JSW Infrastructure Limited v. Kakinada Seaports Limited

Civil Appeal · Neutral citation not assigned (Civil Appeal No. 3422 of 2017)Decided 1 Mar 2017
Civil Appeal No. 3422 of 2017
Justice Madan B. Lokur · Justice Deepak Gupta

Background

Paradip Port Trust invited global bids to mechanise two berths on a Build-Operate-Transfer basis. A consortium led by JSW Infrastructure quoted the highest revenue share and was recommended for the award, but a rival consortium objected, arguing that a port policy barred an operator already running one berth for a type of cargo from bidding for the "next" berth handling the same cargo. The Orissa High Court agreed with the objector and quashed the award to the JSW-led consortium. JSW and its partner appealed to the Supreme Court.

Decision Breakdown

The Supreme Court held that the policy clause barring an existing operator from bidding for the "next" berth applies only when there is a single private operator running a single berth for that cargo type; once more than one private operator exists for that cargo, the restriction does not apply. The Court found the Port Trust's interpretation of its own tender policy was not arbitrary, perverse, or mala fide, and reaffirmed that constitutional courts should defer to a tendering authority's reasonable interpretation of its own documents unless there is bad faith or perversity. Both appeals were allowed, the High Court's judgment was set aside, and the writ petition filed by the rival consortium was dismissed.

Lesson Learnt

Courts will generally not second-guess a government tendering authority's interpretation of its own tender conditions unless that interpretation is shown to be arbitrary, mala fide, or perverse: ordinary disagreement with the decision is not enough to get a court to intervene.

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