# 2 S.C.R. 1127 STATE OF GUJARAT & OTHERS v. ESSAR OIL LIMITED AND ANOTHER

- **Citation:** [2012] 2 S.C.R. 1127
- **Court:** Supreme Court of India
- **Decided:** 2012-01-17
- **Case number:** Civil Appeal No. 599 of 2012
- **Bench:** Asok Kumar Ganguly, Jagdish Singh Khehar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/2-s-c-r-1127-state-of-gujarat-others-v-essar-oil-limited-and-another-28113
- **Pages:** 37

## Headnote

A
B
Sales Tax - Tax incentive scheme - For new industrial
units - Units seeking benefit under the scheme were required C
to commence commercial production within a particular time
frame - Respondent sought to set up a new Oil refinery
project - Pipelines for the project were required to be laid
through forest land including national park and sanctuary area
- Respondent could not obtain requisite permission/licence
D
from the State Government for laying down the pipelines in
view of injunction/restraint orders passed by the High Court.
in certain PILs - High Court orders subsequently set aside
by Supreme Court and requisite permission/licence thereafter
granted to respondent -
Respondent commenced
E
commercial production, albeit after the time frame stipulated
under the incentive scheme - It filed writ petition contending
that the delay in commencement of commercial production
was on account of the injunction granted by the High Court;
that this situation continued till respondent was granted
F
permission/licence pursuant to the judgment of Supreme
Court, and therefore it was entitled to get benefit of exclusion
of the intervening period for calculating the time limit for
commencement of commercial production - High Court
excluded the intervening period and granted respondent the
benefit of the incentive scheme on the principle of restitution G
and on the ground that respondent could not be made to lose
benefit under the scheme, for an act of Court - Justification
of - Held: Not justified - Principle of restitution was not
applicable against the appellant-State Government since it
1127
-
H
1128
SUPREME COURT REPORTS
[2012] 2 S.C.R.
A was nobody's case that it received any unjust benefit or any
unjust enrichment in view of stay orders passed by the High
Court on the P/Ls - Order passed by High Court in the P/Ls
was overturned by Supreme Court on a different interpretation
of s.29 of,fhe WPA - In case of a mere erroneous judgment
8 of a Court the principle of "actus curiae" cannot be invoked -
A mere mistake or error committed by Court cannot be a
ground for restitution - The exercise undertaken by the High
Court in the impugned judgment by directing various
adjustments which virtually re-wrote the State's exemption
C scheme, was an exercise which was neither warranted in Jaw
nor supported by precedents - There was no question of
equity - Wildlife Protection Act - ss. 29 and 35.
Doctrines - Doctrine of Restitution - Principles and
applicability of - Discussed - Held: The concept of restitution
D is basically founded on the idea that when a decree is
reversed, Jaw imposes an obligation on the party who received
an unjust benefit of the erroneous decree to restitute the other
party for what the other party Jost during the period the
erroneous decree was in operation - The Court while granting
E restitution is required to restore the parties as far as possible
· to their same position as they were in at the time when the
Court by its erroneous action displaced them - A person who
has conferred a benefit upon another in compliance with a
judgment or whose property has been taken thereunder, is
F entitled to restitution if the judgment is reversed or set-aside,
unless restitution would be inequitable.
Maxims - "actus curiae neminem gravabit" - Concept
and applicability of.
G
Taxation - Sa/es tax - Exception/Exemption provision -
Interpretation of -
Held: The principle that in case of
ambiguity, a taxing statute should be construed in favour of
the assessee, does not apply to the construction of an
exception or an exempting provision, as the same have to be
H construed strictly - Further a person invoking an exception
STATE OF GUJARAT & ORS. v. ESSAR.OIL LTD 1129
AND ANR.
or an exemption provision to relieve him of the tax liability
A
must establish clearly that he is covered by the said provision
and in case of doubt or ambiguity, benefit of it must go to the
State - An exemption is a stand alone process - Either an .
industry claimi

## Text

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[2012) 2 S.C.R. 1127
STATE OF GUJARAT & OTHERS
v.
ESSAR OIL LIMITED AND ANOTHER
(Civil Appeal No. 599 of 2012)
JANUARY 17, 2012
[ASOK KUMAR GANGULY AND
JAGDISH SINGH KHEHAR, JJ.]
A
B
Sales Tax - Tax incentive scheme - For new industrial
units - Units seeking benefit under the scheme were required C
to commence commercial production within a particular time
frame - Respondent sought to set up a new Oil refinery
project - Pipelines for the project were required to be laid
through forest land including national park and sanctuary area
- Respondent could not obtain requisite permission/licence
D
from the State Government for laying down the pipelines in
view of injunction/restraint orders passed by the High Court.
in certain PILs - High Court orders subsequently set aside
by Supreme Court and requisite permission/licence thereafter
granted to respondent -
Respondent commenced
E
commercial production, albeit after the time frame stipulated
under the incentive scheme - It filed writ petition contending
that the delay in commencement of commercial production
was on account of the injunction granted by the High Court;
that this situation continued till respondent was granted
F
permission/licence pursuant to the judgment of Supreme
Court, and therefore it was entitled to get benefit of exclusion
of the intervening period for calculating the time limit for
commencement of commercial production - High Court
excluded the intervening period and granted respondent the
benefit of the incentive scheme on the principle of restitution G
and on the ground that respondent could not be made to lose
benefit under the scheme, for an act of Court - Justification
of - Held: Not justified - Principle of restitution was not
applicable against the appellant-State Government since it
1127
-
H
1128
SUPREME COURT REPORTS
[2012] 2 S.C.R.
A was nobody's case that it received any unjust benefit or any
unjust enrichment in view of stay orders passed by the High
Court on the P/Ls - Order passed by High Court in the P/Ls
was overturned by Supreme Court on a different interpretation
of s.29 of,fhe WPA - In case of a mere erroneous judgment
8 of a Court the principle of "actus curiae" cannot be invoked -
A mere mistake or error committed by Court cannot be a
ground for restitution - The exercise undertaken by the High
Court in the impugned judgment by directing various
adjustments which virtually re-wrote the State's exemption
C scheme, was an exercise which was neither warranted in Jaw
nor supported by precedents - There was no question of
equity - Wildlife Protection Act - ss. 29 and 35.
Doctrines - Doctrine of Restitution - Principles and
applicability of - Discussed - Held: The concept of restitution
D is basically founded on the idea that when a decree is
reversed, Jaw imposes an obligation on the party who received
an unjust benefit of the erroneous decree to restitute the other
party for what the other party Jost during the period the
erroneous decree was in operation - The Court while granting
E restitution is required to restore the parties as far as possible
· to their same position as they were in at the time when the
Court by its erroneous action displaced them - A person who
has conferred a benefit upon another in compliance with a
judgment or whose property has been taken thereunder, is
F entitled to restitution if the judgment is reversed or set-aside,
unless restitution would be inequitable.
Maxims - "actus curiae neminem gravabit" - Concept
and applicability of.
G
Taxation - Sa/es tax - Exception/Exemption provision -
Interpretation of -
Held: The principle that in case of
ambiguity, a taxing statute should be construed in favour of
the assessee, does not apply to the construction of an
exception or an exempting provision, as the same have to be
H construed strictly - Further a person invoking an exception
STATE OF GUJARAT & ORS. v. ESSAR.OIL LTD 1129
AND ANR.
or an exemption provision to relieve him of the tax liability
A
must establish clearly that he is covered by the said provision
and in case of doubt or ambiguity, benefit of it must go to the
State - An exemption is a stand alone process - Either an .
industry claiming exemption comes within it or it does· not.
B
In 1995, the appellant-State Government introduced
a Capital Investment Incentive Scheme which envisaged
grant of Sales Tax incentives by way of sales tax
exemption/ deferment for new industrial units. Units
seeking benefit of sales tax exemption /deferment under C
the scheme were required to commence commercial
production within a particular time frame, i.e. upto 15-82003. Respondent no.1-Essar, which sought to set up a
100% export oriented unit for refining of petroleum
products, had opted for the sales-tax deferment scheme.
It had filed application for right of way over 15.49 hectares
D
of forest land for laying pipelines for establishment of the
said oil Refinery Project. The said 15.49 hectares of forest
land included 8.79 hectares of Marine National Park and
Sanctuary. Permission under Section 2 of the Forest
Conservation Act ("FCA") was required for the entire
E
15.49 hectares, which was granted to respondent no.1.
However, respondent no.1 also required permission
of the State Government under the Wildlife Protection Act
("WPA") for the said 8.79 hectares of Marine National Park
F
and Sanctuary. But, in view of the orders of the High
Court dated 13.07.2000/ 03.08.2000 in certain Public
Interest Litigations (Plls), whereby the State Government
was restrained from granting further permission under
the WPA, Respondent no.1-Essar was not given G
permission to lay down pipelines by the State
Government.
,.
Respondent no.1-Essar challenged the said orders
of the High Court before this Court. This Court initially
stayed the High Court order insofar as Essar was
H
'1130
SUPREME COURT REPORTS
[2012] 2 S.C.R.
A concerned and ultimately set aside the judgment of High
Court and directed the State Government to issue
authorization to Essar under Sections 29 and 35 of the
Wild Life (Protection) Act after disapproving the
interpretation placed by the High Court on the provisions
B of the Wild Life (Protection) Act, 1972. Consequently, on
27-2-2004, Essar was given permission for laying pipeline
iin the National Marine Park/Sanctuary area and
~hereafter, on 26-11-2006, respondent no.1-Essar
commenced commercial production.
c
Respondent no.1 filed writ petition before the High
Court contending that the reason for delay in
commencement of commercial production was on
account of the injunction granted by the High Court on
13.07.2000 /03.08.2000; that this situation continued till
D 27.02.2004, when pursuant to the judgmentof this Court,
IEssar was granted requisite permission under the Wildlife
Protection Act; and therefore Essar was entitled to get
l:>enefit of the exclusion of the said intervening period of
from 13.07.2000 to 27.02.2004 in calculating the time limit
E for commencement of commercial production for
!Purpose of availing benefit under the said tax deferment
scheme.
The High Court excluded the aforesaid intervening
F period and granted respondent no.1 the benefit of the said
sales tax incentive scheme on two basic line of
reasoning- that the respondents were entitled to the
benefit of sales tax waiver scheme firstly on the principle
of restitution and secondly, that the respondents could
G not be made to lose benefit under the sales tax waiver
scheme, for an act of Court. Hence the present appeal.
Allowing the appeal, the Court
HELD: 1.1. The concept of restitution is basically
H founded on the idea that when a decree is reversed, law
STATE OF GUJARAT & ORS. v. ESSAR OIL LTD
1131
AND ANR.
imposes an obligation on the party who received an
A
·unjust benefit of the erroneous decree to restitute the
other party for what the other party has lost during the
period the erroneous decree was in operation. Therefore,
the Court while granting restitution is required to restore
the parties as far as possible to their same position as
8
they were in at the time when the Court by its erroneous
action displaced them. [Para 60] [1154-C-E]
1.2. The concept of restitution is virtually a common
law principle and it is a remedy against unjust enrichment
. or unjust benefit. The core of the concept lies in the
C
conscience of the Court which prevents a party from
retaining money or some benefit derived from another
which he has received by way of an erroneous decree
of Court. Such remedy in English Law is generally
different from a remedy in contract or in tort and falls
D
within a third category of common law remedy which is
called quasi contract or restitution. [Para 62] [1155-8-C]
1.3. The obligation to restitute lies on the person or
the authority that has received unjust enrichment or E
unjust benefit. [Para 63] [1155-D]
1.4. A person is enriched if he has received a benefit
and similarly a person is unjustly enriched if the retention
of the benefit would be unjust. Now the question is what
constitutes a benefit. A person confers benefit upon
another if he gives to the other possession of or some
other interest in money, land, chattels, or performs
services beneficial to or at the request of the other,
satisfies a debt or a dl,Jty of the other or in a way adds to
F
the other's security or advantage. He confers a benefit G
not only where he adds to the property of another but
also where he saves the other from expense or loss. Thus
the word "benefit" therefore denotes any form of
advantage. Ordinarily in cases of restitution if there is a
benefit to one, there is a corresponding loss to other and
H
1132
SUPREME COURT REPORTS
[2012] 2 S.C.R.
A in such cases; the benefiting party is also under a duty
to give to the losing party, the amount by which he has
been enriched. A person who has conferred a benefit
upon another in compliance with a judgment or whose
property has been taken thereunder, is entitled to
8 restitution if the judgment is reversed or set-aside, unless
restitution would be inequitable. [Paras 64, 65 and 66)
[1155-E-H; 1156-A-B]
1.5. Equity demands that if one party has not been
unjustly enriched, no order of recovery can be made
C against that party. Other situation would be when a party
acquires benefits lawfully, which are not conferred by the
party claiming restitution, Court cannot order restitution.
[Para 67) [1156-C-D]
D
Lal Bhagwant Singh v. Sri Kishen Das AIR 1953 SC 136
and Binayak Swain v. Ramesh Chandra Panigrahi and
another AIR 1966 SC 948 : 1966 SCR 24 - relied on.
Halsbury's Laws of England, Fourth Edition, Volume 9,
page 434 and Restatement of the Law of Restitution by
E American Law Institute (1937 American Law Institute
Publishers, St. Paul) - referred to.
2.1. From the facts of the case, it is debatable whether
the respondent's inability to avail benefit under the said
F Scheme is because of its own act or because of the act
of the appellant. There is a reasonable basis in the
argument of the appellant that after this Court granted the
stay order on 11.5.2001 on the special leave petition filed
by Essar, the respondents should have made an effort
G of obtaining the necessary licence by again coming to
the Court. Admittedly Essar did not do it. Essar merely
represented to the State for grant of licence. Assuming
that the State had not responded favourably to the
representation of Essar by giving the clearance, it was
H open to Essar to approach this Court for some order as
STATE OF GUJARAT & ORS. v. ESSAR OIL LTD 1133
AND ANR.
its special leave petition was pending before this Court.
A
Essar did not do it. Therefore, the question remains
whether Essar acted with due diligence in obtaining the
equitable remedy of restitution. It is well known that due
diligence must be exhibited by the party to seek equity.
[Para 68] [1156-E-G]
B
2;2. Now, if the case of Essar is taken on a higher
plain that it has done its duty even then it has been
denied of the benefit of the said scheme, even then there
is no question of restitution by the State for the simple . C
.reason that it is nobody's case that State has received
any unjust benefit or any unjust enrichment in view of
stay order given by the High Court in the Plls filed in t_he
High Court. On the contrary, it is clear from the record that
the State contested those proceedings and specially,
challenging the orders of the Gujarat High Court dated
D
13.07.2000, 18.07.2000, 20.07.2000, 27.07.2000 and
03.08.2000 on the Pl Ls, the State has filed its SLP.
Therefore, the State has not at all gained or received any
benefit as a result of the orders passed by the High Court
on the Plls. Therefore, the principle of restitution cannot
E
be applied against the State, the appellant. The judgment
of the High Court to that extent is erroneous. [Para 69]
[1156-H; 1157-A-C]
'
2.3. The principle that an act of court cannot prejudice
F
anyone, based on latin maxim "actus curiae neminem
gravabit" is also encompassed partly within the doctrine
of restitution. This actus curiae principle is founded upon
justice and good sense and is a guide for the
administration of law. [Para 70] [1157-D]
G
2.4. When Court passes an order, which is rendered
per incuriam, and the party suffered because of the
mistake of the Court, it is the Court's duty to rectify the
said mistake. It is in that context that the concept of actus
curiae can be invoked. In the instant case the order H
1134
SUPREME COURT REPORTS
[2012] 2 S.C.R.
A passed by the High Court in the Plls was overturned by
this Court by its order-dated 19.01.2004 on a different ·
interpretation of section 29 of the WPA. This Court while
giving a different interpretation of section 29 of WPA
never held that High Court acted per incuriam in
B rendering its judgment. Therefore in the case of a mere
erroneous judgment of a Court the principle of "actus
curiae" cannot be invoked. A mere mistake or error
committed by Court cannot be a ground for restitution.
[Paras 73, 74 and 77] [1158-D-F; 1159-G]
c
2.5. In the instant case, it is clear that the appellant
tiad also challenged this restraint order (passed by the
High Court) before this Court. It cannot be said by this
restraining order the appellant had gained any undue
advantage. On the contrary, twin objects of development
D of the backward areas and employment opportunities,
which were sought to be achieved by the appellant by
floating the said scheme, were adversely affected. [Para
'78] [1160-B-C]
E
2.6. No inaction on the part of appellant was pleaded
by Essar. In fact before the High Court, Essar expressly
gave up its plea of delay against the appellant. In fact the
·High Court passed the injunction order not because of
the inaction of the appellant but the said order was
F passed in a proceedings which was opposed by
appellant right upto this Court. [Para 84] (1161-H; 1162A-B]
G
A. R. Antu lay v. R. S. Na yak & another (1988) 2 SCC 602
: 1988 (1) Suppl. SCR 1 - relied on.
South Eastern Coalfields Ltd. v. State of M. P. & others
(2003) 8 sec 648 : 2003 (4) Suppl. SCR 651; Mumbai
International Airport Pvt. Ltd v. Golden Chariot Airport &
another, (2010) 10 sec 422 : 2010 (12) SCR 326; Karnataka
H Rare Earth & Anr. v. Senior Geologist, Department of Mines
STATE OF GUJARAT & ORS. v. ESSAR OIL LTD
1135
AND ANR.
& Geology and Anr., (2004) 2 SCC 783 : 2004 (1) SCR 965
A
and Bareilly Development Authority v. Methodist Church of
India & Anr. (1988) Supp SCC 174 - held inapplicable.
Hitech Electrothermics & Hydro Power Ltd. v. State of
Kera/a & Ors. (2003) 2 SCC 716: 2002 (5) Suppl. SCR 128
and /sh war Dutt v. Land Acquisition Collector & another (2005)
8
7 SCC 190: 2005 (1) Suppl. SCR 903 - distinguished.
R.S. Nayak v. A.R. Antu/ey, (1984) 2 SCC 183 : 1984
(2) SCR 495 and The State of West Bengal v. Anwar Ali
Sarkar & another AIR 1952 SC 75 : 1952 SCR 284 -
c
referred to.
Rodger v. Comptoir D'escompte De Paris, (1869-71) LR
3 PC 465 - referred to.
3.1. The principle that in case of ambiguity, a taxing
D
statute should be construed in favour of the assessee,
do.es not apply to the construction of an exception or an
exempting provision, as the same have to be construed
strictly. Further a person invoking an exception or an
exemption provision to relieve him of the tax liability must
E
establish clearly that he is covered by the said provision
and in case of doubt or ambiguity, benefit of it must go
to the State. [Para 88] (1163-A·B]
3.2. In this case, Essar was categorically told by letter
dated 28.05.2002, which is much prior to the expiry of the
F
period, that time for availing the exemption cannot be
extended. Admittedly, Essar failed to meet the deadline.
In that factual scenario, the exercise undertaken by the
High Court in the impugned judgment by directing
various adjustments which virtually re-wrote the State's G
exemption scheme, is an exercise which is neither
warranted in law nor supported by precedents. There is
no question of equity here, an exemption is a stand alone
process. Either an industry claiming exemption comes
within it or it does not. [Para 89] (1163-C-E]
H
A
B
c
D
E
F
G
H
1136
SUPREME COURT REPORTS
(2012) 2 S.C.R.
Novopan India Ltd. Hyderabad v. Collector of Central
Exercise and Customs, Hyderabacl (1994) Supp 3 SCC 606
: 1994 (3) Suppl. SCR 549 - relied on.
Union of India & others v. Wood Papers Ltd & another
(1990) 4 SCC 256 : 1990 (2) SCR 659 -
refer~ed to.
Case Law Reference:
AIR 1953 SC 136
relied on
Para 60
1966 SCR 24
relied on
Para 61
1988 (1) Suppl. SCR 1
relied on
Para 71
(1869-71) LR 3 PC 465
referred to
Para 71
1984 (2) SCR 495
referred to
Para 72
.,
1952 SCR 284
referred to
Para 72
2003 (4) Suppl. SCR651
held inapplicable Para 75
2010 (12) SCR 326
held inapplicable Para 80
2004 (1) SCR 965
held inapplicable Para 81
(1988) Supp sec 174
held inapplicable Para 82
2002 (5) Suppl. SCR 128 distinguished
- Para 83
2005 (1) Suppl. SCR 903 distinguished
Para 85
1994 (3) Suppl. SCR 549 relied on
Para 87
1990 (2) SCR 659
referred to
Para 87
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 599
of 2012.
From the Judgment & Order dated 22.04.2008 of the High
Court of Gujarat at Ahmedabad in Special Civil Application No.
24233 of 2007.
STATE OF GUJARAT & ORS. v. ESSAR OIL LTD 1137
AND ANR.
Parag M. Tripathi, ASG, Hemantika Wahi, Ena Toli Serna,
A
Mahima Gupta, Suveni Banerjee, Rojalin Pradhan for the
Appellants.
Gopal Subramanium, Dewal Banerjee, Harish N. Salve,
Mahesh Agarwal, Devansh Mehta, Neeha Nagpal, E.C.
B
Agarwala for the Respondents.
The Judgment of the Court was delivered by
GANGULY, J. 1. Leave granted.
2. This appeal is directed against the judgment of the High
Court of Gujarat dated 22.04.2008 in Special Civil Application
No.24233/2007, whereby the Respondent No; 1 herein, Essar
c
Oil Limited (hereinafter "Essar") was given the benefit of Sales
Tax incentive under the Government of Gujarat "Capital
Investment Incentive to Premier/Prestigious Unit Scheme, 1995D
2000" (hereinafter "the said Scheme")
3. The State Government in the Industries and Mines
Department vide Resolution dated 11.09.1995 introduced the
said scheme to accelerate development of the backward area
E ·
of the State and to create large-scale employment
opportunities.
4. The operative period of the said scheme was from
16.08.1995 upto 15.08.2000, during which new units have to
F
go into commercial production.
5. The Scheme envisaged grant of Sales Tax incentives
by way of Sales Tax Exemption or Sales Tax Deferment or
Composite Schemes, for Premier/Prestigious Units according
to the location, investment and status of the project. Essar fell
G
in the category of premier unit i.e. new industrial unit having a
project cost of more than Rs.1,000/- crores and employing 100
workers on a regular basis and following the employment policy
of the State Government. Clause (v) of the Scheme defined
premier unit in the following terms:-
H
1138
SUPREME COURT REPORTS
[2012] 2 S.C.R.
A
"(v) PREMIER UNIT
B
c
D
A new industrial unit or industrial complex fulfilling the
following criteria will be considered for granting status of
a "Premier Unit".
(a) The industrial unit shall have a project cost of Rs.500
crores or more. Such units having project cost of Rs.1.,000
crores and above shall be entitled for extended period to
avail incentive as provided under para 6 B.
(b) Only one unit per taluka will be eligible for the Premier
Unit status. In banned area no unit is permitted.
(c) The unit shall employ at least 100 workers on a regular
basis arid shall follow the employment policy of the State ·
Government."
6. Part II of the said Scheme provided that the rate of
incentive would depend on the location, investment and status
of the project. The incentives offered were sales-tax exemption
or sales-tax deferment or composite scheme. There is no
E dispute about the fact that Essar opted for sales-tax deferment
scheme. As per clause 6(i)(B), the rate of incentive applicable
to Essar was the rate available for the most backward area.
The extent of exemption was 125% of eligible fixed capital
F
investment.
·
7. Part II Clause (iii) (b) provided that Under the Sales Tax
Deferment incentive scheme, the recovery of sales tax
connected by the unit on sale of goods manufactured by it
including intermediate products, by products and scrap/waste
G generated as incidental to manufacturing activities and turnover
tax, leviable to Government will be deferred and amount so
deferred will be recovered in six equal annual installments by
Sales Tax Department beginning from the financial year
subsequent to the year in which the unit exhausts limit of
incentive granted to it under the scheme or after the expiry of
H
STATE OF GUJARAT & ORS. v. ESSAR OIL LTD 1139
AND ANR. [ASOK KUMAR GANGULY, J.]
relevant period or time limit during which deferment is available
A
or whichever is earlier.
8. Since Essar's investment was going to be more than
Rs.1,000 crores, the duration of incentive of sales-tax
deferment was to be for a period of 17 years from the date of
8
commercial production.
9. Clause 6(v) of the said Scheme provided for effective
steps for extending date of commercial production in the
following terms :
"6(v) Effective steps for extending date of commercial
production :
c
The unit which cannot go into commercial production
before expiry of the scheme will be allowed to go into
commercial production beyond the last date of the scheme
D
provided it has taken the following effective steps:
(1) The industrial unit should have obtained provisional
registration. as a Prestigious/Premier unit before
15th August 2000.
(2) 25% of project cost should have been incurred before
15th August 2000. The unit which has taken above
effective steps will be allowed to go into commercial
production as shown below:
(a) The unit with project cost above Rs.100 crores but
· below Rs.300 crores should go into commercial
production on or before 15th August 2002.
E
F
(b) The unit with project cost more than Rs.300 crores
G
should go into commercial production on or before
15th February 2003.
Such units shall have to apply to industries Commissioner
for extending date of commercial production by 31st August
2000."
H
1140
SUPREME COURT REPORTS
[2012] 2 S.C.R.
. A
10. A High Power State Level Committee (hereinafter
"HPSLC") was the Sanctioning Authority for granting permanent
registration of all the Prestigious/Premier Units
11. Part Ill provides the procedure for Registration for
Premier/Prestigious Status, the relevant clause of the said Part
8
in respect of instant case is set out below:
c
D
E
''An Industrial unit eligible for Prestigious/Premier status
under the scheme will apply to Industries Commissioner
in prescribed form before expiry of the scheme along with
details of following effective steps.
(i) Possession of plot or shed in GIPC Estate. For units
located outside GIDC Estate, the unit must be in legal
possession of land with valid non-agricultural use
permission of industrial use or as per Revenue Act as
modified from time to time.
(ii) The Letter of intent/Letter of Approval or Registration/
obtained receipt against filling of IEM to the appropriate
authority.
(iii) NOC of GPCB (Gujarat Pollution Control Board)
(iv)_ Detailed Project Report.
The following procedure will be adopted for granting the
F
temporary and permanent Prestigious/Premier registration.
G
H
(a) The Industries Commissioner shall give provisional
registration to the eligible prestigious/premier unit after
approval of committee where applicable.
(b) The eligible unit after completion of project will apply
to Industries Commissioner for permanent prestigious/
premier registration, Industries Commissioner will carryout
the assets verification and submit a verification report to
the High Power State Level Committee, for granting
permanent rE'.gistration."
STATE OF GUJARAT & ORS. v. ESSAR OIL LTD 1141
AND ANR. [ASOK KUMAR GANGULY, J.]
12. Some relevant facts which arose prior to the floating
A
of the Scheme and which are necessary for appreciating the
said Scheme, as contended by Essar and which the records
also shows, are as under.
13. Essar was encouraged by the State Government to set
B
up a major venture at Vadinar in Jamnagar District of Gujarat
as a 100% export oriented unit for refining of petroleum
products with a capacity of 9 Million Tons per annum at an
estimated project cost of Rs. 1900 crores in collaboration with
M/s Bechtel Inc., USA.
14. By letter dated 11th April, 1990, the then Chief Minister
c
of the State of Gujarat wrote to the Ministry of Planning,
Government of India, stating that the project was expected to
generate foreign exchange earnings of over Rs.3000 crores
within a period of 5 years and that it was expected to be set
D
up in 36 months. It was anticipated by the State Government
. that the project would "completely change the face of the
Vadinar area, which is traditionally a backward area of Gujarat
offering· direct and indirect employment and will encourage
growth of various other ancillary industries in that region". The
E
letter further said that the project had the full support of the
Government of Gujarat and it was being accorded highest
priority and that Essar's proposal for setting up the oil refinery
should be cleared by the Government of India urgently. The
clearance for setting up the oil refinery was then granted by the
F
Government of India.
15. In January, 1993, Essar applied to the Gujarat Pollution
Control Board (GPCB) for grant of a 'No Objection Certificate'
to establish the refinery for manufacturing several kinds of
petroleum products. By letter dated 15th February, 1993, the
G
GPCB stated that it had no objection from the Environmental
Pollution potential point of view in the setting up of the refinery
project subject to certain environmental pollution control
measures to be taken by the appellant. Essar's !Jroposal
regarding the environmental pollution control system was
H
1142
SUPREME COURT REPORTS
[2012] 2 S.C.R.
A approved by the GPCB on 17th April, 1993 and a Site
Clearance Certificate was issued on that date.
16. On 10.11.1994, Essar filed an application for right of
way over 15.49 hectares of forest land for laying Submarine
B Crude Oil Pipeline, Cooling Water/Return Water Pipeline and
Product Jetty for establishment of its Refinery Project at
Vadinar, District Jamnagar, to the Conservator of Forests,
Marine National Park, Jamnagar. Undisputedly, 15.49 hectares
of forest land applied for includes 8.79 hectares of Jamnagar
C Marine National Park and Sanctuary. Therefore, permission
under Section 2 of the Forest Conservation Act ("FCA") was
required for the entire 15.49 hectares. At the same time,
pennission of State Government was required under the Wildlife
Protection Act ("WPA") for 8. 79 hectares.
D
17. On 13.02.1995, the State Government requested the
Chief Conservator of Forests, Regional Office, Western
Region, Bhopal, to move the Government of India to issue
suitable orders to allow Essar to make geophysical survey in
Marine National Park/Sanctuary area. The proposal was
E forwarded by the Chief Conservator of Forests, Bhopal to the
Government of India on 15.05.1995.
18. The Conservator of Forests recommended and
forwarded the proposal of Essar for Right of Way to the Chief
Conservator of Forests (WL) by letter dated 2nd June, 1995
F along with an application in the prescribed form seeking prior
approval from the Central Government under Section 2 of FCA.
The application with its enclosures together with the
rec:ommendation of the State Government that 15.49 hectares
of forest land be made available to the appellant, was
G forwarded to the Central Government by the Central Chief
Conservator of Forests on 3rd February, 1997. Upon receipt
of the proposal of the State Government, the Central
Government constituted a team for joint inspection of the area.
The report of the joint inspection team was that the proposed
H activity of the appellant would not have much ramification from
STATE OF GUJARAT & ORS. v. ESSAR OIL LTD
1143
AND ANR. [ASOK KUMAR GANGULY, J.]
the forestry point of view and the damage would only be
A
temporary in nature in a localized area during the construction
phase.
19. On 08.09.1995, the State Government in its Forests
and Environment Department informed the Government of India
B
in the Ministry of Environment and Forests, inter alia, that the
approval "in principle" was granted to Essar to install Single
Buoy Mooring I Crude Oil Terminal I Jetty and connecting
pipeline in the National Marine Park and Sanctuary area in
Vadinar, District Jamnagar on the terms and conditions to be
C
decided in due course by the State Government.
20. On 11.09.1995 the said Scheme was announced and
thereafter on 01.02.1996 Essar applied in the new format to
the Industries Commissioner, Gandhinagar for registering the
Industrial Undertaking as a "Premier/Prestigious Unit" under the
D
said Scheme.
21. On 29.05.1996 the Forest and Environment
Department, State of Gujarat made a proposal to Government
of India seeking approval under Section 2 of FCA for diversion
of 15.49 hectares of forest land for construction and operation
of certain offshore and onshore facilities for a grass root refinery
project of Essar.
E
22. On the basis of the letter-dated 30.09.1997 of the
Principal Chief Conservator of Forests, the State Government
F
conveyed on 16.10.1997 its permission under section 29 of
WPA to Essar's proposal of right to way through the National
Park and Sanctuary subject to Essar's compliance with certain
terms and conditions including obtaining permission of the
Central Government under the FCA, 1980. (which was granted
G
on 08.12.1999, mentioned later) and also getting clearance
under the Coastal Regulation Zone (CRZ) Regulations, which
was granted on 03.11.2000.
23. This permission was conveyed to Essar by the
H
1144
SUPREME COURT REPORTS
[2012] 2 S.C.R.
A Conservator of Forests under cover of his letter-dated
18.10.1997. The permission was, however, restricted to the
Kandla Port Trust area. Kandla Port Trust granted permission
to Essar to install "marine facilities" on 10.10.1997.
8
24. On 27.11.1997 the Ministry of Environment & Forest,
Government of India granted "in-principle" approval to Essar
under FCA, 1980 for diverting 15.49 hectares of forest land for
non-forest purpose.
25. On 25.06.1999 Essar was issued the provisional
C Premier Registration Certificate by the Industries
Commissioner. The provisional certificate was valid upto
15.08.2000 i.e. the last date of Scheme, within this time period
Essar was obliged to start commercial production, failing which
Essar would have to apply for extension of date of commercial
D production.
26. In the meantime in view of the permissions granted to
install "marine facilities", Essar started construction work of
laying of water in-take jetty and product jetty in the forest area
E of Marine National Park and Marine Sanctuary. Essar's
grievances ~re that despite the aforesaid permissions being
given to them for construction, the State Forest Department
forced Essar to stop work and further lodged on 19.3.1999 a
criminal complaint against Essar and its contractor, for offence
F committed under sections 17(A), 29, 35(6), 51 (1) and 58 of the
WPA and section 26 of the Indian Forests Act.
.. 27. In April 1999, a writ petition being Special Civil
Application No.2840/1999 in the nature of Public Interest
Litigation was filed before the High Court of Gujarat by one
G Halar Utkarsh Samiti (hereinafter "Samiti") alleging serious
violations of several environmental legislations on the part of
Essar, who was impleaded as Respondent No.4 in the petition.
28. By interim order-dated 20.04.1999 passed in that PIL
High Court directed Essar not to carry on any construction
H activity in the Marine National Sanctuary and Marine National
STATE OF GUJARAT & ORS. v. ESSAR OIL LTD 1145
AND ANR [ASOK KUMAR GANGULY, J.]
Park in violation of the statutory provisions including the
A
· provisions contained in Wildlife (Protection) Act, 1972.
29; By order-dated 20.08.1999 the High Court disposed
of the said PIL in which Essar undertook to file an Undertaking
to the effect that they would not carry out any construction
activities at the site in question, without obtaining the approval
from the authorities. Pursuant to the said order. on 28.09.1999
Essar filed an undertaking to the following effect:
B
" ... no construction activities or marine facilities will be
undertaken without obtaining the approval from the
C
authorities including those which are under process before
the authorities.
This undertaking is given without prejudice to the rights and
contentions of the Respondent No.4.
D
This undertaking will come to an end as and when the
permission is granted by the authorities."
30. In the meantime on 09.09.1999, a charge sheet was
filed against the officers of Essar and its contractor in respect
E
of earlier mentioned offences allegedly committed by them
under the WPA and FCA.
31. On 08.12.1999 the Ministry of Environment and Forest,
Government of India granted approval under section 2 of the
FCA for the total land of 15.49 hectares of forest land.
F
32. In April 2000, said Samiti filed another PIL being
Special Civil Application No.1778, and subsequently two other
PILs were also filed by one Jan Sangarsh Manch and one Shri
Alpesh Y. Kogje, being Civil Application Nos.5476 and 5928
G
of 2000, (hereinafter "second PILs") in the High Court of Gujarat
challenging, inter alia, the permission granted by the State
Government to one Bharat Oman Refineries Ltd. ('BORL') to
lay pipeline in the Marine National Park and Sanctuary Area. It
H
1146
SUPREME COURT REPORTS
[2012] 2 S.C.R.
A
is pertinent to note here that Essar was not a party to these
petitions.
33. On 29.04.2000 the Government of Gujarat
discontinued the said Scheme with effect from 01.01.2000.
8
However, vide the same Government Resolution dated
29.04.2000, it was specifically mentioned that industry units in
pipelines cases which have been registered should start
production within two years from January 1, 2000 failing which
such units shall be rendered ineligible for sales tax incentive.
Therefore, the time to start commercial production was thus
C
extended to 01.01.2002. It is common ground that Essar, being
a registered unit, was entitled to the benefit of the said
extension.
34. Before the High Court, when proceedings in respect
D of the second Pl Ls were going on, the counsel of Government
of Gujarat placed a copy of the letter-dated 25.07.2000.
Relying on the letter, the High Court noted that there were tWo
more pending proposals for laying pipeline in the Marine Park/
Sanctuary Area with the State Government - one from Essar
E
and the other from one Gujarat Poshitra Port Ltd.
35. Before the High Court, the State Government
submitted that the proposal from Essar for laying down
pipelines in Marine National Park and Marine Sanctuary,
Vadinar in Jamnagar District has been only approved 'in
F
principle' vide letter-dated 08.09.1995. However, formal
sanction under section 29 of the WPA, 1972 is yet to be given
by the State Government.
36. By judgment and order dated 13.07.2000, 18.07.2000,
G 20.07.2000, 27.07.2000 and 03.08.2000 the High Court, in the
second Plls, restrained the Government of Gujarat from
granting any more authorization and permission for laying
down any pipeline in any part of the sanctuary or the national
park. As a result of this order, Essar was not given permission
H to lay down pipelines by the State Government.
STATE OF GUJARAT & ORS. v. ESSAR OIL LTD
1147
ANIJ ANR. [ASOK KUMAR GANGULY, J.]
37. Being aggrieved, inter alia, on the ground that it was
A
. , not a party to the second PILs, Essar filed a review/recall
application before the High Court being MCA No.250 of 2011
in SCA No.1778 of 2000, inter alia, seeking review and recall
of the judgment and order dated 13.07.2000, 18.07.2000,
20.07.2000, 27.07.2000 and 03.08.2000 passed in the second
B
PILs by the High Court and a further declaration to the effect
that Essar's project at Vadinar was not affected in any manner
by the said judgment.
38. By judgment and order dated 23.02.2001 the High
Court rejected the said application for review on the ground that
C
there was a factual controversy between Essar and the State
Government and that therefore the grievance of Essar was
beyond the scope of review.
39. Meanwhile, on 12.04.2001 the Government of Gujarat
D
extended the time for going into commercial production upto
15.08.2003 for various pipeline units including Essar, vide
Government Resolution dated 12.04.2001. By that time Essar
had obtained Provisional Premier Unit Registration before
15.08.2000 and had also incurred 25% of the Project Cost
E
before 15.08.2000 and therefore, it was entitled to the benefit
of this extension.
40. Essar challenged the aforesaid judgment and order
dated 13.07.2000, 18.07.2000, 20.07.2000, 27.07.2000,
03.08.2000 and 23.02.2001 of the High Court delivered in the
F
second PILs and the rejection of its review petition in that
second Pl Ls respectively by way of filing Special Level Petition
being (SLP) CC No.3654 of 2001 [later SLP No.9454-9455
of 2001] before this Hon'ble Court.
41. By interim order-dated 11.05.2001 this Court granted
stay of. the judgment of the High Court in so far as Essar was
concerned in SLP No.9454-9455 of 2001 i.e. SLP filed by
Essar. The text of the order of this Court is set out:
G
H
1148
SUPREME COURT REPORTS
[2012.] 2 S.C.R.
A
"Permission to file Special Leave Petition is granted.
B
Issue notice.
Stay of the High Court judgment in so far as the petitioner
is concerned.
Counter affidavit be filed within four weeks. Rejoinder be
filed within four weeks thereafter. List after eight weeks."
42. In view of the above stay order granted by this Court,
C Essar moved the State Government for permitting it to proceed
with the construction of jetty and laying the pipeline. By letter
dated 29.10.2001, the State Government in the Forests and
Environment Department specifically called Essar to ensure that
no construction activities were commenced before obtaining all
necessary clearances from different Government departments,
D agencies and the conditions stipulated by the Ministry of
Environment and Forests, Government of India as well as the
Forests and Environment Department of the State Government
were strictly complied with. However, Essar did not commence
the construction of jetty or laying down the pipeline in the
E National Marine Park/Sanctuary area. One thing which is of
some importance is that despite the stay of this Court and the
Government letter dated 29.10.2001, Essar did not challenge
the Government stand in the pending special leave petition filed
F
by it in this Court.
43.