. This situation is bound to lead to a gap between the demand and supply for transport services generated by the railway and the supply of the service, the resources being not sufficient to meet with all existing demands, the scarce resources, therefore, had to be equitably distributed keeping in view the planned target. This equitable distribution would necessitate imposing of reasonable restrictions and according of priorities.
It further observed as follows:
"Planned regulated movement of coal to meet the priority needs if it results in denial of that facility to non-priority sector could not be rejected as placing an unreasonable restriction on the fundamental freedom to carry on trade or business. And that is the object underlying Section 27-A. It is, therefore, idle to contend mat the section being violative of Article 19(1)(g) is unconstitutional."
The learned Senior Counsel points out the striking similarity in the situation. The learned Senior Counsel also points out that here the Port Trust had the monopolistic rights and under the policy to increase the handling of cargo, the agreements were entered into under a definitive State policy, and in that also meticulous care was taken that all the berths were not dedicated by way of agreements, leaving one berth open and that too only for the limited period of years. The learned Senior Counsel also pointed out that once the Ennore Port was erected the so called dearth of the berths was to vanish which is clear from the agreements themselves. The learned Senior Counsel, therefore, argues that there could be no question of any unreasonableness by mere creation of exclusive rights in respect of the limited number of berths and further there could be no question of the challenge to the agreements also on the ground of violation of Article 19(1)(g).
48. The argument of the learned Senior Counsel for the petitioner as regards Article 19(1)(g) has already been referred to. The learned Senior Counsel argued that respondents being armed with the exclusive rights regarding the berths would throw the other competitor stevedoring companies out of business as the agreements would give a definite advantage to the respondents of offering the berthing priority. It was in this sense that it was argued by the learned Senior Counsel for the petitioner that unfair advantage has been taken over by the licensees/respondents and that unfair advantage had a direct impact on the business of stevedoring concerns like the petitioner. It has already been shown that there will be no question of the business of the petitioner being affected.
49. The learned Senior Counsel for the third respondent Mr.Habibullah Badsha also pointed out a technical snag as regards Article 19(1)(g) by referring to a decision of the Supreme Court reported in The Divisional Forest Officer v. Bishwanath Tea Co. Ltd., . He pointed out that this petition was only by a company and not by a citizen and, therefore, technically the petitioner could not argue of any violation of Article 19(1)(g) as that right was available only to a citizen and not to a company. The argument is undoubtedly correct. Inspite of the fact that this objection was taken right in the beginning, no efforts were made to amend the petition or to add a party to the petition. However, considering the importance of the subject, the petitioner was still allowed to advance the arguments as regards Article 19(1)(g) also. However, here also the petitions must fail for the reasons given by the Apex Court in Viklad Coal Merchant's case, . There cannot indeed be a situation where the petitioner would be completely out of business. One general berth is already available to the Madras Port Trust in respect of which there could be a berthing in accordance with the principle of "first come first served". Again, it cannot be said that the petitioner had no opportunity to compete for the exclusive rights of the berths.
50. For all these reasons, the challenge of the petitioner under Article 19(1)(g) also must fail. In the result, it must be held that both the writ petitions have no merits and they must fail. Answer to question No.2 will be in affirmative, while answers to question Nos. (2a) and (2b) will be in negative. However, before parting, I must record my appreciation for the invaluable assistance given by all the learned Senior Counsels appearing for the parties who argued the matter and rendered the full advantage of their research and knowledge of this complex subject to the Court.
51. In the result, the writ petitions are directed to be disposed of. There will be no order as to costs. W.M.P.Nos. 14472 and 14473 of 1998 are closed.