K.Chandru, J:-

W. P. No. 3304 of 2006 is filed by one c. H. Balamohan, who is said to be a government servant working in the school education de partment, "on"> "on"> pondicherry , and also the honorary president of confederation of pondicherry state government employees' association. This writ petition has been filed in public inter est challenging the order of the eighth respon dent dated 3. 6. 2005 wherein a letter of intent was issued for the development of port in pondicherry on bot (build, operate and transfer) basis. The said communication was given to the eleventh respondent and they were directed to submit a detailed project report (in short, dpr') and feasibility studies within 45 days' from the date of issuance of the said order. It was also stated that a bank guar antee of rs. 50 lakhs should be deposited with the government as earnest money (in short, emd'). Subsequent to several proceedings, by an order dated 21. 1. 2006, in g. O. Ms. No. 1, department of industrial development (port) , government of pondicherry, the ap proval of the lieutenant governor of pondicherry was communicated to the respon dents 11 and 12, who became the partners in the proposed project and they were directed to enter into a concession agreement along with consortium/partner for the development of the pondicherry port and all related and ancil lary/other activities.

2. W. P. No. 12337 of 2006 was filed by one association in public interest with a prayer to quash the very same impugned order in g. O. Ms. No. 1 dated 21. 1. 2006 as well as the consequential memorandum dated 24. 1. 2006 wherein the officers of the port department were instructed to list all the existing movable and immovable assets of the pondicherry port/port development, which are under vari ous officers' custody and the completed lists in all respects should be handed over to the devel oper, viz. , subash project and marketing limited, eleventh respondent in the earlier writ petition, on or before 30. 1. 2006.

3. The above said two orders are under challenge in these writ petitions. Since substantial arguments were made on the facts set out in w. P. No. 3304 or 2006, this writ petition is taken up for describing of arrangement of parties and contentions advanced therein.

4. W. P. No. 3304 of 2006 was taken up on 7. 2. 2006 and after hearing the respective parties, this court passed the following order:

Mr. T. Murugesan, learned government pleader, "on"> "on"> pondicherry takes notice for r - 2 to r - 9. Issue notice to r - 1 and r - 10 to r - 14 returnable by 6. 3. 2006. In the meantime, until further orders, r - 2 to r - 9 are directed not to hand over the land to the developer. Post on 6. 3. 2006.

5. Subsequently, the contesting respon dents have filed counter affidavits as well as records relating to the order impugned in the writ petition. In view of the urgency of the matter and in view of the interim order passed by this court, these writ petitions were taken up for final disposal.

6. Learned counsel mr. Bharath chakravarthy for sai bharath and ilan, ap pearing for the petitioner in w. P. No. 3304 of 2006 took pains to take us through the various documents in the proceedings culminating in the final approval granted to the eleventh re spondent for the purpose of development of port in "on"> "on"> pondicherry and made elaborate argu ments. He summed up by summarising the substance of his argument as under:

(1) the identification of private developer is without a process of tender.

(2) the entire exercise was done without jurisdiction by the government of pondicherry.

(3) the port was handed over to the elev enth respondent without a process of verifica tion of the antecedents.

(4) the exercise of power is mala fide and for extraneous reasons.

(5) the impugned exercise of powers by the government of pondicherry is only a real estate project in the name of port developer and it is an illegal activity.

(6) the entire project is done without any environmental clearance.

7. It was the case of the writ petitioner that the second respondent pursuant to the guide - lines issued by the government of india, took up the issue relating to privatisation of "on"> "on"> port of "on"> pondicherry and by g. O. Ms. No. 2 depart ment of industrial development (port) , dated 13. 5. 2003, a committee consisting of respon dents 2 to 9 was constituted. By another order dated 20. 8. 2003, the thirteenth respondent, viz. , director of ports development, ministry of shipping and surface transport, govern ment of india, was co - opted as per the said committee. Further, the government of pondicherry issued an advertisement inviting expression of interest (in short, eoi') from consultants for the preparation of feasibility report for the development of pondicherry port. The said advertisement was published in an all "on"> "on"> india daily i. E. , economic times dated 18. 10. 2004.

8. In support of his argument, the learned counsel appearing for the petitioners took us through the voluminous documents filed by both sides. The advertisement dated 18. 10. 2005 given by the port department of government of "on"> "on"> pondicherry in the economic times called for feasibility study for the de velopment of pondicherry port and it sought for the eoi from consultants. In response to the advertisement, several other persons/cor porate bodies also responded. But, the elev enth respondent only sent a letter expressing eoi for the development of port and beaches in pondicheny on bot basis as a private de veloper. When presentation of the detailed studies of respective persons, who responded to the advertisement, was done without any comparative analysis of the responses re ceived, the eighth respondent, by a letter dated 3. 6. 2005 gave a proposal to engage them for the development of "on"> "on"> pondicherry "on"> port on bot basis and dpr and feasibility studies to be submitted within fifteen days'. It was thereaf ter, the eleventh respondent formed a consor tium along with the twelfth respondent and sought for permission to develop the port on the basis of the consortium partner. They had also submitted a bank guarantee of rs. 50 lakhs, which was required as a pre - conditional deposit. Even though others also made presen tation, it was only the respondents 11 and 12 forming a consortium who were granted ap proval for the concession agreement to be entered into between the government of pondicherry and the respondents 11 and 12 formed consortium for the development of the "on"> "on"> pondicherry "on"> port and all other related activi ties. Pursuant to the said approval, the director of ports, pondicherry, by a letter dated 24. 1. 2006, directed the various officers managing the port, to prepare the lists of movable and immovable assets of the pondicherry port/port development to be completed and to hand over the same to the developer by 30. 1. 2006. While it is true that several other persons also responded to the advertisement and even the previous applications were pend ing with the department as well as persons, who had submitted their eoi and their presen tation was also considered by the government on various levels, it was only the respondents 11 and 12 forming a consortium who were given the order thereby excluding the eoi pre sented by others. This, according to the learned counsel, was done without the process of tender and that the pondicherry govern ment lacked in jurisdiction. This exercise of power was mala fide and for extraneous rea sons.

9. It is to be stated at this juncture that none of the other persons, who had submitted their eoi either before the date of advertisement and kept pending with the port department or persons, who responded pursuant to the adver tisement either before the cut - off date indi cated in the advertisement or persons, who responded after the cut - off date, were consid ered and being aggrieved against the action of the respondents, have come before this court, challenging the approval granted for submitting a dpr before the government. It was also stated by the learned counsel appearing for the pondicherry government that none of the other parties either submitted the conditional deposit nor sent letter of protest to the govern ment about their alleged exclusion. No other petition except these two public interest liti gants have come before this court challenging the approval granted to the respondents 11 and 12 as a consortium for submitting dpr to the government for developing the pondicherry port.

10. We are of the considered opinion that in a public interest litigation, especially involv ing a commercial transaction, in the absence of persons, who are directly aggrieved coming before us, it will be difficult for this court to go into the relative merits of the claims made before the government by various parties. In any event, there is a misconception in the argument of the learned counsel for the petitioners. Though this was not a case of award of any tender thereby going into the minute details of the procedure involved by the government of pondicherry, it is the case of a port develop ment initiated at the instance of a private party, who will have to make a heavy investment for developing, building and operating and there - after, transferring the assets to the govern ment. It was also shown that this project has been conceived several years before and no one has come forward to develop the port on a bot basis. A previous attempt made by the port department did not fructify into an award of contract to any party and after hectic efforts at least, the respondents 11 and 12 (forming a consortium) have come forward to develop the port with their own resources. In the present case, even other parties, who responded to the advertisement neither offered to make any deposit nor expressed any grievance about their being excluded.

11. Learned counsel relied upon a decision of the supreme court reported in subhash projects and marketing ltd. V. West bengal power development corporation ltd. And others 2005 (8) scale 550 and a decision by a division bench of this court in s. Selvarani v. Commissioner, karaikudi municipality, karaikudi (2005) 1 ctc 81 : (2005) 1 mlj 394 to impress upon his argument that all contracts by government shall be granted only by public auction or by inviting tenders. We are afraid that this line of argument can have no general acceptance as it is not an offer of any contract to any party but it was an offer by a private developer to develop a particular pro ject with his resources.

12. In fact, the learned solicitor - general appearing for the pondicherry government, to refute this argument, took us through the vari ous judgments of the supreme court to contend that public largesses can be given by way of private negotiation. In kasturi lal lakshmi reddy v. State of j & k air 1980 sc 1992 : (1980) 4 scc 1, it was held as follows:

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 consider ations which have weighed with the gov ernment 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 govern - mental action is reasonable and in public in terest and it is for the party challenging its validity to show that it is wanting in reasonableness or is not informed with public in terest. 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.

The predominant purpose of the transac tion was to ensure setting up of a factory by the second respondent as part of the process of industrialisation of the state and since the second respondent wanted assurance of a definite supply of resin as a condition of putting up the factory, the state awarded the tapping contract to the second respondent for that purpose. If the state were giving tapping contract simpliciter there can be no doubt that the state would have to auction or invite tenders for securing the highest price, subject, of course, to any other relevant overriding considerations of public weal or interest, but in a case like this where the state is allocating resources such as water, power, raw materials, etc. , for the purpose of encouraging setting up of industries within the state, we do not think the state is bound to advertise and tell the people that it wants a particular industry to be set up within the state and invite those interested to come up with proposals for the purpose. The state may choose to do so, if it thinks fit and in a given situation, it may even turn out to be advantageous for the state to do so, but if any private party comes before the state and offers to set up an industry, the state would not be committing breach of any constitutional or legal obligation if it negotiates with such party and agrees to provide resources and other facilities for the purpose of setting up the industry. The state is not obliged to tell such party:

Please wait i will first advertise, see whether any other offers are forthcoming and then after considering all offers, decide whether i should let you set up the industry. It would be most unrealistic to insist on such a procedure.

The state must be free in such a case to ne gotiate with a private entrepreneur with a view to inducing him to set up an industry within the state and if the state enters into a contract with such entrepreneur for provid ing resources and other facilities for setting up an industry, the contract cannot be assailed as invalid so long as the state has acted bona fide, reasonably and in public in terest. If the terms and conditions of the contract or the surrounding circumstances show that the state has acted mala fide or out of improper or corrupt motive or in order to promote the private interests of someone at the cost of the state, the court will undoubtedly interfere and strike down state action as arbitrary, unreasonable or con trary to public interest. But so long as the state action is bona fide and reasonable, the court will not interfere merely on the ground that no advertisement was given or publicity made or tenders invited. (emphasis added)

13. Further, the supreme court in a subse quent judgment, after referring to kasturi lakshmi reddy v. State of j & k (supra) ob served in its decision reported in state of m. P. V. And jaiswal air 1987 sc 251: (1986) 4 scc 566 as under:

We may also point out that when the state government is granting licence for putting up a new industry, it is not at all necessary that it should advertise and invite offers for putting up such industry. The state govern ment is entitled to negotiate with those who have come up with an offer to set up such in dustry. This principle was clearly and un equivocally accepted by this court in kasturi lal lakshmi reddy v. State of j & k.

14. The supreme court once again consid ering an issue of this nature observed as follows in the decision in g. D. Zalani v. Union of india 1955 (supp) 2 scc 512:

We must reiterate that this was not a simple case of granting of lease of a government company, in which case the court would have been justified in insisting upon the authorities following a fair method, consistent with article 14, i. E. , by calling for tenders. We agree that while selling public property or granting its lease, the normal method is auction or calling for tenders so that all intending purchasers/lessees should have an equal opportunity of submitting their bids/tenders. Even there, there may be exceptional situations were adopting such a course may not be insisted upon. Be that as it may, the case here is altogether different. Hal was trying to improve not only the quantum of production but also its quality and for that purpose looking for an appro priate partner. They went in for the best. It must be remembered that this technology is not there for the mere asking of it. All the leading drug companies keep their pro cesses and technology a guarded secret. Be ing businessmen, they like to derive maximum profit for themselves. It is ulti mately a matter of bargain. In such cases, all that need be ensured is that the government or the authority, as the case may be, has acted fairly and has arrived at the best available arrangement in the circumstances.

15. The very same question once again came up for consideration in the decision in 5 m & t consultants v. S. Y. Nawab (2003) 8 scc 100 and the supreme court held as follows:

In g. B. Mahajan v. Jalgaon municipal council dealing with the case of a munici pal council entering into contract with a pri vate developer or building for construction of a commercial complex involving its execution on self - financing basis subject to handing over to the municipality, the com plex free of cost and allotting some shops at a fixed rate/free of cost to certain specified persons while having the right to dispose of the remaining accommodation at one's own discretion to allottees with occupancy rights therein for 50 years and retain the premia received by way of reimbursement of the financial outlays of the developer plus profits, it was observed that a project, otherwise legal, does not become any the less permissible by the mere reason that the local authority had entered into an agreement di rectly with a developer for its financing and execution. A distinction between proper use and improper abuse of power was consid ered to be relevant in adjudging the reason ableness of the exercise of power and liberty to adopt appropriate techniques of management of projects with concomitant eco nomic expediencies which really pertain to matters of economic policy, which was conserved in the authority concerned, unless there was any violation of constitutional or legal limits of exercise of such powers itself.

16. The supreme court in the decision cited supra also observed about the attitude to be shown to the authorities dealing with a de velopment project on the following lines:

It is by now well settled that non - floating of tenders or absence of public auction or invitation alone is no sufficient reason to cas tigate the move or an action of a public authority as either arbitrary or unreasonable or amounting to mala fide or improper exercise or improper abuse of power by the authority concerned. Courts have always leaned in favour of sufficient latitude being left with the authorities to adopt their own techniques of management of projects with concomitant economic expediencies depending upon the exigencies of a situation guided by appropriate financial policy in the best interests of the authority motivated by public interest as well in undertaking such ventures.

17. After going through the records and in the light of the above principles, we do not find any mala fide in the grant of approval for the project being given to the respondents 11 and 12 and that it was for extraneous reasons. The argument that the identification of the private developer was done without a process of tender is not based upon sound principles of law.

18. Even regarding the contention on (sic) jurisdiction of the pondicherry government, we are of the view that under indian ports act 1908, pondicherry port is only a minor port and the state government has full powers in developing the port and we have no hesitation in rejecting this contention.

19. It is at this juncture, the learned counsel for the petitioners fairly conceded that his cli ents' concern was more on the environmental impact that the project may have and he was not canvassing the relative merits of the parties who had submitted offer to the government of pondicherry. He requested the court to safeguard the interest of the general public and future development of the union territory of pondicherry with reference to the development of the pondicherry port.

20. The learned counsel for the petitioners thereafter took us through the main report in volume i submitted by the eleventh respon dent during the month of november 2005. He was more concerned with the ancillary devel opments to be included in the port develop ment. In chapter 6 of the said report (page 177 of the typed set of papers) it is shown that after the development of the port, lands to be devel oped, can be sold or leased in a planned manner to make it as an area of tourist development. For this purpose, it was stated that the devel oper has ideas to build star hotels, trade centre as well as a beach resort and it was this activity, he called as real estate activity and once it is permitted, it will endanger the coastal area and also violate the coastal regulation zones in short crz'). He also stated that any construction activity within the prohibited area prescribed by the crz should not be per mitted and the environmental impact that may be created by such a construction activity will destroy the beauty of the coastal line and it will lead to environmental degradation of the coastal area. In the name of development of port, one should not indulge in real estate transaction.

21. To this line of argument, sri v. T. Gopalan, learned additional solicitor general, appearing for the union of pondicherry, stated that no one can permit any construction activity, which is prohibited by crz. He further submitted that this being a project exceeding rs. 50 crores, necessary en vironmental clearance has to be obtained from the ministry of environment and forest (in short, moef') of union of india. Before such consent is obtained, a full environmental im pact assessment (in short, 'eip') will be done. During that exercise, public hearings will be conducted as a matter of rule and all the con cerns expressed by the public will be taken due note of by the authorities concerned. He had also stated that the specific objections raised by the two writ petitioners will also be consid ered and if it is so directed, they will also be heard at the hearings done by the government. He further submitted that mere submission of the dpr is not the end of any decision - making. The implementation of the project per dpr is solely dependent on the clearance to be given by the moef. In that events certainly, the government will have no hesitation in stopping the project if it is against environmental safeguards. Further, the consideration of crz will also be part of that exercise. In fact, the notification issued under the environmental protection act clearly requires a prior consent and it provides for any aggrieved party to file an appeal before the tribunal constituted for the said purpose. When a question was posed by this court as to whether the tribunal is functioning as of present, the learned addi tional solicitor general fairly stated that it is not having any presiding officer at present. In any event, he contended that the decision mak ing process of an authority can be judicially reviewed by having request under article 226 of the constitution of india and that is to be done as and when such a decision is done by competent authority and the contention of the learned counsel for the petitioners is prema ture and can never be taken note of at this stage.

22. In answering the allegations made by the learned counsel for the petitioners that it is a real estate project having within itself con struction of five star hotels, a trade centre as well as a beach resort, the learned counsel for the respondents 11 and 12 fairly stated that their main project is only for the development of pondicherry port and they do not have any intention of making it as a real estate activity and such an allegation is unwarranted. In any event, such project was not conceived by them so as to build five star hotels, trade centre and beach resort in the vicinity of the coastal line. However, while developing the port, it is necessary to provide certain infrastructural fa cilities for passengers, shipping crew, port staff and other personnel as part of the port de velopment activity and that cannot be stopped by any one in the name of public interest.

23. Even though the dpr submitted by the respondents 11 and 12 has certain basis to cre ate a grievance regarding construction of cer tain developments which are not strictly coming within the port development, it should be made clear that such an activity can never involve construction of five star hotels, trade centre and beach resorts as it is not coming under the proposal to award bot to develop the pondicherry port. In any event, when necessary plans to be submitted by the developer to the moef seeking for clearance of the project, certainly, the said authority will take note of as to the desirability of making constructions within the prohibited distance prescribed under the crz. At the same time, we should also make it clear that the ancillary activities while developing the port cannot be stopped by merely naming it as real estate ac tivity. These are the aspects, which are to be taken into account at the time of granting envi ronmental clearance by the moef.

24. In view of the above, we dispose the writ petitions with the following directions:

(a) the further development of the port of pondicherry by the private developer, viz. , re spondents 11 and 12, will be based upon the environmental clearance to be given by the moef in terms of the environmental protec tion act, 1986.

(b) while considering any clearance for the project, the ministry will take note of the ob jections raised in these two writ petitions and also issue notice to the two writ petitioners apart from issuing to the other parties, which is mandatory under law and if they so desire in writing, a oral hearing will be given to them.

(c) the government of pondicherry, which will be entering into a concession agreement with the private developer, namely, the re spondents 11 and 12 forming a consortium, will see to it that the project will be imple mented in its letter and spirit for the develop ment of pondicherry port and not to indulge in any real estate activity as alleged by the learned counsel for the petitioners.

25. We make it clear that in view of the above, the interim order dated 17. 2. 2006 expired on 6. 3. 2006 does not survive any more. There will be no impediment for the respon dents to proceed with the project in accordance with law. In the circumstances of the case, there will be no order as to costs. Conse quently, w. P. M. P. Nos. 3492 and 3493 of 2006 in w. P. No. 3304 of 2006 and w. P. M. P. Nos. 13934 and 13935 of 2006 in w. P. No. 12337 of 2006 are closed.

W. Ps. Disposed of.