Research › Search › Judgment

Madras High Court · body

2014 DIGILAW 422 (MAD)

ABS Marine Services v. Union of India

2014-02-21

V.DHANAPALAN

body2014
Judgment 1. This Writ Petition has been filed, praying for issuance of a writ of certiorarified mandamus, to call for the records relating to the award of contract passed by the second respondent vide the impugned letter No.NIOT/VMC/ABS Corres/13-14, dated 18th October 2013, for grant of total management of the vessel ORV Sagar Nidhi and quash the same including any further proceedings thereto and consequently direct the second respondent to call for fresh tenders for awarding the contract for the total management of the vessel ORV Sagar Nidhi in accordance with the second respondent's previous policy of having separate tenders vide Tender No.NIOT/S&P/VMC/7245/2007-2008 in the year 2007 and Tender No.05/457/2010-11 in the year 2010. 2. Case of the petitioner : 2.1. Petitioner is a reputed company and engaged in the business of offering ship management and managing services for the past 20 years. Its operations and clients are pan India. Petitioner employs a permanent staff of over 80 personnel and has a floating staff of over 300 mariners on its roster. It has obtained all necessary registrations with respect to carrying out its business from the relevant government departments. It has already been duly carrying on the business of manning and management of vessels prior to the contracts of handling the total management of the vessel. In the year 2007, the second respondent came out with an open tender for manning and management of their vessel ORV Sagar Nidhi, in short, "the vessel". The third respondent and the petitioner were two among the various bidders for this prestigious contract and subsequently after all relevant evaluations including the techno- commercial evaluation, the petitioner was declared as the L1 bidder. The vessel was constructed at Fincantieri Shipyard, La Specia, Italy. 2.2. Pursuant to being declared the L1 bidder in 2007, the second respondent and the petitioner entered into a contract for running, manning and maintenance of the vessel. The term of the contract was for a period of three years. The vessel was delivered on 10th December, 2007, and was set sail to India on 16th December, 2007. The vessel was managed very efficiently and effectively. The incident free maiden voyage from Italy to India through the Mediterranean waters, the Suez Canal, Red Sea and Arabian Sea through the high risk piracy areas was indicative of the high standards that the petitioner was known for. The vessel was managed very efficiently and effectively. The incident free maiden voyage from Italy to India through the Mediterranean waters, the Suez Canal, Red Sea and Arabian Sea through the high risk piracy areas was indicative of the high standards that the petitioner was known for. The costs for the services and supplies provided by the petitioner were the most competitive in comparison with other similar government vessels of the second respondent, which are being run by the third respondent. 2.3. Subsequently, the second respondent floated a tender in 2010 vide Tender No.05/457/2010-11 on 02.09.2010. Once again, the petitioner was declared the L1 bidder as its tender bid was at least 30% lesser than the quote of the third respondent, as was the case during the first tender. After being declared the L1 bidder, the petitioner entered into a contract with the second respondent on 16.12.2010 for the total management of the vessel for a further period of three years. In the six years of the management of the vessel, there was not a single incident of mishap or report of loss, compromise or any other instance of confidential and proprietary information being compromised. 2.4. When such being the position, the second respondent, vide its letter dated 18.10.2013, informed the petitioner that the management of the vessel is to be handed over to the third respondent on nomination basis on the expiry of the term of contract entered into with the petitioner in 2010. The term of the said contract is to expire on 15th December, 2013. When the petitioner has not been faulted on a single occasion over the last six years, the action of the second respondent in awarding the contract on nomination basis is arbitrary, illegal, violative of law and against public policy and also such an action will defeat the very purpose of laws of tendering and the guidelines of the Central Vigilance Commission, which are clearly laid down to promote and establish transparency and accountability. 2.5. Hence, this writ petition. 3. Case of respondents 1 and 2 : 3.1. The Ministry of Earth Services is mandated to provide the nation with best possible services in forecasting the monsoons and other weather/climate parameters, ocean state, earthquakes, tsunamis and other phenomena related to earth systems through well integrated programmes. 2.5. Hence, this writ petition. 3. Case of respondents 1 and 2 : 3.1. The Ministry of Earth Services is mandated to provide the nation with best possible services in forecasting the monsoons and other weather/climate parameters, ocean state, earthquakes, tsunamis and other phenomena related to earth systems through well integrated programmes. The Ministry also deals with science and technology for exploration and exploitation of ocean resources (living and non-living) and plays nodal role for Antarctic/Arctic Southern Ocean research. The Ministry's mandate is to look after atmospheric sciences, ocean science and technology and seismology in an integrated manner. The Earth Commission, under which the Ministry of Earth Science works in mission mode based on commission structure, is responsible for formulating policies, oversee implementation of policies and programmes in mission mode and ensure the necessary interdisciplinary integration. 3.2. National Institute of Ocean Technology (NIOT), second respondent herein, is the technical arm of the Ministry of Earth Sciences (MoES), Government of India, carrying out technological development activities for harnessing the ocean resources. The main areas of focus are : Energy and Fresh Water from the sea, Offshore Structures, Deep Sea Mining, Submersibles, Gas Hydrates, Coastal and Environmental Engineering, Ocean/sensors, Electronics & Acoustics, Ocean Observation Systems and Marine Biotechnology. The Vessel Management of NIOT maintains two coastal research vessels, viz., Sagar Purvi and Sagar Paschimi; a buoy tender cum research vessel, by name, Sagar Manjusha and a state of the art technology demonstration vessel, called, Sagar Nidhi, totalling four vessels. 3.3. The activities of controlling deployment and managing logistics are centralised in NIOT in a cell called "Vessel Management Cell" with 9 staff. The day to day management of all the four vessels at sea was undertaken by private companies, identified through competitive bidding. Now, pursuant to the policy decision taken by the Government of India, the management of all four vessels has been handed over to Shipping Corporation of India (SCI), third respondent herein. 4. The day to day management of all the four vessels at sea was undertaken by private companies, identified through competitive bidding. Now, pursuant to the policy decision taken by the Government of India, the management of all four vessels has been handed over to Shipping Corporation of India (SCI), third respondent herein. 4. Learned Senior Counsel for the petitioner would contend that in matters of award of contracts of governmental organisations, the authorities must call for tenders, and, in this case, though the respondents followed the tender process in the years 2007 and 2010, the same procedure is not followed in the year 2013, but, instead, they have decided to award the contract on nomination basis to third respondent vide the impugned order, which is violative of established principles of law, arbitrary and unjust. He would cite the following authorities : (i) Nagar Nigam v. Al Faheem Meat Exports (P) Ltd., (2006) 13 SCC 382: "12. In this case, however, we are concerned with a different question. It is now a well-settled principle of law that having regard to the provisions of Article 14 of the Constitution of India, a State within the meaning of Article 12 thereof cannot distribute its largesse at its own sweet will, vide Ramana Dayaram Shetty v. International Airport Authority of India. The court can ensure that the statutory functions are not carried out at the whims and caprices of the officers of the Government/local body in an arbitrary manner. But the court cannot itself takeover these functions. 13. This Court time and again has emphasised the need to maintain transparency in grant of public contracts. Ordinarily, maintenance of transparency as also compliance with Article 14 of the Constitution would inter alia be ensured by holding public auction upon issuance of advertisement in the well-known newspapers. That has not been done in this case. Although the Nagar Nigam had advertised the contract, the High Court has directed that it should be given for 10 years to a particular party (Respondent 1). This was clearly illegal. 14. It is well settled that ordinarily the State or its instrumentalities should not give contracts by private negotiation but by open public auction/tender after wide publicity. In this case the contract has not only been given by way of private negotiation, but the negotiation has been carried out by the High Court itself, which is impermissible. 15. 14. It is well settled that ordinarily the State or its instrumentalities should not give contracts by private negotiation but by open public auction/tender after wide publicity. In this case the contract has not only been given by way of private negotiation, but the negotiation has been carried out by the High Court itself, which is impermissible. 15. We have no doubt that in rare and exceptional cases, having regard to the nature of the trade or largesse or for some other good reason, a contract may have to be granted by private negotiation, but normally that should not be done as it shakes the public confidence. 16. The law is well settled that contracts by the State, its corporations, instrumentalities and agencies must be normally granted through public auction/public tender by inviting tenders from eligible persons and the notification of the public auction or inviting tenders should be advertised in well-known dailies having wide circulation in the locality with all relevant details such as date, time and place of auction, subject-matter of auction, technical specifications, estimated cost, earnest money deposit, etc. The award of government contracts through public auction/public tender is to ensure transparency in the public procurement, to maximise economy and efficiency in government procurement, to promote healthy competition among the tenderers, to provide for fair and equitable treatment of all tenderers, and to eliminate irregularities, interference and corrupt practices by the authorities concerned. This is required by Article 14 of the Constitution. However, in rare and exceptional cases, for instance during natural calamities and emergencies declared by the Government; where the procurement is possible from a single source only; where the supplier or contractor has exclusive rights in respect of the goods or services and no reasonable alternative or substitute exists; where the auction was held on several dates but there were no bidders or the bids offered were too low, etc., this normal rule may be departed from and such contracts may be awarded through “private negotiations”. (See Ram and Shyam Co. v. State of Haryana8.) 17. In Sachidanand Pandey v. State of W.B.3, AIR at p. 1133, O. Chinnappa Reddy, J. after considering almost all the decisions of the Court on the subject summarised the legal propositions in the following terms: (SCC p. 330, para 40) “40. (See Ram and Shyam Co. v. State of Haryana8.) 17. In Sachidanand Pandey v. State of W.B.3, AIR at p. 1133, O. Chinnappa Reddy, J. after considering almost all the decisions of the Court on the subject summarised the legal propositions in the following terms: (SCC p. 330, para 40) “40. On a consideration of the relevant cases cited at the Bar the following propositions may be taken as well established: State-owned or public-owned property is not to be dealt with at the absolute discretion of the executive. Certain precepts and principles have to be observed. Public interest is the paramount consideration. One of the methods of securing the public interest, when it is considered necessary to dispose of a property, is to sell the property by public auction or by inviting tenders. Though that is the ordinary rule, it is not an invariable rule. There may be situations where there are compelling reasons necessitating departure from the rule but then the reasons for the departure must be rational and should not be suggestive of discrimination. Appearance of public justice is as important as doing justice. Nothing should be done which gives an appearance of bias, jobbery or nepotism.” (emphasis supplied) “14. The public property owned by the State or by any instrumentality of the State should be generally sold by public auction or by inviting tenders. This Court has been insisting upon that rule, not only to get the highest price for the property but also to ensure fairness in the activities of the State and public authorities. They should undoubtedly act fairly. Their actions should be legitimate. Their dealings should be aboveboard. Their transactions should be without aversion or affection. Nothing should be suggestive of discrimination. Nothing should be done by them which gives an impression of bias, favouritism or nepotism. Ordinarily these factors would be absent if the matter is brought to public auction or sale by tenders. That is why the court repeatedly stated and reiterated that the State-owned properties are required to be disposed of publicly. But that is not the only rule. As O. Chinnappa Reddy, J. observed, ‘that though that is the ordinary rule, it is not an invariable rule’. There may be situations necessitating departure from the rule, but then such instances must be justified by compulsions and not by compromise. But that is not the only rule. As O. Chinnappa Reddy, J. observed, ‘that though that is the ordinary rule, it is not an invariable rule’. There may be situations necessitating departure from the rule, but then such instances must be justified by compulsions and not by compromise. It must be justified by compelling reasons and not by just convenience.” (emphasis supplied) 18. The law is, thus, clear that ordinarily all contracts by the Government or by an instrumentality of the State should be granted only by public auction or by inviting tenders, after advertising the same in well-known newspapers having wide circulation, so that all eligible persons will have an opportunity to bid in the bid (sic auction), and there is total transparency. In our opinion this is an essential requirement in a democracy, where the people are supreme, and all official acts must be actuated by the public interest, and should inspire public confidence." (ii) Ramana Dayaram Shetty v. International Airport Authority of India, (1979) 3 SCC 489 : "20. Now, obviously where a corporation is an instrumentality or agency of Government, it would, in the exercise of its power or discretion, be subject to the same constitutional or public law limitations as Government. The rule inhibiting arbitrary action by Government which we have discussed above must apply equally where such corporation is dealing with the public, whether by way of giving jobs or entering into contracts or otherwise, and it cannot act arbitrarily and enter into relationship with any person it likes at its sweet will, but its action must be in conformity with some principle which meets the test of reason and relevance. 21. This rule also flows directly from the doctrine of equality embodied in Article 14. It is now well-settled as a result of the decisions of this Court in E.P. Royappa v. State of Tamil Nadu17 and Maneka Gandhi v. Union of India18 that Article 14 strikes at arbitrariness in State action and ensures fairness and equality of treatment. It requires that State action must not be arbitrary but must be based on some rational and relevant principle which is non-discriminatory: it must not be guided by any extraneous or irrelevant considerations, because that would be denial of equality. It requires that State action must not be arbitrary but must be based on some rational and relevant principle which is non-discriminatory: it must not be guided by any extraneous or irrelevant considerations, because that would be denial of equality. The principle of reasonableness and rationality which is legally as well as philosophically an essential element of equality or non-arbitrariness is projected by Article 14 and it must characterise every State action, whether it be under authority of law or in exercise of executive power without making of law. The State cannot, therefore, act arbitrarily in entering into relationship, contractual or otherwise with a third party, but its action must conform to some standard or norm which is rational and non-discriminatory. This principle was recognised and applied by a Bench of this Court presided over by Ray, C.J., in Erusian Equipment and Chemicals Ltd. v. State of West Bengal where the learned Chief Justice pointed out that “the State can carry on executive function by making a law or without making a law. The exercise of such powers and functions in trade by the State is subject to Part III of the Constitution. Article 14 speaks of equality before the law and equal protection of the laws. Equality of opportunity should apply to matters of public contracts. The State has the right to trade. The State has there the duty to observe equality. An ordinary individual can choose not to deal with any person. The Government cannot choose to exclude persons by discrimination. The order of blacklisting has the effect of depriving a person of equality of opportunity in the matter of public contract. A person who is on the approved list is unable to enter into advantageous relations with the Government because of the order of blacklisting .... A citizen has a right to claim equal treatment to enter into a contract which may be proper, necessary and essential to his lawful calling .... It is true that neither the petitioner nor the respondent has any right to enter into a contract but they are entitled to equal treatment with others who offer tender or quotations for the purchase of the goods”. It is true that neither the petitioner nor the respondent has any right to enter into a contract but they are entitled to equal treatment with others who offer tender or quotations for the purchase of the goods”. It must, therefore follow as a necessary corollary from the principle of equality enshrined in Article 14 that though the State is entitled to refuse to enter into relationship with any one, yet if it does so, it cannot arbitrarily choose any person it likes for entering into such relationship and discriminate between persons similarly circumstanced, but it must act in conformity with some standard or principle which meets the test of reasonableness and non-discrimination and any departure from such standard or principle would be invalid unless it can be supported or justified on some rational and non discriminatory ground." (iii) Kasturi Lal Lakshmi Reddy v. State of J&K, (1980) 4 SCC 1 : "10. It was pointed out by this Court in Ramana Dayaram Shetty v. International Airport Authority of India1 that with the growth of the welfare State, new forms of property in the shape of Government largess are developing, since the Government is increasingly assuming the role of regulator and dispenser of social services and provider of a large number of benefits including jobs, contracts, licences, quotas, mineral rights etc. There is increasing expansion of the magnitude and range of governmental functions, as we move closer to the welfare State, and the result is that more and more of our wealth consists of these new forms of property. Some of these forms of wealth may be in the nature of legal rights but the large majority of them are in the nature of privileges. The law has however not been slow to recognise the importance of this new kind of wealth and the need to protect individual interest in it and with that end in view, it has developed new forms of protection. Some interests in Government largess, formerly regarded as privileges, have been recognised as rights, while others have been given legal protection not only by forging procedural safeguards but also by confining, structuring and checking Government discretion in the matter of grant of such largess. Some interests in Government largess, formerly regarded as privileges, have been recognised as rights, while others have been given legal protection not only by forging procedural safeguards but also by confining, structuring and checking Government discretion in the matter of grant of such largess. The discretion of the Government has been held to be not unlimited in that the Government cannot give largess in its arbitrary discretion or at its sweet will or on such terms as it chooses in its absolute discretion. There are two limitations imposed by law which structure and control the discretion of the Government in this behalf. The first is in regard to the terms on which largess may be granted and the other, in regard to the persons who may be recipients of such largess. 11. So far as the first limitation is concerned, it flows directly from the thesis that, unlike a private individual, the State cannot act as it pleases in the matter of giving largess. Though ordinarily a private individual would be guided by economic considerations of self-gain in any action taken by him, it is always open to him under the law to act contrary to his self-interest or to oblige another in entering into a contract or dealing with his property. But the Government is not free to act as it likes in granting largess such as awarding a contract or selling or leasing out its property. Whatever be its activity, the Government is still the Government and is, subject to restraints inherent in its position in a democratic society. The constitutional power conferred on the Government cannot beexercised by it arbitrarily or capriciously or in an unprincipled manner; it has to be exercised for the public good. Every activity of the Government has a public element in it and it must therefore, be informed with reason and guided by public interest. Every action taken by the Government must be in public interest; the Government cannot act arbitrarily and without reason and if it does, its action would be liable to be invalidated. If the Government awards a contract or leases out or otherwise deals with its property or grants any other largess, it would be liable to be tested for its validity on the touchstone of reasonableness and public interest and if it fails to satisfy either test, it would be unconstitutional and invalid. 12. If the Government awards a contract or leases out or otherwise deals with its property or grants any other largess, it would be liable to be tested for its validity on the touchstone of reasonableness and public interest and if it fails to satisfy either test, it would be unconstitutional and invalid. 12. Now what is the test of reasonableness which has to be applied in order to determine the validity of governmental action. It is undoubtedly true, as pointed out by Patanjali Sastri, J., in State of Madras v. V.G. Row that in forming his own conception of what is reasonable, in all the circumstances of a given case, it is inevitable that the social philosophy and the scale of values of the judge participating in the decision, would play an important part, but even so, the test of reasonableness is not a wholly subjective test and its contours are fairly indicated by the Constitution. The concept of reasonableness in fact pervades the entire constitutional scheme. The interaction of Articles 14, 19 and 21 analysed by this Court in Maneka Gandhi v. Union of India3 clearly demonstrates that the requirement of reasonableness runs like a golden thread through the entire fabric of fundamental rights and, as several decisions of this Court show, this concept of reasonableness finds its positive manifestation and expression in the lofty ideal of social and economic justice which inspires and animates the directive principles. It has been laid down by this Court in E. P. Royappa v. State of Tamil Nadu4 and Maneka Gandhi case3 that Article 14 strikes at arbitrariness in State action and since the principle of reasonableness and rationality, which is legally as well as philosophically an essential element of equality or non-arbitrariness, is projected by this Article, it must characterise every governmental action, whether it be under the authority of law or in exercise of executive power without making of law. So also the concept of reasonableness runs through the totality of Article 19 and requires that restrictions on the freedoms of the citizen, in order to be permissible, must at the best be reasonable. So also the concept of reasonableness runs through the totality of Article 19 and requires that restrictions on the freedoms of the citizen, in order to be permissible, must at the best be reasonable. Similarly Article 21 in the full plenitude of its activist magnitude as discovered by Maneka Gandhi case3 insists that no one shall be deprived of his life or personal liberty except in accordance with procedure established by law and such procedure must be reasonable, fair and just. The directive principles concretise and give shape to the concept of reasonableness envisaged in Articles 14, 19 and 21 and other Articles enumerating the fundamental rights. By defining the national aims and the constitutional goals, they set forth the standards or norms of reasonableness which must guide and animate governmental action. Any action taken by the Government with a view to giving effect to anyone or more of the directive principles would ordinarily, subject to any constitutional or legal inhibitions or other overriding considerations, qualify for being regarded as reasonable, while an action which is inconsistent with or runs counter to a directive principle would prima facie incur the reproach of being unreasonable. 13. So also the concept of public interest must as far as possible receive its orientation from the directive principles. What according to the founding fathers constitutes the plainest requirement of public interest is set out in the directive principles and they embody par excellence the constitutional concept of public interest. If, therefore, any governmental action is calculated to implement or give effect to a directive principle, it would ordinarily, subject to any other overriding considerations, be informed with public interest. 14. Where any governmental action fails to satisfy the test of reasonableness and public interest discussed above and is found to be wanting in the quality of reasonableness or lacking in the element of public interest, it would be liable to be struck down as invalid. It must follow as a necessary corollary from this proposition that the Government cannot act in a manner which would benefit a private party at the cost of the State; such an action would be both unreasonable and contrary to public interest. It must follow as a necessary corollary from this proposition that the Government cannot act in a manner which would benefit a private party at the cost of the State; such an action would be both unreasonable and contrary to public interest. The Government, therefore, cannot, for example, give a contract or sell or lease out its property for a consideration less than the highest that can be obtained for it, unless of course there are other considerations which render it reasonable and in public interest to do so. Such considerations may be that some directive principle is sought to be advanced or implemented or that the contract or the property is given not with a view to earning revenue but for the purpose of carrying out a welfare scheme for the benefit of a particular group or section of people deserving it or that the person who has offered a higher consideration is not otherwise fit to be given the contract or the property. We have referred to these considerations only illustratively, for there may be an infinite variety of considerations which may have to be taken into account by the Government in formulating its policies and it is on a total evaluation of various considerations which have weighed with the Government in taking a particular action, that the court would have to decide whether the action of the Government is reasonable and in public interest. But one basic principle which must guide the court in arriving at its determination on this question is that there is always a presumption that the governmental action is reasonable and in public interest and it is for the party challenging its validity to show that 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 lightly assume that the action taken by the Government is unreasonable or without public interest because, as we said above, there are a large number of policy considerations which must necessarily weigh with the Government in taking action and therefore the court would not strike down governmental action as invalid on this ground, unless it is clearly satisfied that the action is unreasonable or not in public interest. But where it is so satisfied, it would be the plainest duty of the court under the Constitution to invalidate the governmental action. This is one of the most important functions of the court and also one of the most essential for preservation of the rule of law. It is imperative in a democracy governed by the rule of law that governmental action must be kept within the limits of the law and if there is any transgression, the court must be ready to condemn it. It is a matter of historical experience that there is a tendency in every Government to assume more and more powers and since it is not an uncommon phenomenon in some countries that the legislative check is getting diluted, it is left to the court as the only other reviewing authority under the Constitution to be increasingly vigilant to ensure observance with the rule of law and in this task, the court must not flinch or falter. It may be pointed out that this ground of invalidity, namely, that the governmental action is unreasonable or lacking in the quality of public interest, is different from that of mala fides though it may, in a given case, furnish evidence of mala fides. 15. The second limitation on the discretion of the Government in grant of largess is in regard to the persons to whom such largess may be granted. It is now well settled as a result of the decision of this Court in Ramana D. Shetty v. International Airport Authority of India that the Government is not free, like an ordinary individual, in selecting the recipients for its largess and it cannot choose to deal with any person it pleases in its absolute and unfettered discretion. The law is now well-established that the Government need not deal with anyone, but if it does so, it must do so fairly without discrimination and without unfair procedure. Where the Government is dealing with the public whether by way of giving jobs or entering into contracts or granting other forms of largess, the Government cannot act arbitrarily at its sweet will and, like a private individual, deal with any person it pleases, but its action must be in conformity with some standard or norm which is not arbitrary, irrational or irrelevant. The governmental action must not be arbitrary or capricious, but must be based on some principle which meets the test of reason and relevance. This rule was enunciated by the court as a rule of administrative law and it was also validated by the court as an emanation flowing directly from the doctrine of equality embodied in Article 14. The court referred to the activist magnitude of Article 14 as evolved in E.P. Royappa v. State of Tamil Nadu and Maneka Gandhi case and observed that it must follow as a necessary corollary from the principle of equality enshrined in Article 14 that though the State is entitled to refuse to enter into relationship with anyone, yet if it does so, it cannot arbitrarily choose any person it likes for entering into such relationship and discriminate between persons similarly circumstanced, but it must act in conformity with some standard or principle which meets that test of reasonableness and non-discrimination and any departure from such standard or principle would be invalid unless it can be supported or justified on some rational and non-discriminatory ground. (SCC p. 512, para 21) This decision has reaffirmed the principle of reasonableness and non-arbitrariness in governmental action which lies at the core of our entire constitutional scheme and structure." (iv) Union of India v. International Trading Co., (2003) 5 SCC 437 : "22. If the State acts within the bounds of reasonableness, it would be legitimate to take into consideration the national priorities and adopt trade policies. As noted above, the ultimate test is whether on the touchstone of reasonableness the policy decision comes out unscathed. 23. Reasonableness of restriction is to be determined in an objective manner and from the standpoint of interests of the general public and not from the standpoint of the interests of persons upon whom the restrictions have been imposed or upon abstract consideration. A restriction cannot be said to be unreasonable merely because in a given case, it operates harshly. In determining whether there is any unfairness involved; the nature of the right alleged to have been infringed, the underlying purpose of the restriction imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevailing condition at the relevant time, enter into judicial verdict. In determining whether there is any unfairness involved; the nature of the right alleged to have been infringed, the underlying purpose of the restriction imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevailing condition at the relevant time, enter into judicial verdict. The reasonableness of the legitimate expectation has to be determined with respect to the circumstances relating to the trade or business in question. Canalisation of a particular business in favour of even a specified individual is reasonable where the interests of the country are concerned or where the business affects the economy of the country." (v) Tata Cellular v. Union of India, (1994) 6 SCC 651 : "77. The duty of the court is to confine itself to the question of legality. Its concern should be: 1. Whether a decision-making authority exceeded its powers? 2. Committed an error of law, 3. committed a breach of the rules of natural justice, 4. reached a decision which no reasonable tribunal would have reached or, 5. 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 in which those decisions have been taken. The extent of the duty to act fairly will vary from case to case. Shortly put, the grounds upon which an administrative action is subject to control by judicial review can be classified as under: (i) Illegality : This means the decision-maker must understand correctly the law that regulates his decision-making power and must give effect to it. (ii) Irrationality, namely, Wednesbury unreasonableness. (iii) Procedural impropriety. 94. The principles deducible from the above are: (1) The modern trend points to judicial restraint in administrative action. (2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made. (3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible. (4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible. (4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts. (5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides. (6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure." 5. On the other hand, learned counsel for the respondents would submit that the action of second respondent to award contract to third respondent is a policy decision of the Government keeping in mind the security of the nation and risks of piracy and, therefore, there is no violation of rules or norms. 6. I have heard the learned counsel for the parties and also gone through the records. 7. On a perusal of the records, it is seen, that originally, the total management contract of the Vessel "ORV Sagar Nidhi" was awarded to the petitioner by the second respondent initially for a period of three years from 21.09.2007 and, thereafter, for a further period of three years from 16.12.2010. Since the said contract was coming to an end on 15.12.2013, the second respondent, by the order impugned, dated 18.12.2013, requested the petitioner to make all systems of the Vessel operational for general inspection by a team of SCI, before hand over of the ship. 8. The reasons assigned by respondents 1 and 2 for taking a decision to entrust the management of the Vessel to SCI are explained in paras 9 to 13 of their counter, which are necessary to be extracted hereunder: "9. The nation is facing challenges at sea from agencies inimical to our country. 8. The reasons assigned by respondents 1 and 2 for taking a decision to entrust the management of the Vessel to SCI are explained in paras 9 to 13 of their counter, which are necessary to be extracted hereunder: "9. The nation is facing challenges at sea from agencies inimical to our country. Sub-marine operations of intelligence, surveillance and espionage have been on the increase. The operation, positioning and activities of Govt. ships are, therefore, of utmost importance to the safety and security of the country, especially when the vessel is used for scientific activities and measurement of ocean parameters and deployment of data buoys etc. While aiming to create a framework for understanding the complex interactions among ocean, atmosphere and solid earth, by encompassing meteorology, climate, environment and seismology the units of MoES play vital role of strategic importance too. So much so, the day to day management of all MoES vessels should be co-ordinated by a single chain of command of an expert public sector agency. Hence a detailed proposal was put up by the NIOT viz., the 2nd respondent herein in September 2012, highlighting all these aspects and seeking approval of the Government of India for entrusting/nominating vessel management of all 4 vessels owned by NIOT to SCI. 10. The proposals sent, inter alia, underscored that sensitive information with reference to ship's location is available with private operators, which has been a matter of concern. Private contractors do not have sufficient infrastructure to go through security training. Research ships are prone to piracy attacks due to low speed, low free board and stay put at a location while doing deployment of buoys, remotely operable vehicles etc. The safety regulations need to be understood in depth, the absence of which leads to emergency situations leading to delays and additional costs. Being a public sector agency, SCI has formal tie ups at various ports and marine workshops in India and abroad. This ensures that operational time and quality are not compromised. Likewise, with a vast fleet of ships, SCI has standard procedures and system for obtaining Port/CISF/Customs/Immigration clearances so that there is no wastage of ship time anywhere. For procurements and all spares and services, SCI, being a Government concern, have their own set procedures followed in public sector undertakings. Private contractors mostly try to employ shortcuts to complete jobs on hand which at times lead to serious embarrassment. For procurements and all spares and services, SCI, being a Government concern, have their own set procedures followed in public sector undertakings. Private contractors mostly try to employ shortcuts to complete jobs on hand which at times lead to serious embarrassment. Under the projects of Exclusive Economic Zone (EEZ) and Coastal Ocean Monitoring and Prediction System (COMAPS), the data collected is related to bathymetry and Conductivity, Temperature, Depth (CTD) profiling which are essentially confidential as per Maritime Zone Act 1976. With private operators on board, it has been considerably difficult for NIOT to obtain naval clearances. Lot of technological developmental activities to develop technology for deep sea mining is done in areas allotted by International Seabed Authority of the United Nations in the Central Indian Ocean Basin. There is significant presence of hostile neighbouring countries nearby our area. Launching and recovery of underwater machinery, attachment and detachment of transponder that prop up to surface after operations need a fool proof system to maintain confidentiality. With private operators around, scientists are not comfortable to perform these tasks which results in losing focus on technical work. In addition, SCI, having regard to its large fleet, has armed Sea Marshals in its contract to provide security to ships/vessels whenever needed. The verification of the credentials of armed guards is another serious issue which institutions like NIOT cannot handle, particularly when the vessel management is given to private players. These inter alia constituted the special interest, purpose and circumstances leading to outsourcing of complete vessel management to SCI under Rule 184 of General Financial Rules. 11. It needs to be stated that Ministry has expanded its activities in atmospheric science, ocean science, earth science and deep sea mineral exploration from 12th Plan (April 2012 to March 2017). These activities of national importance are having international commitment by Govt. of India with UN agencies like International Sea Bed Authority (ISA), World Meteoroligical Organisation (WMO), UNESCO – International Oceanographic Commission (IOC). The current 30 year old scientific fleet of MoES Sagar Kanya (1983) and Sagar Sampada (1984) are being operated by Shipping Corporation of India from inception. In recent times, as age has reduced their effectiveness at sea, these vessels have been assigned the role of reinforcement to ORV Sagar Nidhi. The latest scientific programmes brought about highest level of sensitivity in operation of data collection, storage and dissemination etc. In recent times, as age has reduced their effectiveness at sea, these vessels have been assigned the role of reinforcement to ORV Sagar Nidhi. The latest scientific programmes brought about highest level of sensitivity in operation of data collection, storage and dissemination etc. as per the guidelines of Indian Navy and enhanced the scope of Sagar Nidhi to an advanced complex level. The Ministry is, therefore, planning to augment the vessel with sophisticated devices commensurate with intensified pursuits envisaged in the current plan period and future. So, it is imperative that SCI, having proficiency and track record of three decades of operation handles Sagar Nidhi as well. 12. The matter was initially placed before the Governing Council of NIOT which is chaired by the Secretary, Ministry of Earth and Sciences, Govt. of India. The Governing Council accorded its approval and later the papers were forwarded to the Government of India viz., the 1st respondent herein. The Government, after consultation with the Financial Adviser and after taking into account all relevant aspects set out in detail in para 10 above, accorded approval for NIOT to enter into agreement with SCI vide their OM dated 31.05.2013. The management of the other vessels viz., Sagar Purvi, Sagar Paschimi and Sagar Manjusha has since been handed over to SCI in a phased manner. Sagar Nidhi is presently under the management of writ petitioner, the contract of which comes to an end on 15.12.2013, and NIOT had taken all steps to entrust the vessel management to SCI to commence the next day on 16.12.2013. 13. It is further submitted the system of vessel management by SCI is not restricted to MoES vessels alone. The vessels of other government institutions like CSIR-National Institute of Oceanography, ONGC and Geological Survey of India are also managed by SCI. Hence, there is no illegality in the decision taken by the Government of India and NIOT in this regard. The writ petition is without merit and has to be dismissed." 9. The vessels of other government institutions like CSIR-National Institute of Oceanography, ONGC and Geological Survey of India are also managed by SCI. Hence, there is no illegality in the decision taken by the Government of India and NIOT in this regard. The writ petition is without merit and has to be dismissed." 9. In view of the specific stand taken by the respondents in their counter as above coupled with the fact that the nation's interest involved in the policy decision cannot be ignored at any cost while awarding the contracts of strategic importance to private operators and that SCI is the only Indian Shipping Company, operating break-bulk services, international container services, liquid/dry bulk services, offshore services, passenger services and it mans and manages a large number of vessels on behalf of various governmental organisations so also it being a 'Navaratna' company in the government sector owning and operating multifarious marine voyage activities internationally, the action of the second respondent to hand over the management of the vessel ORV Sagar Nidhi in keeping with the perceived impacts on the country due to piracy and other sensitive issues, including security implications cannot be said to be unreasonable or arbitrary. 10. The contract of the petitioner came to an end on 15.12.2013. Hence, the petitioner does not have any right to manage the vessel after the said date. He has also no right whatsoever thereafter to insist that the respondent must go in for tender or necessarily award the contract to him for the third time. It is not the monopoly of the petitioner to have the contract for ever. It is also not his case that during the currency of the contract, the respondents have terminated the contract. What all is made known by the second respondent through the impugned order is that the total management contract was awarded to the petitioner for a period of three years from 16.12.2010 to 15.12.2013 and, after expiry of the contract, the vessel had to be handed over to SCI, third respondent, for total management and, accordingly, the second respondent requested the petitioner to make arrangements for inspection of the vessel by a team of SCI, before take over. Therefore, all the contentions of the petitioner are misconceived and rejected. Therefore, all the contentions of the petitioner are misconceived and rejected. Though the petitioner has cited some authorities for his case, considering the peculiar factual position as stated above, they are not useful to this case. 11. 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 in which those decisions have been taken. The extent of the duty to act fairly will vary from case to case. Shortly put, the grounds upon which an administrative action is subject to control by judicial review are : (i) Illegality; (ii)Irrationality; and (iii) Procedural impropriety. Further, The principles deducible relating to scope of judicial review of administrative decisions and exercise of contractual powers by government bodies are : (1) The modern trend points to judicial restraint in administrative action. (2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made. (3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible. (4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts. (5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides. (6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure. The above are the principles laid down by a Three Judge Bench of the Supreme Court in Tata Cellular v. Union of India, (1994) 6 SCC 651 . (6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure. The above are the principles laid down by a Three Judge Bench of the Supreme Court in Tata Cellular v. Union of India, (1994) 6 SCC 651 . In the very same judgment, the power of Judicial Review has been examined by the Supreme Court, wherein it has been held that if the decision relating to award of contract is bona fide and is in public interest, Courts will not, in exercise of power of judicial review, interfere even if a procedural aberration of error in assessment or prejudice to a tenderer, is made out. The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest or to decide contractual disputes. Therefore, restraint under judicial review is always limited to this Court and it has to be invoked rarely and hesitantly under Article 226 of the Constitution of India. 12. Moreover, the terms of the contract are not open to judicial scrutiny, the same being in the realm of contract. The Courts are always hesitant to interfere with the administrative policy decision and in rarest of rare occasions, if it is arbitrary, discriminatory, mala fide or actuated by bias, the Courts can interfere. The right 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. Even when some defect is found in the decision making process, the Court has to necessarily exercise its discretionary powers under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point. The Court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion and is satisfied that overwhelming public interest requires interference, the Court should interfere. Otherwise, the larger public interest will prevail upon the individual's interest. This is the law laid down by this Court in the cases of Ion Exchange Waterleau Ltd., 2008 (3) CTC 675. 13. Only when it comes to a conclusion and is satisfied that overwhelming public interest requires interference, the Court should interfere. Otherwise, the larger public interest will prevail upon the individual's interest. This is the law laid down by this Court in the cases of Ion Exchange Waterleau Ltd., 2008 (3) CTC 675. 13. In terms of Rule 184 of the General Financial Rules,2005, the respondents have taken a decision in respect of four ships of NIOT to hand over the management to SCI for the following reasons : Firstly, the safety of the ships, crew and scientists on these vessels can be better ensured by a governmental agency viz., SCI, as they have the licensed Sea Marshals and the experience to obtain permission to take fire arms onboard the ships from ports where such permission can be obtained. The expertise of SCI is on account of their operating and managing more than 200 vessels, which could not be the position in case of private firms. Secondly, in the Indian ocean and also in Arabian Sea, the International Sea Bead Authority (ISBA) has allocated specific earmarked areas for mineral prospecting in the ocean floor and those areas of operation are close to piracy infested areas and as the ships of NIOT have to stay in those areas for a considerable period of time, utmost secrecy about their locations and operations is essential and, therefore, NIOT has no as much confidence about the private operators maintaining the requisite confidentiality as they reasonably have with SCI. Thirdly, the ships of NIOT engaged in scientific research collect considerable data of economic and strategic importance; the confidentiality of such data is of primary importance and that the operation and management of the research vessels by SCI gives a greater measure of reassurance about the safety and protection of the data. Fourthly, the maintenance repairs at dry-docks are greatly facilitated if the management of ships is entrusted with SCI and such a facility is not available with private firms. Fourthly, the maintenance repairs at dry-docks are greatly facilitated if the management of ships is entrusted with SCI and such a facility is not available with private firms. The last reason is that the norms of SCI relating to operation and management of the vessels are known, as they are in public domain; in a system of open tendering, private operators manage to quote lower rates and, therefore, the competition from the beginning is loaded heavily against the public sector entity and cannot be considered as fair and equitable which alone is the sine qua non of inviting open tenders and as the said process is vitiated by the lowest possible quote of SCI being public knowledge, there is no merit in continuing with the petitioner. 14. Considering the advantages of ship management by SCI over private contractors, as stated in the previous paragraph, particularly in view of great significance of safety of vessels and security of scientific data, the approval of Governing Council was sought in terms of Rule 184, to hand over the management of NIOT ships, including the vessel in question "ORV Sagar Nadhi", to SCI from the dates of expiry of the contracts with the private contractors and, accordingly, the approval was also accorded by the first respondent on 31.05.2013. 15. With regard to the expenditure, it is stated by the second respondent that the difference of Rs.12.61 crores between actual expenditure and estimate projected by SCI is offset to the extent of Rs.2.28 crores due to the loss of ship time and non-availability of berthing as and when required and embarkation/disembarkation of Sea Marshals and that the estimated monetary loss is Rs.2.28 crores for all the four ships when they are operated by private operators and the said loss will not occur if ships are operated by SCI, which means, there is a likely saving of Rs.2.28 crores, if the ships are operated by SCI. 16. The scientific programmes that are being done by the second respondent are of national significance and great strategic and economic importance with high level of confidentiality. All the data that is collected for research and development work in the deep sea mining is done in the areas allotted by International Sea Bed Authority of the United Nations. The areas allotted to India are close to piracy infested areas. All the data that is collected for research and development work in the deep sea mining is done in the areas allotted by International Sea Bed Authority of the United Nations. The areas allotted to India are close to piracy infested areas. The nature of work involves launching and recovery of underwater mining machinery, attachment and detachment of transponder that pop-up to surface after operations. There is a high element of confidentiality considering the nature of work in deep-sea exploration. Therefore, it will not be a fool proof system to maintain the requisite level of confidentiality when the ships are managed by private operators. 17. Security of the ships at sea is a matter of serious concern and also will depend upon local marine workshops. SCI, being a public sector entity owned by the Government of India, has formal understanding with various ports and marine workshops in India and abroad. This ensures that there would be no loss of operational time and quality would not be compromised. Further, there is a difficulty in bunkering at foreign ports due to lack of network with the private operators. For all the above factors, the second respondent has taken a decision to keep the operational system with SCI. 18. However, learned Senior Counsel for the petitioner would argue that those factors were waived at the time of awarding of contract to the petitioner and now, suddenly, the second respondent turned down the contract without due process of law, thereby taking a decision to hand over the management of the vessel to SCI. 19. It is true, the petitioner was awarded the contract of maintenance of the ship for a considerable period and by the said contract he acquired expertise in the field. But, considering the safety, strategic importance of the areas, particularly, the areas which are close to piracy infested areas and also the high level of confidentiality, the decision taken by the second respondent to hand over the management of the vessel to SCI, which is a public sector entity, in the considered opinion of this Court, is well founded and supported by policy decision. When such is the position, this Court has no reason to believe that the said decision taken by the second respondent is arbitrary and any interference with such policy decision on contractual matters, unless it is shown that such decision is contrary to law and tainted with mala fides, is unwarranted. 20. Writ Petition is, therefore, dismissed. No costs. Consequently, the connected M.P. Nos. 1, 2 and 3 of 2013 are closed.