{"id":58551,"date":"2011-02-04T00:00:00","date_gmt":"2011-02-03T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/whether-vs-kandla-on-4-february-2011"},"modified":"2016-11-27T06:54:49","modified_gmt":"2016-11-27T01:24:49","slug":"whether-vs-kandla-on-4-february-2011","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/whether-vs-kandla-on-4-february-2011","title":{"rendered":"Whether vs Kandla on 4 February, 2011"},"content":{"rendered":"
Gujarat High Court<\/div>\n
Whether vs Kandla on 4 February, 2011<\/div>\n
Author: D.H.Waghela,&Nbsp;Honourable Mr.Justice K.A.Puj,&Nbsp;<\/div>\n
   Gujarat High Court Case Information System \n\n  \n  \n    \n\n \n \n    \t      \n         \n\t    \n\t\t   Print\n\t\t\t\t          \n\n  \n\n\n\t \n\t \n\t \n\t \n\t \n\t \n\t \n\t \n\t \n\t \n\t \n\t \n\t \n\t\n\n\n \n\n\n\t \n\nSCA\/286\/2011\t 35\/ 35\tJUDGMENT \n \n \n\n\t\n\n \n\nIN\nTHE HIGH COURT OF GUJARAT AT AHMEDABAD\n \n\n \n\n\n \n\nSPECIAL\nCIVIL APPLICATION No. 286 of 2011\n \n\n \n \nFor\nApproval and Signature:  \n \nHONOURABLE\nMR.JUSTICE D.H.WAGHELA \tSd\/- \n \n\n\n \n\nHONOURABLE\nMR.JUSTICE K.A.PUJ \t\t\tSd\/- \n \n\n\n \n\n===================================\n<\/pre>\n
1.<\/p>\n
Whether
\n\t\t\t\tReporters of Local Papers may be allowed to see the judgment ?\n<\/p>\n
YES<\/p>\n
2.<\/p>\n
To
\n\t\t\t\tbe referred to the Reporter or not ?\n<\/p>\n
YES<\/p>\n
3.<\/p>\n
Whether
\n\t\t\t\ttheir Lordships wish to see the fair copy of the judgment ?\n<\/p>\n
NO<\/p>\n
4.<\/p>\n
Whether
\n\t\t\t\tthis case involves a substantial question of law as to the
\n\t\t\t\tinterpretation of the constitution of India, 1950 or any order
\n\t\t\t\tmade thereunder ?\n<\/p>\n
NO<\/p>\n
5.<\/p>\n
Whether
\n\t\t\t\tit is to be circulated to the civil judge ?\n<\/p>\n
NO<\/p>\n
NIKHIL
\nADHESIVES LIMITED THRO’DHARMESHBHAI DHIRAJBHAI PANDYA – Petitioner<\/p>\n
Versus<\/p>\n
KANDLA
\nPORT TRUST – Respondent<\/p>\n
Appearance
\n:\n<\/p>\n
MR MIHIR
\nTHAKORE, SENIOR ADVOCATE WITH MR
\nKASHYAP K PUJARA
\nWITH MR VISHAL T. PATEL for Petitioner.\n<\/p>\n
MR DHAVAL D VYAS for
\nRespondent.\n<\/p>\n
===================================<\/p>\n
CORAM
\n\t\t\t:\n<\/p>\n
HONOURABLE
\n\t\t\tMR.JUSTICE D.H.WAGHELA<\/p>\n
and<\/p>\n
HONOURABLE
\n\t\t\tMR.JUSTICE K.A.PUJ<\/p>\n
Date
\n: 04\/02\/2011
\nCAV JUDGMENT <\/p>\n
(Per
\n: HONOURABLE MR.JUSTICE K.A.PUJ)<\/p>\n
The
\n\tpetitioner has filed this petition under Article 226 of the
\n\tConstitution of India praying for quashing and setting aside the
\n\tResolution No.108 dated 22.11.2010 passed by the respondent, Kandla
\n\tPort Trust.  The petitioner has also prayed for stalling the
\n\tproceedings of fresh tenders in respect of construction of liquid
\n\tstorage tanks issued by the respondent.  The petitioner further
\n\tprayed for the direction to the respondent to issue formal letter of
\n\tallotment to the petitioner.\n<\/p>\n
The
\n\tbrief facts giving rise to the present petition are that the
\n\trespondent invited tenders on 12.03.2005 for allotment of 17 plots
\n\tfor construction of liquid storage tanks at Kandla by issuing a
\n\tpublic notice. The petitioner submitted its price bid in August 2005
\n\tfor allotment of Plot No.8 for construction of liquid storage tanks
\n\tat Kandla.  The petitioner was declared the highest bidder for Plot
\n\tNo.8 by the respondent on 12.01.2006 on the basis of the
\n\trecommendation of the Tender Committee constituted in the matter of
\n\ttender for allotment of plot for construction of liquid storage
\n\ttanks at Kandla.  Allotment of 17 plots to the respective highest
\n\tbidder for 30 years lease is subject to receipt of CRZ Clearance.
\n\tThe petitioner thereafter entered into further correspondence with
\n\tthe respondent between the period from 2006 to 2010.  The petitioner
\n\tthereafter addressed a letter dated 18.01.2010 informing the
\n\trespondent about their subsidiary Company M\/s.
\n\tSanghavi Logistics Private Limited, incorporated for
\n\tconstruction, maintenance and operation of liquid storage tanks at
\n\tKandla and asking permission to carry out construction, maintenance
\n\tand operation of storage tank at Plot No.8 in the name of M\/s.
\n\tSanghavi Logistics Private Limited, instead of M\/s. Nikhil Adhesives
\n\tLimited, the petitioner
\n\therein.  In response to the said letter, the petitioner received a
\n\treply dated 18.03.2010 from the respondent stating that the matter
\n\tof allotment is still not finalized.  The petitioner, therefore,
\n\tapproached the respondent and met respondent’s Estate Manager who
\n\tassured the petitioner that things will work out.  The petitioner
\n\twaited in anticipation that things would work out and the respondent
\n\tbeing Govt. Organization would take its own time to take decision.\n<\/p>\n
To
\n\tthe shock and surprise of the petitioner, a Resolution No.108 was
\n\tpassed by the respondent on 22.11.2010 terminating the contract
\n\tentered into with the petitioner.  The respondent vide its letter
\n\tdated 09.12.2010 informed the petitioner that the Board of Trustees
\n\tof the Port of Kandla vide Resolution No.108 in its meeting held on
\n\t22.11.2010 has decided to cancel the tender process started in the
\n\tyear 2005 for allotment of 17 plots for construction of liquid
\n\tstorage tanks at Kandla. Despite the fact that CRZ Clearance was
\n\tgranted by the Ministry
\n\tof Forest & Environment on 02.02.2010, the
\n\trespondent has cancelled the allotment and started fresh tender
\n\tprocess by issuing fresh public notice on the website of Kandla Port
\n\tTrust.  The petitioner apprehended that if such tender process is
\n\tallowed to be completed, in that case, the petitioner would suffer
\n\thuge losses and all the efforts, time, money, labour invested by the
\n\tpetitioner in furtherance of the said contract would go in vain.
\n\tThe petitioner was, therefore, constrained to file the present
\n\tpetition before this Court.\n<\/p>\n
Mr.\n<\/p>\n
\tMihir Thakore, learned Senior Advocate appearing with Mr. Kashyap
\n\tPujara for the petitioner submitted that the impugned Resolution
\n\tNo.108 is absolutely illegal, arbitrary, unjust, unfair and is
\n\tpassed high-handedly and, therefore, deserves to be quashed and set
\n\taside.  He further submitted that the impugned Resolution was passed
\n\twithout giving any opportunity of hearing to the petitioner and
\n\thence, it is violative of the principles of natural justice.  He
\n\tfurther submitted that the tender process
\n\twas complete in 2006, when the petitioner received the letter of
\n\tintent dated 12.01.2006 informing that the petitioner is the highest
\n\tbidder, which amounts to a concluded contract.  He further submitted
\n\tthat the doctrine of promissory estoppel is where one party has by
\n\this words or conduct made to the other a clear and unequivocal
\n\tpromise which is intended to create legal relations or effect a
\n\tlegal relationship to arise in the future, knowing or intending that
\n\tit would be acted upon by the other party to whom the promise is
\n\tmade and it is in fact so acted upon by the other party, the promise
\n\twould be binding on the party making it and he would not be entitled
\n\tto go back upon it.  He has, therefore, submitted that the principle
\n\tof promissory estoppel would certainly estop the respondent from
\n\tbacking out of its obligation arising from a solemn promise made by
\n\tit to the petitioner.  In support of this submission, Mr. Thakore
\n\trelied on the decision of the Apex Court in the case of The
\n\tGujarat State Financial Corporation V\/s. M\/s. Lotus Hotels Private
\n\tLimited, AIR 1983 SC 848,
\n\twherein it is held that it is too late in the day to contend that
\n\tthe instrumentality of the State which would be “other
\n\tauthority” under Article 12 of the Constitution can commit
\n\tbreach of a solemn undertaking on which other side has acted and
\n\tthen contend that the party suffering by the breach of contract may
\n\tsue for damages but cannot compel specific performance of the
\n\tcontract.  It was not disputed that the Gujarat State Financial
\n\tCorporation which is set up under Section 3 of the State Financial
\n\tCorporations Act, is an instrumentality of the State and would be
\n\t“other authority” under Article 12 of the Constitution.
\n\tBy its letter of offer and the subsequent agreement the appellant
\n\tCorporation entered into a solemn agreement in performance of its
\n\tstatutory duty to advance the loan of Rs.30 Lacs to the respondent
\n\tCompany.  Acting on the solemn undertaking, the respondent proceeded
\n\tto undertake and execute the project of setting up a 4 Star Hotel.
\n\tThe agreement to advance the loan was entered into in performance of
\n\tthe statutory duty cast on the Corporation by the statute
\n\tunder which it was created and set up.  On its solemn promise
\n\tevidenced by the afore-mentioned two documents, the respondent
\n\tincurred expenses, suffered liabilities to set up a Hotel.
\n\tPresumably, if the loan was not forthcoming, the respondent may not
\n\thave undertaken such a huge project.  Acting on the promise of the
\n\tappellant evidenced by documents, the respondent proceeded to suffer
\n\tfurther liabilities to implement and execute the project.  In that
\n\tbackdrop of this incontrovertible fact situation, the principle of
\n\tpromissory estoppel would come into play.  Thus, the principle of
\n\tpromissory estoppel would certainly estop the Corporation from
\n\tbacking out of its obligation arising from a solemn promise made by
\n\tit to the respondent.  The respondent acting upon the solemn promise
\n\tmade by the appellant incurred huge expenditure and if the appellant
\n\tis held to its promise, the respondent would be put in a very
\n\tdisadvantageous position and therefore also the principle of
\n\tpromissory estoppel can be invoked in this case.\n<\/p>\n
Mr.\n<\/p>\n
\tThakore further submitted that the petitioner suffered loss of
\n\topportunity from the year 2005, as there were such other projects
\n\tamongst various ports across the country of which tenders were
\n\tfloated.  The petitioner never took part in other tender process in
\n\tthe country as the petitioner was declared highest bidder and was
\n\tallotted Plot No.8 subject to the observance of the formality of CRZ
\n\tClearance.  He further submitted that in order to meet with the bid
\n\tamount quoted by the petitioner other than the amount invested
\n\ttowards technical and other purpose, the petitioner always had to
\n\tkeep provision for a sum of Rs.23,74,00,442.64 ps. and as a result,
\n\the could not utilize the said amount for any other purpose and
\n\tthereby suffered loss of opportunity.  He further submitted that the
\n\trespondent being a Government Undertaking cannot be allowed to
\n\tfunction in such an arbitrary manner as State action must not be
\n\tarbitrary, must be based on some rational and relevant principle and
\n\tdealing with the public, whether by giving of jobs or entering into
\n\tcontracts or otherwise, it cannot act arbitrarily and enter into
\n\trelationship with any person it likes as its sweet will, but its
\n\taction must be in conformity with some principle which meets the
\n\ttest of reason and relevance.  He has, therefore, submitted that the
\n\tpetition deserves to be admitted and the interim relief as prayed
\n\tfor is required to be granted.  In support of this submission, Mr.
\n\tThakore relied on the decision of the Apex Court in the case of
\n\tState of H.P. &
\n\tOthers V\/s. Ganesh Wood Products and others, (1995) 6 SCC 363,
\n\twherein it is held that the rule of promissory estoppel being an
\n\tequitable doctrine, has to be moulded to suit the particular
\n\tsituation.  It is not a hard and fast rule but an elastic one, the
\n\tobjective of which is to do justice between the parties and to
\n\textend an equitable treatment to them.  The doctrine of promissory
\n\testoppel was evolved to protect a promisee who acts on the faith of
\n\ta promise \/ representation made by promisor and alters his position
\n\teven though there is no consideration for the promise and even
\n\tthough the promise is not
\n\trecorded in the form of a formal contract.  Anything and everything
\n\tdone by the promisee on the faith of the representation does not
\n\tnecessarily amount to altering his position so as to preclude the
\n\tpromisor from resiling from his representation.  Altering his
\n\tposition should mean such alteration in the position of the promisee
\n\tas it makes it appear to the Court that holding the promisor to his
\n\trepresentation is necessary to do justice between the parties.  The
\n\tdoctrine should not be reduced to a rule of thumb.  If the equity
\n\tdemands that the promisor is allowed to resile and the promisee is
\n\tcompensated appropriately, that ought to be done.  If, however,
\n\tequity demands, in the light of the things done by the promisee on
\n\tthe faith of the representation, that the promisor should be
\n\tprecluded from resiling and that he should be held fast to his
\n\trepresentation, that should be done.  This is the proper way of
\n\tunderstanding the words “promisee altering his position”.\n<\/p>\n
Mr.\n<\/p>\n
\tThakore further relied on the decision of the Apex
\n\tCourt in the case of Mahabir
\n\tAuto Stores V\/s. Indian Oil Corporation, AIR 1990 SC 1031
\n\twherein it is held that the State acts in its executive power under
\n\tArticle 298 of the Constitution in entering or not entering in
\n\tcontracts with individual parties.  Article 14 of the Constitution
\n\twould be applicable to those exercise of power.  Therefore, the
\n\taction of State organ can be checked under Article 14.  Every action
\n\tof the State executive authority must be subject to rule of law and
\n\tmust be informed by reason.  So, whatever be the activity of the
\n\tpublic authority, it should meet the test of Art.14 of the
\n\tConstitution.  If a Government action even in the matters of
\n\tentering or not entering into contracts, fails to satisfy the test
\n\tof reasonableness, the same would be unreasonable.  Rule of reason
\n\tand rule against arbitrariness and discrimination, rules of fair
\n\tplay and natural justice are part of the rule of law applicable in
\n\tsituation or action by State instrumentality in dealing with
\n\tcitizens.  Even though the rights of the citizens are in the nature
\n\tof contractual rights, the manner, the method and motive
\n\tof a decision of entering or not entering into a contract, are
\n\tsubject to judicial review on the touchstone of relevance and
\n\treasonableness, fair play, natural justice, equality and
\n\tnon-discrimination.\n<\/p>\n
Mr.\n<\/p>\n
\tThakore further relied on the decision of the Apex Court in the case
\n\tof State of
\n\tMaharashtra and others V\/s. Atur India Private Limited, (1994) 2 SCC
\n\t497, wherein the Apex
\n\tCourt was concerned with the leviability of stamp duty under the
\n\tBombay Stamp Act on agreement to lease.  While pointing out the
\n\tdistinction between the agreement to lease and agreement of lease,
\n\tthe Court has referred to Woodfall on law of Landlord and Tenant
\n\twherein it is observed that a contract for lease is an agreement
\n\tenforceable in law whereby one party agrees to grant and another to
\n\ttake a lease.  The expressions ‘contract for lease’ and ‘agreement
\n\tfor lease’ is to be preferred as being more definite, agreement
\n\tfrequently means one of many situations in a contract.  A contract
\n\tfor a lease is to be distinguished
\n\tfrom a lease, because a lease is actually a conveyance of an estate
\n\tin land, whereas a contract for a lease is merely an agreement that
\n\tsuch a conveyance shall be entered into at a future date.  In
\n\tcontradistinction to this, in the case of a lease, there must be
\n\twords of demise.  The usual words by which a lease is made are
\n\t‘demise’ and ‘let’; but any words which amount to a grant are
\n\tsufficient to make a lease.  Whatever words are sufficient to
\n\texplain the intent of the parties, that the one shall divest himself
\n\tof the possession and the other come into it, for any determinate
\n\ttime, whether they run in the form of a license, covenant or
\n\tagreement, are sufficient, and will in construction of law amount to
\n\ta lease for years as effectually as if the most proper and pertinent
\n\twords had been used for that purpose; for if the words used are
\n\tsufficient to prove a lease of land, in whatsoever form they are
\n\tintroduced, the law calls in the intent of the parties, and moulds
\n\tand governs the words accordingly.\n<\/p>\n
Based
\n\ton the facts and circumstances of the case and
\n\tdecided case law on the subject, Mr. Thakore strongly urged that the
\n\timpugned Resolution deserves to be quashed and set aside and the
\n\tpetitioner is entitled to the letter of allotment and contract in
\n\tits favour.\n<\/p>\n
Mr.\n<\/p>\n
\tDhaval D. Vyas, learned advocate appearing for the respondent on
\n\tcaveat, on the other hand, has invited the Court’s attention to the
\n\taffidavit-in-reply filed on behalf of the respondent.  He submitted
\n\tthat the offers were invited for leasing 23 plots of land of various
\n\tsizes of Kandla Port Trust to be utilized for construction of liquid
\n\tstorage tanks.  The offers were invited for a minimum basic premium
\n\tfixed at Rs.612\/- per Sq. Mtr.  The annual lease rent was fixed at
\n\tnominal rate of Rs.1 per plot.  The bidders would have to submit an
\n\tEMD of Rs.3 Lacs, along with the offer.  He has, therefore,
\n\tsubmitted that the revenue to be received for parting of the subject
\n\tplots would only be the amount of upfront premium and not
\n\tthereafter.  The minimum premium to be offered in the present tender
\n\twas Rs.612\/- per Sq. Mtr.  The minimum premium to be offered for
\n\tqualifying bid in the subsequent tender dated 03.01.2011 would be
\n\tRs.8358 per Sq. Mtr.  He has, therefore, submitted that apparently,
\n\tthere would be considerable amount of escalation, which would be a
\n\trelevant consideration.  The respondent being a Public authority,
\n\tthe decision, action and resolution are to be guided by the public
\n\tinterest.  Public interest requires Kandla Port Trust to fetch
\n\tmaximum price.  He further submitted that there is a specific term
\n\tin the tender document that the validity of any bid, would be for a
\n\tperiod of six months from the date of opening of tenders, unless the
\n\textension is sought for by Kandla Port and is agreed by the bidders.
\n\t On lapse of six months, there would be no valid bid or offer for
\n\twhich enforcement could be sought.\n<\/p>\n
Mr.\n<\/p>\n
\tVyas further submitted that in a pre-bid meeting, the prospective
\n\tbidders were persuaded and queried on mandatory government
\n\tclearances to be taken, including CRZ Clearance.  The respondent by
\n\tcommunication dated 25.05.2005 informed the prospective bidders that
\n\tthe respondent would obtain general clearance for the area for tank
\n\tfarms. However, further clearances were to be obtained by the
\n\tindividual lessee.  Since the bid of the petitioner was highest, the
\n\tTender Committee recommended the Board of Trustees for approval,
\n\twhich was approved by the Resolution dated 08.12.2005.  In view of
\n\tprior mandatory clearances required for the Project, it was
\n\tcommunicated to the petitioner vide letter dated 12.01.2006 that it
\n\tis only after the receipt of CRZ Clearance, the formal letter of
\n\tallotment will be issued to the petitioner.  He further submitted
\n\tthat the communication dated 12.01.2006 would, at best, be pitched
\n\tto be a letter of intent.  The said letter would be an expression of
\n\tintention to acceptance of the offer of the petitioner for being
\n\tallotted the plot in question.  The offer of the petitioner would be
\n\tfinally accepted by a further act of allotment, which would
\n\tobviously be as per the terms of the tender.\n<\/p>\n
Mr.\n<\/p>\n
\tVyas has invited the Court’s attention to certain terms and
\n\tconditions of the tender document, more particularly, Clause 11
\n\tregarding validity of Bids, Clause 12 regarding right of acceptance
\n\tor rejection of any Bid, Clause 16 regarding allotment, Annexure II,
\n\tClause 1 regarding lease execution and Clause 2 regarding payment
\n\tperiod.  Based on these provisions contained in the tender document,
\n\tMr. Vyas has submitted that the petitioner would not have any vested
\n\tright or interest for allotment.  Unless the possession of land is
\n\toffered upon receipt of all payments, there would be no right,
\n\tinterest or otherwise in favour of bidder for allotment of land.
\n\tThe petitioner is at present at the stage of submission of bid and
\n\tpayment of EMD only, without there being any offer by the petitioner
\n\tfor payment of premium amount.  He further submitted that there was
\n\tno promise of whatsoever nature, which was offered by the
\n\trespondent.  In fact, the ingredients of promise under law, are not
\n\tmet with.  Even if it is considered that there were any promise
\n\twhich have been given that would estop the respondent to cancel the
\n\ttender process, it would be highly inequitable in set of present
\n\tcircumstance to direct the respondent to grant the prayers made in
\n\tthis petition.  The decision has been taken considering the public
\n\tinterest which is involved, for allotment of Government lands.  The
\n\tpublic interest would entitle the respondent to change its stand and
\n\tthe same would give power to withdraw the representation made by it,
\n\tif at all.  The public interest would have to be accepted as equity,
\n\twhich can override the individual equity.\n<\/p>\n
Mr.\n<\/p>\n
\tVyas has further submitted that there is no iota of evidence and
\n\tdetails worth credence, which confirms the petitioner to have
\n\taltered its position. Vague averments are made in the petition
\n\twithout any support or evidence.  Even these averments are not
\n\tsatisfying that the petitioner has altered its position to its
\n\tdetriment.\n<\/p>\n
Mr.\n<\/p>\n
\tVyas further submitted that during the last five years, there was no
\n\tcommunication or representation by the petitioner confirming any
\n\turgency or desire to have the proposal of the allotment made by it
\n\tbeing accepted by the respondent.  He further submitted that for
\n\tapplication for CRZ Clearance, the consultants, namely, National
\n\tInstitute of Ocean Technology, New Delhi was appointed by the
\n\trespondent who had called for material particulars which were in
\n\tturn requested to be supplied by the petitioner and all other
\n\tbidders.  Vide communication dated 15.02.2006, the petitioner was
\n\tcalled upon to submit the relevant particulars.  In absence of
\n\tdetails supplied by the petitioner and other bidders, the same could
\n\tnot be sent for the CRZ Clearance.  If details were available and
\n\tthey were sent to the Consultant, he would have in term submitted
\n\this advise there upon.  It is only after that the CRZ Clearance
\n\twould be applied to much later.  The respondent had thereafter made
\n\trepeated reminders to the Ministry of Environment and Forest
\n\trequesting early clearance for Project.  The said permission came to
\n\tbe received by the Trust as late as in February, 2010.\n<\/p>\n
Mr.\n<\/p>\n
\tVyas further submitted that it is a specific term that the allotment
\n\twould commence from the actual date of handing over the possession
\n\tto the allottee upon issuance of letter of allotment.  Therefore,
\n\tthe allotment and possession would apply prospectively.\n<\/p>\n
While
\n\tdealing with the specific issue raised by Mr. Thakore with regard to
\n\tconcluded contract, Mr. Vyas submitted that there is no contract,
\n\tmuch less, concluded contract between the petitioner and the
\n\trespondent and, therefore, there is no question for the petitioner
\n\tto be entitled for the reliefs prayed for. He further submitted that
\n\tthe ingredients for a concluded contract are not satisfied in the
\n\tpresent case since there is no acceptance much less final acceptance
\n\tto the proposal of the petitioner for being allotted Plot No.8.  In
\n\tabsence of there being any final acceptance, there would be no
\n\tpromise and thereby there would be no agreement to enforce at law.
\n\tHe has, therefore, submitted that the petition deserves to be
\n\tdismissed with cost.\n<\/p>\n
In
\n\tsupport of his submissions, Mr. Vyas relied on the following
\n\tdecisions :-\n<\/p>\n
\tIn Siemons
\n\tPublic Communication Private Limited and Another V\/s. Union of India
\n\tand others, 2009 AIR SCW 470, the Apex Court held that
\n\twhen the power of judicial review is invoked in the matters relating
\n\tto tenders or award of contracts, certain special features have to
\n\tbe considered.  A contract is a commercial transaction and
\n\tevaluating tenders and awarding contracts are essentially commercial
\n\tfunctions.  In such cases, principles of equity and natural justice
\n\tstay at distance.  If the decision relating to award of contract is
\n\tbonafide and is in public interest, Courts will not exercise the
\n\tpower of judicial review and interfere even if it is accepted for
\n\tthe sake of argument that there is a procedural lacuna.\n<\/p>\n
\tIn M. P.\n<\/p>\n
\tMathur and others V\/s. DTC & others, (2006) 13 SCC 706, the
\n\tApex Court held that once the public interest is accepted as the
\n\tsuperior equity which can override individual equity, the principle
\n\twould be applicable.  If there is a supervening public equity, the
\n\tGovernment would be allowed to change its stand and has the power to
\n\twithdraw from representation made by it which induced persons to
\n\ttake certain steps which may have gone adverse to the interest of
\n\tsuch persons on account of such withdrawal.  Merely because the
\n\tresolution was announced for a particular period, it did not mean
\n\tthat the Government could not amend and change the policy under any
\n\tcircumstances.  If the party claiming application of doctrine acted
\n\ton the basis of a notification, it should have known that such
\n\tnotification was liable to be amended or rescinded at any point of
\n\ttime, if the Government felt that it was necessary to do so in
\n\tpublic interest.\n<\/p>\n
\tIn Dresser
\n\tRand S. A. V\/s. M\/s. Bindal Agro Chem. Ltd. & Another, AIR 2006
\n\tSC 871, the Apex Court held that it is now well settled that a
\n\tletter of intent merely indicates a party’s intention to enter into
\n\ta contract with the other party in future.  A letter of intent is
\n\tnot intended to bind either party ultimately to enter into any
\n\tcontract.  It is no doubt true that a letter of intent may be
\n\tconstrued as a letter of acceptance if such intention is evident
\n\tfrom its terms.  It is not uncommon in contracts involving detailed
\n\tprocedure, in order to save time, to issue a letter of intent
\n\tcommunicating the acceptance of the offer and asking the contractor
\n\tto start the work with a stipulation that a detailed contract would
\n\tbe drawn up later.  If such a letter is issued to the contractor,
\n\tthough it may be termed as a letter of intent it may amount to
\n\tacceptance of the offer resulting in a concluded contract between
\n\tthe parties.  But the question whether the letter of intent is
\n\tmerely an expression of an intention to place an order in future or
\n\twhether there is a final acceptance of the offer thereby leading to
\n\ta contract, is a matter that has to be decided with reference to the
\n\tterms of the letter.\n<\/p>\n
\tIn Speech &
\n\tSoftware Technologies (India) Private Limited V\/s. Neos Interactive
\n\tLimited, (2009) 1 SCC 475, the Apex Court held that it is well
\n\tsettled legal position that an agreement to enter into an agreement
\n\tis not enforceable nor does it confer any right upon the parties.
\n\tAs the agreement contemplated by the letter of intent was never
\n\texecuted, it cannot be said that the agreement contemplated by the
\n\tsaid letter of intent had novated, rescinded or superseded the
\n\tTripartite Share Purchase Agreement.\n<\/p>\n
Based
\n\ton the aforesaid decisions of the Apex Court and considering the
\n\tprovisions contained in the tender document and further considering
\n\tthe aspect of public interest, Mr. Vyas has strongly urged that the
\n\tpetitioner is not entitled to any relief prayed for in this petition
\n\tand hence, it deserves to be summarily dismissed.\n<\/p>\n
Having
\n\theard learned Counsel appearing for the parties and having
\n\tconsidered their rival submissions, in light of the statutory
\n\tprovisions contained in the Indian Contract Act as well as the
\n\tdecided case law on the subject, the Court is of the view that the
\n\tpetitioner cannot succeed merely on the basis of the letter of
\n\tintent issued by the respondent Port Trust on 12.01.2006 informing
\n\tthe petitioner that the petitioner had been declared highest bidder
\n\tfor the plot that has been applied by it for construction of liquid
\n\tstorage tank at Kandla and further informing that formal allotment
\n\tletter shall be issued to the petitioner after the receipt of the
\n\tCRZ clearance in general by the Kandla Port Trust for tank farms for
\n\thandling of hazardous and non-hazardous cargo and further informing
\n\tthat further CRZ clearance if required for installation, safety,
\n\tpollution control etc. has to be obtained by the petitioner from
\n\ttime to time at its cost and the payment shall have to be made by
\n\tthe petitioner after obtaining the CRZ clearance for the individual
\n\tpremises allotted to the petitioner or within three months of issue
\n\tof allotment letter, whichever was earlier.  Between the period from
\n\t12.01.2006 to the passing of another Resolution No.108 of
\n\t22.11.2010, no effective steps were taken by the petitioner despite
\n\tthe fact that the petitioner was informed by the respondent Kandla
\n\tPort Trust on 15.02.2006 that the work of preparation of EIA studies
\n\tin respect of allotment of 17 plots for construction of Liquid
\n\tStorage Tanks for obtaining CRZ clearance from the Govt. of India,
\n\tMinistry of Environment has already been entrusted to M\/s. NIOT,
\n\tChennai along with other project works and the said institute has
\n\talready completed site survey work for the purpose.  The petitioner
\n\twas also informed that the said M\/s. NIOT, Chennai has suggested to
\n\tprovide following information for incorporation of the same in EIA
\n\tstudies :- (i) Approximate estimation for the activity (ii) Proposed
\n\tactivity (type of Cargos to be stored) (iii) Proposed storage
\n\tcapacity (approximate quantum of the liquid commodity, size etc.).\n<\/p>\n
The
\n\tpetitioner was specifically informed that the said information was
\n\turgently required to be furnished to the NIOT so that the same would
\n\tenable the said institute to submit the report as early as possible
\n\tfor obtaining CRZ clearance in the matter.  Since these informations
\n\twere not supplied by the petitioner, another letter was issued by
\n\tthe respondent Trust on 13.05.2008 reiterating the same request to
\n\tprovide the said information.  Instead of furnishing these details,
\n\tthe petitioner sought appointment of the Deputy Secretary (Estate)
\n\tof the respondent Port Trust vide letters dated 27.05.2008,
\n\t18.07.2008 and  13.11.2008.  The petitioner thereafter vide its
\n\tletter dated 18.01.2010 giving reference of the respondent’s letter
\n\tdated 12.01.2006, informed the respondent that for construction,
\n\tmaintenance and operation of Liquid Storage Tank, it had
\n\tincorporated a wholly owned subsidiary Company, namely, M\/s. Sanghvi
\n\tLogistics Private Limited, which is fully owned by them and the said
\n\tCompany would carry out the construction, operation and maintenance
\n\tof Storage Tanks on the said plot.  The petitioner has also sought
\n\tthe permission to carry out construction, operation and maintenance
\n\tof Storage Tank on the said plot in the name of M\/s. Sanghvi
\n\tLogistics Private Limited instead of M\/s. Nikhil Adhesives Limited.
\n\tThis request was turned down by the respondent vide its letter dated
\n\t20.03.2010 informing that the matter of allotment was not finalized
\n\tand hence, the request could not be considered.  The respondent
\n\tthereafter vide letter dated 10.12.2010 informed the petitioner that
\n\tthe Board of Trustees of the Port of Kandla vide Resolution No.108
\n\tat its meeting held on 22.11.2010 has decided to cancel the tender
\n\tprocess, started in the year 2005 of allotment of 17 numbers of
\n\tPlots for construction of Liquid Storage Tanks at Kandla.  In this
\n\tview of the matter, it cannot be said that there was any concluded
\n\tcontract between the petitioner and the respondent Port Trust nor
\n\tany promise was given by the respondent Port Trust to allot Plot
\n\tNo.8 to the petitioner.  The letter of intent issued by the
\n\trespondent was merely an expression of intention and imparting an
\n\tinformation that the petitioner stood highest bidder and on receipt
\n\tof CRZ clearance, the formal letter of allotment would be issued.
\n\tHowever, the petitioner had not cooperated in the meantime for
\n\tobtaining CRZ clearance and before any formal letter of allotment is
\n\tissued, the earlier tender process stood cancelled.  Even while
\n\tcanceling the earlier tender process, the respondent Port Trust
\n\tneither acted arbitrarily nor it would amount to any malafide
\n\texercise of discretionary powers.  Before taking this decision at
\n\tits Board meeting held on 22.11.2010, the respondent Prot Trust
\n\tsought an opinion of the Additional Solicitor General who opined
\n\tthat it would be prudent to cancel 2005 tender process and start
\n\tfresh process so as to fetch the realistic market price in
\n\taccordance with the present market value of the land.  He further
\n\topined that there is no legal impediment in cancellation of the
\n\ttender process of the year 2005 since there is no concluded contract
\n\twhich is in existence.\n<\/p>\n
The
\n\trespondent is well within its rights to take such a decision in the
\n\tyear 2010 keeping in mind the larger public interest.  The figures
\n\titself would indicate that the original tender premium was of
\n\tRs.612\/- per Sq. Mtr. whereas fresh tender premium is Rs.8358\/- per
\n\tSq. Mtr.  Thus, the premium amount to be received by the respondent
\n\tPort Trust by issuance of fresh tender would come to more than 10
\n\ttimes than the original premium amount.  Moreover, the petitioner
\n\thad paid only Rs.3 Lacs by way of earnest money.  The total premium
\n\tamount is of Rs.23,74,00,442.64 ps.  This amount was to be paid by
\n\tthe petitioner only after receipt of the CRZ clearance in general
\n\tand after issuance of allotment letter, receipt of individual CRZ
\n\tclearance and on execution of lease document.  None of these events
\n\ttook place and hence, it cannot be said that any vested right or
\n\tinterest is created in favour of the petitioner.  The judgments
\n\trelied upon by Mr. Thakore in support of his contentions are not of
\n\tmuch assistance to the petitioner.  In Gujarat State Financial
\n\tCorporation V\/s. M\/s. Lotus Hotels Private Limited (Supra), not
\n\tonly an agreement was executed, but the respondent on the basis of
\n\tthe said agreement incurred further liabilities to implement and
\n\texecute the Project.  There is nothing on record of the present case
\n\tto show that except making payment of Rs.3 Lacs by way of earnest
\n\tmoney, the petitioner had incurred any other expenses or suffered
\n\tliabilities to implement the project of construction and maintenance
\n\tof the Tank.  Even if it is assumed that the issuance of letter
\n\tdated 12.01.2006 tantamounts to a promise given by the respondent
\n\tPort Trust, the petitioner has not altered his position to such an
\n\textent which inspires the Court to take the decision that holding
\n\tthe promisor to his representation is necessary to do justice
\n\tbetween the parties.  The equity demands that the respondent Port
\n\tTrust is allowed to resile looking to the facts and circumstances.
\n\tThus, the decision of H.P. & Others V\/s. Ganesh Wood Products
\n\tand others (Supra) helps the respondent rather than it helps the
\n\tpetitioner.\n<\/p>\n
There
\n\tis no dispute about the proposition laid down by the Apex Court in
\n\tMahabir Auto Stores V\/s.\n<\/p>\n
\tIndian Oil Corporation, AIR 1990 SC 1031 (Supra).
\n\t However, looking to the facts of the present case, it cannot be
\n\tsaid that the action of the respondent Port Trust of not issuing
\n\tallotment letter or of cancelling the tender process fails to
\n\tsatisfy the test of reasonableness.  It would neither amount to an
\n\tarbitrary action nor give rise to any discrimination.  The Court
\n\tdoes not see any justification in interfering with the said action
\n\ton the touchstone of relevance and reasonableness, fair play,
\n\tnatural justice, equality and non-discrimination.\n<\/p>\n
The
\n\tletter of intent issued by the respondent Port Trust
\n\ton 12.01.2006, at best, can be said to be an agreement to issue the
\n\tallotment letter and to execute the lease document in favour of the
\n\tpetitioner subject to fulfillment of certain conditions.  However,
\n\tin absence of issuance of allotment letter, the said letter of
\n\tintent cannot be enforced in the Court of law.  The Apex Court in
\n\tDresser Rand S.A. V\/s.\n<\/p>\n
\tBindal Agro Chem Limited and others
\n\t(Supra) clearly stated that a letter of intent merely indicates a
\n\tparty’s intention to enter into a contract with the other party in
\n\tfuture.  Such a letter of intent is not intended to bind either
\n\tparty ultimately to enter into any contract.  Even in Speech
\n\t& Software Technologies (India) Private Limited V\/s. Neos
\n\tInteractive Limited (Supra),
\n\tthe Apex Court clearly held that an agreement to enter into an
\n\tagreement is not enforceable nor does it confer any right upon the
\n\tparties.\n<\/p>\n
Taking
\n\tany view of the matter, the petitioner is not entitled to any relief
\n\tprayed for in this petition.  The petition is, therefore, dismissed
\n\tat the threshold without any order as to costs.\n<\/p>\n
\t\t\t\t\t\t\t\t    Sd\/-\n<\/p>\n
\t\t\t\t\t\t\t[D. H. WAGHELA, J.]<\/p>\n
\t\t\t\t\t\t\t\tSd\/-\n<\/p>\n
\t\t\t\t\t\t\t[K. A. PUJ, J.]<\/p>\n
Savariya<\/p>\n
\t\t   \u00a0\u00a0\u00a0<\/p>\n
\t\t   Top<\/p>\n","protected":false},"excerpt":{"rendered":"
Gujarat High Court Whether vs Kandla on 4 February, 2011 Author: D.H.Waghela,&Nbsp;Honourable Mr.Justice K.A.Puj,&Nbsp; Gujarat High Court Case Information System Print SCA\/286\/2011 35\/ 35 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 286 of 2011 For Approval and Signature: HONOURABLE MR.JUSTICE D.H.WAGHELA Sd\/- HONOURABLE MR.JUSTICE K.A.PUJ Sd\/- =================================== 1. Whether […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[16,8],"tags":[],"class_list":["post-58551","post","type-post","status-publish","format-standard","hentry","category-gujarat-high-court","category-high-court"],"yoast_head":"\nWhether vs Kandla on 4 February, 2011 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/whether-vs-kandla-on-4-february-2011\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Whether vs Kandla on 4 February, 2011 - Free Judgements of Supreme Court & High Court | Legal India\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.legalindia.com\/judgments\/whether-vs-kandla-on-4-february-2011\" \/>\n<meta property=\"og:site_name\" content=\"Free Judgements of Supreme Court & High Court | Legal India\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/LegalindiaCom\/\" \/>\n<meta property=\"article:published_time\" content=\"2011-02-03T18:30:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2016-11-27T01:24:49+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/i0.wp.com\/www.legalindia.com\/judgments\/wp-content\/uploads\/sites\/5\/2025\/09\/legal-india-icon.jpg?fit=512%2C512&ssl=1\" \/>\n\t<meta property=\"og:image:width\" content=\"512\" \/>\n\t<meta property=\"og:image:height\" content=\"512\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Legal India Admin\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@legaliadmin\" \/>\n<meta name=\"twitter:site\" content=\"@Legal_india\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Legal India Admin\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"29 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/whether-vs-kandla-on-4-february-2011#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/whether-vs-kandla-on-4-february-2011\"},\"author\":{\"name\":\"Legal India Admin\",\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#\\\/schema\\\/person\\\/0bfdffe9059fb8bb24a86d094609c5ea\"},\"headline\":\"Whether vs Kandla on 4 February, 2011\",\"datePublished\":\"2011-02-03T18:30:00+00:00\",\"dateModified\":\"2016-11-27T01:24:49+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/whether-vs-kandla-on-4-february-2011\"},\"wordCount\":5705,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#organization\"},\"articleSection\":[\"Gujarat High Court\",\"High Court\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/whether-vs-kandla-on-4-february-2011#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/whether-vs-kandla-on-4-february-2011\",\"url\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/whether-vs-kandla-on-4-february-2011\",\"name\":\"Whether vs Kandla on 4 February, 2011 - 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