# CENTRAL WAREHOUSING CORPORATION v. ADANI PORTS SPECIAL ECONOMIC ZONE LIMITED

- **Citation:** [2022] 9 S.C.R. 1003
- **Court:** Supreme Court of India
- **Decided:** 2022-10-13
- **Case number:** Civil Appeal Nos.7277-7278 of 2022
- **Bench:** B. R. Gavai, C. T. Ravikumar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/central-warehousing-corporation-v-adani-ports-special-economic-zone-limited-36548
- **Pages:** 28

## Headnote

Infrastructure Project - Special Economic Zone - Gujrat
Maritime Board (GMB) executed Lease and Possession Agreement
thereby granting lease of undeveloped land to Gujarat Adani Port
Limited (GAPL) for 30 years - GMB also granted development rights
under a Concession Agreement to GAPL to develop port and other
facilities - GAPL vide agreement dated 2nd June, 2004 sub-leased a
plot of land admeasuring about 34 acres to appellant-CWC, a
statutory Corporation under the 1962 Act, for setting up a warehouse
for storage and handling of foodgrains, notified commodities and
related activities - CWC set up two Godowns and also made
payments for development of infrastructure - Meanwhile, the
Special Economic Zones Act, 2005 came into force and vast area of
the leased land came to be notified as a Special Economic Zone
(SEZ) vide notification issued by Ministry of Commerce and Industry,
Government of India (Ministry of C & I) - Appellant-CWC made
representation to Ministry of C & I for de-notification of said 34
acres of land from the SEZ - Meanwhile, respondent no.1-Adani
Ports Special Economic Zone Limited (APSEZL) addressed
communication to appellant-CWC informing that it would not permit
the latter to continue warehouse activities and declined to issue
gate pass for transportation stating that it had violated conditions
enumerated in agreement dated 2nd June, 2004 - CWC filed writ
petition - Single Judge of the High Court did not grant interim
relief while issuing notice - CWC filed LPA - Division Bench granted
ad-interim relief and directed respondents to allow CWC to carry
out activities and to issue gate pass for transportation - In the
meantime, request of CWC for delineation / de-notification of 34
acres of land rejected by Ministry of C & I - Appellant filed another
writ petition - Attempts made by parties to amicably settle the matter
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- Proposal for settlement made by APSEZL that equivalent plot of
land outside the SEZ zone would be earmarked, whereupon a
godown of similar size would be constructed - Board of Directors
of CWC accepted the settlement proposal on three conditions -
APSEZL agreed on all the three conditions - However, it unilaterally
resiled from the 3rd condition subsequently - Both parties thereafter
informed the High Court that settlement was not possible - High
Court held that though CWC was bound by the first two conditions
as agreed between the parties, the second respondent was not bound
by the 3rd condition offered by APSEZL and subsequently retracted
by it - High Court held that, since there was a consensus on the
first two conditions and no consensus on the 3rd condition, CWC
was bound by the first two conditions and insofar as the 3rd
condition was concerned, it was open for the parties to settle the
same amicably between themselves or through mediation - On
appeal, held: Approach adopted by High Court was not tenable -
Offer given by respondent no.1-APSEZL was a composite one so
also acceptance thereof by appellant-CWC was also composite -
Acceptance of the first two conditions was also dependent upon the
third condition - If High Court was so concerned about settlement
of the dispute, then, while compelling appellant-CWC to accept the
first two conditions, it also ought to have compelled respondent
no.1-APSEZL to accept the third condition - When an issue involved
the balancing of interests of a statutory Corporation and a private
company, the approach of the High Court ought to have been
balanced - The High Court ought to have taken into consideration
that, unless all the three conditions were complied with, the interest
of appellant-CWC, which is a statutory Corporation, could not have
been safeguarded - Judgment of High Court not sustainable -
Warehousing Corporation Act, 1962.
Statutory Corporation - Dispute between statutory
corporation and a private entity - Settlement - Effect of - Held:
Unless the settlement arrived is found to be in

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 [2022] 9 S.C.R. 1003
1003
CENTRAL WAREHOUSING CORPORATION
v.
ADANI PORTS SPECIAL ECONOMIC ZONE LIMITED
(APSEZL) AND OTHERS
(Civil Appeal Nos.7277-7278 of 2022)
OCTOBER 13, 2022
[B. R. GAVAI AND C. T. RAVIKUMAR, JJ.]
Infrastructure Project - Special Economic Zone - Gujrat
Maritime Board (GMB) executed Lease and Possession Agreement
thereby granting lease of undeveloped land to Gujarat Adani Port
Limited (GAPL) for 30 years - GMB also granted development rights
under a Concession Agreement to GAPL to develop port and other
facilities - GAPL vide agreement dated 2nd June, 2004 sub-leased a
plot of land admeasuring about 34 acres to appellant-CWC, a
statutory Corporation under the 1962 Act, for setting up a warehouse
for storage and handling of foodgrains, notified commodities and
related activities - CWC set up two Godowns and also made
payments for development of infrastructure - Meanwhile, the
Special Economic Zones Act, 2005 came into force and vast area of
the leased land came to be notified as a Special Economic Zone
(SEZ) vide notification issued by Ministry of Commerce and Industry,
Government of India (Ministry of C & I) - Appellant-CWC made
representation to Ministry of C & I for de-notification of said 34
acres of land from the SEZ - Meanwhile, respondent no.1-Adani
Ports Special Economic Zone Limited (APSEZL) addressed
communication to appellant-CWC informing that it would not permit
the latter to continue warehouse activities and declined to issue
gate pass for transportation stating that it had violated conditions
enumerated in agreement dated 2nd June, 2004 - CWC filed writ
petition - Single Judge of the High Court did not grant interim
relief while issuing notice - CWC filed LPA - Division Bench granted
ad-interim relief and directed respondents to allow CWC to carry
out activities and to issue gate pass for transportation - In the
meantime, request of CWC for delineation / de-notification of 34
acres of land rejected by Ministry of C & I - Appellant filed another
writ petition - Attempts made by parties to amicably settle the matter
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- Proposal for settlement made by APSEZL that equivalent plot of
land outside the SEZ zone would be earmarked, whereupon a
godown of similar size would be constructed - Board of Directors
of CWC accepted the settlement proposal on three conditions -
APSEZL agreed on all the three conditions - However, it unilaterally
resiled from the 3rd condition subsequently - Both parties thereafter
informed the High Court that settlement was not possible - High
Court held that though CWC was bound by the first two conditions
as agreed between the parties, the second respondent was not bound
by the 3rd condition offered by APSEZL and subsequently retracted
by it - High Court held that, since there was a consensus on the
first two conditions and no consensus on the 3rd condition, CWC
was bound by the first two conditions and insofar as the 3rd
condition was concerned, it was open for the parties to settle the
same amicably between themselves or through mediation - On
appeal, held: Approach adopted by High Court was not tenable -
Offer given by respondent no.1-APSEZL was a composite one so
also acceptance thereof by appellant-CWC was also composite -
Acceptance of the first two conditions was also dependent upon the
third condition - If High Court was so concerned about settlement
of the dispute, then, while compelling appellant-CWC to accept the
first two conditions, it also ought to have compelled respondent
no.1-APSEZL to accept the third condition - When an issue involved
the balancing of interests of a statutory Corporation and a private
company, the approach of the High Court ought to have been
balanced - The High Court ought to have taken into consideration
that, unless all the three conditions were complied with, the interest
of appellant-CWC, which is a statutory Corporation, could not have
been safeguarded - Judgment of High Court not sustainable -
Warehousing Corporation Act, 1962.
Statutory Corporation - Dispute between statutory
corporation and a private entity - Settlement - Effect of - Held:
Unless the settlement arrived is found to be in the interest of both
the parties, it cannot be thrust upon a statutory Corporation to its
detriment and to the advantage of a private entity.
Government litigation - Two departments of the Union of
India cannot be permitted to take stands which are diagonally
opposite - Union of India to evolve a mechanism to ensure that
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whenever conflicting stands are taken by different departments, they
should be resolved at the governmental level itself.
Allowing the appeals, the Court
HELD:1. The present case, rather than being decided on
law, requires to be decided on the factual position as emerges
from the record. The appellant-CWC is a statutory corporation.
It cannot act as per the independent decisions of any officer and
has to act in accordance with the resolution of the Board of
Directors. [Paras 26 and 29][1016-G; 1019-F-G]
2.1. Vide the impugned judgment and order, the Division
Bench of High Court, in fact, held that though the appellant-CWC
was bound by the first two conditions as agreed between the
parties, the second respondent was not bound by the 3rd condition
as was offered by respondent no.1-APSEZL on 9th March 2019
and subsequently retracted on 10th June 2019. The Division
Bench went on to hold that, since there was a consensus on the
first two conditions and no consensus on the third condition, the
appellant-CWC was bound by the first two conditions and insofar
as the third condition is concerned, it was open for the parties to
settle the same amicably between themselves or through
mediation. The Division Bench further observed that though
APSEZL had initially proposed the 3rd condition, it had
immediately explained and clarified the same in its next letter
dated 10th June 2019. In the view of the Division Bench, a period
of three months is 'immediate'. The said approach is wholly
untenable. [Paras 41 and 43][1026-D-G]
2.2 The approach adopted by the Division Bench was, in
fact, forcing the appellant-CWC, which is a statutory body, to
accept the settlement. The High Court, in effect, forced the MD
of the appellant CWC, which is a statutory body, to accept the
first two conditions and leave the third condition to be settled
mutually through mediation. The offer given by respondent no.1APSEZL 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 third condition. If the Division Bench was so concerned
CENTRAL WAREHOUSING CORP. v. ADANI PORTS SPECIAL
ECONOMIC ZONE LTD. (APSEZL)
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about settlement of the dispute, then, while compelling the
appellant-CWC to accept the first two conditions, it also ought to
have compelled respondent no.1-APSEZL to accept the third
condition. [Paras 44 and 45][1026-G; 1027-D-E]
3. 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 warehousing facility from the present site to
a changed site would cause serious financial implications and also
that there could be various vested interests involved. The CVC
had also observed that there was also a possibility of losing
business. Further, the Division Bench totally ignored the stand
taken by the Ministry of CAF&PD, which too had opposed such
a swapping. When an issue involved the balancing of interests of
a statutory Corporation and a private company, the approach of
the High Court ought to have been a balanced one. The High
Court ought to have taken into consideration that, unless all the
three conditions were complied with, the interest of the appellantCWC, which is a statutory Corporation, could not have been
safeguarded. If a settlement was to be arrived at, unless the same
was found to be in the interest of both the parties, it could not
have been thrust upon a statutory Corporation to its detriment
and to the advantage of a private entity. [Para 47][1028-C-F]
4. 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-CWC is not permissible in law. On the other hand,
the Ministry of CAF&PD has taken a stand that such a
delineation/denotification is permissible in law and has also stated
that there are precedents for doing so. It is also a stand of the
Ministry of CAF&PD that shifting of the warehouses to the
alternate locations would be against the interest of the appellantCWC as well as public revenue. It does not augur well for the
Union of India to speak in two contradictory voices. The two
departments of the Union of India cannot be permitted to take
stands which are diagonally opposite. It is impressed upon the
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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. [Paras 5053][1029-B, D, F-G; 1030-C]
Lloyd Electric and Engineering Limited v. State of
Himachal Pradesh and Others (2016) 1 SCC 560 :
[2015] 10 SCR 362 - referred to.
5.1. The best course available with the Division Bench was to
direct the Single Judge to decide the petition on its merits. The impugned
judgment and order of the Division Bench dated 30th June 2021 is not
sustainable in law. [Paras 48 and 49]
5.2. Until further orders are passed by the learned Judge, the
interim order dated 26th April 2019 passed by the Division Bench shall
continue to operate. This order would not come in the way of the parties
in arriving at a settlement which would be acceptable to both the parties.
[Paras 56 and 57]
Krishnadevi Malchand Kamathia and Others v. Bombay
Environmental Action Group and Others (2011) 3 SCC
363 : [2011] 3 SCR 291 and Ratnagiri Nagar Parishad
v. Gangaram Narayan Ambekar and Others (2020) 7
SCC 275 : [2020] 6 SCR 303 - referred to.
Case Law Reference
[2011] 3 SCR 291
referred to
Para 25
[2020] 6 SCR 303
referred to
Para 25
[2015] 10 SCR 362
referred to
Para 52
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.72777278 of 2022.
From the Judgment and Order dated 30.06.2021 of the High Court
of Gujarat at Ahmedabad in Letters Patent Appeal No.22 of 2017 and
Order dated 26.08.2021 in Misc. Civil Application No.01 of 2021 in Letters
Patent Appeal No.22 of 2017.
Maninder Singh, Sr. Adv., Amarjeet Singh, Adv. for the Appellant.
Vikramjit Banerjee, ASG, Shyam Divan, Sr. Adv., Mahesh
Agarwal, Rishi Agrawala, Ankur Saigal, Anshuman Srivastava, Ms.
CENTRAL WAREHOUSING CORP. v. ADANI PORTS SPECIAL
ECONOMIC ZONE LTD. (APSEZL)
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Kamakshi Sehgal, Ms. Geetika Sharma, E. C. Agrawala, Ms. Alka
Agarwal, Rajan Kr. Chourasia, Navanjay Mahapatra, Ms. Preeti Rani,
Raj Bahadur Yadav, Amrish Kumar, Advs. for the Respondents.
The Judgment of the Court was delivered by
B. R. GAVAI, J.
1. Leave granted.
2. The appeals challenge the judgment and order dated 30th June
2021 passed by the High Court of Gujarat at Ahmedabad in Letters
Patent Appeal (LPA) No. 22 of 2017 in Special Civil Application (SCA)
No. 184 of 2017 with SCA No. 5816 of 2017, and Miscellaneous Civil
Application No. 1 of 2021 in the above LPA, vide which the Division
Bench of the High Court has issued the following directions:
"(i) That Appellant - CWC is allowed three months time from
today either:-
(a) to seek and obtain approval as a SEZ compliant Unit from
the competent authority under the SEZ Act in respect of its
Warehouse facility situated in 34 acres of land in question within
SEZ Area developed by Respondent - 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
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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 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 otherwise, the parties are left free to make efforts for
amicable settlement of this issue between themselves with the
help of Development Commissioner or the Mediation process
under Section 89 of Civil Procedure Code in the High Court
annexed Mediation Centre, where services of Senior Trained
Mediators can be made available to the parties at the appropriate
point of time.
(vi) For the aforesaid period of 18 months of timeline involved in
the aforesaid directions namely, three months under Clause (i)
and one year or 12 months under Clause (ii) and three months for
handing over the vacant possession under Clause (iii) aforesaid,
the interim order granted by the coordinate bench of this Court on
CENTRAL WAREHOUSING CORP. v. ADANI PORTS SPECIAL
ECONOMIC ZONE LTD. (APSEZL) [B. R. GAVAI, J.]
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11.1.2017 shall continue to operate between both the parties.
(vii) That if the extension of the aforesaid time period(s) becomes
very necessary for compelling reasons, both the parties shall be
at liberty to apply to the learned Single Judge in the pending Writ
Petition; being Special Civil Application No.184 of 2017 and the
learned Single Judge keeping in view the conduct of the applicantparty may grant such further time as may be considered expedient
and necessary by the learned Single Judge."
3. By an order dated 26th August 2021, the impugned judgment
and order came to be modified as under:
"3. In place of the words "already identified and selected by CWC",
the following words will be substituted in paragraph 33(ii) & (iii)
of the Judgment dated 30.06.2021:
"identified and proposed by the Respondent APSEZL and finally
selected by CWC subject to the time-frame prescribed in the
present Judgment.""
4. Being aggrieved by the aforesaid directions, the appellantCentral 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 plot
of land admeasuring about 34 acres to the appellant-CWC for the purpose
of setting up a warehouse to be used for storage and handling of
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foodgrains, notified commodities and related activities. The lease of the
land was for a term up to 16th February 2031. After the said agreement
was executed and the possession of the said land was handed over to
the appellant-CWC on 1st October 2004, the appellant-CWC set up two
Godowns each with a capacity of 33,000 MT. The appellant-CWC also
made payments at the rate of Rs.603 per sq. metre, i.e., about Rs.8.29
crores for the development of infrastructure in the year 2005.
7. The Special Economic Zones Act, 2005 (for short, "SEZ Act")
came into force on 23rd June 2005. The Special Economic Zones Rules,
2006 (for short, "SEZ Rules") were also notified on 10th February 2006.
Vide notification dated 23rd June 2006 issued by the Ministry of Commerce
and Industry, Government of India (for short, "Ministry of C & I), a vast
area came to be notified as a Special Economic Zone (for short, "SEZ").
The appellant-CWC made a representation dated 10th April 2015 to the
Ministry of C & I for delineation/denotification of the said 34 acres of
land from the SEZ. Till the year 2017, there was no obstruction to the
appellant-CWC in utilizing the said area.
8. A communication came to be addressed on 5th January 2017 by
the respondent No.1-Adani Ports Special Economic Zone Limited
(hereinafter referred to as "APSEZL") to the appellant-CWC stating
therein that, the appellant-CWC had violated Clause 4.2.3 of the
agreement dated 2nd June 2004, which required the appellant-CWC to
obtain and comply with all approvals, consent and permits under the
applicable law pertaining to the sub-leased premises and activities
proposed to be carried out by the appellant-CWC. Vide the said
communication, the appellant-CWC was informed that APSEZL has
taken a decision of discontinuing the issuance of gate-passes, and further
that it would not permit the appellant-CWC to continue the warehousing
activities.
9. Being aggrieved by the communication dated 5th January 2017
and alleging that the same was causing obstruction in free movement of
vehicles and transportation of foodgrains etc. to be stored at the
warehousing facility, the appellant-CWC filed the first writ petition being
SCA No. 184 of 2017 before the High Court. Since the learned Single
Judge 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
CENTRAL WAREHOUSING CORP. v. ADANI PORTS SPECIAL
ECONOMIC ZONE LTD. (APSEZL) [B. R. GAVAI, J.]
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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
before the Division Bench on various occasions. It further appears that
there were also attempts to settle the issues amicably. A perusal of the
order dated 26th April 2019 passed by the Division Bench would reveal
that an offer was made by APSEZL that an equivalent plot of land outside
the limit of SEZ would be earmarked, whereupon a Godown of similar
size would be constructed at the expense of APSEZL within a period of
twelve months from the said date. Till then, the appellant-CWC was to
be permitted to carry on its activities as per the terms and conditions of
the agreement dated 2nd June 2004. The said proposal of APSEZL was
placed before the Board of Directors of the appellant-CWC (hereinafter
referred to as the "BoD") on 12th June 2019. The BoD accepted the
said proposal in principle.
12. Thereafter, the matter was again listed before the Division
Bench on certain dates. On 28th January 2021, an adjournment was
again sought on behalf of the appellant-CWC to take instructions from
the Managing Director (for short, "MD") of the appellant-CWC. Vide
order of the said date, the Division Bench granted time as a last chance
and the matter was directed to be posted on 9th February 2021. On 9th
February 2021, the matter was adjourned for 18th February 2021. Since
both the parties informed the High Court that the settlement is not possible,
the High Court directed the matter to be kept on 17th March 2021.
Thereafter, due to COVID, the matter could not be listed and finally, it
was listed on 30th June 2021, on which date the impugned judgment and
order was passed.
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13. We have heard Shri Maninder Singh, learned Senior Counsel
appearing on behalf of the appellant-CWC and Shri Shyam Divan, learned
Senior Counsel appearing on behalf of the respondents.
14. Shri Maninder Singh submitted that the Division Bench has
failed to take into consideration that the area admeasuring 34 acres in
possession of the appellant-CWC could not have been included in the
SEZ areas. He submitted that as per Rule 7 of the SEZ Rules, the
developer is required to furnish to the Central Government, particulars
required under sub-section (1) of Section 4 with regard to the area referred
to in sub-section (2) or sub-section (4) of Section 3 of the SEZ Act. He
submitted that, along with the said information, the developer is also
required to submit a proof of legal right and possession and 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 appellantCWC 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. Shri Singh further submitted that the Ministry of Consumer
Affairs, Food and Public Distribution, Government of India (hereinafter
referred to as the "Ministry of CAF&PD"), which is the controlling
Ministry of the appellant-CWC, has also been supporting the stand of
the appellant-CWC. It is submitted that however, the Ministry of C&I
has been, on an untenable ground, refusing the request of the appellantCWC for delineation/denotification of the land occupied by it. It is
submitted that, though the Ministry of C&I has taken a stand in case of
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the appellant-CWC that there is no provision in the SEZ Act and Rules
which empowers the authorities to grant a waiver as requested, the
Ministry of CAF&PD, vide communication dated 13th September 2013,
has informed the Chief Secretaries of all the States that in certain cases,
such request could be accepted. It is submitted that, not only this, but
vide notifications dated 31st May 2013 and 4th July 2019, certain areas
have been delineated/denotified from the said SEZ areas at the request
of APSEZL. It is submitted that when such a request could be allowed
at the behest of APSEZL, there is no rhyme or reason as to why the
request of the appellant-CWC could not be considered by the Ministry
of C&I.
17. Shri Singh further submitted that the High Court has totally
erred in castigating the appellant-CWC. It is submitted that the
observations of the High Court that the appellant-CWC was having an
ego in the matter and was not reasonable are totally unwarranted. He
submitted that the impugned judgment and order of the High Court is
almost thrusting a part of the settlement on the appellant-CWC. He
submitted that the relocation of the warehouse to a new location on rent
as per the published tariff of the appellant-CWC is not the solitary decision
of an individual. It is submitted that the BoD has accepted the proposal
for settlement on three conditions. As a matter of fact, APSEZL itself
had agreed on all the three conditions vide its communication dated 9th
March 2017. However, it unilaterally, vide communication dated 10th
June 2019, resiled from the 3rd condition. Though the High Court has
directed the appellant-CWC to abide by the first two conditions, it has
failed to direct APSEZL to abide by the 3rd condition.
18. Shri Singh submitted that the conduct of the Ministry of C&I
in rejecting the proposal of the appellant-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
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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 appellant-CWC, having not challenged the validity of the said
notification dated 23rd June 2006, no relief could be granted in the said
writ petition filed by it, contrary to the statutory provisions.
20. Shri Divan submitted that, as early as on 26th March 2007,
APSEZL had given the proposal to the appellant-CWC to allot an
equivalent plot at an alternative location. The said proposal was further
reiterated by APSEZL on 23rd May 2007. Vide another communication
dated 31st August 2007, APSEZL has proposed to utilize the warehousing
facility to be constructed on the sub-leased area for a minimum period
of three years. However, the same was not positively responded to by
the appellant-CWC. As such, APSEZL was required to issue a
communication dated 5th January 2017 inasmuch as the continuation of
the warehousing facility was in contravention of the SEZ Act.
21. Shri Divan submitted that a perusal of Rule 17 of the SEZ
Rules would reveal that a proposal has to be submitted for approval to
the Development Commissioner for setting up of a Unit in SEZ. Under
Rule 18 (2)(i) of the SEZ Rules, it is required that the proposal meets
with the positive net foreign exchange earning requirement. Under Rule
19 of the SEZ Rules, unless the proposal is approved by the Approval
Committee and unless the Development Commissioner issues a letter of
approval in Form G, no Unit can be established. Shri Divan has submitted
that sub-rule (v) of Rule 11 would make the position clear. Shri Divan
has further submitted that the communication dated 13th September 2013
issued by the Ministry of C&I clearly provides that a proposal for seeking
delineation/denotification cannot be considered unless such a proposal
has an unambiguous 'No Objection Certificate' from the State
Government concerned.
22. Shri Divan further submitted that in view of the provisions of
Section 51 of the SEZ Act, the provisions of the said Act will have an
overriding effect. He has further submitted that various documents have
been placed on record by the appellant-CWC which were not placed
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before the High Court and as such, the same cannot be taken into
consideration.
23. Shri Divan further submitted that, as a matter of fact, after
the order was passed by the High Court, the appellant-CWC had made
a representation to the Development Commissioner on 17th August 2021
requesting for delineation/denotification of 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 the
appellant-CWC should have challenged the same. Shri Divan relies on
the judgments of this Court in the cases of Krishnadevi Malchand
Kamathia and Others v. Bombay Environmental Action Group and
Others1 and Ratnagiri Nagar Parishad v. Gangaram Narayan
Ambekar and Others2 in support of the proposition that the appellantCWC, having not challenged the notification dated 5th July 2004, is
estopped from arguing contrary thereto.
26. In our considered view, the present case, rather than being
decided on law, requires to be decided on the factual position as emerges
from the record. It is not in dispute that, after the land was leased to the
then GAPL by the GMB in the year 2000-2001, it entered into an
agreement with the appellant-CWC on 2nd June 2004 with regard to the
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2 (2020) 7 SCC 275
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area admeasuring 34 acres. It is also not in dispute that the appellantCWC was put in possession of the said plot and has constructed the
warehouse on the same. It is also not in dispute that after the construction
of the warehouse, the storage facilities were being utilized by the then
GAPL. However, it appears that in the year 2007, for the first time, the
then GAPL made a proposal for swapping the land and construction of
the warehouse on the swapped land. It further appears that, though
certain communications were addressed, there was no hindrance on the
operations of the appellant-CWC till 5th January 2017. From a perusal of
the communication dated 5th January 2017, it is seen that the appellantCWC was restrained from continuing with the activities in the said
premises. It further states that the appellant-CWC would 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.
27. A perusal of the record would reveal that, immediately after
the said communication dated 5th January 2017 was passed, the appellantCWC filed SCA No. 184 of 2017. In the said writ petition, vide order
dated 10th January 2017, notice was issued returnable on 17th January
2017. Since the interim relief was not granted 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
appellantCorporation 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."
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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 Commissioner, MD of the appellant-CWC
and the President of APSEZL. It will be relevant to refer to the Minutes
of the said Meeting dated 17th January 2017, which read thus:
"2. Explaining the background, DC, APSEZ informed that in Dec
2002, CWC has 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 to delineate pre-existing structures in the port area built
prior to the notification of 23.06.2006, the plot with CWC were
not delineated as perhaps the CWC Godown had come up after
23.06.2006. He mentioned that CWC is carrying out container
stuffing in its Godown which was against the provision of SEZ
Act and Rules. The developer, on 19.03.2015, asked CWC to
discontinue all activities from the Godown. Thereafter, on
10.04.2015, CWC approached DoC for delineating the warehouse
from the SEZ. In Oct 2015, the developer offered an alternative
site to CWC, which was rejected by CWC. It was also stated
that on 05.01.2017, the developer wrote to CWC to stop its
operation and that CWC obtained a stay against this letter from
the Hon'ble High Court of Gujarat.
3. The representatives from CWC informed that they have entered
into the agreement with APSEZL in 2004 for a period of 30 years.
APSEZ had not informed CWC that the land in question was
included in the proposed SEZ which was notified in June, 2006. It
was also stated that since CWC had made investment of Rs. 60
crores in construction of the warehouse, the CVC had advised it
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that it should not move out without proper arrangement. It was
also stated that presently MMTC was storing 26,000 tonnes of
imported pulses as buffer stock for the GoI. Since APSEZL had
arbitrarily stopped this storage 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 the issue with APSEZL by either becoming a
SEZ Unit in the SEZ or become a do-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."
29.