2021 (11) TMI 287 - HC - Customs

Validity of exit order in terms of Rule 74 of the Special Economic Zone Rules, 2006 - Lease agreement - rent control provisions - dispute between the petitioner and the 4th respondent in connection with the lease - HELD THAT - The 4th respondent - M/s. Zerone Consulting Private Limited, is a Unit inside the Infopark SEZ, Kakkanad engaged in IT services with LOA given in 2008. Ext.R4(a) is the LOA. The 4th respondent approached the office of the Development Commissioner with an application for exit order from the SEZ scheme under Rule 74 of the SEZ Rules, 2006. The same was considered by the 3rd respondent and passed Exts.P10 and P11 orders. A Unit may opt out of Special Economic Zone with the approval of the Development Commissioner and such exit shall be subject to payment of applicable duties on the imported or indigenous capital goods, raw materials, components, consumables, spares and finished goods in stock. It is also stated in Rule 74 that if the unit has not achieved positive Net Foreign Exchange, the exit shall be subject to penalty that may be imposed under the Foreign Trade (Development and Regulation), Act, 1992. Rule 74(2) says about three conditions that is applicable on the exit of a unit. Similarly, other formalities are also mentioned in Rule 74 (3), (4) and (5). There is nothing in Rule 74 or in the Act 2005, which will give an opportunity of hearing to a co-developer while considering an application for exit order. The short point raised by the petitioner is that the prayer of the 4th respondent is not for getting an exit order. If there is any grievance to the petitioner regarding the arrears of rent, the petitioner is free to agitate the same in accordance to law, before the appropriate authority. But the petitioner cannot challenge Exts.P10 and P11 order, which according to me, is only an exit order and the co-developer of the 4th respondent has no role in it. Therefore, according to me there is nothing to be interfered with Exts.P10 and P11 - Petition dismissed.

Summary

Issues:
Challenge to orders Exts.P10 and P11 allowing exit to the 4th respondent from the Special Economic Zone (SEZ) without considering petitioner's contentions.

Analysis:
1. Background: The petitioner, a co-developer in the Infopark SEZ, had a lease agreement with the 4th respondent for running an SEZ Unit. Disputes arose, leading to rent control proceedings where the petitioner's sought rent was finalized. The 4th respondent, while owing ?2.33 crores to the petitioner, applied for an exit order under Rule 74 of the SEZ Rules, 2006.

2. Petitioner's Contentions: The petitioner argued that the 4th respondent's application was for shifting the unit, not an exit order, citing SEZ Rules and communications requiring a "No Due Certificate" from the existing developer for relocation. The petitioner contended that the 4th respondent was merely relocating within the same zone, necessitating the petitioner's involvement.

3. Respondent's Defense: The 4th respondent maintained that their application was for an exit order as per Rule 74 of the SEZ Rules, 2006. They pointed out that under the SEZ Act, 2005 and Rules, 2006, the developer/co-developer has no role once an exit order application is made. The respondent argued that the 3rd respondent's decision was in accordance with the law and supported by a detailed counter affidavit.

4. Court's Analysis: The court examined Rule 74 of the SEZ Rules, 2006, which outlines the conditions for a unit to exit the SEZ. The court found that the 4th respondent's application was for an exit order, not a relocation, as claimed by the petitioner. The court noted that the 3rd respondent's decision was lawful and based on a thorough evaluation of the 4th respondent's request.

5. Decision: The court dismissed the writ petition, stating that the petitioner's grievances regarding rent arrears should be addressed through appropriate legal channels. The court emphasized that the exit orders Exts.P10 and P11 were valid and that the co-developer had no standing in matters related to exit orders under Rule 74 of the SEZ Rules, 2006.

In conclusion, the court upheld the legality of the exit orders issued to the 4th respondent, emphasizing compliance with Rule 74 of the SEZ Rules, 2006, and dismissing the petitioner's challenge to the orders Exts.P10 and P11.