# RISHI KIRAN LOGISTICS PVT. LTD. '· A v. BOARD OF TRUSTEES OF KANDLA PORT TRUST & ORS

- **Citation:** [2014] 5 S.C.R. 411
- **Court:** Supreme Court of India
- **Decided:** 2014-04-21
- **Case number:** Civil Appeal No. 4655 of 2014
- **Bench:** Surinder Singh Nijjar, A.K. Sikri
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/rishi-kiran-logistics-pvt-ltd-a-v-board-of-trustees-of-kandla-port-trust-ors-30089
- **Pages:** 33

## Headnote

Contract:
B
c
Allotment of plots by Port Trust on lease hold basis -
Letters of intent issued to prospective allottee, subject to CRZ
cleara11ce - It took 5 years in getting CRZ clearance - Neither
possession of plots given, nor payments received -
Meanwhile price of property shot up - Port Trust cancelling
D
the tender process started 5 years ago - Held: A letter of intent
is not intended to bind either party ultimately to enter into any
contract - The question whether the letter of intent is merely
ah expression of an intention to place an order in future or
whether there is a final acceptance of the offer thereby leading
E
to a contract, is a matter that has to be decided with reference
to the terms of the letter - When the LOI is itself hedged with
the condition that final allotment would be made later after
obtaining CRZ and other clearances, it may depict an
intention to enter into contract at a later stage and the process
F
had not resulted in a concluded contract.
Constitution of India, 1950:
. Art. 226 - Port Trust - Proposal to allot plots on leasehold basis cancelled - Cancellation challenged - Held: By
G
way of writ petition under Art. 226 only public/aw remedy can
be,invoked - As far as contractual dispute is concerned that
is outside the power of judicial review under Art. 226 with th~
sole exception in those cases where such a contractual
411
H
412
SUPREME COURT REPORTS
[2014] 5 S.C.R ..
A dispute has a public law element - The issue of there being
a concluded contract is raised in a petition filed under Art. 226
and not by way of suit - In such proceedings main aspect
which has to be considered is as to whether impugned
· decision of Port Trust was arbitrary or unreasonable - In the
B . instant case, the impugned decision of the Port Trust was not
arbitrary, unreasonable or malafide, but was based on valid
consideration, as larger public interest demanded fresh
tender process in order to receive maximum amount.
c
D
Administrative Law:
Public property - Disposal of - Held: In auction of public
property, it has to be ensured that public assets were not
disposed of except for a fair price and in a fair and transparent
manner.
Promissory estoppels - Letters of intent (LOI) issued for
allotment of plots on leasehold basis, subject to CRZ
clearance - CRZ clearance received after 5 years - Tender
process started 5 years back cancelled - Held: An LOI merely
E indicates a party's intention to enter into a contract with the
other party in future - It is not intended to bind either party
ultimately to enter into any contract -
LOI clearly mentioned
that total premium amount in respect of each of the three plots
(which runs into several crores in each case) was not to be
F paid on the issuance of said LOI, since formal LOI or lease
documents were to be executed only after CRZ clearance -
High Court has, therefore, rightly observed that appellants did
not alter its position to its prejudice pursuant to LOI to such
an extent which could inspire the cowt to take the decision
that holding the promisor to its representation is necessary
G to do justice between the parties -
Besides, specific
r:learances on individual basis in this behalf were also to be
obtained-· Doctrine of promissory estoppel has no application
in the fact situation.
H
Pursuant to the notice inviting tenders (NIT) dated
RISH! KIRAN LOGISTICS PVT. LTD. v. BOARD OF
413
TRUSTEES OF KANDLA PORT TRUST
12.3.2005, the appellant being one of the successful
A
bidders, was issued a letter of intent (LOI) stating that
leasehold rights in respect of plot Nos. 14,15 and 17 were
given for a premium of Rs.3,200/- per sq. mtr., Rs.3, 150/-
per sq. mtr., and Rs.3,120/- per sq. mtr. respectively. The
letter further mentioned that formal letter would be issued
B
after receipt of CRZ clearance in general. CRZ clearance
was ultimately received on 16.8.2010. The Board of
trustees of the Port-Trust, on 9.12.2010 decided to cancel
the tender process started in 2005. The appellant

## Text

_Characters 0–39,940 of 64,614. This is a partial read: ask again with offset=39940 for what follows._

[2014] 5 S.C.R. 411
RISH! KIRAN LOGISTICS PVT. LTD.
'· A
v.
BOARD OF TRUSTEES OF KANDLA PORT TRUST &
ORS.
(Civil Appeal No. 4655 of 2014)
APRIL 21, 2014
[SURINDER SINGH NIJJAR AND A.K. SIKRI, JJ.]
Contract:
B
c
Allotment of plots by Port Trust on lease hold basis -
Letters of intent issued to prospective allottee, subject to CRZ
cleara11ce - It took 5 years in getting CRZ clearance - Neither
possession of plots given, nor payments received -
Meanwhile price of property shot up - Port Trust cancelling
D
the tender process started 5 years ago - Held: A letter of intent
is not intended to bind either party ultimately to enter into any
contract - The question whether the letter of intent is merely
ah expression of an intention to place an order in future or
whether there is a final acceptance of the offer thereby leading
E
to a contract, is a matter that has to be decided with reference
to the terms of the letter - When the LOI is itself hedged with
the condition that final allotment would be made later after
obtaining CRZ and other clearances, it may depict an
intention to enter into contract at a later stage and the process
F
had not resulted in a concluded contract.
Constitution of India, 1950:
. Art. 226 - Port Trust - Proposal to allot plots on leasehold basis cancelled - Cancellation challenged - Held: By
G
way of writ petition under Art. 226 only public/aw remedy can
be,invoked - As far as contractual dispute is concerned that
is outside the power of judicial review under Art. 226 with th~
sole exception in those cases where such a contractual
411
H
412
SUPREME COURT REPORTS
[2014] 5 S.C.R ..
A dispute has a public law element - The issue of there being
a concluded contract is raised in a petition filed under Art. 226
and not by way of suit - In such proceedings main aspect
which has to be considered is as to whether impugned
· decision of Port Trust was arbitrary or unreasonable - In the
B . instant case, the impugned decision of the Port Trust was not
arbitrary, unreasonable or malafide, but was based on valid
consideration, as larger public interest demanded fresh
tender process in order to receive maximum amount.
c
D
Administrative Law:
Public property - Disposal of - Held: In auction of public
property, it has to be ensured that public assets were not
disposed of except for a fair price and in a fair and transparent
manner.
Promissory estoppels - Letters of intent (LOI) issued for
allotment of plots on leasehold basis, subject to CRZ
clearance - CRZ clearance received after 5 years - Tender
process started 5 years back cancelled - Held: An LOI merely
E indicates a party's intention to enter into a contract with the
other party in future - It is not intended to bind either party
ultimately to enter into any contract -
LOI clearly mentioned
that total premium amount in respect of each of the three plots
(which runs into several crores in each case) was not to be
F paid on the issuance of said LOI, since formal LOI or lease
documents were to be executed only after CRZ clearance -
High Court has, therefore, rightly observed that appellants did
not alter its position to its prejudice pursuant to LOI to such
an extent which could inspire the cowt to take the decision
that holding the promisor to its representation is necessary
G to do justice between the parties -
Besides, specific
r:learances on individual basis in this behalf were also to be
obtained-· Doctrine of promissory estoppel has no application
in the fact situation.
H
Pursuant to the notice inviting tenders (NIT) dated
RISH! KIRAN LOGISTICS PVT. LTD. v. BOARD OF
413
TRUSTEES OF KANDLA PORT TRUST
12.3.2005, the appellant being one of the successful
A
bidders, was issued a letter of intent (LOI) stating that
leasehold rights in respect of plot Nos. 14,15 and 17 were
given for a premium of Rs.3,200/- per sq. mtr., Rs.3, 150/-
per sq. mtr., and Rs.3,120/- per sq. mtr. respectively. The
letter further mentioned that formal letter would be issued
B
after receipt of CRZ clearance in general. CRZ clearance
was ultimately received on 16.8.2010. The Board of
trustees of the Port-Trust, on 9.12.2010 decided to cancel
the tender process started in 2005. The appellant and
other tenderers were informed accordingly. Writ petitions c
filed by the tenderers challenging•the decision dated
9.12.2010 of the Port Trust were dismissed.
Dismissing the appeal, the Court
HELD:
WHETHER DECISION CONTAiNED IN RESOLUTION NO.
108 DATED 9.12.2010 IS ARBITRARY AND MALAFIDE.
D
1.1. It is a matter of record that for more than 5. years
the CRZ clearance had not been granted and it came to
E
be granted only on 16.8.2010. By that time significant
change had> occurred from the date of the issuance of the
NIT in. March, 2005. The prices of the property had taken
quantum jump. Though in the NIT premium was.fixed on
Rs. 612/- per sq. mtr., it was more than Rs. 8,000/- per sq.
F
mtr. in'2010. E;ven the quotation of Rs. 3,000/- and odd of
the appellant which were found to be highest, was far
below the marked rate. It is more than obvious that larger
public interest demanded fresh tender process in order
t'o receive maximum amount. Further, even when total
G
premium amount to be paid by the appellant was to the
tune of several crores for each plot at which LOI was
issued in the year 2006, the appellant had paid only Rs.
3 lakhs by way of EMO in each case. No further amount
was paid for want of final allotment letter. However, before
H
414
SUPREME COURT REPORTS
[2014] 5 S.C.R.
A taking a final decision in the matter, the Port Trust sought
legal opinion and based upon the expert legal opinion i.e.
there was no legal impediment in cancellation of the
tender process, the decision was taken by the Port Trust
to cancel the earlier tender process and to start fresh
B process. [Para 16] [427-H; 428-C-F]
1.2. Therefore, it cannot be said that the decision of
the Port Trust is arbitrary. It is based on valid
considerations. In the realm of administrative law, the
contractual aspect of the matter has to be kept aside
C which would be examilled separately while dealing with
the issue as to whether there was a concluded contract
between the parties. [Para 17] [428-G-H]
Kisan Sehkari Chini Mills & Ors. V. Vardan Linkers &
D Ors. 2008 (12) SCC 500 = 2008 (6) SCR 528 - relied on.
1.3. When competing claims are private interest v.
public interest, then in the case of disposal of public
property the question would be whether the right of the
E person, who has earned the right to the public property
in a public auction, is to be preferred over the right of the
public in ensuring that valuable public assets were not
disposed of except for a fair price and in a fair and
transparent manner. The decision of the Port Trust, a
F public body, that it need not go further ahead with the
tender process, has not been taken without any reasons
to support it. There are reasons which were analysed by
the High Court and found valid. In matters, particularly,
to the disposal of valuable assets by the State when the
State seeks to explore the possibility of getting higher
G price, the decision cannot be said to be arbitrary. [para
18] [429-B-D]
Meerut Development Authority v. Assn. Of Management
Studies 2009 (6) SCR 663 = 2009 (6) SCC 171; Tata Cellular
H v. Union of India 1994 (2) Suppl. SCR 122 = 1994 (6) SCC
RISH! KIRAN LOGISTICS PVT. LTD. v. BOARD OF
415
TRUSTEES OF KANDLA PORT TRUST
651; Tejas Constructions and lnsfrastructure (P) Ltd. vs.
A
Municipal Counci, Sen<jhwa & Anr. 2012 (4 ) SCR 190 =
2012(6) sec 464 - rsil'ied on.
1.4. In so far as argument of malafides is concerned,
apart from bald averment, there are no pleadings and
8
there is not even a suggestion as to how the decision
was actuated with malafides and on whose part. A
concluded contract if terminated in a· bonafide manner,
that may amount to breach of contract and certain
consequences may follow thereupon under the law of C
contract. However, on the touch stone of parameters laid
down in the administrative law it has to be seen that the
decision is found to be bonafide and not actuated with
arbitrariness. [Para 22] [433-F; 434-A-B]
WHETHER DOCTRINE OF PROMISSORY.ESTOPPEL D
APPLIES.
2.1. The impugned decision of the Port Trust was not
arbitrary, unreasonable or malafide. Further, the doctrine
of promissory estoppel has no application in the fact
E
situation. [Para 30] [440-B]
Kisan Sehkari Chini Mills & Ors. v. Vardan Linkers &
Ors. 2008 (12) SCC 500 = 2008 (6) SCR 528 - relied on.
2.2. Apart from paying EMO of Rs. 3 lakhs alongwith
tender documents, the appellant did nothing more and,
in fact, no occasion for the same even occurred in the
instant case. LOI was issued but it clearly mentioned that
F
the total premium amount in respect of each of the three
plots (which runs into several crores in each case) was
G
not to be paid on the issuance of said LOls, since formal
LOI or lease documents were to be executed only after
the CRZ clearance. The High Court has, therefore, rightly
observed that the appellants did not alter its position to
its prejudice pursuant to LOI, to such an extent which
H
416
SUPREME COURT REPORTS
[2014] 5 S.C.R.
A could inspire the court to take the decision that holding
the promiser to its representation is necessary to do
justice between the parties. [Para 25] [436-C-D, G]
MP Mathur & Ors. V. OIC & Ors. 2006 (9) Suppl.
8
SCR 519 = 2006 (13) sec 706 - relied on.
WHETHER THERE WAS CONCLUDED CONTRACT
BETWEEN THE PARTIES.
3.1. By way of writ petition under Art. 226 of the
c Constitution, only public law remedy can be invoked. As
far as contractual dispute is concerned that is outside the
power of judicial review under Art. 226 with the sole
exception in those cases where such a contractual
dispute has a public law element. [Para 29] [439-H.; 440-A]
D
3.2. In so far as the issue regarding concluded
contract in the instant case is concerned, this falls
squarely in the realm of the contract law, without any hue
or shade of any public law. However, merely because one
of the authorities raises a dispute in regard to the facts,
E it may not be always necessary to relegate the parties to
a suit. [Para 31] [440-C-E]
ABL International Ltd. & Anr. V. Export Credit Guarantee
Corporation of India Ltd. & Ors. JT 2013 (10) SC 300 -
F referred to.
3.3. The plea of the appellant that the issuance of LOI
amounted to acceptance of the offer and, thus, a
concluded contract, cannot be countenanced. It is
G significant to note that CRZ clearance was delayed by a
period of 5 years. Because of that neither any final LOI
could be issued, nor possession of the plots given or the
payments received. It is also to be borne in mind that
apart from general CRZ clearance, specific clearances on
individual basis in this behalf were also to be obtained.
H [Para 33] [441-C-D]
RISH! KIRAN LOGISTICS PVT. LTD. v. BOARD OF
417
TRUSTEES OF KANDLA PORT TRUST
3.4. As per clause 12 of the Rules and Procedure for . A
Allotment of Plots, the Port Trust had reserved with itself
the right of acceptance or rejection of any bid with
specific stipulation that mere payment of EMO and
offering of premium will not confer any right or interest
in favour of the bidder for allotment of land. Such a right
B
to reject the bid could be exercised 'at any time without
assigning any reasons thereto'. Clause 13 relates to
'approvals from statutory authorities', with unequivocal
assertion therein that the allottees will have to obtain all
approvals from different authorities and these included c .
approvals from CRZ as well. As per clause 16, the
allotment was to be made subject to the approval of Port
Trust Board/ Competent Authority. [para 34] [441-F-G]
3.5. It has been held by this Court that a letter of
intent merely indicates a party's intention to enter into a
D
contract with the other party in future. A letter of intent is
not intended to bind either party ultimately to enter into
any contract. It is no doubt true that a letter of intent may
be construed as a letter of acceptance if such intention
is evident from its terms. It is not uncommon in contracts
E
involving detailed procedure, in order to save time, to
issue a letter of intent communicating the acceptance of
the 'offer and asking the contractor to start the work with
a stipulation that a detailed contract would be drawn up
later. If such a letter is issued to the contractor, though it
F
may be termed as a letter of intent .it may amount to
acceptance of the offer resulting in a concluded contract
between the parties. But the question whether the letter
of intent is merely an expression of an intention to place.
an order in future or whether there is a final acceptance
G
of the offer thereby leading to a contract, is a matter that
has to be decided with reference to the terms of the letter.
When the LOI is itself hedged with the condition that the
final allotment would be made later after obtaining CRZ
and other clearances, it may depict an intention to enter
H
418
SUPREME COURT REPORTS
[2014] 5 S.C.R.
A into contract at a later stage. Thus, on the facts of the
instant case, LOI was a letter with intention to enter into
a contract which could take place after all other
formalities are completed. However, when the completion
of these formalities had taken undue long time and the
B prices of land, in the interregnum, shot up sharply, the
respondent had a right to cancel the process which had
not resulted in a concluded contract. [Para 34) [442-A-F]
Dresser Rand S.A. v. Mis. Bindal Agro Chem Ltd. & Anr.
C 2006 (1) SCR 308 =AIR 2006 SC 871 - relied on.
3.6. Besides, it is significant to note that the issue of
there being a concluded contract is raised in a petition
filed under Art. 226 of the Constitution and not by way of
suit. The issue whether there was a concluded contract
D and breach thereof become secondary and is examined
by this Court with that limited scope in mind. In such
proceedings main aspect which has to be considered is
as to whether impugned decision of the Port Trust was
arbitrary or unreasonable. It is also important to remark
E that in a given case even if it is held that there was a
concluded contract, whether specific performance can
be ordered or not would be a moot question in writ
proceedings. The appellant took the calculated risk in not
going to the civil court and choosing to ·invoke
F extraordinary jurisdiction of the High Court, which is also
discretionary in nature. [Para 36) [443-C-E]
Case Law Reference:
2008 (6) SCR 528
relied on
Para 17
G
2009 (6) SCR 663
relied on
·Para 19
1994 (2) Suppl. SCR 122 relied on
Para 20
2012 (4) SCR 190
relied on
Para 21
H
2006 (9) Suppl. SCR 519 relied on
Para 26
RISHI KIRAN LOGISTICS PVT. LTD. v. BOARD OF
419
TRUSTEES OF KANDLA PORT TRUST
JT 2013 (10) SC 300
referred to
Para 31
A
2006 (1) SCR 308
relied on
Para 35
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
4655 of 2014.
From the Judgment & Order dated 10.02.2011 passed by
the High Court of Gujarat at Ahmedabad in Special Civil
Application No. 1877 of 2011.
B
Vikas Singh, Nikhil Goel, Marsook Bafaki, Naveen Goel
C
for the Appellant.
H.N. Salve, H.P. Raval, Sanjay Kapur, Anmol Chandan,
Priyanka Das, Lekha Vishwanath, Shinam Seth, Anando
Mukherjee, Divya Anand, Aniruddha P. Mayee, Nitin Lonkar for
the Respondents.
·
D
The Judgment of the Court was delivered by
A.K. SIKRI, J. 1. Leave granted.
'•
2. The factual matrix which needs to be taken note of, for
E
the purpose of deciding the present appeal, unfolds as unde(:-
Respondent No. 2 herein, viz., the Board of
Trustees of Kandla Port Trust (hereinafter referred
to as the 'Port Trust') has number of plots, in and
around Kandla Port, which are of different sizes.
F
The Port Trust took a decision, sometime in the year
2005, to allot these plots on leasehold basis for a
periocf'of 30 years for the purpose of enabling the
allottees thereof to put up the construction of liquid
G
storage tanks. For this purpose the Kandla Port
Trust issued notice inVlting tenders dated
. 12.3.2005. The annual rent in respect of tflese plots
was fixed at a nominal rate of Re. 1/- per plot.
However, the bidders were requireg to subm.it the
price bid in the form of premium in respect ofthe
H .
A
B
c
D
E
420
SUPREME COURT REPORTS
[2014] 5 S.C.R.
concerned plots for which they intended to bid. The
basic value of this premium was fixed at Rs. 612/-
per sq. mtr. The bids were to accompany the
earnest money deposit of Rs. 3 lakhs per plot. As
per the prescribed procedure in such matters, the
Port Trust held pre-bid meeting on 21.4.2005
wherein the terms of NIT of the bldders were
explained and querries answered. The bidders
were also informed that since these plots fall under
Coastal Regulatory Zone (CRZ), requisite
permission from the competent authority under CRZ
was required which would be obtained by the
Kandla Port Trust. However, at the same time it was
also made clear that any specific clearance like
safety, pollution control etc. was to be obtained by
the individual lessee (s). This was also reiterated
vide communication dated 25.5.2005. In this letter
it was also stated that the successful bidder was
required to pay the premium within a period of 3
months from the issuance of formal letter of
allotment or CRZ clearance whichever was earlier.
One more pre-bid meeting was held on 20.6.2005
and, thereafter the last date of submitting the tender
was also postponed and subsequently fixed as
11.8.2005.
F
3. The appellant submitted its bid in .respect of Plot Nos.
14, 15 and 17. The technical bids of the bidders, including that
of the appellant, were opened on 11.8.2005. Bid of the
appellant was found to be technically qualified. Thereafter, price
bids were opened on 30.8.2005. These bids were scrutinised
G by the Tender Committee of the i::>ort Trust. Recommendations
were placed before the Board of Trustees in its meeting held
on 8.12.2005. It was followed by communication dated
7.1.2006 to the appellant in the form of Letter of Intent (LOI),
inter alia stating that the leasehold rights in respect of Plot Nos.
H 14, 15 and 17 were given for a premium of Rs. 3,200/- per sq.
RISH! KIRAN LOGISTICS PVT. LTD. v. BOARD OF
421
TRUSTEES OF KANDLA PORT TRUST [A.K. SIKRI, J.]
mtrs., 3, 150/- per sq. mtr. and 3, 120 per sq. mtr. respectively.· A
This communication further mentioned that the formal letter wiU
be issued to the appellant after the receipt of CRZ clearance
in general.
4. The letter of allotment to the various successful bidders
B
went into limbo thereafter, presumably awaiting CRZ clearance.
The Gandhidham Chamber of Commerce and Industry was
informed about this road block by thePort Trust in response to
, its representation, wherein the Port Trust also requested the
said Chamber of Commerce and Industry to use its good office
C
with the Ministry of Environment and Forest, Union of India for
early clearance of CRZ permission.
5. It appears that CRZ clearance was ultimately received
on 16.8.2010. However, this occurred more than 5 years after
the NIT dated 12.3.2005 was floated. This prolonged time lag
D
resulted in taking decision by the Board of Trustees on
9.12.2010, in the form of Resolution No. 108, deciding to
cancel the tender process started in the year 2005. This
decision of the Port Trust was conveyed to the appellant vide
letter dated 9.12.2010. Similar letters were written to other
E
tenderers as well who were issued similar LOl's.
6. All these affected persons challenged the validity of
Resolution No. 108 ·of the Port Trust by preferring Writ-Petitions
under Article 226 of the Constitution of India in the High Court
F
of Gujarat. One such Writ Petition being Special Civil
Application No. 286 of 2011 filed by Mis. Nikhil Adhesives Ltd.
was dismissed by the High Court vide detailed reasoned
judgment dated 4.2.2011. Another SCA NO. 1328 of 2011 filed
by IMC Limited was also dismissed by detailed reasoned order
on 7.2.2011. When the petition of the appellant herein i.e. SCA
G
No. 1877 of 2011 came up before the same Bench of the High
Court on 10.2.2011, following the decision in the said two Writ
Petitions the Court dismissed the petition of the appellant as
well with one paragraph order, which reads as follows:-
·H
422
SUPREME COURT REPORTS
[2014] 5 S.C.R.
A
"Identical petitions for the same purpose and with the same
prayer being Special Civil Application Nos. 2.86 of 2011
and 1328 of 2011 have been decided by this Court by
CAV judgment dated 4.2.2011 and order dated 7.2.2011
respectively. Since no new issue is raised and the
s
factual matrix admittedly remains the same, present
petition is summarily dismissed for the reasons
discussed in detail in CAV judgment dated 4.2.2011 in
Special Civil Application No. 286 of 2011."
C
7. Appellant has challenged the aforesaid order in the
present appeal.
8. We may also record at this stage that IMC limited, M/s.
Nikhil Adhesive Ltd. as well as one more similarly situated
person had also filed Special Leave Petitions. All these four
D petitions were listed and were taken together for hearing from
time to time. When these matters came up for hearing
14.3.2014 other three petitioners sought permission to withdraw
their Special Leave Petitions which were accordingly
dismissed as withdrawn on 14.3.2014. Case of the appellant .
· E herein only remain in which we have heard the arguments in
detail.
9. Before we proceed to take note of the submissions of
the learned Counsel for the parties on either side, it would be
F better to glance through the two reasoned judgments rendered
by the High Court which have been followed in the case of the
appellant herein.
10. In Mis. Nikhil Adhesive Limited, after taking note of the
factual background starting from the issuance of tender and
G culminating in cancellation of said tender process by the
impugned Resolution No. 108, the High Court found that the
challenge to the said resolution was predicated on the following
premise:-
H
I. With the issuance of LOI to the successful highest bidder,
I
,
RISHI KIRAN LOGISTICS PVT. LTD. v. BOARD OF
423
TRUSTEES OF KANDLA PORT TRUST (A.K. SIKRI, J.]
a concluded contract was arrived at between the parties and,
A
therefore, it was not permissible for the Port Trust to terminate
the tender process thereafter.
II. Doctrine of promissory estoppel was applicable in as
much as by its actions and conduct, the Port Trust had given a
clear and unequivocal promise, with intention to create legal
· relation to arise in future and the Port Trust i.e. the promissory
was bound by the said promise arid to honour its commitment
and not to back out of its obligation.
B
Ill. The action of the Port Trust, which was an instrumentality
C
of the state being "other authority" under Article 12 of the
Constitution, was arbitrary as it was hot based on any rational
or relevant principle. There amounted to infraction of Article 14
of the Constitution.
D
11. The High Court negated all the aforesaid propositions.
E
F
Answering the first argument, the High Court concluded that the
·LOI issued by the Port Trust was just an information that the
addressee (the petitioner therein) had been declared highest
bidder for the plot for which it had submitted its tender. This
letter further informed that formal allotment letter shall be issued
after the receipt of CRZ clearance in general by Port Trust for
tank ·forms for handling all hazardous and non-hazardous and
also informing that additional CRZ clearance if required for
installation, safety, pollution control etc. had to be obtained by
the said petitioner, from time to time at its.cost. This letter also
mentioned that payment will be made by the said petitioner
after obtaining CRZ clearance for the individual premises
allotted to it or within 3 months of issuance of allotment letter
whichever was earlier. In the opinion of the High Court it did
not result in any concluded contract.
G
In the process, the High Court' also noted that after the
issuance of LOI on 12.1.2006 till.the passing of Resolution No.
108 dated 22.11.2010, no effective steps were taken by the
said petitioner despite the fact that it was informed by the Port. H
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SUPREME COURT REPORTS
[2014] 5 S.C.R.
A Trw>t on 15.2.2006 that the work of preparation of EIA studies
in respect to allotment of 17 plots for construction of Liquid
Storage Tanks for obtaining CRZ clearance from the
Government of India, Ministry of Environment has already been
entrusted to Mis. NIOT, Chennai along with other project works
B and the said institute had already completed site survey work
for the purpose. The petitioner was also informed that the said
M/s. NIOT, Chennai had suggested to provide following
information for incorporation of the same in EIA Studies:- (I)
Approximate estimation for the activity. (ii) Proposed activity
c (type of Cargos to be stored) (iii) Proposed storage capacity
(approximate quantum of the liquid commodity, size etc.)
The petitioner was specifically informed that the said '
information was urgently required to be furnished to the NIOT
so that the same would enable the said Institute to submit the
D report as early as possible for obtaining CRZ clearance in the
matter. Since these informations were not supplied by the
petitioner, another letter was issued by the respondent Trust on
13.5.2008 reiterating the same request to provide the said
information.
E
However, instead of doing the needful by furnishing the
details it only indulged in worthless correspondence and
ultimately vide letter dated 18.1.2010 sought permission to carry
out construction portion and maintenance of storage tanks in
F the name of one Mis Sanghvi Logistics Pvt. Ltd. instead o its
own name which request was turned down vide letter dated
20.3.2010. Thereafter impugned resolution came to be passed.
This showed that delay was entirely attributed to the said
petitioner. Taking note of aforesaid contracts, the position is
G summed up by the High Court in the following words:-
"ln view of the matter, it cannot be said that there was any
concluded contract between the petitioner and the
respondent Port Trust nor any promise was given by the
respondent Port Trust to allot Plot No. 8 to the petitioner.
H
The letter of intent issued by the respondent was merely
RISHI KIRAN LOGISTICS PVT. LTD. v. BOARD OF
425
TRUSTEES OF KA°NDLA PORT TRUST [A.K. SIKRI, J.]
an expression ofintention and imparting an information that
A
the petitioner stood highesl tiidder and on receipt of .CRZ
clearance; the formal letter:Of allotment would be issued.
However'.·1the petitioner' had not cooperated in the
meantime- for ,,obtaining CRZ clearance and before any
formal letter ·of allotment is issued, the earlier tender
B
proce~s stood cancelled .. "
12. In so far as argument based on Article 14 is concerned,
the High Court found that the action on the part of the Port Trust
was neither arbitrary nor malafide. Before taking the decision,
C
the Board had sought the opinion· of the Additional Solicitor
General. Further, the Port Trust was within its right to take such
a decision in the year 2010 keeping in mind the larger public
interest. The court noted that the original tender premium in the
year 2005 was fixed on Rs. 612/- per sq. mtr. whereas fresh
tender premium, after the cancellation of the earlier tender
D
process was fixed at Rs. 8358 per sq. mtrs.
13. In so far as argument of promissory estoppel is
concerned the same was rejected on the ground that the LOI
did not amount to any promise. Further, the petitioner had paid
E
only Rs. 3 lakhs by way of earnest money as against the total
premium amount which was 23.74 crores and was to be paid
only after receipt of the said CRZ clearance, which amount was
never paid.
F
14. The reaaing of the judgment in IMC Limited case would
reveal that the Counsel for the petitioner in that case had
argued that their case was di$tinguishable from the case of
Nikhil Adhesives Limited on facts. Endeavour was made to
demonstrate that in so far as the petitioner in IMC is concerned,
it had supplied all the requisite details promptly and because
G
of this reason the Port Trust had not issuea any letters to them
alleging default on their part in furnishing the details. Therefore,
it could not be held responsible for delaying the tender process.
It was, thus, argued that there was a concluded contract in their
H
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SUPREME COURT REPORTS
[2014] 5 S.C.R.
A case and not a contingent one. Further, in any case the only
contingency at the time of issuing LOI was the clearance of CRZ
authorities which also was granted subsequently. In view of
aforesaid argument, the court went into the specific question
as to whether there was already a concluded contract between
B the parties. This issue has been answered against the
petitioner in the said case holding that merely a Letter of Intent
was issued and this expressed an intention of the parties to
enter into a contract but no concluded contract ultimately
fructified nor there was any promise given by the Port Trust. The
c Court reproduced the following discussion from its earlier
D
E
F
judgment in Nikhil Adhesives Limited:
"The letter of intent issued by the respondent Port Trust on
12.1.2006, at best, can be said to be an agreement to
issue the allotment letter and to execute the lease
document in favour of the petitioner subject to fulfilment of
certain conditions. However, in absence of issuance of
allotment letter, the said letter of intent cannot be enforced
in the court of law. The Apex Court in Dresser Rand S.A.
v. Bindal Agro Chem Limited and others (supra) clearly
stated that a letter of intent merely indicates a party's
intention to enter into a contract with the other party in future.
Such a letter of intent is not intended to bind either party
ultimately to enter into any contract. Even in Speech &
Software Technologies (India) Pvt. Ltd. v. Neos Interactive
Limited (Supra), the Apex Court clearly held that an
agreement to enter into an agreement is not enforceable
nor does it confer any right upon the parties."
15. Before us as well, edifice of the case was sought to
G be erected on the same three pillars by Mr. Vikas Singh,
learned Senior Counsel for the appellant. Therefore, we
propose to straightaway go into these three aspects of the case
and while discussing the same, we would take note of the
arguments which were advanced by both the sides on these
propositions.
H
RISHI KIRAN LOGISTICS PVT. LTD. v. BOARD OF
427
TRUSTEES OF KANDLA PORT TRUST [A.K. SIKRI, J.]
WHETHER DECISION CONTAINED IN
RESOLUTION NO. 108 DATED 9.12.2010 IS
ARBITRARY AND MALAFIDE.
16. Few facts, leading to this impugned Resolution, which
need to be recapitulated are the following:-
A
B
Tenders for allotment of plots on leasehold basis
were floated on 12.3.2005. After receiving bids
and evaluating technical as well as price bids
respectively, the Tender Committee had
recommended the cases for allotment of plots. In C
so far as the appellant is concerned in respect of
all the three plots bearing No. 14, 15 and 17, LOI
was issued after the Board agreed to accept the
recommendations of the Tender Committee in its
meeting held on 8.12.2005. However, in the LOI it
D
was made clear that formal letter of allotment will
be issued after receiving the CRZ clearance in
general and if any further CRZ clearance was
required for installation, safety, pollution etc. the
same was to be obtaii:ied by the appellant. The Port
E
Trust applied to the Ministry of Environment,
Government of India for such permission. However,
F
for one reason or the other, this permission/
clearance was not forthcoming. Even when
Ghandhidham Chamber of Commerce and Industry
wrote to the Port Trust, on behalf of these allottees
who were issued LOl's and were waiting for formal
letter of allotment, in reply the Port Trust had
requested the said Chamber of Commerce and
Industry to also use its good offices with the Ministry
G
of Environment and Forests for early clearance of
CRZ permission. It is a matter of record that for
more than 5 years the clearance had not been
granted and came to be granted only on 16.8.2010.
By that time significant change had occurred from
the date of the issuance of the NIT in March, 2005.
H
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8
c
D
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428
SUPREME COURT REPORTS
[2014] 5 S.C.R.
Th~ prices of the property had taken quantum jump.
Though in the NIT premium was fixed on Rs. 612/-
per sq. mtr., it was more than Rs. 8,000/- per sq.
mtr. in 2010. In this backdrop the Port Trust wanted
to take a decision as to whether it could go for fresh
tenders. It is more than obvious that larger public
interest demanded fresh tender process in order to
receive maximum amount as the premium of Rs.
612/- per sq. mtr originally fixed and even the
quotation of Rs. 3,000/- and odd of the appellant
which were found to be highest, was far below the
marked rate. Further, even when total premium
- amount to be paid by the appellant was to the tune
of several crores for each plot at which LOI was
issued in the year 2006, the appellant had paid only
Rs. 3 lakhs by way of EMO in each case. No further
amount was paid for want of final allotment letter.
However before taking a final decision in the matter,
the Port Trust sought legal opinion specifically on
the point as to whether it would be prudent to cancel
2005 tender process and start fresh process so as
to fetch the realistic marked price in accordance
with present maliket value of the land. Based upon
the expert legal opinion i.e. there was no legal
impediment in cancellation of the tender process,
the decision was taken by the Port Trust to cancel
the earlier tender process and to start fresh process.
17. On the aforesaid facts there is hardly any scope for
argument that the decision of the Port Trust is arbitrary. It is
based on valid considerations. We have to keep in mind that
G while examining this aspect we are in the realm of
administrative law. The contractual aspect of the matter has to
be kept aside which would be examined separately while
dealing with the issue as to whether there was a concluded
contract between the parties. This distinction is lucidly explained
H in Kisan Sehkari Chini Mills & Ors. v. Vardan Linkers & Ors.;
RISHI KIRAN LOGISTICS PVT. LTD. v. BOARD OF - 429
TRUSTEES OF KANDLA PORT TF~UST [A.K. SIKRI, J.]
(2008) 12 SCC 500. Keeping in mind this distinction between
A
'
the two~ we are not required to bring in the contractual elements
of the case while dealing with the administrative law aspects.
18. When competing claims are private interest v. public
interest, then in the case of disposal of public property the
B
question would be whether the right of the person, who has
earned the right to the public property in a public auction, is to
be preferred over the right of the public in ensuring that valuable
public assets were not disposed of except for a fair price and
in a fair and transparent manner. Whether this court should, in
C
judicial review, sit in judgment over the decision of a public body
which is of the view that it need not go further ahead with the
tender process. It is true if such a decision is taken without any
reasons to support it or mere ipsi dixit it would be arbitrary. In
this case there are reasons. The High Court analysed the
reasons and has taken the view that those reasons are valid.
D
In our view in matters particularly to the disposal of valuable
assets by the State when the State seeks to explore the
possibility Of getting higher price.
'
19. The guiding principles in such cases can be noted from
the judgments discus.sed hereinafter.
In Meerut Development Authority v.
Assn. of
- Management Studies; (2009) 6 SCC 171, the decision related
to disposal of public property by an instrumentality of the State.
In the said context, the Court inter alia held as follows:
"26. A tender is an offer. It is something which invites and
E
F
is communicated to notify acceptance. Broadly stated it
must be unconditional; must be in the proper form, the
person by whom tender is made must be able to and
G
willing to perform his obligations. The terms of the invitation
to tender cannot be open to judicial scrutiny because the
invitation to tender is in the realm of contract. However, a
limited judicial review may be available in cases where it
is established that the terms of the invitation to tender were
H
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c
D
E
F
430
SUPREME COURT REPORTS
[2014] 5 S.C.R.
so tailor made to suit the convenience of any particular
person with a view to eliminate all others from participating
in the biding process.
The bidders participating in the tender process have no
other right except the right to equality and fair treatment in
the matter of evaluation of competitive bids offered by
interested persons in response to notice inviting tenders
in a transparent manner and free from hidden agenda.
One cannot challenge the terms and conditions of the
tender except on the above stated ground, the reason
being the terms of the invitation to tender are in the realm
of the contract. No bidder is entitled as a matter of right to
insist the authority inviting tenders to enter into further
negotiations unless the terms and conditions of notice so
provided for such negotiations.
It is so well settled in law and needs no restatement at our
hands that disposal of the public property by the State or
its instrumentalities partake the character of a trust. The
methods to be adopted for disposal of public property must
be fair and transparent providing an opportunity to all the
interested persons to participate in the process.
The authority has the right not to accept the highest bid and
even to prefer a tender other than the highest bidder, if
there exist good and sufficient reason, such as, the highest
bid not representing the market price but there cannot be
any doubt that the Authority's action in accepting or refusing
the bid must be free from arbitrarinesses or favouritism."
· 20. Lucid enunciation on the scope of judicial review of
G administrative action, that too in tender matters can be found
in Tata Cellular v. Union of India (1994 (6) SCC 651), where
following discussion is worthy of extraction:
"70. It cannot be denied that the principles of judicial review
H
would apply to the exercise of contractual powers by
RISH! KIRAN LOGISTICS PVT. LTD. v. BOARD OF
· 431
TRUSTEES OF KANDLA PORT TRUST [A.K. SIKRI, J.]
- Government bodies in order to prevent arbitrariness or
A
favouritism. However, it must be clearly stated that there
are inherent limitations in exercise of that power of judicial
review. Government is the guardian of the finances of the
state. It is expected to protect the financial interest of the
State. The right to refuse the lowest or any other tneder is
B
always available to the Government. But the principles laid
down in Article 14 of the Constitution have to be kept in
view while accepting or refusing a tender. There can be
no question of infringement of Article 14 if the government
tries to get the best person or the best quotation. The right c
to choose cannot be considered to be an arbitrary power.
Of course, if the said power is exercised for any collateral
purpose the exercise of that power will be struck down.
Judicial review is con_cerned with reviewing not the merits
of the decision in support of which the application for
D
judicial review is made, bu the decision making process
itself.
The duty of the court is to confine itself to the question of
legality. Its concern should be:
E
·(i)
Whether a decision making authority exceeded its
powers?
(ii)
Co.mmitted an error of law,
(iii)
Committed a breach of rules of natural justice,
(iv)
reached a decision which no reasonable tribunal
would have reached or,
(v)
Abused its powers.
Therefore, it is not for the court to determine whether a
particular policy or particular decision taken in the fulfilment
of that policy is fair. It is only concerned with the manner
F
G
in which those decisions have been taken.