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TMI Blog2021 (6) TMI 1121X X X X Extracts X X X X X X X X Extracts X X X X ..... by Mr. Kamal Trivedi, learned Senior Counsel for the Private Respondent that even though the Respondent No.3 APSEZL was not under any kind of legal obligation or contractual obligation, it made an offer to Appellant - CWC to construct at the cost of APSEZL an equal size Warehouse, outside the SEZ Area for CWC for its warehousing facility which was not permitted within the SEZ Area as per the over riding legal provisions of the SEZ Act 1951 and Rules which has over riding effect as per Section 51 of the SEZ Act - The Proposal No.3 in letter dated 9.3.2019 was also conditional and it was given only if new warehouse outside SEZ area was provided by APSEZL to CWC by taking such a warehouse on rent, purportedly to facilitate immediate shifting out of CWC from the existing warehouse within SEZ area. Section 51 of the Act provides that nothing inconsistent in any other law or even in any instrument having effect by virtue of any other law shall override the provisions of this Act. The Board for Approval has been constituted under Chapter III of the said Act to approve the proposals for creating SEZ areas, while a lower authority in the form of Development Commissioner has also been cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 hand over the peaceful and vacant possession of existing warehousing facility and land of 34 Acres in question to the Respondent - APSEZL within such period of three months of the communication of the Respondent - APSEZL that new warehousing facility on the land situated outside the SEZ area is ready to be taken in possession and occupied by CWC. (iv) If the Appellant CWC fails to hand over the vacant and peaceful possession to the Respondent, even thereafter, the Respondent - APSEZL shall be free to approach this Court or the concerned Development Commissioner or the learned Single Judge or other authorities of the State for appropriate execution of these directions of this Court. (v) That regarding Proposal No.3 about underwriting of the future business loss of CWC on the basis of published tariffs or market tariffs or oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal was filed by CWC, on 11.1.2017. 2. The present Appeal was filed by the Appellant in this Court on 11.1.2017 and on 11.1.2017 itself a Coordinate Bench of this Court passed an Interim Order in favour of the Appellant- CWC permitting the Appellant-Corporation to carry on its business activity of the storing and transportation of the commodities in and from the Warehouse situated within the Special Economic Zone (SEZ) developed by Private Respondent No.2 - GAPL (APSEZL). The said Interim Order was extended from time to time. 3. On 12.1.2021, the learned Counsels submitted before the Court that the parties are trying to settle the dispute out of Court and to finalise the same, some time may be granted. Accordingly, time prayed for was allowed and the hearing was adjourned. On 28.1.2021, this Court passed a detailed order impressing upon the parties to not to delay the settlement process or else the matter may be argued on merits. The said Interim Order dated 28.1.2021 is quoted herein below: 1. The present appeal arises out of an order passed by the learned Single Judge whereby, the learned Single Judge has only issued Notice in Special Civil Application No.184 of 2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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. 5. Direct service today permitted. Order dated 26.04.2019: 1. Heard learned advocate for the parties. 2. On behalf of respondent No.2, following statement is made: Respondent No.2 undertakes to see that equivalent plot of land outside the limit of SEZ would be found out whereupon similar size of go-down will be constructed at the cost of respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3, which also takes into account the future workings and escalations of costs etc. of the appellant Central Warehousing Corporation, does not appear to be fair and may unnecessarily linger on the dispute. 6. Before us also, on the last date, i.e. on 12.01.2021, the learned counsel for the parties submitted that the parties are likely to arrive at a Settlement and that may avoid the need to decide the appeal on merits. 7. After some submissions, Mr. Maulik Nanavati, learned counsel appearing for the appellant Central Warehousing Corporation, prays for a short accommodation to take final instructions from the Managing Director of the appellant Central Warehousing Corporation about the aforesaid condition No.3 and if that can be waived and deleted, the Settlement already arrived at between the parties can be finalised as the agreed Settlement of Dispute between the parties and the appeal can be disposed of in terms of the aforesaid terms. 8. In the interest of justice, we grant said short accommodation to the learned counsel for the appellant Central Warehousing Corporation to take instructions from the Managing Director of the appellant Central Warehousing Corporation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to lease land in SEZ to CWC unless they hold a valid Letter of Approval (LOA) issued by the Development Commissioner (DC) as a SEZ Unit for carrying out authorized activities and since the CWC has failed to obtain the required LOA from the DC, they do not have a legal right to occupy and continue their business activity in the godown on the 34 Acres of land given on sub-lease by the APSEZL to them under the earlier Agreement dated 2.6.2004. Therefore, the said communication asked the Appellant - CWC to either; (a) obtain LOA from the DC as a SEZ Unit in compliance with the provisions of SEZ Act or Rules; or (b) obtain specific permission from DC to carry out the activities of warehousing etc. in the said premise in SEZ by waiving the requirement of being approved as a Unit. 7. Feeling aggrieved by the said Communication of the Private Respondent - APSEZL, the CWC approached the learned Single Judge by way of aforesaid Writ Petition (Special Civil Application No.184 of 2017) on which the aforesaid Order dated 10.1.2017 was passed by learned Single Judge only issuing Notice to the Respondents and not granting any Interim Relief to the Appellant - CWC. 8. Mr. Vikas Sing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the proposal that since they want to dedicate the said current CWC Area of 34 Acres to Liquid Cargo Business, they would make alternative arrangements for CWC and, therefore, proposed an equivalent plot in Bharat Zone Area outside this SEZ Area and even offered to construct the warehousing facility at their own cost for the Appellant - CWC on such alternative plot outside the SEZ Area for them so that CWC could shift from the SEZ Area. He also submitted that such a proposal was given by APSEZL because it did not disclose the encumbrance by way of sublease in favour of CWC under Agreement dated 2.6.2004 and obtained the Declaration as Developer under SEZ Act from the Court in 2006. He further drew the attention of the Court towards another letter dated 9.3.2017 of the Respondent - APSEZL, in which, three proposals were given to the Appellant - CWC for shifting to another warehousing facility to be constructed by Respondent - APSEZL outside the SEZ Area. The said three proposals from letter dated 9.3.2017 are quoted below for ready reference. * APSEZ to offer alternative location in Non-SEZ area of Mundra Industrial Estate of the same size ie. approx.34 acres. * APSEZ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principle to the said proposals in its Board meeting dated 12.6.2019 [Not placed on Record]. This fact is stated in the Affidavit dated 13.6.2019 of Mr.Vishnuvardhan M, Regional Manager of the Appellant-CWC working in the Regional Office of Gujarat Region vide paragraphs 5 and 6 of the said Affidavit which are quoted below for ready reference. 5. I say that prior to the statement being made by the Adani Port Special Economic Zone in the pending court proceedings, as recorded in the order dated 26.4.2019, the Chairman of Adani Port Special Economic Zone held a personal meeting with the Managing Director of the Corporation and subsequent to the meeting sent a letter containing similar proposal. A copy of the said letter is annexed herewith and marked as Annexure AA-1. 6. I say that the proposal submitted by Adani Port Special Economic Zone was included as an agenda item for discussion in the meeting of the Board of Directors of the Corporation held on 12.6.2019. The members of the board, after due deliberation, have resolved to accept the proposal in principle. The in-principle acceptance of the proposal is based on following conditions: (i) M/s. APSEZ may provide a suita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and Rules framed thereunder, namely, SEZ Rules, 2006 will prevail and the Appellant cannot claim any immunity from such compliance with this law therefore, the Respondent is entitled to even cancel its lease and prohibit its unauthorized activities as warehousing godown on said 34 Acres of land in notified SEZ Area. 16. Mr. Kamal Trivedi, learned senior counsel further submitted that though APSEZL was under no legal obligation or any contractual obligation, the Respondent offered to undertake the construction of an alternative warehousing facility outside the SEZ Area for Appellant CWC, on same size plot of land procured at its own cost, taking a fair and benevolent view so that APSEZL could to carry out its SEZ development activities in a lawful and appropriate manner in accordance provisions of the said Act and Rules. It offered to construct such alternative facility for the Appellant - CWC outside the said SEZ Area at a place chosen and selected by CWC only and despite agreeing to the same, the Appellant - CWC is now trying to unnecessarily impose upon the Respondent - APSEZL the Condition/Proposal No.3 which CWC has enlarged beyond comprehension in its Affidavit dated 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hing prevented CWC from doing so or in the alternative even to seek a waiver of such requirements from the Development Commissioner, but instead of becoming a law compliant, the Appellant, a Government of India Undertaking has chosen to involve not only the Respondent - APSEZL in this litigation but even its own Parent viz. the Central Government itself by way of filing another connected Special Civil Application No.5816 of 2017 seeking a delineation or exclusion of said 34 Acres from the SEZ Area notified already in 2006 in favour of the Respondent - APSEZL, for which, the Ministry of Commerce in its joint meeting of the parties had already decided on 10.5.2010 that it was not possible to do so. This would be clear from communication dated 19.5.2010 of the Ministry of Commerce, Government of India, New Delhi, addressed to Appellant - CWC which is quoted below for ready reference. GOVERNMENT OF INDIA MINISTRY OF COMMERCE INDUSTRY, OFFICE OF THE DEVELOPMENT COMMISSIONER, 4TH FLOOR, C WING, PORT USER S BUILDING, MUNDRA PORT AND SPECIAL ECONOMIC ZONE, MUNDRA, (KUTCH)-370 421. No.MPSEZ/03/IUA/2008-09 19.05.2010 To, M/s. Central Warehousing Corporation, Mund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on 17th January, 2017 at 04.00 PM in Room No.141, Udyog Bhavan, New Delhi under the Chairmanship of Sh. Alok Vardhan Chaturvedi, Additional Secretary, Department of Commerce on the issue request of Central Warehousing Corporation (CWC) for delineation of land occupied by it in APSEZ. List of participants is at Annexure-I 2. Explaining the background, DC, APSEZ informed that in Dec 2002, CWC had entered into MoU with APSEZ for two plots in the SEZ measuring 40 acres and 34 acres. Lease agreement for the plot for 34 acres, which is now in dispute, was signed in June 2004. CWC took possession of the same but did not get the agreement registered with the Revenue authorities. He informed that subsequently, on 23.06.2006, Mundra SEZL, now APSEZL, was notified which included the 34 acres with CWC. CWC constructed its warehouse on the piece of land. In September, 2008, DC, APSEZ issued notice to CWC for non-compliance of provisions of SEZ Act and Rules and requested APSEZL to initiate action to exclude the plots with CWC from SEZ limits. CWC, on 14.10.2008, requested APSEZ Ltd. to initiate action to exclude its both plots from the SEZ limits. Although EGoM, in Oct 2008, had decided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... delineation as there was no provision in the SEZ Act or SEZ Rules fro such delineation. It was, therefore, advised representatives of CWC to amicably sort out the issue with APSEZL by either becoming a SEZ Unit in the SEZ or become a co-developer in the SEZ after ascertaining the provisions and requirements under SEZ Unit Act, 2005 and SEZ Rules, 2006, If required, the matter may be put up before the BoA for its consideration. 6. The meeting ending with vote of thanks to the chair. 20. Mr. Trivedi, learned senior counsel therefore, submitted that these Minutes dated 17.1.2017 of Ministry have also been challenged by the Appellant - CWC in separate Special Civil Application No.5816 of 2017 against the Union of India and the Respondent -APSEZL. 21. Mr. Kamal Trivedi, drew the attention of the Court towards the SEZ Rules, 2006 particularly, Rule 7 which requires Details to be furnished for issuing of Notification for declaration of an area as Special Economic Zone which inter alia requires a Developer to give a declaration that the said area is free from all encumbrances and also Rule 18 which requires consideration of proposals for units in a Special Economic Zone and their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Appellant which is highly unreasonable and illegal. 23. We have heard learned counsel at length and given out thoughtful consideration to the rival submissions. 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 approach to remain non-compliant with law and trying to exert pressure on the private Respondent because of its own status. We fail to understand how a body corporate of the stature of CWC can have any Ego which is a vice of a human being and a juristic person, of course managed by human beings, can definitely have a better democratic and consensual decision making process at its top level. The CWC in the present case, is not only in this spree of litigation against the private Respondent - APSEZL but also against its own parent, namely, the Central Government challenging its action of not agreeing with the CWC to exclude its existing area of Warehouse from the SEZ Area, which was allotted to the private Respondent - APSEZL and is being developed by them in accordance with the provisions of SEZ Act, 2005 and Rules made thereunder just because under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SEZL, as its proposal on their part and then claim that all the three proposals as contained in letter dated 9.3.2019 were accepted by CWC in its Board Resolution dated 12.6.2019 without taking into account the subsequent letter dated 10.6.2019 of the Respondent APSEZL and still APSEZL was bound by all the three proposals. There was no consensus ad idem, a sine qua non for a valid contract as far as Proposal No.3 is concerned. However on First and Second Proposal, the parties have such a mutual consensus ad idem and therefore a valid Agreement to that extent can be said to have come into existence between them. 27. A bare perusal of the scheme of SEZ Act, 2005 would indicate that this is an overriding special law to promote exports and to create specially carved out Economic Zones within the country, which can be developed by Developer as defined in the Act and who may be either Central Government, State Government or even a private party having land available with it. Section 53 of the Act provides that the SEZ area will be deemed to be a territory outside the customs territory of India for the purpose of undertaking the authorised operations and such SEZ Area will be deemed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The other contentions raised on behalf of the Respondent including its preliminary objections may have some force but we are not required to make any comments on the same because we are leaving it open for the learned Single Judge to decide the present Writ Petition as well as the connected Writ Petition against the Union of India. 29. This Court also allowed both the parties to amicably settle the aspect of Proposal No.3, namely underwriting of future business loss of CWC by APSEZL in the matter and as the Court proceedings would indicate that on quite a few occasions, the matter was adjourned to allow the top level management meetings for both corporate bodies and to arrive at an amicable settlement but unfortunately it could not happen and that is why the present Appeal itself was required to be heard on its own merit. 30. We are therefore of the opinion that both the parties can now start working upon the mutually agreed first two proposals, namely, providing of land of the same size by the Respondent - APSEZL to Appellant CWC outside the SEZ zone at the cost of APSEZL and to construct a Warehouse of the same size at the cost of APSEZL and provide the same to CWC on mut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent APSEZL; or (b) to obtain a waiver of the conditions to comply with the provisions of SEZ Act as a SEZ Unit and the Competent Authority while considering any such application of CWC, if any filed by it, will provide opportunity of hearing to both the parties; (ii) If CWC fails to get such approval as a SEZ compliant Unit or waiver as aforesaid within aforesaid period of three months, the Respondent - APSEZL may acquire the land of the same size of approximately 34 Acres outside SEZ area as already identified and selected by CWC, for 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 previ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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