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TMI Blog2022 (10) TMI 465X X X X Extracts X X X X X X X X Extracts X X X X ..... uld not be able to get gate passes for the SEZ until the appellant-CWC either (a) obtains a Letter of Approval (LOA) from Development Commissioner (DC) as a SEZ Unit in compliance with the provisions of SEZ Act/Rules; or, (b) obtains specific permission from DC to carry out the activities of warehousing stuffing etc. in the said premises in the SEZ by waiving the requirement of being approved as an SEZ-compliant Unit - The CVC has clearly observed that due to the presence of CWC warehouse, various kinds of developmental activities have been undertaken by other related government undertakings like Railway etc. It has further been observed that by shifting the warehouse to another place, GAPL will be unduly benefited and at the same time, the appellant-CWC will not only lose business but will also have to struggle afresh in creating the same kind of infrastructure at the new location. The CVC further observed that there could be a vested interest in shifting of the CWC warehouse. The High Court ought to have taken into consideration that the appellant-CWC was a statutory body. There are already observations made by the CVC as early as in the year 2010 that the swapping of the wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the construction of a Warehouse facility for the Appellant CWC of approximately same size as agreed between the parties under Proposal Nos.1 and 2 in the letter dated 9.3.2019 and affirmed by subsequent correspondence and Board Resolution dated 12.6.2019 of CWC and the Affidavits of the parties filed in this Court. Such acquisition of land and construction of warehouse by the Respondent - APSEZL may be completed within a period of one year after the expiry of aforesaid period of three months in Clause (i) above and same may be offered to CWC to be occupied by the Appellant - CWC on such terms and conditions in consonance with the previous Agreement between the parties vide Lease Agreement dated 2.6.2004 or under such mutually agreed terms as may be agreed afresh between the parties. (iii) Once the completed construction on the land outside the SEZ Area, already identified and selected by CWC, is offered to the Appellant - CWC, the Appellant - CWC shall vacate the existing premises of the warehousing facility on the said 34 acres of land situated within SEZ area within three months of such communication of the Respondent - APSEZL and the Appellant - CWC shall be bound to han ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly selected by CWC subject to the time-frame prescribed in the present Judgment. 4. Being aggrieved by the aforesaid directions, the appellant-Central Warehousing Corporation (for short, CWC ) has approached this Court. 5. The facts in brief giving rise to the present appeals are as under: The appellant-CWC was set up by the Government of India in the year 1957 to provide support to the agricultural sector by operating warehouses and Container Freight Stations across the country. In the year 1962, the Warehousing Corporation Act, 1962 (for short, 1962 Act ) came to be enacted. As such, the appellant-CWC became a statutory Corporation under the 1962 Act. In the year 2000-2001, the Gujarat Maritime Board (for short, GMB ) executed a Lease and Possession Agreement, thereby granting lease of an undeveloped land within New Mundra Port Limits to Gujarat Adani Port Limited (for short, GAPL ). The said lease was granted for a period of 30 years. Vide the said agreement, GMB also granted development rights under a Concession Agreement dated 17th February 2001 to GAPL to develop the port and other facilities. 6. By an agreement dated 2nd June 2004, GAPL sub-leased a pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge of the High Court did not grant an interim relief while issuing notice, the appellant-CWC filed LPA No. 22 of 2017. In the said LPA, vide order dated 11th January 2017, the Division Bench of the High Court had granted an ad-interim relief and directed the respondents to allow the appellant-CWC to carry out the activities of storing and transportation of its commodities to and from the warehouse. The respondents were also directed to issue gate passes for transportation till the next date of hearing. 10. It further appears from the record that, in the meantime, the request of the appellant-CWC for delineation/denotification of the 34 acres of land in its possession from the SEZ area, which was pending consideration, was considered by the Ministry of C I in its meeting held on 17th January 2017, wherein it was decided to reject the said request of the appellant-CWC to delineate/denotify the said land. The said communication was communicated to the appellant-CWC on 25th January 2017. Being aggrieved thereby, the appellant-CWC filed the second writ petition being SCA No. 5816 of 2017 before the High Court. 11. It appears that thereafter, the said LPA came up for hearing befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a certificate from the State Government or the authorized agency that the said area is free from all encumbrances. It is submitted that, as per sub-rule (2) of Rule 7 of the SEZ Rules, the identified area is required to be contiguous and vacant. He submitted that APSEZL has suppressed the material fact that the possession of the said area of 34 acres was not with it but with the appellant-CWC. He submitted that, had this fact been brought to the notice of the authorities, the area in possession of the appellant-CWC could not have been included in the SEZ areas. 15. Shri Maninder Singh submitted that from Clause 2.1 of the agreement dated 2nd June 2004 itself, it is clear that the warehousing infrastructure and the leased premises was required to be set up by the appellant-CWC in accordance with the plan as approved by APSEZL (then GAPL). It is submitted that, in accordance with the said clause, the appellant-CWC had submitted plans on 25th July 2006. The said plans were duly approved by the then GAPL. It is submitted that, in addition to the aforesaid, the then GAPL has itself been using the warehousing facilities provided by the appellant-CWC from the year 2006 onwards. 16. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant-CWC for delineation/denotification of the said land from SEZ areas vide its order dated 17th January 2017 is itself under a cloud of doubt. He submitted that, in SCA No. 184 of 2017, the notice was issued on 10th January 2017 returnable on 17th January 2017. However, by the Minutes of the Meeting of the Ministry of C I passed on the very same day, the said proposal was rejected. It is seen that the conduct of the Ministry of C I in deciding the matter on the very same day on which notice was made returnable, speaks volumes of its conduct. 19. Shri Divan, on the contrary, submitted that insofar as the writ petition being SCA No. 184 of 2017 is concerned, the same is not at all tenable. He submitted that APSEZL is not a public body and as such, a writ against it would not be tenable. It is submitted that insofar as the second writ petition being SCA No. 5816 of 2017 is concerned, no effective hearing has taken place in the said proceedings. Shri Divan further submitted that there is no challenge made by the appellant-CWC to the notification dated 23rd June 2006. The said notification has been issued in accordance with the provisions of the SEZ Act. He submitted that the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the plot in question. The same has already been rejected by the Development Commissioner by its order dated 7th September 2021. He therefore submitted that, as a matter of fact, nothing survives in the present proceedings. 24. Insofar as the contention of the appellant-CWC with regard to non-compliance with the provisions of Rule 7 of the SEZ Rules, it is submitted that the application was made by the then GAPL under the old regime on 9th January 2004. The same was approved on 12th February 2004. The notification was issued on 5th July 2004. As such, the SEZ Act, which has come into effect in the year 2005 and the SEZ Rules in the year 2006, would not be applicable. It is therefore submitted that the arguments advanced on that behalf are without substance. 25. Shri Divan submitted that, though APSEZL was not duty bound to provide an alternate site to the appellant-CWC, it gratuitously agreed to give to the appellant-CWC an alternate site of the same size. Not only that, it also agreed to construct the Godowns of the same size as were in existence. As such, the directions, which were issued are, in fact, for the benefit of the appellant-CWC and there is no reason as to why t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the said writ petition, the appellant-CWC preferred LPA No. 22 of 2017, wherein the Division Bench has passed the order dated 11th January 2017, which reads thus: 4. In the communication dated 5th January 2007, reference is made to Rule 11(5) and Rule 11(7) of the SEZ Rules, applicability or otherwise of the said Rules is a matter which is required to be considered in the petition pending before the learned single Judge. As it is the case of the appellant that since 2005, the appellant Corporation is using the leased area after making constructions for storage and for transportation of food grains, if abruptly they are stopped from using the same, public interest will suffer. In view of the same, by way of ad-interim relief, the respondents are directed to allow the appellant-Corporation to carry out the activity of storing and transportation of their commodities in and from the warehouse. The respondents are further directed to issue necessary gate passes for transportation till the next date of hearing. 28. It appears that after the notice was issued in SCA No. 184 of 2017 which was returnable on 17th January 2017, a meeting was held between the Development Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... age and therefore CWC had to approach Hon ble High Court for stay. CWC representatives therefore reiterated that since they are having an agreement of 30 years lease from APSEZ, they are a Central Government PSU, they have already invested more than Rs. 60 cr. in warehouse and they are operating peacefully, they should be allowed to do business from the warehouse within the SEZ. 4. The representatives of APSEZL informed that as per the agreement entered with the CWC, 30 year agreement had to be registered within four months without penalty and within 8 months with penalty. CWC had not taken any action for getting the agreement registered within the said period and therefore the agreement had become null and void. It was stated that APSEZ was willing to give alternative plot to CWC for creating a new warehouse and also that it had explored the possibility of delineation and de-notification of the area in possession with CWC. However the same was not feasible. 5. It was made clear that there was no possibility of any delineation as there was no provision in the SEZ Act or SEZ Rules for such delineation. It was, therefore, advised representatives of CWC to amicably sort out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed that by shifting the warehouse to another place, GAPL will be unduly benefited and at the same time, the appellant-CWC will not only lose business but will also have to struggle afresh in creating the same kind of infrastructure at the new location. The CVC further observed that there could be a vested interest in shifting of the CWC warehouse. 32. It is further to be noted that, though the Ministry of C I has been taking a stand that the delineation/denotification was not permissible, another Ministry of the Union of India has been taking a contrary stand. It will be relevant to refer to the communication addressed by the Ministry of CAF PD dated 31st July 2017, thereby specifying the stand to be taken on its behalf, as thus: (i) With regard to non registration of the agreement dated 02.06.2004 between GAPL and CWC, it has been informed by CWC that the land was physically banded over by GAPL to CWC on 01.10.2004 and thereafter, CWC started construction of warehouse on the land. CWC has been paying lease rent and GAPL has been accepting the same. Even GAPL has stored its cargo in the godowns of CWC on the same plot of land. Thus the lease has existed by virtue of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -lineation, the Department of Food and PD is of the view that the stand of Department of Commerce is not correct. In fact, there are provisions for de-lineation/partial de-notification of areas within SEZ which have been circulated by Department of Commerce vide letter No. D.J2/4S/2009-SEZ dated 13.09.2013 (Annexure-3). However, as per these provisions, it is the responsibility of the developer i.e. APSEZL to take action for such de-lineation or partial de-notification. There is precedent for such partial de-notification, which has taken place in the SEZ at Jamnagar on the initiative of the Developer (M/s Reliance Industries) at that SEZ, as per newspaper report in The Hindu Business Line published on 18.01.2013(Annexure-4). Thus, it is apparent that APSEZL first included the sub-leased premises of CWC in SEZ by suppressing the facts and now it is not taking action for de-notification of the same premises. Additional Point APSEZL has not only suppressing the facts by including CWC's premises in the SEZ Area, but also has attempted several times to take possession of CWC's plot by offering CWC alternate land far away from Mundra port. The value of CWC's plo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that there was no possibility of delineation/denotification was not a correct stand. It is also stated that there are also precedents of such partial denotifications taking place. It has been stated that the value of the plot of the appellant-CWC has appreciated several times due to development around it and the alternate land is not only of low value but also less suitable from a business point of view. It is stated that the appellant-CWC has also not agreed to this proposal for alternate land due to serious financial implications. A reference has also been made to the office memorandum of the CVC dated 12th January 2010 referred to hereinabove. 34. It is further pertinent to note that, in the meantime, being aggrieved by the Minutes of the Meeting dated 17th January 2017, the appellant-CWC had preferred the second writ petition being SCA No. 5816 of 2017 before the High Court. The prayers of the said writ petition read thus: (a) To issue a writ of certiorari or a writ, order or direction in the nature of certiorari quashing and setting aside the decision taken by the Ministry of Commerce in a meeting held on 17.01.2017, as communicated to the petitioner Corporation under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant-CWC by taking the warehouse to a new location on rent as per the published tariff of the appellant-CWC for the balance period of lease, and the same was accepted by the appellant-CWC only with a rider that APSEZL shall sign an agreement giving a suitable amount of bank guarantee to the said effect. 39. However, after a period of almost three months, APSEZL retracted from its proposal dated 9th March 2019 vide its communication dated 10th June 2019, which reads thus: Dear Sir, This has reference to our letter dated March 9, 2019 and your reply dated April 4, 2019, subsequently our teams have been working together for last 3 months in order to arrive at a mutually beneficial solution. With reference to our letter dated March 9,2019 wherein, along with offering an alternate location for relocation of your existing facility we had suggested to underwrite the revenue risk for CWC for the warehouse at new location on rent. We would like to clarify that such underwriting of revenue risk should be done based on Market rates which can be mutually worked out as the existing published tariff is too high when compared to the market rates of similar type of warehouse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and if the said settlement is not agreeable to the appellant Central Warehousing Corporation, an Affidavit of the Managing Director of the appellant Central Warehousing Corporation disclosing the reasons for the same may be submitted, on which, appropriate orders may be passed by this Court on next date. 45. The High Court, in effect, forces the MD of the appellant-CWC, which is a statutory body, to accept the first two conditions and leave the 3rd condition to be settled mutually through mediation. The offer given by APSEZL on 9th March 2019 was a composite one so also the acceptance thereof by the appellant-CWC was a composite one. The acceptance of the first two conditions was also dependent upon the 3rd condition. If the High Court was so concerned about settlement of the dispute, then, while compelling the appellant-CWC to accept the first two conditions, it also ought to have compelled APSEZL to accept the 3rd condition. 46. The Division Bench of the High Court, in paragraph (24), observed thus: 24. We are little surprised and also pained at the reticent attitude of the Appellant - CWC, a Central Government Undertaking to have an insistent and persistent appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not have been thrust upon a statutory Corporation to its detriment and to the advantage of a private entity. 48. In any event, the writ petitions before the learned Single Judge are very much pending. If the impugned order of the High Court remains in force, there remains nothing to be decided in the said writ petitions. The question as to whether the first writ petition is tenable or not will be a question that will have to be decided by the learned Single Judge. Undisputedly, the second writ petition which seeks a relief against the statutory authorities is very much tenable in law. We are of the considered view that the best course available with the Division Bench was to direct the learned Single Judge to decide the petition on its merits. 49. We are therefore of the considered view that the impugned judgment and order of the High Court dated 30th June 2021 is not sustainable in law. 50. Before we part with the judgment, an important issue has invited our concern. The stands taken by two ministries of the Union of India are diagonally opposite to each other. On one hand, the Ministry of C I has held that the delineation/denotification as sought by the appellant-CW ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as only one policy. The departments are to implement the government policy and not their own policy 53. We, therefore, impress upon the Union of India to evolve a mechanism to ensure that whenever such conflicting stands are taken by different departments, they should be resolved at the governmental level itself. 54. We, therefore, direct the Registry to furnish a copy of this judgment to the learned Attorney General for India to use his good offices and do the needful. 55. In the result, we pass the following order: (i) The appeals are allowed; (ii) The judgment and order dated 30th June 2021 passed by the Division Bench of the High Court in LPA No. 22 of 2017 in SCA No. 184 of 2017 with SCA No. 5816 of 2017 is quashed and set aside; (iii) The SCA Nos. 184 and 5816 of 2017 are remitted back to the learned Single Judge of the High Court for consideration afresh, to be decided as expeditiously as possible and preferably within a period of six months from the date of this judgment. 56. Until further orders are passed by the learned Single Judge, the interim order dated 26th April 2019 passed by the Division Bench in LPA No. 22 of 2017 shall continue to operat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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