AI Drafter 
TaxTMI 
TaxTMI 
2017 (8) TMI 580
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....s members handling 76% of the Import­Export to and from the Jawaharlal Nehru Port Trust (for short, "JNPT") Port. 4 On 23 March 2017, Bid/Tender Notice issued by Respondent No.2­JNPT for "selection of transporter for providing transport solution for various identified routes for direct port delivery ISO freight containers from the four terminals of JNPT", whereby the JNPT under the Direct Port Delivery (DPD) Model intends to select a panel of transporters with respect to five regions as earmarked by them through the tender process. All the containers which are required to be cleared before 48 hours under the DPD model shall be diverted only to the selected five transporters. On 1 September 2008, the Chief Commissioners of Customs, Nhava­Sheva issued a facility Notice No. 63 of 2008 ("FN 63/2008") as per which DPD facility was introduced for the first time as a facility to accredited importers, i.e. the importers who fulfilled certain criteria as per the aforesaid facility notice, as per which on payment of duty, containers were allowed to be removed directly from the port itself without any examination as required under the Customs Act, 1962 (for short, "the Customs ....
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....iverted only to the selected five transporters. On account of introduction of DPD a.k.a. DPD facility, the Import General Manifest also indicates where a container is meant for DPD. An Import Advance List ("IAL") is filed by the shipping line with the terminal prior the berthing of the vessel. The importers who fulfilled certain criterion on the basis on their tract record and reputation, with minimum compliance under the Customs Act, as part of the Risk Management System ("RMS") and on the basis of self­assessment were allowed to take their goods directly to their factory premises from the port terminal without it being diverted to Container Freight Station (for short, "CFS"). Even as per FN No. 161/2016, it was provided that if the DPD containers which are not cleared by the importer within 48 hours of the arrival of the container, then such container will be automatically transferred to the designated CFS, speedy CFS. However, due to sudden increase in the number of DPD importers from 50 to 681 i.e. from 3% to 17%, the port became all the more congested. Hence this Petition. 7 Both the Petitioners have challenged tender/notice of JNPT, Traffic Department dated 23 March 20....
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....r Gandhinagar & Ahmedabad (MEGA) Company Ltd. 2017(6) SCALE 345 has interpreted the tender conditions and the eligibility criteria and set aside the High Court order­ "29 In Reliance Telecom Ltd. and another v. Union of India and another, the Court referred to the authority in Asia Foundation & Construction Ltd. v. Trafalgar House Construction (I) Ltd. and others wherein it has been observed that though the principle of judicial review cannot be denied so far as exercise of contractual powers of Government bodies are concerned, but it is intended to prevent arbitrariness or favouritism and it is exercised in the larger public interest or if it is brought to the notice of the court that in the matter of award of a contract power has been exercised for any collateral purpose." 11 The Supreme Court, while dealing with the requirement of the State to take any new policy decision and/or in related administrative action, has recorded in the judgment of Ekta Shakti Foundation Vs. Government of NCT of Delhi (2006) 10 SCC 337 that:­ 11. "5 While exercising the power of judicial review of administrative action, the Court is not the appellate authority and '....
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.... facets, viz., it permits reasonable classification which is founded on intelligible differential must have a rational relation to the objects sought to be achieved. Further, it does not allow any kind of arbitrariness and ensures fairness and equality of treatment. It is the fonjuris of our Constitution, the fountainhead of justice. Differential treatment does not per se amount to violation of Article 14 of the Constitution and it violates Article 14 only when there is no reasonable basis and there are several tests to decide whether a classification is reasonable or not and one of the tests will be as to whether it is conducive to the functioning of modern society." 13 The position of law with regard to the tender, contract and/or such policy decision has been settled through various judgments, specifically when it comes to taking administrative and/or executive decision to bring in and/or make policy. In JSW Infrastructure Limited & Anr. (supra), the Apex Court held that­ "9. We may also add that the law is well settled that superior courts while exercising their power of judicial review must act with restraint while dealing with contractual matters. A Three Judge Benc....
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....­ Performance of services by Board or other person.­ "(1) A Board shall have power to undertake the following services:­ (a) landing, shipping or transhipping passengers and goods between vessels in the port and the wharves, piers, quays or docks belonging to or in the possession of the Board; (b) receiving, removing, shifting, transporting, storing or delivering goods brought within the Board's premises;" "[(3A) Without prejudice to the provisions of subsection (3), a Board may, with the previous approval of the Central Government, enter into any agreement or other arrangement (whether by way of partnership, joint venture or in any other manner) with, any body corporate or any other person to perform any of the services and functions assigned to the Board under this Act on such terms and conditions as may be agreed upon.]" 16 The Customs Act, provides that­ 2. Definitions­ ..... "(12)"customs port" means any port appointed under clause (a) of section 7 to be a customs port, [and includes a place appointed under clause (aa) of that section to be an inland container depot];" "(13)"customs station" means any customs port, [customs airport,....
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....er, there was no similar example for arriving at a transportation solution. The international ports were studied, however, it was found that the similar system cannot be implemented at JNPT because in India the transportation sector is highly unorganized and the number of trucks available with a transporter is much less as compared to other developed countries. Also, the level of automation, standardization and use of technology is much different in India and hence, a suitable example for replication was not found. To address this issue an "Out­of­box" solution was found which would be "first­of­its­kind" in India. The model was worked out considering the two requirement­ 1) The number of stacks has to be minimum and 2) It should be designed on the "best­pick model" keeping the number of shifting to the minimum. The detailed background and the transportation solution is explained further in this section." 19 This was after various studies and information collected by Port of Customs, Ministry of Shipping and with intent to identify measures to reduce the transaction cost and time, and the reasons so reflected and keeping in line "Ease of Doing B....
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....h a bidding process. The rate of the selected transporter arrived through the bidding process will be publish on the website of JNPT and Customs. v. The importers with DPD facility will be informed about the transporters selected through the bidding process and their rates and the importers shall need to enter into commercial arrangement with the transporter. vi. Importer will need to clear the documentation of the container immediately and ensure that the selected transporter clears the cargo from the port within a total time of 48 hours, failing which the container cargo will be transferred to the designated CFS. In such cases, the importer shall be required to clear the documentation and the transporter of the concerned CFS shall transport the containers from the CFS to Importer premises. vii. JNPT, NSICT, NSIGT, GTI, DG Shipping, Indian Ports Association and Customs together shall form a grievance redressal committee that will address the issues of the stakeholders related to the transport solution. viii. JNPT shall not enter into any direct commercial arrangement with the transporter. ix. Importers will need to hire the selected transporters for taking the DPD i....
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....to the dispute. JNPT/Grievance Redressal Committee shall only address the issues related to the DPD arrangement." 24 The provision of transportation arrangement is also provided in clause 6.10 and so also extension of duration of contract and arrangement. Clause 6.16.12 deals with the dispute between JNPT and the Contractor. The decision of the Chairman of JNPT made will be final and binding on both the parties, with provision in case, the contractor is not satisfied the law of land shall prevail. The jurisdiction of Mumbai High Court shall prevail, so also any dispute relating to the tender is subject to the jurisdiction of Court at Mumbai only. 25 The Petitioners have crystallized the concept of DPD and CFS and requirement of 48 hours evacuation on the arrival of the goods. Those are as under:­ CFS MODEL:­ The CFS, which is nothing but an extension of the port, was introduced in the year 1989 by the Customs Department to help clear the congestion of the ports in India. In this model, imported goods are immediately shifted after the arrival from the port to CFS, where all the activities related to clearance of goods for home consumption, warehousing, temporary adm....
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....e No. 161/2016 dated 28 November 2016, was subject matter of All Cargo Logistics & Ors. (Supra) [Writ Petition No.3310 of 2017], whereby, it is recorded as under:­ "16. On 1st September, 2008, respondent No. 3 issued Facility Notice No. 63 of 2008. That notice, inter alia, provided for DPD facility (i.e. for importers to take delivery directly from the port terminal) to ACP importers (as per Public Notice No. 64 of 2005) and to 100% Export Oriented Units (EOUs) for FCL containers covered by the RMS or where no examination is required. The petitioners state that under the DPD facility, delivery of the containers would be done at the port itself and therefore, such containers would not travel to a CFS for completion of the Customs formalities. Facility Notice No. 63 of 2008 provided for importers, who satisfy the aforesaid criteria, to apply for DPD facility to respondent No. 3 in the prescribed form. It also provided for the procedure that would be followed under the DPD facility." "20. The petitioners state that on account of Public Notice No. 161 of 2016, there has been a rise in the volume of DPD container traffic. As a result of this, the business of CFSs, including th....
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....any existing law insofar as it imposes or prevent the State from making any law imposing, in the interests of the general public, reasonable restrictions on the exercise of the right conferred by sub­clause (g). The freedom, therefore, is not absolute. In the interest of general public, the law may impose restrictions on the freedom of the citizen to start or carry out his business. Such a law cannot be, therefore, struck down as violative of the mandate of Article 19(1)(g) of the Constitution of India. A business loss to a particular person or diminution in profits cannot be, therefore, the ground on which any action, which is in public interest, can be interfered with. Therefore, at the instance of the petitioners, the present public notices cannot be quashed and set aside." "67. In the first notice of 2017 (Public Notice No. 8 of 2017 dated 16th January, 2017), the office of the Commissioner of Customs refers to the representations by various stakeholders/members from trade and then states that as a measure of trade facilitation and ease of doing business, the points raised by these persons have been examined and point­wise clarification/procedural requirements are se....
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....ed in excess of the mischief sought to be prevented or object sought to be achieved. vii) There is no urgency which is shown by Respondent No.2 in the issuance of such tender and that the said tender is of an excessive nature as it goes beyond the requirement of the interest of general public. Insofar as Writ Petition (L) No. 1626 of 2017­ i) Power and the jurisdiction of the Respondents. ii) Fundamental right to do business under Article 19(1)(g) of the Constitution of India. iii) Minutes of the meeting can never amount to "policy decision of the Government". iv) The transportation policy will be optional and not compulsory. v) The tender is an extension of the DPD policy and even supported by Customs. vi) Tender creates monopoly. vii) The tender does not deal with the delivery of the goods. Policy decision by any mechanism­ 28 The concept of "policy decision" may include Executive instructions/instructions also. The effect and use of it only enlightend its utility and usefulness. Any challenge to policy decision, without factual document/material is premature. Any policy decision cannot be challenged on presumption and assumption. Th....
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....ation. 31 The JNPT has issued the tender for selection of transporters, keeping in view the change in the staking order of the containers at the port, to ensure speedy removal the number stacks need to be reduced and to be arranged region­wise, so that each of the containers can be delivered and removed in the sequence in which the same are stacked, without shifting them for the purposes of giving delivery of a specific container to the transporter. It has therefore, been decided, based on the data received by Respondent No. 2 from the Customs Authorities to identify five routes. This would enable the stacking of containers to be done region­wise, thereby making stacking simpler and avoiding shifting of containers since irrespective of the order in which the containers are stacked, it would be stacked for the same route in the same region, and the transporter can pick any of them for delivery to the consignee (importer). This is to ensue that the dwell time and the costs of delivery of the container would be reduced. 32 The JNPT, published the tender with various conditions, including eligibility criteria of two models which provides the opportunity to wider the numbe....
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....ia and has accordingly been designed in public interest with the above objectives. 34 It is clear therefore, considering the preamble and object of policy decision, taken at higher level, in furtherance of the DPD model to promote the government of India's "Make in India", and "Ease of Doing Business" initiatives. The Respondents' decision to rerationalise and streamline the implementation of the DPD model at its port is well within the scheme. The DPD model is introduced to bring in a change in the existing clearance framework to meet contemporary needs. The tender, is with view to implement the policy decision to promote the manufacturing industry and streamline the processes for import of goods. 35 The process relating to transport of containers is further clarified as under­ (i) JNPT is one of the twelve major Ports in India and the biggest container port in the country. (ii) The dispatch logistics of transport of imported cargo from ports conventionally works in two ways -CFS Model and DPD Model. The DPD Model was introduced in the Port in 2008 to streamline the dispatch of imported cargo that lands at the port. The two models are briefly described belo....
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.... with Government decision to significantly enlarge DPD volume, permitted more numbers of Importers to avail the DPD facility for removal of cargo at JNPT and has been in the process of accrediting such importers. As of late 2016, more than 700 importers were recognized to avail the DPD Facility. vii) With a significant increase in the number of importers using the DPD Model, it was realized that segregating containers on to large number of heaps and in the absence of a suitable / tailored transport solution, evacuation difficulty will increase manifold. Anticipating the chaos and confusion likely to occur with the increase in traffic congestion, the Petitioner decided to rationalize and streamline the implementation of the DPD Model at its Port. viii) The policy decision by the JNPT was to select transporters for five different high­volume routes, by way of a transparent tendering process. The criteria for selection of transporters were broadly premised on: (a) fleet size and capability of transporter, (b) experience in the field, (c) financial capability of transporter, (d) technological capability to cater to logistical requirements. ....
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....e respective authorities under the law. The privilege/license/gate passes of transportations and/or doing business even if granted, it is always subject to terms and conditions and its limitations. All are bound to manage their affairs and to do the business even of transportation and/or delivery of goods within the spare of law and regulation and conditions. The Petitioners have right to take the delivery of goods through the one transporters­ that itself does not mean such transporters and/or importers can bring in or out their own transports at their will and wish, even at port/customs area. The smooth transportation of goods and/or delivery of goods from port/customs area to respective market places and/or vice­versa, required to be streamlined to avoid congestion and delay. All departments and stake­holders are required to work in coordination and in the interest of people at large for providing the goods at the destiny, at the earliest point of time. This is in the background that ultimately, the department/the officials in the port area and/or customs area are required to handle and/or deal specifically in bulk imported and/or exported goods. The requisite number....
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....ed route. The route­wise arrangement, cannot be stated to be contrary to any law and/or jurisdiction and/or authority. No fundamental rights are affected­ 39 The submission that the tender interfering with the fundamental rights of the Petitioners to carry on its trade under Article 19(1)(g) of the Constitution of India is unacceptable. The private selection of transporters and right to continue to do business with them by the importers association, members and/or right of transporters to do business, only with the particular private importers even by long standing, in no way can be stated to be violative of Article 19(1)(g) of the Constitution of India. The internal contract, even if any, required to be arranged as per the policy and/or regulation fixed by the authorities with whom they want to and/or intend to do such business. To say that for this existing contracts the Respondents should not change and/or bring a new policy, is unacceptable situation. The Respondents have been regulating the affairs of such transportation and/or delivery of goods from time to time in the port/customs area, keeping in mind the demand and supply of such goods and the requirement of ....
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....rs have been envisaged under Article 19(1)(g) of the Constitution of India and have been curtailed permanently and/or temporarily. They are free to their business, but then according to the policy decision, so declared by the JNPT, insofar as the transportation and/or importation and delivery of goods within their area. 42 This is also in the background that the Respondents have issued the tender to implement the public notice dated 28 November 2016 issued by the Chief Commissioner of Customs, under Section 141(1) of the Customs Act, which was issued for implementation which includes the DPD policy in the JNPT. About 681 importers have been identified from DPD from the JNPT port. As noted, the Petitioners and others have already welcomed the DPD policy in JNPT. This also is to promote the Government of India's "make an India" and "Ease of doing business initiative". 43 The Respondents' mechanism to select the transporters, keeping in mind, to clear the transport congestion at the port, therefore, cannot be halted with. This is in the background that the increase in the DPD containers, created the containers stake, the containers DPD Wise, due to the congestion of the ....
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....mport and export of goods and its proper and effective timely delivery by avoiding the congestion area, any sorts of delay in actual delivery of goods, even if it is "out of charge". 45 There is no force in the contention that it creates the monopoly in the hands of somebody, who will have selected region-wise. The purpose of this selection, the region­wise and route­wise selection and internal to have a few importers in­charge with their respective numbers of trucks/transport containers, cannot be stated to be a creation of monopoly. The freedom of business, jointly, singly and/or collectively, based upon the policy and/or regulations. The requirements in the respective fields is always a matter of commercial wisdom and arrangement. Therefore, the contentions of the Petitioners are unacceptable. The reliance on the Mahesh Verma Vs. State of Maharashtra 2008 (4) Mh. L.J. 657 is of no assistance on the facts itself. There is a force in the contentions that the DPD containers only 28% of the import cargoes (which ratio of import and export cargo is 50:50). The transporters are free to do their remaining business of transportation, even at the JNPT port, apart from abou....
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....ere diverted to the designated CFC were not out of charge and the customs have lien on the said goods. The movement of the goods which are out of charge by JNPT through this tender is a issue. 49 We are inclined to observe that the above distinct features of All Cargo (supra) as recorded above, cannot be dissected totally, as the policy decision so taken, is the integrated and connected part of JNPT regulation and so the Commissioners, customs regulations. The preamble of tender itself makes position clear that all the concerned departments are interested and involved for free and smooth transportation of the goods of the importers, through the transporters from the JNPT and/or by customs area. Power to change or modify the policy decision in the public interest­ 50 The individual Petitioners' instance to do the business, through the contractors of their choice is not fundamental rights and/or legal rights/ which should prevail over the authority of Respondents, to change the policy and/or implementing the new transportation policy. Such Petitioners/importers/ manufacturers are free to do business and/or transportation, but according to the policy and the regulatio....