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TMI Blog2011 (4) TMI 614X X X X Extracts X X X X X X X X Extracts X X X X ..... of sub-section (2) of Section 12 of the Act - it is a well-settled position of law that acquiescence or waiver would not vest in an authority a power which is otherwise not vested in it. In the circumstances, in view of the findings recorded hereinabove, the said contention also does not merit acceptance - Held that: petitioner is entitled to interim relief - 4571 of 2011 - - - Dated:- 19-4-2011 - Harsha Devani and R.M. Chhaya, JJ. REPRESENTED BY : S/Shri Mihir H. Joshi, Sr. Counsel with Abhishek M. Mehta, for the Petitioner. S/Shri P.S. Champaneri, ASG, R.J. Oza, Virendra M. Gohil and C.Z. Sankhla, Advocate, for the Respondent. [Order per : Harsha Devani, J. (Oral)]. Being aggrieved by the order dated 31st March, 2011 passed the respondent No. 2-Development Commissioner reviewing the appointment of the petitioner No. 1 company as custodian under Section 45 of the Customs Act, 1962 and appointing the respondent No. 5-M/s. MMTC Limited, Mumbai as custodian for the Surat Special Economic Zone, the petitioner has filed the present petition. 2. The petitioner No. 1, a company, (hereinafter referred to as the petitioner company) is engaged in the business/activity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not for a limited period. According to the learned counsel, the scheme indicates that the appointment was to continue indefinitely subject to periodic review every five years as laid down in the guidelines. In view of clause 17 of the guidelines the termination could be for valid reasons and after giving opportunity of hearing to the custodian. It was submitted that in the present case no notice as regards review had been issued by the respondent No. 2 prior to terminating the custodianship of the petitioner nor was the petitioner called upon to tender any explanation. It was submitted that in fact there was no order of termination, but only an order appointing M/s. MMTC Ltd. as custodian. Moreover, the impugned order does not disclose any reason whatsoever for reviewing the custodianship of the petitioner company nor does it disclose any reasons whatsoever for appointing the respondent No. 5 in place of the petitioner company. It was pointed out that over and above appointing M/s. MMTC Ltd. as custodian the respondent No. 2 has also proceeded to appoint transporters for transporting the precious goods on behalf of the custodian, who, in terms of the public notice were required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner company has also been handling enormous quantity of cargo running into billions of US dollars and has developed the SEZ by making enormous investments over the years and as such the balance of convenience also leans heavily in favour of the petitioner entitling the petitioner to the grant of interim relief It was, accordingly, urged that the petition be admitted and the interim relief as prayed for be granted. 5. The petition is vehemently opposed by Mr. P.S. Champaneri, learned Additional Solicitor General appearing on behalf of respondents No. 1, 2 and 3. The learned counsel submitted that by virtue of the provisions of sub-section (1) of Section 53(1) of the SEZ Act, a special economic zone, on and from the appointed day, is deemed to be a territory outside the customs territory of India for the purposes of undertaking authorized operations. Sub-section (2) of Section 53 of the SEZ Act provides that the Central Government may notify a Special Economic Zone as a deemed port/airport/land station, etc. under Section 7 of the Customs Act. It was submitted that these provisions have been made in order to facilitate regular import and export activities from a special economic z ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... changes brought in the Customs Act by introducing the provisions of Chapter-XA in the Customs Act dealing exclusively with the special economic zones to contend that by virtue of the provisions of Section 76A thereof, the special economic zone came to be treated as a different territory outside the purview of the Customs Act. Placing emphasis on the provisions of Section 76B it was submitted that by virtue of the said provision, the provisions of Chapter XA had an overriding effect over the other provisions of the Customs Act and that in case of any conflict the provisions of Chapter XA would prevail and as such on and from the year 2002 the provisions of Chapter XA prevailed over the provisions of the Customs Act. The learned counsel further submitted that under the provisions of Section 76C, the Central Government was empowered to make rules specifying the requirements relating to goods or class of goods admissible to a special economic zone, the nature of operations to which such goods or class of goods may be subjected and the conditions to be fulfilled and the procedure in this regard. It was contended that the expression admissible also means custody and that by virtue of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the respondent No. 2. It was submitted that the petitioner having taken part in the process of appointment of custodian is now estopped from challenging the same. It was urged that the conduct of the petitioner subsequent to passing of the impugned order also requires to be deprecated inasmuch as despite the fact that the petitioner was directed to make necessary arrangements for handing over the strong room to the respondent No. 5-M/s. MMTC Ltd. with effect from 15-4-2011, the petitioner had resisted the same. It was submitted that despite the fact that the petitioner was fully aware that in the eventuality of non-handing over the strong room at Surat SEZ, the export-import activities of the precious cargo may get paralyzed resulting in irreparable loss to the industries in the Zone and also to the nation, the petitioner had failed to hand over the same to the respondent No. 5. It was submitted that the conduct of the petitioner, therefore, dis-entitles the petitioner from the grant of any of the reliefs prayed for in the petition. 10. Another submission advanced by Mr. Champaneri was that the respondent No. 2 had put the petitioner to notice as early as on 6-1-2011 that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or sub-section (1) or sub-section (2) of Section 22 of the SEZ Act, 2005 It was submitted that the said decision squarely covers the issue involved in the present case, viz., the powers of the customs authority under the Customs Act are not taken away even in respect of special economic zones and as such the power of the Commissioner of Customs to appoint a custodian under Section 45 of the Act would prevail even after the coming into the force of the SEZ Act. It was further submitted that Rule 2(1)(h) of the Rules refers to custodian to mean any person referred to in Section 45 of the Customs Act, hence, even under the SEZ Act and the SEZ Rules reference to custodian means a custodian who is appointed under Section 45 of the Customs Act. In the circumstances, the Development Commissioner has no powers under Section 12 of the SEZ Act to appoint a custodian. 13. Having heard learned Counsel for the respective parties the court is of the opinion that the matter requires consideration. Hence, RULE returnable on 20-6-2011. In the meanwhile, the parties shall complete all pleadings on or before 15-6-2011. 14. On the question of grant of interim relief, a perusal of the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the developer to undertake in a Special Economic Zone. Sub-section (9) of Section 15 of the Act provides that the Development Commissioner may, after approval of the proposal referred to in sub-section (3), grant a letter of approval to the person concerned to set up a Unit and undertake such operations which the Development Commissioner may authorise and every such operation so authorised shall be mentioned in the letter of approval. Thus, sub-section (9) of Section 15 pertains to granting approval for setting up of a unit undertaking such operation as may be authorised by the Development Commissioner. Sub-section (1) of Section 53 of the Act is therefore, required to be read in the light of the expression authorised operations . On a plain reading of Section 53(1) of the Act, it appears what is contemplated under the said provision is that the area of a special economic zone is deemed to be a territory outside the customs territory of India for the purposes of undertaking the authorised operations as contemplated in Section 4(2) and 15(9) of the Act. The said provision however, does not take the special economic zone out of the purview of the provisions of the Customs Act, e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urs for setting up of Units in the Special Economic Zone; (b) ensure and take suitable steps for effective promotion of exports from the Special Economic Zone; (c) ensure proper co-ordination with the Central Government or State Government Departments concerned or agencies with respect to, or for the purposes, of clauses (a) and (b); (d) monitor the performance of the Developer and the Units in a Special Economic Zone; (e) discharge such other functions as may be assigned to him by the Central Government under this Act or any other law for the time being in force; and (f) discharge such other functions as may be delegated to him by the Board. (3) Every Development Commissioner shall be overall in charge of the Special Economic Zone and shall exercise administrative control and supervision over the officers and employees appointed under sub-section (2) of Section 11 (including the officials deputed to such Special Economic Zone) to discharge any of the functions under this Act. (4) Without prejudice to the provisions of sub-sections (1) to (3), every Development Commissioner shall discharge such functions and exercise such powers as may be delegate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Section 45 of the Customs Act, 1962. Hence, any reference to custodian under the Rules would mean a custodian referred to in Section 45 of the Customs Act. It has been argued on behalf of the respondent No. 2 that the words used in the said rule are person referred to in Section 45 of the Customs Act , which is not same as the person appointed under the Customs Act. The said contention is fallacious inasmuch as even if one goes by the express language of Rule 2(1)(h) of the SEZ Rules, which speaks of the custodian as being the person referred to in Section 45 of the Customs Act, the custodian would be the person referred to in Section 45 of the Customs Act, meaning thereby the person approved by the Commissioner of Customs. Thus, for all intents and purposes a custodian under the provisions of the SEZ Act and the SEZ Rules is a custodian as envisaged under Section 45 of the Customs Act. Once that is the position, any person appointed as a custodian otherwise than under the provisions of Section 45 of the Customs Act would not be a custodian within the meaning of Rule 2(1)(h) of the Rules so as to be competent to discharge the duties of a custodian in the special economic zone. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eighs heavily in favour of the petitioner company. Moreover, non-grant of interim relief would cause irreparable injury to the petitioner. On behalf of the respondent No. 2 it has been contended that the petition is barred by delay, laches and acquiescence. Insofar as delay and laches are concerned, it is true that the petitioner did not file the petition at the earliest point of time when it was asked to issue public notice. However, the facts on record indicate that the petitioner was duly pursuing the matter with the respondent No. 2 and even after the impugned order was passed the petitioner had made a representation to the respondent No. 2 to reconsider his decision. The petitioner company has, thereafter, before the date on which the impugned order was to take effect, approached this Court by way of the present petition. Hence the contention that the petition is barred by delay and laches is prima facie not substantiated. Insofar as the question of acquiescence on the part of the petitioner company is concerned, the petitioner company has emphatically denied the said contention. Moreover, it is a well-settled position of law that acquiescence or waiver would not vest in an au ..... X X X X Extracts X X X X X X X X Extracts X X X X
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