The Kerala High Court on Friday upheld the amendments to the agreement between Cochin Port Trust and India Gateway Terminal Pvt Ltd for the construction and operation of the International Container Transshipment Terminal (ICTT) at Vallarpadom in Kochi.
The petition challenging the amendments contended that the amendments incorporated in the licence agreement dated January31, 2005 after acceptance of the final bid of the licensee was illegal.
‘Loss to exchequer’
Petitioner B. Hamza, general secretary, Cochin Port Labour Union, argued that the amendments which had made fundamental changes in the original agreement had caused huge loss to the public exchequer. He pointed out that an amendment was brought to the definition of gross revenue earned by the licensee to the effect that income from interest, sale of assets, penalties or charges for delay as also damages of any kind and reimbursement of expenses incurred by licensee shall not be included in the definition.
Besides, the revenue earned by the licensee from the levy of ground rent charges within the RGCT project site was amended as not forming part of the gross revenue for the purpose of royalty calculation. That part, the interest prescribed for delayed payments at the rate of 2 per cent per month was reduced to 1.25 per cent per month through an amendment.
Court ruling
Dismissing the petition, a division bench comprising Chief Justice Manjula Chellur and Justice K. Vinod Chandran observed that the amendments were not made surreptitiously without the knowledge of the Union government or without making proper appraisal of the circumstances. The court also pointed out that an independent financial consultancy firm was appointed to carry out the financial evaluation and analysis of the changes proposed. It was on the basis of the report of the consultancy that the CPT had made the modifications in the agreement after negotiations.
The court said the tender was only a draft agreement and not the final agreement and it was obvious that any contract , specially with financial and commercial implication necessitated negotiations even after the financial bid was accepted. Acceptance of the bid definitely indicated only the crossing of the threshold and the terms were to be set only on further negotiations.
The Bench said that it could not agree with the contention of the petitioner that the draft agreement ought to have been executed by the CPT and the awardee and that no modification could be made.
The court observed that the amendments did not in any manner indicated a benefit conferred on the licensee at the expense of the public exchequer.