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1. Mr. Ramdas S. Nayak, the Petitioner No. 1 is a social worker and an Ex-member of the Legislative Assembly of Maharashtra and presently a Corporator of the Bombay Municipal Corporation. Petitioner No. 2 Mr. Vinay P. Shasrabuddhe, is also a social worker and Executive Director of Rambhau Mhalgi Prabodhini. By this writ petition filed by way of public interest litigation, both these petitioners seek to challenge the power purchase agreement being finalised between the Maharashtra State Electricity Board (Respondent No. 6 herein)'and the Dabhol Power Company, promoted by the U. S. based Enron Corporation, on the ground that it is unconstitutional and against the interest of the people at large. It is contended by the petitioners that this deal, which according to them is shrowded in total secrecy, is blatently illegal and has grave financial implications on the State Exchequer and the people in general.

2. When the matter came up before us on 15th July, 1994, we heard the learned counsel for the petitioners Mr. Apte at length. The main challenge to the award of the contract by the Maharashtra State Electricity Board to the Dabhol Power Company (Respondent No. 8 herein) is on the ground that it was finalised without resorting to competitive bidding by inviting global tenders. The contention of the petitioners is that the Maharashtra State Electricity Board has not followed the norms normally followed in awarding such contracts i.e. inviting competitive bids. Finalisation of the contract by negotiations, according to the petitioners is not a permissible mode of awarding such contracts by the State or its instrumentalities. According to the petitioners, the whole contract has been finalised in complete secrecy and is even now shrowded by secrecy. The entire negotiations in this regard have been kept away from the gaze of the public and the decision to award the contract has been arrived at without any regard to. the views expressed by various experts in the field including the World Bank. Reference was made to the report of a fact-finding committee appointed by some voluntary organisation, which had expressed its reservations in regard to the impugned deal. Our attention was also drawn to comments of some persons claiming expertise and experience in this field and some press reports published in the newspapers from time to time. The petitioners allege that the whole deal is against public interest. The petitioners have also a complaint against the guarantee and counter guarantee which is being given by the State of Maharashtra and the Central Government respectively. According to the petitioners, the terms on which the agreement has been finalised are not the most beneficial terms. By competitive bidding, more beneficial terms might have been available.

3. Also heard the Counsel for the respondents who had entered appearance through their respective Counsel and filed their respective affidavits countering the various allegations made In the Writ Petition.

4. After hearing the learned Counsel for the parties at some length, we directed the respondents to furnish us with all the facts, events and documents leading to the finalisation of the agreement in question with the Respondent No. 8, Dabhol Power Company. In compliance with the above direction, further affidavits have been filed by all the parties setting out in detail material facts and particulars of the case. A copy of the power purchase agreement entered into between the Maharashtra State Electricity Board and the Dabhol Power Company on 8th December, 1993 was also produced before us for our perusal. The learned counsel for the petitioners wanted to peruse the said agreement. On his request, we also asked the learned Advocate General appearing for the Maharashtra State Electricity Board to give inspection of the said document to the petitioners and their counsel to enable them to point out any clause or condition, therein, which according to them might justify judicial review in this case. The hearing was accordingly adjourned till lunch break. When the Court reassembled, on being informed by petitioners and their Counsel, that they have perused the agreement, the hearing for admission of the Writ Petition was resumed. The Counsel for the petitioners was further heard at some length. His main grievance however was the same i.e. finalisation of the agreement by negotiations without competitive bidding. According to the petitioners, in respect of a project of such a vast rnagnitude, competitive bidding was a must and failure to report to it would render the negotiations and the resultant agreement most arbitrary and against public interest. It was submitted that this is a fit case where this Court should exercise its power of judicial review and halt the deal in question. In support of this contention, reliance was placed on the decision of the Supreme Court in Kasturi Lal v. State of Jammu and Kashmir. Sterling Computers, Limited y. M/s. M. & N. Publications Limited, . the decision of the State Government and the Central Government to furnish guarantee and counter guarantee respectively was also challenged as unprecedented and arbitrary.

20. Considering the facts and circumstances of the present case in the light of the ratio of the decisions of the Supreme Court referred to above, we do not find any impropriety in the Power Purchase Agreement entered into between the MSEB and respondent No. 8, the Dabhol Power Company. Finalisation of a deal by negotiations, as has happened in the present case cannot, per se, be termed as illegal. It depends on the facts and circumstances of each case. The nature of the contract, the surrounding circumstances and the facts of this case clearly go to show that the Government of India took a policy decision in the year 1991 to encourage and invite private entrepreneurs both from within and outside the country to set up power projects. Widest possible publicity was given to this policy of the Government in India and abroad. A high level delegation of the Government of India also visited U.K. & U.S.A. for inviting foreign entrepreneurs to set up power projects in India. Wide publicity was given to the visits by the high level delegation and the discussions they held with prospective private investors. The delegation made highly publicised presentations to audiences of investors, project developers, financial institutions, independent power generators and US-based companies. One such presentation was made to the Enron Power Corporation in Houston, USA ("Enron") which is one of the world's largest power companies and is the major shareholder of the 8th respondent-- Dabhol Power. Company. Enron expressed a desire to negotiate the setting up of a gas-based power project in India. No other entrepreneur having necessary expertise and experience did come forward with offer to set up power project. Enron took interest in the offer of the Government and sent a team of experts to visit India which surveyed the field of power generation, selected the site at Dabhol for the proposed project and made its offer to set up the project to the Government of India as far back as in 1992. The proposal was deliberated at length for two-and-half years; draft agreements were prepared from time to time and it was ultimately the eighth or ninth draft which was finalised. Nothing was done secretly. There was total transparency at every stage of the negotiations. It is also no one's case that there was a rival company which was interested in setting up the project whose case has been turned down to favour the 8th respondent. While considering the submissions of the learned counsel for the petitioners that by competitive bidding more favourable terms might have been available, we asked the learned counsel whether he had got any material to show that any equally reliable and competent company had come up with any offer which was more beneficial than the offer of the 8th respondent, which has been turned down in favour of the 8th respondent. No such material could be brought before us. It is evident that for the last two-and-half years it is known to everybody concerned that power project at Dabhol is being negotiated with Enron. None else came on the scene for the particular project, though we are told that there are seventy more proposals for setting up power projects in different regions are in the pipeline, out of which seven are in the process. We do not find any material or evidence to substantiate the contention of the petitioners that the contract in question is arbitrary or illegal or against the public interest. On the other hand, all the facts and circumstances, indicate the contrary. So far as the views of the World Bank are concerned, we find that the said views were considered and certain major modifications in the project were made in the light thereof. We however, like to make it clear that under Art. 226 of the Constitution of India, we are not expected to go into the merits of the project and/or objections of the World Bank. It is the function of the Government or the authority concerned who has to take a decision taking into account the overall facts and circumstances before it and to decide as to what is in its best interest. We may also make it clear that the petitioners have not alleged any mala fides against the respondents. There is nothing to show that anybody was being favoured for any specified reason. The grievance of the petitioners is based on the sole ground of the failure to follow the usual procedure of inviting tenders, which as stated by us earlier, is not an invariable rule. In our opinion, in the present case, it may not be an appropriate mode. Negotiations was the only appropriate mode which has been done in a most reasonable manner. The decision has been arrived at after long deliberations and discussions and consideration of all relevant factors. We do not find any reason to interfefe with the same in exercise of our extraordinary powers of judicial review under Art. 226 of the Constitution of India.