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TMI Blog2019 (6) TMI 800X X X X Extracts X X X X X X X X Extracts X X X X ..... Board had no option but to grant extension of the Letter of Approval to the petitioners, it has now come up with a totally new case by taking shelter behind rule 18(4) of the SEZ Rules, reading into it a policy decision to phase out units which were already established in the SEZ and the petitioners case is the first case for implementing such so called policy. It appears that the new stand adopted by the Board for not considering the case of the petitioners, is presumably to wriggle out of the above order passed by this court. Considering the manner in which the petitioners case has been either deferred or rejected on one ground or the other, while similarly situated parties have been granted extension of Letter of Approval, it appears that the Board for reasons best known to it is not inclined to grant approval to the petitioners without any valid reasons for such refusal - the decision of the Board taken in its meeting held on 5th October, 2018 rejecting the request of the petitioners for renewal of Letter of Approval for extension of recycling of plastic waste scrap, suffers from the vice of being discriminatory, arbitrary and capricious and flies in the face of the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioners found it difficult to continue their business in the normal fashion. However, their plastic division was never entirely shut down and the petitioners always had the intention to carry on the said business on standardization of the policy by the respondent Ministry. The petitioners, therefore, from time to time, kept renewing the Letter of Approval. 2.2 It appears that a draft policy came to be issued by the respondent Ministry on 4.2.2013 concerning the functions and operations of units engaged in the business of recycling of plastic, which also came to be published on the website of the said authority. As a consequence of the finalization of the policy, the respondent Ministry addressed a letter to all Zonal Development Commissioners, including the third respondent, for listing all the cases relating to extension of letter of permission of units engaged in plastic reprocessing before the second respondent for consideration during its meeting scheduled on 17.10.2013. Pursuant thereto, the petitioner addressed various communications to the third respondent requesting it to place the matter of the petitioner s unit also before the Board of Approval for c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly, the case was posted before the second respondent for consideration in its meeting held on 3.7.2017. However, despite the recommendation made by the third respondent, the Board of Approval rejected the proposal without assigning any reasons whatsoever, which was communicated to the petitioner by a letter dated 12/14.7.2017. 2.6 Being aggrieved, the petitioners filed a writ petition before this court being Special Civil Application No.19048 of 2017. This court by a judgment and order dated 8.5.2018, recorded the submissions of the petitioners and directed the concerned authority to reconsider the petitioner s case to examine the similarity with other existing units, which, according to the petitioners, were granted renewal despite being non-operational for extended period. Accordingly, the petitioner s case was placed back before the Board of Approval. In its 83rd meeting held on 19.6.2018, the petitioner s case was taken up, but after considering the facts of the case and petitioner s submissions, the Board of Approval directed the Development Commissioner, KASEZ to carry out inspection of the unit and furnish a factual report after checking the records of the u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the Development Commissioner, Noida also confirmed that the unit of M/s Plastic Processors and Exporters Pvt. Ltd. remained closed for a long period of fifteen years before renewal/extension of Letter of Approval was granted in their favour. It was submitted that the similarity between such cases and the case of the petitioners herein stood fully established; and therefore, the Board of Approval was under an obligation to allow extension and renewal of Letter of Approval in favour of the petitioners in compliance with the direction issued by this court. It was submitted that the Board of Approval, however, has bypassed the specific direction of this court and has come up with a totally new ground for rejecting the application of the petitioner on the ground that there was a policy for phasing out the units which were engaged in plastic recycling and reprocessing activities. It was submitted that the petitioner being better situated than the two units, the Board of Approval was not justified in not granting the extension of the Letters of Approval to the petitioner. It was, accordingly, urged that the petition deserves to be allowed by granting the reliefs as prayed for. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... just, legal and proper, and does not warrant interference. It was reiterated that the Board of Approval has taken the decision taking into consideration the larger Government policy of phasing out such units and not to encourage revival of such plastic recycling business in SEZ, and that the decision of the Board of Approval is in compliance of the letter and spirit of the direction issued by this court. It was, accordingly, urged that the petition being devoid of merits, deserves to be dismissed. 5. In rejoinder, Mr. Paresh Dave invited the attention of the court to the fact that after rejecting the petitioner s application on 5.10.2018, the Board of Approval, on 22.11.2018, has allowed extension of one year to twenty eight similarly situated plastic scrap reprocessing units. It was argued that this decision of extension of Letter of Approval for twenty eight similar SEZ units shows that: (a) there is no policy by the Government for phasing out plastic processing units; and (b) such so called policy is applied only in the petitioner s case. 6. The facts are not in dispute. Pursuant to the judgment and order dated 8.5.2018 passed by this court, the B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at for without an adequate nexus to exports, which is the paramount rationale of the SEZs. The Board noted that considering the overall policy of phasing out such units in the interest of environment, there should not be any further repetition of the decisions which have been taken on the earlier referred cases, contrary to the above reality and the objectives of the policy. If the renewal of this case of extension of LoA is considered, this again would become precedent for such cases in future and consequently the larger policy intent of phasing out such units would remain unachievable. In view of the above discussion, the Board was not inclined to consider the proposal for present renewal favourably. The unit has been closed for 7 years, and the balance of convenience lies in maintaining that position. Accordingly, BoA decided not to accede to the request of M/s Anita Exports, for renewal of LoA for extension of recycling of plastic waste and scrap. 7. On a plain reading of the above decision, it is clear that such decision has been taken in the light of the larger policy intent of phasing out such units in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ( f) suspension of the letter of approval granted to a Developer and appointment of an Administrator under sub-section (1) of section 10; ( g) disposing of appeals preferred under sub-section (4) of section 15; ( h) disposing of appeals preferred under sub-section ( 4) of section 16; ( I) performing such other functions as may be assigned to it by the Central Government. ( 3) The Board may, if so required for the purposes of this Act or any other law for the time being in force relating to Special Economic Zones, by notification, decide as to whether a particular activity constitutes manufacture as defined in clause (r) of section 2 and such decision of the Board shall be binding on all Ministries and Departments of the Central Government. ( 4) The Board may delegate such powers and functions as it may deem fit to one or more Development Commissioners for effective and proper discharge of the functions of the Board. ( 5) Without prejudice to the foregoing provisions of this Act, the Board shall, in exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has framed any policy for phasing out units involved in recycling of scrap and plastic waste. 12. On behalf of the respondents, strong reliance has been placed upon sub-rule (4) of rule 18 of the SEZ Rules, it may, therefore, be germane to refer to the said rule, which to the extent the same is relevant for the present purpose, reads thus: 18. Consideration of proposals for setting up of Unit in a Special Economic Zone .- xxxx ( 4) No proposal shall be considered for: - ( a) Recycling of plastic scrap or waste: Provided that extension of Letter of Approval for an existing Unit shall be decided by the Board: 13. It is the case of the respondents that rule 18 of the SEZ Rules bars setting up of any new unit for recycling of plastic waste. However, the proviso thereto empowers the Board of Approval, an inter-ministerial body constituted under section 8 of the SEZ Act to decide the extension of validity of Letter of Approval granted to such units. It is also the case of the respondents that there is a ban on setting up of any new units for recycling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner, the case was similar to the case of other SEZ units, its unit was not granted renewal. Surprisingly, the respondent no. 2 during the said meeting held on 3rd July 2017 rejected the proposal of the petitioner without assigning any reasons. Admittedly, the petitioner was granted Letter of Permission [LoP] under the erstwhile Import-Export Policy dated 15th May 1996 for manufacturing of all types of plastic bags-Garbage collection/carry/ shopping bags, etc., and subsequently, on a request having been made by the petitioner-unit, the said LoA was also amended/broad banded to include recycling activity of worn and used clothing on 27th September 2001, after conversion of the said Free Trade Zone [FTZ] into SEZ unit with effect from 1st November 2000 and thereafter, their five-year block period was recasted from 1st November 2000 to 31st October 2005. Rule 18 of the SEZ Rules, 2006 empowers the Board of Approval which is an inter-ministerial body constituted under section 8 of the SEZ Act to decide extension of validity of LoA granted to such units. We noticed that LoA in the case of the petitioner was further renewed on 13th September 2006 for a period of five ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18. In compliance of such direction, the Development Commissioner submitted a report dated 11.7.2018, the relevant part whereof reads thus: 4. As per directions of the BoA to DC KASEZ to carry out inspection of the Unit and furnish a factual report, the Development Commissioner along with the Joint Development Commissioner and other officials of KASEZ visited the unit on 22.06.2018. During inspection of the unit, some old machinery for recycling of plastic waste and scrap such as Agglomerate Machine, Generator in covered condition etc. were found in their allotted Plot No.419-B, which are lying idle due to non-operation of the plastic business and non-renewal of their LoA. 5. Further, it is noticed from the records available with this office that the said Unit has already ordered additional new machinery like Agglomerate Machine, Blade Sharping Machine, Steel trays for collection, Extra electric motor (Heavy Duty), Electric cable, Diesel Generator set (250 KVA) at a cost of ₹ 66.80 lakhs for recycling of plastic waste and scrap from M/s Brahmani Engineering Works, Shed No.K-42, Opp. ITI, GIDC, Gandhidham (Kutch) 370201. Also, they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Board for not considering the case of the petitioners, is presumably to wriggle out of the above order passed by this court. Considering the manner in which the petitioners case has been either deferred or rejected on one ground or the other, while similarly situated parties have been granted extension of Letter of Approval, it appears that the Board for reasons best known to it is not inclined to grant approval to the petitioners without any valid reasons for such refusal. 18. In the opinion of this court, the decision of the Board taken in its meeting held on 5th October, 2018 rejecting the request of the petitioners for renewal of Letter of Approval for extension of recycling of plastic waste scrap, suffers from the vice of being discriminatory, arbitrary and capricious and flies in the face of the order dated 8th May, 2018 of this court, and cannot be sustained. 19. For the foregoing reasons, the petition succeeds and is, accordingly, allowed. The impugned decision dated 10th October, 2018 of the Board of Approval, to the extent the same relates to the petitioners herein, is hereby quashed and set aside. The request of the petitioners for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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