# VILLIANUR IYARKKAI PADUKAPPU MAIYAM v. UNION OF INDIA AND OTHERS

- **Citation:** [2009] 9 S.C.R. 225
- **Court:** Supreme Court of India
- **Decided:** 2009-05-14
- **Case number:** Civil Appeal No. 3572 of 2009
- **Bench:** K.G. Balakrishnan, P. Sathasivam, J.M. Panchal
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/villianur-iyarkkai-padukappu-maiyam-v-union-of-india-and-others-26155
- **Pages:** 88

## Headnote

DEVELOPMENT OF PORTS:
A
B
c
Pondicherry Port - Development of - Government of
Pondicherry entering into a concession agreement with a
developer - The Development Project was on Build Operat(!J
and Transfer (BOT) basis. -
Issue of Government
Memorandum by which existing movable/immovable assets·· 0
of the port were to be handed over to the developer -
'
Challenged in High Court by way of Writ Petitions -
Dismissed by the High Court - On appeal, Held: Port of
Pondicherry being a minor port, Government of Pondicherry
has the necessary jurisdiction and control to develop the port
E
- On the facts and circumstances of the case it cannot be said
that the Government of Pondicherry had acted arbitrarily or
that the Letter of Intent was issued in favour of the developer
with oblique motives - The Government adopted a pragmatic
approach and proceeded to shortlist the developer directly
F
and acted in the best interests of the State to overcome the
failed attempts in the past to develop the Pondicherry Port -
Thus the Supreme Court being a constitutional court not
expected to presume alleged irregularities, illegalities or
unconstitutionality- Nor would it be justified in substituting its
opinion for the bonafide opinion of the State Government - It G
cannot be said that the project was cleared without the
environmental aspects in total violation of Precautionary and
Trusteeship Principles - In fact it was done - Plea that the ·
Government of Pondicherry could not have taken the decision
225
H
·-·
226
SUPREME COURT REPORTS
[2009] 9 S.C.R.
A to privatize the Pondicherry Port without consent/approval of
the Central Government is rejected as misconceived - Grant
of Letter of Intent or execution of Concession Agreement in
favour of the developer for development of the Port on BOT
basis cannot be regarded as gifting public largesse - Any
B
ancillary development cannot be characterized as real estate
business - Issue of Public Tender - In view of the facts, there
was no requirement - Constitution of India, Articles 162, 239,
239A - Government of Union Territories Act, 1963, Section
18 - Pondicherry (Laws) Regulation, 1963, Regulation 6(b)
c - Rules of Business of the Government of Pondicherry, Rule
5(2), Delegation of Financial Rules, Rule 21 - Pondicherry
Administrative Act, 1962, Section 5 -
Pondicherry
Administration Regulation Act, 1963, Section 3 - Indian Potts
Act, 1908, Section 3(9).
D
PUBLIC INTEREST LJTiGA T/ON:
E
Locus standi -
Challenging policy decision of the
Government in Pl(... is impermissible - Policy decision of
Government - Interference with.
·PRACTICE & PROCEDURE:
Concession made before Court - Submission before the
Court that only environmental impacts of the Project and not
· selection of the Developer, were raised - Recorded by the
F High Court - Certainly a concession - No application was
filed before the High Court making a grievance that
concession was never made and /or was wrongly recorded by
the Court - Hence, it is a concession and binding on the
appellants - Now, they cannot canvass for challenging the
G selection of the developer.
SUPREME COURT RULES, 1960:
Order XVI Rule 4(b) - List of dates in chronological order
with relevant material facts or events pertaining to each of the
H dates - Furnishing of """' Filing of inaccurate and incomplete
' \_
_...._. --
t
.
I
-{
VILLIANUR IYARKKAI PADUKAPPU MAIYAM v.
227
UNION OF INDIA AND ORS.
f;
list of dates causing confusion and waste of time of the Court
A
- Such practice of filing incomplete/inaccurate list of dates
and events deprecated - Practice & Procedure.
JUDICIAL REVIEW·
It is neither within the domain of the courts nor the scope
B
of judicial review to embark upon an enquiry as to whether a
particular policy is wise or whether better public policy can be
evolved - Nor are the courts inclined to strike down a policy
merely because a different policy would have been fairer or
wiser or more scientific or more logical -
Wisdom and c
advisability of economic polic

## Text

_Characters 0–39,983 of 180,814. This is a partial read: ask again with offset=39983 for what follows._

[2009] 9 S.C.R. 225
VILLIANUR IYARKKAI PADUKAPPU MAIYAM
v.
UNION OF INDIA AND OTHERS
(Civil Appeal No. 3572 of 2009)
MAY 14, 2009
[K.G. BALAKRISHNAN, CJI., P. SATHASIVAM AND J.M.
PANCHAL, JJ.]
DEVELOPMENT OF PORTS:
A
B
c
Pondicherry Port - Development of - Government of
Pondicherry entering into a concession agreement with a
developer - The Development Project was on Build Operat(!J
and Transfer (BOT) basis. -
Issue of Government
Memorandum by which existing movable/immovable assets·· 0
of the port were to be handed over to the developer -
'
Challenged in High Court by way of Writ Petitions -
Dismissed by the High Court - On appeal, Held: Port of
Pondicherry being a minor port, Government of Pondicherry
has the necessary jurisdiction and control to develop the port
E
- On the facts and circumstances of the case it cannot be said
that the Government of Pondicherry had acted arbitrarily or
that the Letter of Intent was issued in favour of the developer
with oblique motives - The Government adopted a pragmatic
approach and proceeded to shortlist the developer directly
F
and acted in the best interests of the State to overcome the
failed attempts in the past to develop the Pondicherry Port -
Thus the Supreme Court being a constitutional court not
expected to presume alleged irregularities, illegalities or
unconstitutionality- Nor would it be justified in substituting its
opinion for the bonafide opinion of the State Government - It G
cannot be said that the project was cleared without the
environmental aspects in total violation of Precautionary and
Trusteeship Principles - In fact it was done - Plea that the ·
Government of Pondicherry could not have taken the decision
225
H
·-·
226
SUPREME COURT REPORTS
[2009] 9 S.C.R.
A to privatize the Pondicherry Port without consent/approval of
the Central Government is rejected as misconceived - Grant
of Letter of Intent or execution of Concession Agreement in
favour of the developer for development of the Port on BOT
basis cannot be regarded as gifting public largesse - Any
B
ancillary development cannot be characterized as real estate
business - Issue of Public Tender - In view of the facts, there
was no requirement - Constitution of India, Articles 162, 239,
239A - Government of Union Territories Act, 1963, Section
18 - Pondicherry (Laws) Regulation, 1963, Regulation 6(b)
c - Rules of Business of the Government of Pondicherry, Rule
5(2), Delegation of Financial Rules, Rule 21 - Pondicherry
Administrative Act, 1962, Section 5 -
Pondicherry
Administration Regulation Act, 1963, Section 3 - Indian Potts
Act, 1908, Section 3(9).
D
PUBLIC INTEREST LJTiGA T/ON:
E
Locus standi -
Challenging policy decision of the
Government in Pl(... is impermissible - Policy decision of
Government - Interference with.
·PRACTICE & PROCEDURE:
Concession made before Court - Submission before the
Court that only environmental impacts of the Project and not
· selection of the Developer, were raised - Recorded by the
F High Court - Certainly a concession - No application was
filed before the High Court making a grievance that
concession was never made and /or was wrongly recorded by
the Court - Hence, it is a concession and binding on the
appellants - Now, they cannot canvass for challenging the
G selection of the developer.
SUPREME COURT RULES, 1960:
Order XVI Rule 4(b) - List of dates in chronological order
with relevant material facts or events pertaining to each of the
H dates - Furnishing of """' Filing of inaccurate and incomplete
' \_
_...._. --
t
.
I
-{
VILLIANUR IYARKKAI PADUKAPPU MAIYAM v.
227
UNION OF INDIA AND ORS.
f;
list of dates causing confusion and waste of time of the Court
A
- Such practice of filing incomplete/inaccurate list of dates
and events deprecated - Practice & Procedure.
JUDICIAL REVIEW·
It is neither within the domain of the courts nor the scope
B
of judicial review to embark upon an enquiry as to whether a
particular policy is wise or whether better public policy can be
evolved - Nor are the courts inclined to strike down a policy
merely because a different policy would have been fairer or
wiser or more scientific or more logical -
Wisdom and c
advisability of economic policy are not ordinarily amenable
to judicial review.
LEGAL PRINCIPLES/DOCTRINE:
Precautionary principle -
Trusteeship principle· -
D
..i
Applicability of
For the development of Pondicherry Port, the
Government of Pondicherry entered into a Concession
Agreement with Respondent No.11 SPML along with its
E
partners after following a detailed- consortium procedure.
The Development Project was on Build Operate and
Transfer (BOT) basis. Government of Pondicherry also
-(
issued an Office Memorandum by which all the existing
movable/immovable assets of the Port were to be
F
handed over to the developer as per the Concession
Agreement. This was challenged by the appellants by
filing writ petitions in the High Court. The writ petitions
were dismissed by the High Court. Hence the appeals.
Dismissing the appeals, the Court
G
HELD: 1.1. A fair and reasonable reading of
paragraph 19 of the impugned judgment makes it very
clear that the appellants had fairly conceded before the
High Court that they were not assailing the selection of
H
228
SUPREME COURT REPORTS
[2009] 9 S.C.R.
.:._A the respondent No. 11 as Developer for the Pondicherry
Port, but were more concerned with the environmental
impact that the project may have and, therefore, the
counsel for the appellants had requested the Court to
safeguard the interest of general public and future
s development of the Union Territory of Pondicherry with
,~eference to the development of the Pondicherry Port. It
is relevant to notice that in the grounds of memorandum
of the Special Leave Petitions it is not contended by the
appellants that no concession was made by the counsel
c before the High Court or the concession made was
different and· was not correctly recorded by the High
Court. [Para 12] [278-G-H; 279-A-B]
1.2. It is evident that during the course of the
arguments and after examining the documents, the High
D Court had expressed its view that the selection of the
Developer was correctly made and, therefore, in those
circumstances, the High Court had ascertained from the
appellants as to whether they would like to .concede on
the issue of selection of the Developer and. agitate its ·.
E concern in relation to the environmental Jmpact of the
project. It is ~lso seen from .ttt~ hnpugnedjudgment that
the counse' for the appellants had sought for a pass over
of the matter and; r~quested ~h·~,Co.urt to take up the
matter inth~:sec.Q_nd·tialf.on the same day at 2.15 P.M. to
F ·.·enable him :t(?;.9et instructions from the appellants. It is
also evident that the counsel for the appellants pointed
out to ttie court that he was not able to get in touch with·
his clients and, therefore, sought an adjournment to seek
instructions from the appellants. What is relevant to
G notice is that on the next date of hearing the counsel for
the appellants had informed the High Court that his
clients had instructed him to concede on the issue of
selection of the Developer, but had pointed out -that his
clients were seeking certain safeguards relating to the
H

230
SUPREME COURT REPORTS
[2009] 9 S.C.R.
A was not selected, has come forward to challenge the
selection procedure adopted by the Gover~ment of
Pondicherry or the selection of the respondent No. 11 as
Developer of the Pondicherry Port. [Para 13] (281-E-F]
8
2.2. The only ground on which a person can maintain
a PIL is where there has been an element of violation of
Article 21 or human rights or where the litigation has been
initiated for the benefit of the poor and the
underprivileged who are unable to come fo the court due
to some disadvantage. On the facts and in the
C circumstances of the case, this Court is of the view that
I
the only ground on which the appellants could have
maintained a PIL before the High Court was to seek
protection of the interest of the people of Pondicherry by
safeguarding the environment. This issue was raised by
D the appellants before the High Court and the High. Court
has issued directions regarding the same, which are to
be found in paragraph 24 of the impugned judgment.
After the High-Court's directions the element of public
interest of the appellants' case no longer survives. The
E appellants cannot, therefore, proceed to challenge the
Award of the Contract in favour of the respondent No. 11
on other grounds as this would amount to challenging
the policy decision of the Government of Pondicherry
through a PIL, which is not permissible. Thus on the
F ground of locus standi also the appeals should fail. [Para
13] (282-F-H; 283-A]
3. The list of dates submitted by the appellants
straightaway refers to the advertisement dated October
G 18, 2004, published in the Economic Times, but omits to
mention that even prior to October 18, 2004, on October
5, 2004 the Apollo Infrastructure Projects Finance
Company Limited had a meeting with the Minister of
Ports, Government of Pondicherry and had sought time
to make a presentation for the development of
H
)-
VILLIANUR IYARKKAI PADUKAPPU MAIYAM v.
231
UNION OF INDIA AND ORS.
Pondicherry Port and such an opportunity was given to
A
the said firm. Significant events, which took place during
January 12, 2005 to JaRuary 20, 2005, are not mentioned
in the list of dates at all. To enable the Court to know the
factual background, in the absence of records, clause (b)
of Rule 4(1) of Order XVI of the Supreme Court Rules,
B
1960 requires a list of dates in chronological order with
relevant material facts or events pertaining to each of the
dates to be furnished along with the special leave
petition. In practice, the list of dates is prefaced by a brief
.synopsis of facts to give a complete and coherent picture c
of the facts but in the instant case this Court finds that
in the special leave petitions, the synopsis/list of dates
filed suffers from the defect of filing of a list of dates
without relevant material facts/events or synopsis and
from the defect of filing of inaccurate and incomplete 0
synopsis/list of dates. The above defects have resulted
in defeating the very purpose of requiring the filing of
synopsis/list of dates. The filing of inaccurate and
incomplete list of dates has caused confusion
necessitating detailed reference to the facts carved out
from the pleadings of the parties before the High Court
E
and this Court. But for the filing of list of events on behalf
of the respondents, the list of events filed on behalf of the
appellants would have resulted into unintended
miscarriage of justice. To say the least, the list of events
submitted on behalf of the appellants cannot be termed
F
as accurate and such a practice of filing of incomplete/
inaccurate list of events is not approved by this Court at
all. [Para 14) [283-B-H; 284-A]
4. The contention that the Government of G ..
~
Pondicherry having taken a conscious decision on the
basis of available guidelines to get a Feasibility Report
before taking up development of Pondicherry Port could
not have given it up in an arbitrary manner, all of a
sudden, to benefit Mis SPML and therefore grant of Letter
H
232
SUPREME COURT REPORTS
(2009] 9 S.C.R.
A of Intent dated June 3, 2005 to the Respondent No.11
should be voided, has no factual basis. [Para 16] (284-DE]
5.1. What is most important to notice is that in the
8 meeting held on March 11, 2005 only Respondent No.11
was present. During the presentation made by the
Respondent. No. 11, it was found that Respondent No. 11
had entered into consortium with Halcrow, a very
prominent company in the field of Port development
projects. The background of the said firm is set out in the
C Minutes of the proceedings held on March 11, 2005. The
said firm is described as a company which has been in
India for more than 30 years and its expertise is in the
development of multi purpose ports. (Para 16] (291-A-C]
D
5.2. The petitioners have not made any reference to '
the proceedings of March 11, 2005 or the Minutes of the
said Meeting. Instead, they have straightaway referred to
the.note prepared on April 5, 2005 to suggest that Mr. S.D.
Sunderesan, Director (Ports) was opposed to the
E development of the Port and for that reason he was
transferred by the Government. The affidavit in reply
makes it very clear that this allegation of the petitioner is
factually wrong. Mr. Sunderesan was recommended for
promotion to higher grade by Departmental Promotion
F Committee in March 2005 itself and his posting as a
Deputy Secretary was effected in May 2005. Thus, it is
wrong on the part of the petitioners to allege/suggest that
merely because he was opposed to the development of
the Port, he was transferred by the Government. The note
dated April 5, 2005 was considered and the Under
G Sec.retary (Port) made a detailed note with reference
thereto on April 8; 2005 dealing with every aspect, pointwise. The Chief Secretary prepared a detailed note
pointing out that the matter had been considera~ly
delayed and that the Port Privatisation Committee had
H
111(
VILLIANUR IYARKKAI PADUKAPPU MAIYAM v.
233
UNION OF INDIA AND ORS.
}!.
recommended that a Letter of Intent be issued to SPML.
A
The Chief Secretary sent a note dated May 26, 2005 which
mrwas put-up before the Minister of Ports for orders. The
Minister of Ports approved the note on June 1, 2005
recommending that suitable clauses be incorporated to
bind the party down to ensure that the project did not get 8
delayed. The Chief Minister approved the proposal on
~
June 3, 2005 and thereafter the proposal was approved
by the Lieutenant Governor on June 3, 2005. [Para 16]
[291-0-H; 292-A-B]
6. On the facts and in the circumstances of the case, c
this Court is of the firm opinion that the events leading
.._
to the award of Letter of Intent to the respondent No.11
In June, 2005 do not indicate~ Jn any manner, that the
Government had acted arbitrarily or that the Letter of
D
)
Intent was issued to favour· the respondent No.11 with
..
oblique motives and, tht.refore, the contention of the
appellants in this regard is rejected. [Para 20) [298-A-B]
7 .1. It is well settled that non-floating of tenders or not
holding of public auction would not be in all cases be
E
deemed to be the result of the exercise of the executive
power in an arbitrary manner. Generally, when any State
--'...
land is intended to be transferred or the State largesse
......
decided to be conferred, resort should be had to public
auction or transfer by way of inviting tenders from the
F
people. However, what is important to notice is that the
old Pondicherry Port is very much in existence. This is
not a case of establishment of new port at Pondicherry
but this is a case of developing an existing port to meet
rapid changes in transport technology and to improve G'
the existing port facilities. The development of an existing
-1
...-
port on Build, Operate and Transfer basis can never be
equated with intended sale of Government land or
. transfer of State largesse. This is not a case where a
State asset is sought to be sold or the State is out to H
-
234
SUPREME COURT REPORTS
)-
[2009] 9 S.C.R.
A purchase goods. Such cases stand on a different footing
~.
from a major issue of economic development sμcfl as
,.._\
development of a port. The respond~nt No.11 is called
upon to develqp tt~e Pondicherry Port on BOT ba.sis.
Thus after deveiopment of the Port, the same will have
B to be retransferred to the Government of Poodicherry. In
the matter of policy decision and econornic tests the
scope of judicial review is very limited. Unless the
,..
decision is shown to be contrary to any statutory
provision or the Constjtution, the Court would not
c interfere with an economic decision taken by the State.
[Para 21] [298-0-H; 299-A]
7 .2. The court cannot examine the relative merits of
,__.;;,
different economic policies and cannot strike down the
D
same merely on ground that another policy would have
(
been fairer and better. In a democracy, it is the prerogative
).
of each elected Government to follow its own policy ..
Often a change in Government may result in the shift in
focus or change in economic policies. Any such change
may result in adversely affecting some vested interests.
E Uniess any illegality is committed in the execution of the
policy or the same is contrary to law or malafide, a
decision bringing about change cannot per se be
>--
interfered with by the court. It is neither within the ctomain
of the courts nor the scope of judicial review to embark
..._
F upon an enquiry as to whether. a particular public policy
is wise or whether better public policy can be evolved.
Nor are the courts inclined to strike down a policy at the
behest of a petitioner merely because it has been urged
that a different policy would have been fairer or wiser or
G more scientific or more logical. Wisdom and advisability
of economic policy are _ordinarily not amenable to judicial
)-
review. In matters relating to economic issues the -
........
Government has, while taking a decision, right to "trial
and error" as long as both trial and error are bona fide and
H
-
i
VILLIANUR IYARKKAI PADUKAPPU MAIYAM v.
235
UNION OF INDIA AND ORS.
:l'
within the limits of the authority. For testing the
A
correctness Qf a policy, the appropriate forum is
.
-
Parliament and not tfle courts. [Para 21] [299-A-F]
7.3. Normally, there is always a presumption th~t ttte
Governmental action i~ rea§onable and in public interest
B
and it is for the party challenging its validity to show that
Ji
it is wanting in reasonableness or is not informed with
public interest. This burden is a heavy one and it has to
be discharged to the satisfaction of the court by proper
and adequate material. The court cannot Jightly assume c
that the action taken by the Government is unreasonable
or against public interest because there are large number
of considerations, which necessarily weigh with the
Government in taking an action. In a case like this where
..
the State is allocating resources such as water, power,
D
raw materials, etc. for the purpose of encouraging
development of the port, this Court does not think that
the State is bound to advertise and tell the people that it
wants development of the Port in a particular manner and
invite those interested to come up with proposals for the
purpose. The State may choose to do so if it thinks fit and
E
in a given situation it may turn out to be advantageous
~
for the State to do so, but if any private party comes
before the State and offers to develop the port, the State
..
would not be committing breach of any constitutional
obligation if it negotiates with such a party and agrees
F
to provide resources and other facilities for the purpose
of development of the port. The State is not obliged to tell
the respondent No.11 to wait without certainty. It would
be most unrealistic to insist on such a procedure,
particularly, in an area like Pondicherry, which on G
-J
account of historical, political and other reasons, is not
--
_ yet industrially developed and where entrepreneurs have
'
to be offered attractive terms in order to persuade them
to set up industries. The State must be free in such a
H
236
SUPREME COURT REPORTS
[2009] 9 S.C.R.
A case to negotiate with a private entrepreneur with a view
to inducing him to develop the port and if the State enters
into a contract with such an .entrepreneur for providing
resources and other facilities for developing the port, the
contract cannot be assailed as invalid because the State
B has acted bonc:t fide, reasonably and in public interest.
The terms and conditions of the contract entered into with
the respondent No. 11 as well as the surrounding
circum$tances show that the State has acted bona fide
and not out of improper or corrupt motive or in order to
C promote the private interest of the respondent No. 11 at
the cost of the State. Therefore, it is difficult to interfere
and strike down the State action as arbitrary,
unreasonable or contrary to public interest. [Para 21]
[299-F-H; 300-A-H]
D
7.4. It is true that one of the methods of securing the
public interest, when it i& considered necessary to
dispose of a property, is to sell the property by public·
auction or by inviting tenders. This is not a case of sale
of property by the State. Though public auction or
E inviting of tenders is the ordinary rule in case where the
State Government proposes to dispose of a property, it
is not an invariable rule. There may be situations where
\
there are compelling reasons necessitating departure
from the rule, the reasons indicated in·:this case for the
F departure are shown to be rational and are not
suggestive of discrimination. The Government is entitled
to make pragmatic decisions and policy decisions which
may be necessary or called for under the prevalent
peculiar circumstances. The issue of privatisation of the
G Port had been engaging the attention of the Government
of Pondicherry since 1973. The said issue had been
delayed for a long time. Therefore, no fault can be found
with the expert Committee, with the various officers of the
Government including the Chief Secretary, the Ministers,
H the Chief Minister and the Lt. Governor for deciding to
>'.!.
-
VILLIANUR IYARKKAI PADUKAPPU MAIYAM v.
237
UNION OF INDIA AND ORS.
develop the Port with the assistance of the respondent
A
No. 11 and not just restricting the process to appoint a
consultant. The sole purpose behind the said exercise
was to ensure development of the Port in a proper
manner and as expeditiously as possible. It is necessary
B
to mention that the Government of Pondicherry was
trying to develop the Port and was looking for an
appropriate partner. It must be remembered that
technology for development of the Port would not be
available for the mere asking of it. All the leading firms/
companies were not found suitable to develop the Port c
and none of them has made grievance either before the
High Court or before this Court regarding selection of
respondent No. 11 as Developer of the Port. It is ultimately
a matter of bargain. In such cases, all that needs to be
assured is that the Government or the authority, as the
0 .
case may be, has acted fairly and has arrived at the best
available arrangement in the circumstances. The
materials on record substantiated the absolute need and
necessity to undertake the development of the Port by
the Government of Pondicherry in furtherance of great
public interest and for larger public and common good.
E
The admitted dire financial position of the State
Government and its inability to undertake such a project
at the cost of Government coupled with the fact that the
venture was long overdue apparently made the State
Government and its authorities to avail of the project as
unfolded and volunteered by the respondent No. 11,
subject, of course, to further revisions, modifications and
suggestions in the best interest of the State Government.
F
A
careful and dispassionate assessment and
consideration of the materials placed on record does not G
leave any reasonable impression, on the peculiar facts
and circumstances of this case, that anything obnoxious
which requires either public criticism or condemnation by
courts of law had taken place. The objective of the
H
238
SUPREME COURT REPORTS
[2009] 9 S.G.R.
A Government of Pondicherry to develop the Port was
admitted to be fulfilled at the initial stage by short listing
a consultant itself. However, the Government did not wish
to continue the process of selection of the consultant and
risk losing the chance of privatisation of the Port again.
B As firms/companies had offered to develop the Port
directly, the Government of Pondicherry could not have
asked the firms/companies to first participate in the
process of selection of a consultant, prepare a project
report and require them to participate in the process for
c selection of the developer all over again. The
Government of Pondicherry adopted a pragmatic
approach and proceeded to short list the developer
directly and in doing so the Government has acted in the
best interest of the State to overcome the failed attempts
0 in the past to secure a developer to develop the
Pondicherry Port. Under the circumstances, this Court,
which is a constitutional Court, is not expected to
presume. the alleged irregularities, illegalities or
unconstitutionality nor this Court would be justified in
E substituting its opinion for the bona fide opinion of the
State Government. Therefore, the plea raised on behalf
of the appellants thaf the Government of Pondicherry
had acted in arbitrary and unreasonable manner in
switching the whole public tender process into a system
of personal selection, is rejected. [Para 21] [300-H; 302F A-H]
8. It is admitted position that the Pondicherry Port is
not a "major port" and as such jurisdiction and control
to develop the said port vests in the Government of
G. Pondicherry. There is no manner of doubt. that
development and privatisation of minor ports can be
-·
undertaken by the respective State Government after
~ ·-~
formulating its own guidelines and modalities. The Indian
Ports Act, 1908 permits the State Government to develop
H the minor ports. By virtue of power vested in the
VILLIANUR IYARKKAI PADUKAPPU MAIYAM v.
239
UNION OF INDIA AND ORS.
;
Parliament by Article 239A of the Constitution, the
A
a.
Government of Union Territories Act, 1963 was enacted
and Pondicherry was provided with a Legislative
Assembly. The extent of the legislative power of the State
Legislative Assembly is laid down in Section 18 of the Act
of 1963, which, inter alia, provides that the Legislative
B
Assembly is empowered to make laws in respect of any
matters In the State List or the Concurrent List. Entry 31
of the Concurrent List provides for "Ports other than
those declared by or under law made by Parliament or
existing law to be major ports". As the Pondicherry Port c
has not been declared as a major port, the Legislative
Assembly of Pondicherry has absolute power to make
laws in relation to the Pondicherry Port. Article 162 of the
,
~
. Constitution provides that the executive power of a State
is co-extensive with its legislative powers. Therefore,
D
•
there is no manner of doubt that the Government of
~
Pondicherry has complete jur~sdiction in relation to
Pondicherry Port, which is a minor port. The reliance
placed upon Section 3(9) of the Indian Ports Act, 1908
read with Regulation 6(b) of the Pondicherry (Laws)
E
Regulation, 1963 is totally misconceived. Section 3(9) of
the said Act provides that the jurisdiction of ports other
than major ports vests in the State Government. Having
~
considered the different provisions of the Constitution
-
and Statutes, referred to by the counsel for the appellants,
this Court finds that there is fundamentarfallacy in the
F
argument and it is that they rely upon Regulation G(b) only
in part. Though the said Regula_tion provides that
reference to the State Government shall be construed as
a reference to the Central Government, it also provides
that reference to the State Government shall be G
construed as reference to the Chief Commissioner. A
~-
~
conjoint and meaningful reading of the provisions of the
Constitution read with Regulation G(b) of the Pondicherry
(Laws) Regulation, 1963 leaves no doubt that the power
H
240
SUPREME COURT REPORTS
[2009] 9 S.C.R.
A in respect of Pondicherry Port necessarily vests in the
Government of Pondicherry and not in the Central
Government. The reliance placed on Rule 5(2) of the
Rules of Business of the Government of Pondicherry
read with Rule 21 of the Delegation of Financial Rules to
B contend that prior approval of the Central Government
was required to be taken by the Government of
Pondicherry before entering into the Concession
Agreement with the respondent No.· 11 as it was beyond
the financial powers of the Government of Pondicherry,
C is devoid of merits. Rule 21 relates to the power to
sanction expenditure in relation to contracts. Execution
of Concession Agreement or grant of Letter of Intent
does· not entail any expenditure to be incurred by the
Government of pondicherry. [Para 23] (303-C; 305-B]
:::>
9.1. It is relevant to notice that the Union Territory of
Pondicherry gained its freedom in the year 1962.
Therefore, several laws were passed by the Parliament
for its integration with the Union of India. One such law
was Pondicherry Administration Regulations Act, 1963.
E Article 240 of the Constitution deals with power of
President to make regulations for certain Union
Territories. The first proviso to Article 240, inter alia,
provides that when any body is created under Article
239A to function as a Legislature for the Union Territory
F of Puducherry (substituted by Section 4 of the
Pondicherry (Alteration of name) Act, 2006 for
Pondicherry], the Pre~·ident shall not make any regulation
for the peace, progress and good Government of that
Union Territory with effect from the date appointed for the
G first meeting of· the Legislature. Therefore, the
Pondicherry Administration Regulation Act, 1963 will
have to be regarded as a Transitional Legislation.
Moreover, the primary reason for enacting Section 3 of
the Pondicherry Administr~tion Regulation Act, 1963 was
H
-
(
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VILLIANUR IYARKKAI PADUKAPPU MAIYAM v.
241
UNION OF INDIA AND ORS.
to extend all the laws enacted by the Union of India under
A
the Union List to the Pondicherry. It is only an Act akin
to adaptation Act by which the laws of Union of India
were extended to this Union Territory, which was
incorporated with India after partition. The extension of
laws of Union of India shall only mean that those laws
B
would be applicable as they are applicable to any other
State of India. As noticed earlier, the Port in question is
admittedly a minor port and, therefore, not covered by the
provisions of Indian Major Ports Act, 1908. The extension
of law to Indian Major Ports Act, 1908 would only mean c
that a particular law is prevalent but its applicability would
. be dependant upon as to whether facts and
· .. circumstances warrant its invocation. Had the Port in
questio.n been a major port, Indian Ports Act, 1908 would
have applied. In this case as the Port in question is a 0
minor port, the Indian Major Ports Act, 1908 would not
apply. [Para 24] [305-0-H; 306-A-C)
9.2. This Court finds that Section 5 of the Pondicherry
Administration Act, 1962 is the provision by which all
properties and assets, which earlier vested in the French
E
· Republic, stood transferred to the Union, i~e., Union of
States {India). In other words, Section 5 was enacted for
the purpose of transfer of properties from one sovereign
State to another sovereign State. It has no power on the
right of Government of Pondicherry over the properties
F
and assets in Pondicherry. The vesting of land from
French Republic to the Republic of India can have no
bearing on the powers of Government of Pondicherry to
dispose of land in accordance with the provisions of the
Constitution. Further, it is to be noticed that the entire
G
Pondicherry Administration Act, 1962 was a Transitional
Act for transfer of power from the French Republic to the
Republic of India, which is evident from the Statement of
Objects and Reasons to the said Act. Therefore, the plea
H
242
SUPREME COURT REPORTS
[2009] 9 S.C.R.
A that the Government of Pondicherry could not have taken
the decision to privatize the Pondicherry Port without
consent/approval of the Central Government is totally
misconceived. [Para 25] (306-D-F]
8
9.3. The letter dated March 22, 1996 addressed by the
Joint Secretary of India to the Chief Secretary of
Pondicherry Administration read with decision taken by
the Committee of which Director (Port Development),
Ministry of Shipping, New Delhi, was one of the Member,
C to privatize the Port will have to be construed as
approval/consent of the Central Government to the
project for the development of Pondicherry Port by
privatisation and it was not necessary for the Government
of Pondicherry to seek further approval at every stage of
development of the Port. Therefore, the plea that the
D Government of Pondicherry could not have tak~n the
decision to privatize the Pondicherry Port without
cpnsent/approval of the Central Government is found to
.be misconceived and is rejected hereby. [Para 27] [3080G]
E
10.1. The argument that the project in question is
cleared without examining the environmental aspects by_
the Union Territory of Pondicherry in total violation of the
Precautionary and Trusteeship principles and is also
F prohibited under the CRZ notification as the same is a
real-estate activity in the garb of port development, has
no substance worth the name. [Para 28] [308-H; 309-A]
10.2. The record of the case indicates that concession
agreement is already entered into between the
G Government of Pondicherry on one hand and the 11th
and 12th respondents on the other, on January 21, 2006.
Those respondents in terms of the concession
agreement have incorporated a Special Purpose Vehicle
(SPV) company known as Pondicherry Port Limited for
H implementation of the Port Development Project. An
0
\-
•
.
"
' jl
-t.
VILLIANUR IYARKKAI PADUKAPPU MAIYAM v.
243
UNION OF INDIA AND ORS.
B
Assignment agreement to this effect in favour of A
Pondicherry Port Limited is executed by the Respondent
Nos. 11 and 12 and confirmed by the Government of
Pondicherry. In terms of the Concession agreement, the
Government of Pondicherry has entered into Lease and
Possession agreement with the Special Purpose Vehicle
Company on February 4, 2006. The Lease-hold
occupancy is given to the Pondicherry Port Limited
subject to obtaining necessary clearance including
environmental clearance from the Government of India.
There is n.o manner of doubt that no one can be permitted c
to carry on construction activity which is prohibited by
the CRZ. However, this being a project exceeding Rs.50
crores necessary environmental clearance has to be
obtained from the Ministry of Environment and Forest
Union of India. Before such consent is granted/obtained,
0
a full Environmental Impact Assessment has to be done.
During that exercise, public hearing would be conducted
as a matter of rule and all the concerns expressed by the
public will have to be taken due note of, by the authorities
concerned. The specific objections raised by the
E
appellants will also have to be considered and they
would be entitled to hearing by the competent authority.
Mere submission of DPR is not the end of any decision
making process. The implementation of the project as per
DPR is solely dependent on the clearance to be given by
F
the Ministry of Environment and Forest, Union of India.
There is no manner of doubt that the Government has
every power to stop the project if it violates environmental
safeguards. The consideration of CRZ regulations would
also be part of the said exercise. Further, the notification
issued under the Environment Protection Act clearly
G
-..+
requires a prior consent and provides for an appeal to be
filed before the tribunal constituted for the said purpose
by an aggrieved party. The plea that the environmental
cl1earance must precede the award of the project is
H
244
SUPREME COURT REPORTS
[2009] 9 S.C.R.
A wholly misconceived and is incorrect. The application
form for obtaining environment clearance under the
notification of 2006 makes it very clear that the
application has to be made by the entity which has been
entrusted with the project. In the judgment, impugned in
B the appeals, appropriate directions addressing all the
issues raised on behalf of the appellants relating to .the
environment have been issued by the High Court. In
addition, the Ministry of Environment and Forest which
has to given clearance for the project has t.o examine the
c proposals of the developer and follow due procedure
before granting approval. Therefore; the judgment
impugned is not liable to be set aside on the ground that
environmental aspects were not examined by the Union
Territory of Pondicherry in total violation of the
0 Precautionary and Trusteeship principles or that the
project in question is completely prohibited under the
CRZ notification. [Para 29] (309-D; 310 .. A-E]
11. It can hardly be disputed by anyone that the main
objective of the project is the development of
E Pondicherry Port. The Government of Pondicherry has
not entered into Concession agreement with the
Respondent No. 11 to permit the said respondent to run
a Real-estate business. While developing the port, it is
necessary to provide certain infrastructural facilities for
F passengers, shipping crew, port staff and other
personnel associated with the port, as part of the port .
development activity. Respondent No. 11 as developer of
the Port has not yet submitted necessary plans for
scrutiny of Ministry of Environment and Forest,
G Government of India, seeking clearance to the project. As
and when, the plans are submitted for clearance, the
competent authority can always decide upon the
desirability of making of constructions which do not fall
within the development of port. The ancillary activities to
H
" -
VILLIANUR IYARKKAI PADUKAPPU MAIYAM v.
245
UNION OF INDIA AND ORS.
be undertaken while developing a port cannot be
A
stopped by merely naming them as Real-estate business.
The affidavit in reply filed on behalf of Respondent Nos.
11 and 12 before the Madras High Court would indicate
that the Government of Pondicherry is not going to make
investment in the project at all. Therefore, the question
B
of Government of Pondicherry favouring the Respondent
No. 11 does not arise. The affidavit filed by the
Respondent Nos. 11 and 12 makes it clear that they have
taken up the project after conducting detailed study and
have decided to make investment in the project. The c
Respondent Nos. 11 and 12 are permitted to develop the
Port only on Build, Operate and Transfer (BOT) basis. No
material was placed by the appellants before the High
Court to substantiate the claim that the Respondent Nos.
11 and 12 are the Real-estate agents. The development 0
of Port of Pondicherry on BOT basis makes it evident
that,· in effect· and substance, the Government of
Pon.dicherry would get back the assets built by the
Respondent Nos. 11 and 12 after the expiry of period
, mention.ed in the Concession agreement. Grant of Letter
.· of lnten.t or execution of Concession agreement in favour, E
of Respondent No. 11 to permit it to develop the Port on
13-0T basis cannot be regarded as gifting public largesse.
The appellants have failed to bring on record any material
to substantiate the allegation that there is a conspiracy
to grab the land belonging to the Government of F
Pondicherry for the purpose of Real-estate of
Respondent No.11 by permitting it to construct five-star
hotel, commercial mall, etc. The reply affidavit filed by the
Respondent before the High Court, on the contrary,
shows that the feasibility report prepared by it indicated
G
- that the Port was to be developed in composite manner
,\ and therefore project should be commercially viable and
therefore considering the enormous cost involved in the
development of the Port, certain activities are sought to
be undertaken for the benefit of passengers, crew of H
246
SUPREME COURT REPORTS
[2009] 9 S.C.R.
A ships, staff etc. On the facts and in the circumstances of
~
the case, this court is of the opinion that the appellants
have failed to make out the case that the Pondicherry
Government has permitted the Respondent No. 11 to
carry on Real-estate business and therefore the appeals
B should be accepted. [Para 30] [310.;F; 312-B]
'
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
13572 of 2009.
"
From the Judgement/Order dated 10.8.2006 of the High
c Court of Judicature at Madras in W.P. No. 12337 of 2006.
Dr. Rajeev Dhavan, Nikhil Nayyar, T.V.S.