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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 ..... conomic Zone situated at Surat. 3. Assailing the impugned order Mr. Mihir Joshi, learned Senior Advocate appearing on behalf of the petitioner submitted that the impugned order dated 31-3-2011 is in colourable exercise of power and authority not vested with the respondent No. 2-Development Commissioner and amounts to usurping the authority under Section 45 of the Customs Act by appointing a custodian under the guise of reviewing the appointment of the petitioner company made by the Commissioner of Customs, Gujarat vide Notification No. 2/95 (CCP), dated 20-10-1995 followed by Customs Notification No. 14/1998, dated 18-6-1998. It was submitted that the petitioner was appointed as a custodian in the year 1995/1998 by the aforesaid notifications issued by the Commissioner of Customs in exercise of powers under sub-section (1) of Section 45 of the Customs Act and had continued to remain custodian since the last fifteen years. That all of a sudden, the respondent No. 2-Development Commissioner has decided to review the appointment of the petitioner company and in its place appoint the respondent No. 5 as custodian. Referring to the public notice inviting proposals to work as custo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at there is no statutory basis for bringing an end to the term of the petitioner as custodian. It was contended that the scheme indicates adverse review as a ground for termination; however, no such reason has been stated in the present case. 4. Inviting attention to the provisions of Section 45 of the Customs Act, it was submitted that under the said provision it is the Commissioner of Customs who has been vested with the power to appoint a custodian and that the respondent No. 2 does not have the authority or jurisdiction to appoint a custodian. It was submitted the impugned order indicates that the same has been passed in exercise of powers under Section 12 of the Special Economic Zones Act, 2005 (hereinafter referred to as "the SEZ Act"). Referring to, sub-section (2) of Section 12 of the Act, it was submitted that any power of the Development Commissioner to act under the provisions of Section 45 of the Customs Act can be traced to clause (e) of the said sub-section, which provides for discharge of such other functions as may be assigned to the Development Commissioner by the Central Government under the SEZ Act or any other law for the time being in force. It was submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ules, 2006 (hereinafter referred to as "the SEZ Rules") which lays down that the Special Economic Zone shall be deemed to be a port, airport, inland container depot, land customs station under Section 7 of the Customs Act in accordance with the provisions of Section 53, from the date notified in this behalf. It was further submitted by the learned counsel that the SEZ Rules provide that the Specified Officer may designate any area or areas in the Special Economic Zone as an area for loading and unloading of import and export cargo and that as per Rule 2(1)(zd) of the SEZ Rules, Specified Officer, in relation to a Special Economic Zone means a Joint or Deputy or Assistant Commissioner, for the time being in force posted in the Special Economic Zone. Thus, it is amply clear that for the purpose of regular customs work in a special economic zone, there is a separate set-up of officers who are posted in the special economic zone on deputation basis and are under the administrative control of the Development Commissioner, in-charge of the Zone by virtue of Sections 11 and 12 of the SEZ Act read with Rule 20 of the SEZ Rules. According to the learned counsel, in view of the said provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of Chapter XA (containing Sections 76A to 76N) came to be omitted by Act 22 of 2007 and came to be replaced by the SEZ Act. According to the learned counsel, a special economic zone is a floating sovereign placed under the authority of the Development Commissioner under Section 12 of the SEZ Act which was treated as being outside the customs territory of India and as such, the same was not governed by the provisions of the Customs Act. Insofar as the powers of the Development Commissioner to appoint a custodian are concerned, the learned Counsel placed reliance on the provisions of Section 12 of the Act to submit that under the said provision, the Development Commissioner was duly empowered to appoint even a custodian as the administrative control and supervision of the officers appointed under sub-section (2) of Section 11 (including the officers deputed to such special economic zone) was vested in him. 8. The next submission advanced by Mr. Champaneri was that Rule 2(1)(h) of the Rules defines "custodian" to mean any person referred to in Section 45 of the Customs Act and that after the enactment of Special Economic Zone Act, 2005 and the Special Economic Zone Rules, 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of time could have challenged the same if it so deemed fit. However, the petitioner, instead of challenging the said action at the relevant point of time, has acquiesced with the same by issuing the public notice as directed by the respondent No. 2 and also taking part in the process of appointment of custodian. That it was only after the respondent No. 5 was appointed as custodian, that the petitioner has approached this Court challenging the impugned order, in the circumstances, the petition is also barred by delay, laches and acquiescence and as such deserves to be dismissed on this ground alone. 11. On behalf of M/s. MMTC Ltd., Mr. C.Z. Sankhla, learned advocate submitted that pursuant to passing of the impugned order, the respondent No. 5 has taken charge as custodian. 12. In rejoinder, Mr. Joshi, for the petitioner submitted that the interpretation of Section 53(1) of the Act, as put forth by the learned counsel for the respondent is not a correct interpretation. Reliance was placed on the decision of a Division Bench of this High Court in the case of Union of India v. Oswal Agricomm Private Limited and Others, rendered on 6-7-2010 in Letters Patent Appeal No. 25 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued in 1995/1998 show that the said provision empowers the Commissioner of Customs to approve of such person in whose custody all imported goods unloaded in a customs area shall remain, until they are cleared for home consumption or are warehoused or are transshipped in accordance with provisions of Chapter-VIII of the Act. "Customs area" has been defined under Section 2(11) of the Customs Act to mean the area of a customs station and includes any area in which imported goods or export goods are ordinarily kept before clearance by Customs Authorities. Customs area is defined under Section 2(11) of the Customs Act to mean the area of a customs station and includes any area in which imported or export goods are ordinarily kept before clearance by Customs authorities. The proviso to Rule 28 of the SEZ Rules speaks of transfer of high value imported goods through the airport to the custodian who shall transfer the same to a designated Customs Area located inside the Processing Area designated by the Specified Officer for further delivery to the unit or developer. Thus, the SEZ Rules also envisage a customs area even within the processing area. On behalf the respondent No. 2 it is sough ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to hereinabove, on which reliance has been placed on behalf of the petitioner, which clearly lays down that Special Economic Zone is deemed to be a territory outside the Customs area only for the purposes of undertaking the authorized operations which means that the Customs Authorities, who were empowered under Section 76G (repealed since 11-5-2007), had no power to authorise any developer to undertake any operation in the special economic zone nor had the power to approve any proposal for setting up any unit within the special economic zone. However, Section 53 being limited to the extent of "authorized officer", who was earlier empowered to perform certain jobs under Chapter XA and power of the Customs authorities under the Customs Act, including the power to confiscate and impose penalty under Sections 111 to 114, as enumerated in Chapter-XIV of the Customs Act, is not taken away. In the light of the clear provisions of Section 53(1) of the SEZ Act as well as in the light of the ratio laid down in the aforesaid decision, reliance placed upon sub-section (1) of Section 53 of the SEZ Act by the respondent No. 2 appears to be misplaced as the same does not in any manner curtail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gated to him by a general or special order by the Central Government or the State Government concerned, as the case may be. (5) Every Development Commissioner may call for such information from a Developer or Unit from time to time as may be necessary to monitor the performance of the Developer or the Unit, as the case may be. (6) The Development Commissioner may delegate any or all of his powers or functions to any of the officers employed under him." 16. On a plain reading of sub-section (1) of Section 12 of the Act, it appears that the Development Commissioner is required to generally discharge functions for ensuring speedy development of the Special Economic Zone and promotion of exports therefrom and in particular the functions enumerated in Section 12(2) of the Act. Clause (e) of sub-section (2), which is relevant for the present purpose, empowers the Development Commissioner to discharge such other functions as may be assigned to him by the Central Government under the Act or any other law for the time being in force. Thus, the Development Commissioner may exercise powers under Section 45 of the Act if such functions have been specifically assigned to him b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial economic zone. 18. In light of the aforesaid discussion, the court is of the prima facie view that Section 12 of the SEZ Act does not empower the Development Commissioner to appoint a custodian under Section 45 of the Customs Act, inasmuch as the powers under the Customs Act are required to be expressly assigned to the Development Commissioner under clause (e) of sub-section (2) of Section 12 of the Act. The power under Section 45 of the Customs Act is specifically conferred on the Commissioner of Customs, who is the only authority in whom the power of appointing a custodian under sub-section (1) thereof is vested. Thus, the action of the respondent No. 2 in appointing the respondent No. 5-M/s. MMTC Ltd. as custodian in place of the petitioner prima facie appears to be without jurisdiction and authority of law. The appointment of custodian by the respondent No. 2 having been made under Section 12 of the SEZ Act, the person so appointed would not be a custodian as contemplated under Rule 2(1)(h) of the SEZ Rules so as to be competent to discharge functions of a custodian under the said Rules. From the facts as appearing from the record, the petitioner is the developer of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 19. In the light of the aforesaid discussion, the petitioner has made out a strong prima facie case, the balance of convenience also leans heavily in favour of the petitioner and non-grant of interim relief as prayed for would cause irreparable injury to the petitioner. Moreover, the Court has also prima facie found the appointment of the respondent No. 5-M/s. MMTC Ltd. to be without any authority and jurisdiction. The Court is accordingly of the view that the petitioner is entitled to interim relief prayed for in the petition. Hence, by way of interim relief, the execution, operation and implementation of impugned order dated 31-3-2011 (at Annexure-A) is hereby stayed till the final disposal of the present petition. 20. At this stage Mr. P.S. Champaneri, learned Assistant Solicitor General has requested that this order be stayed for a period of three weeks from today so as to enable the respondents to avail of remedy before the higher forum. In the facts and circumstances of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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