# ESSAR BULK TERMINAL LIMITED & ANR v. STATE OF GUJARAT & ORS

- **Citation:** [2018] 2 S.C.R. 335
- **Court:** Supreme Court of India
- **Decided:** 2018-02-22
- **Case number:** Civil Appeal No. 2406 of 2018
- **Bench:** R. F. Nariman, Navin Sinha
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/essar-bulk-terminal-limited-anr-v-state-of-gujarat-ors-32872
- **Pages:** 26

## Headnote

Indian Ports Act, 1908:
s.5 - Notification under - By State Government - For
expansion of port limits - Challenged by appellant-Company (who
was using a captive jetty) stating that the expansion would affect
the lands reclaimed or to be reclaimed by them - Petition dismissed
by High Court - On appeal, held: The Notification for expansion
of Port limits issued u/s. 5 was in public interest and hence was not
ultra vires s. 5 - The alteration/expansion of the limits of the Port
cannot be said to affect appellant-Company's rights qua reclaimed
lands as the lands were reclaimed illegally i.e. without prior
permission under s.35(1) of Gujarat Maritime Board Act - In the
facts of the case the appellant-Company cannot be said to have
legitimate expectation - The land reclaimed by the appellantCompany not only belonged to the State Government, but the same
also could be utilized by Maritime Board for any purpose - Therefore,
appellant-Company has no right to private property - Thus, the
Notification also does not affect any rights of the appellantCompany to private property - Gujarat Maritime Board Act, 1981
- s.35(1) - Gujarat Infrastructure Development Act, 1999 - ss. 8, 9
and 10 - Doctrine of Legitimate expectation.
Gujarat Maritime Board Act, 1981:
s.35(1) - Interpretation of.
Dismissing the appeal, the Court
HELD: 1. It is not correct to say that if Section 35(1) of
Gujarat Maritime Board Act, 1981 were to be read with Section
35(2), it would be clear that permission for reclamation would
only be necessary if a private asset were to be created in the
hands of a private person. The asset to be created belonged only
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to the Government of Gujarat and it was for the Gujarat Maritime
Board (GMB) to grant permission to the Appellants to use the
same. Section 35(1) is couched in negative language and does
not refer to private rights being created. Section 35(2) cannot
be read so as to throw light on Section 35(1), as under Section
35(2), the GMB is only given a discretionary power to require a
person, who has acted in contravention of Section 35(1), to remove
the illegal erection. The wide language of Section 35(1) cannot
be whittled down by Section 35(2), as the GMB may or may not
utilise the discretionary power granted to it under Section 35(2).
The plain language of Section 35(1) cannot be curtailed by reading
by inference, into sub-section (2), the fact that the GMB may, by
notice, require a person to remove an erection, only when it has
been made without previous permission, so as to create a private
asset in the hands of a private person. The wide language of
Section 35(1) makes it clear that any reclamation within the limits
of the GMB cannot be carried out except with the previous
permission in writing of the GMB. It is clear, therefore, that
dredging to a depth of below 8 meters and reclamation of any
area to the south of the mangroves was done by the Appellants in
the teeth of Section 35(1) of the Gujarat Maritime Board Act.
[Para 16] [351-G-H; 352-A-D]
2. Despite appellant-Company's production being at much
less than what was projected, the Appellants' continued demands
would show that the real motive was to go beyond a captive jetty
and to develop a commercial port which cannot be done without
a global tender under the Gujarat Infrastructure Development
Act. [Para 17] [352-G]
3. As many as three MOUs were executed between the
Appellants, the GMB and the State Government, which MOUs
were valid only for a period of 12 months and were stated not to have
granted any right to the Appellants, who would incur all the expenditure
for the same. This being the case, it cannot said that any legitimate
expectation could be based on any of the aforesaid expired MOUs.
Therefore, no such expectation could possibly have arisen out of
the aforesaid MOUs or the correspondence between the
Appellants and the GMB. [Para 18] [352-H; 353-A-B]
4. It is evident fr

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ESSAR BULK TERMINAL LIMITED & ANR.
v.
STATE OF GUJARAT & ORS.
(Civil Appeal No. 2406 of 2018)
FEBRUARY 22, 2018
[R. F. NARIMAN AND NAVIN SINHA, JJ.]
Indian Ports Act, 1908:
s.5 - Notification under - By State Government - For
expansion of port limits - Challenged by appellant-Company (who
was using a captive jetty) stating that the expansion would affect
the lands reclaimed or to be reclaimed by them - Petition dismissed
by High Court - On appeal, held: The Notification for expansion
of Port limits issued u/s. 5 was in public interest and hence was not
ultra vires s. 5 - The alteration/expansion of the limits of the Port
cannot be said to affect appellant-Company's rights qua reclaimed
lands as the lands were reclaimed illegally i.e. without prior
permission under s.35(1) of Gujarat Maritime Board Act - In the
facts of the case the appellant-Company cannot be said to have
legitimate expectation - The land reclaimed by the appellantCompany not only belonged to the State Government, but the same
also could be utilized by Maritime Board for any purpose - Therefore,
appellant-Company has no right to private property - Thus, the
Notification also does not affect any rights of the appellantCompany to private property - Gujarat Maritime Board Act, 1981
- s.35(1) - Gujarat Infrastructure Development Act, 1999 - ss. 8, 9
and 10 - Doctrine of Legitimate expectation.
Gujarat Maritime Board Act, 1981:
s.35(1) - Interpretation of.
Dismissing the appeal, the Court
HELD: 1. It is not correct to say that if Section 35(1) of
Gujarat Maritime Board Act, 1981 were to be read with Section
35(2), it would be clear that permission for reclamation would
only be necessary if a private asset were to be created in the
hands of a private person. The asset to be created belonged only
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to the Government of Gujarat and it was for the Gujarat Maritime
Board (GMB) to grant permission to the Appellants to use the
same. Section 35(1) is couched in negative language and does
not refer to private rights being created. Section 35(2) cannot
be read so as to throw light on Section 35(1), as under Section
35(2), the GMB is only given a discretionary power to require a
person, who has acted in contravention of Section 35(1), to remove
the illegal erection. The wide language of Section 35(1) cannot
be whittled down by Section 35(2), as the GMB may or may not
utilise the discretionary power granted to it under Section 35(2).
The plain language of Section 35(1) cannot be curtailed by reading
by inference, into sub-section (2), the fact that the GMB may, by
notice, require a person to remove an erection, only when it has
been made without previous permission, so as to create a private
asset in the hands of a private person. The wide language of
Section 35(1) makes it clear that any reclamation within the limits
of the GMB cannot be carried out except with the previous
permission in writing of the GMB. It is clear, therefore, that
dredging to a depth of below 8 meters and reclamation of any
area to the south of the mangroves was done by the Appellants in
the teeth of Section 35(1) of the Gujarat Maritime Board Act.
[Para 16] [351-G-H; 352-A-D]
2. Despite appellant-Company's production being at much
less than what was projected, the Appellants' continued demands
would show that the real motive was to go beyond a captive jetty
and to develop a commercial port which cannot be done without
a global tender under the Gujarat Infrastructure Development
Act. [Para 17] [352-G]
3. As many as three MOUs were executed between the
Appellants, the GMB and the State Government, which MOUs
were valid only for a period of 12 months and were stated not to have
granted any right to the Appellants, who would incur all the expenditure
for the same. This being the case, it cannot said that any legitimate
expectation could be based on any of the aforesaid expired MOUs.
Therefore, no such expectation could possibly have arisen out of
the aforesaid MOUs or the correspondence between the
Appellants and the GMB. [Para 18] [352-H; 353-A-B]
4. It is evident from the correspondence between the
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Appellants and the GMB, that the Appellants were clearly told
that the land to be reclaimed by the Appellants would not only
belong to the Government of Gujarat, but also that the GMB
could utilize the aforesaid land for any purpose. What seems to
emerge on a reading of the letters between the parties is that the
Appellants wished to dredge the canal, at their own cost, which
was next to their captive jetty, for their own purposes, for which
they obtained the necessary permission. However, since dumping
of earth, which would emerge as a consequence of dredging, into
the open sea would be extremely expensive, it was stated that
instead this earth could be dumped to create reclaimed land next
to the captive jetty, which would then benefit both, the Appellants
and the GMB. The argument that huge amounts had been spent
to reclaim land is wholly fallacious - huge amounts were spent to
dredge a canal which was permitted, as the Appellants alone were
to bear the cost, and as an increased draft would benefit all, as
the canal was open to all to use. Therefore, any plea as to a
legitimate expectation of reclaimed land being allocated for the
Appellants' own use is contrary to the correspondence by the
Appellants themselves. [Para 19] [353-C-F]
5. Even if the Appellants' plea were to be accepted, the
alteration of the limits of the port cannot possibly be said to affect
the Appellants' rights qua reclaimed land, which has been
reclaimed illegally i.e. without prior permission under the Gujarat
Maritime Board Act. Thus, the CRZ clearance by the Ministry
of Environment and Forests dated 6th May, 2014 for reclamation
of 334 hectares of land does not further the Appellants' case in
any way. [Para 22] [358-H; 359-A-B]
6. It is correct that the power of the Government to alter
the limits of any port under Section 5(1) of the Ports Act must be
done only in public interest. However, it has not been shown to
the Court as to how the impugned notification is contrary to public
interest. The affidavits filed in the High Court, by the State
Government and the GMB, show that a commercial port's limits
were altered in public interest because the number of vessels at
the port were expected to increase dramatically and it was,
therefore, necessary to make adequate facilities not only for
anchorage of such vessels, but also for reasons of customs
ESSAR BULK TERMINAL LIMITED & ANR. v. STATE OF
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formalities, port conversion, general security etc. Therefore, the
notification is not ultra vires Section 5 of the Ports Act. The
Appellants have no 'right' to private property in view of the fact
that the ownership of the captive jetty that has been constructed
and the ownership of reclaimed land is with the GMB/State
Government. For this reason also, the Notification is intra vires
as the alteration in the limits of the Port does not affect any 'right'
of the Appellants to private property. [Para 25] [359-E-H]
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2406
of 2018.
From the Judgment and Order dated 25.04.2017 of the High Court
of Gujarat at Ahmedabad in SPLCA No. 8356 of 2016.
Mihir Joshi, Sr. Adv., Kyur Gandhi, Ms. Priyal Parikh, Ms. Divanshi
Singh, Rudreshwar Singh, Kaushik Poddar, Advs. for the Appellants.
Tushar Mehta, ASG, Harish N. Salve, Neeraj Kishan Kaul, Kapil
Sibal, Dr. A.M. Singhvi, Harin P. Raval, Sr. Advs., Ms. Hemantika Wahi,
Ms. Vishakha, Samar Kachwaha, Ms. Chanan Parwani, Akash Lamba,
Varun Mathur, Nikhil Goel, Ms. Naveen Goel, Ashutosh Ghade, R. N.
Karanjawala, Ms. Ruby Singh Ahuja, Vishal Gehrana, Sahil Monga,
Siddhant Gupta, Sandeep Singhi, Mrs. Manik Karanjawala (For M/s.
Karanjawala & Co.), M/s. Lawyer's Knit & Co, Advs. for the
Respondents.
The Judgment of the Court was delivered by
R. F. NARIMAN, J. 1. Leave granted.
2. The present appeal involves a challenge to a notification dated
18th January, 2016, issued under Section 5 of the Indian Ports Act, 1908,
by which the State Government of Gujarat expanded the port limits of
Hazira port. It is the case of the Appellants before us that by doing so,
the Appellants have been affected because they have spent huge monies
on lands reclaimed by them, which would be directly affected by the
expansion of the aforesaid port limits.
3. The brief facts necessary for determining the questions that
arise in this appeal are as follows.
In 1994, the parent company of the Appellants entered into an agreement
with the Gujarat Maritime Board (hereinafter referred to as "GMB")
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for use of a captive jetty in Magdalla port. Pursuant to a Port Policy
framed by the Government of Gujarat in 1995, and a Build, Own, Operate
and Transfer (BOOT) Policy framed for private sector participation in
development of the State's ports in 1997, the GMB issued a Global Notice
for Expression of Interest for Development of Green Field Site Port
Facilities, inviting bids in the name of Hazira port project. A consortium
led by Shell Gas B.V. was selected to develop, operate and maintain
certain facilities on leased area in the port on a BOOT basis, together
with related LNG facilities. Pursuant to the acceptance of its bid, Shell
Gas B.V. created two subsidiaries in Gujarat, namely, Hazira Port Private
Limited (HPPL) and Hazira LNG Private Limited. A concession
agreement dated 22nd April, 2002 was entered into between the GMB,
the State Government and HPPL for the purpose of development,
operation and maintenance of Hazira port by HPPL. A notification
dated 23rd June, 2004 was issued by the State Government notifying
Hazira port and setting out its limits, in exercise of powers under Section
4(2) of the Indian Ports Act. This was carved out of the port limits of
Magdalla port, which was so reduced as to exclude the aforesaid Hazira
port.
4. Sometime in the year 2000, the Appellants had set up a shallow
draft captive jetty of 456 meters at the mouth of the River Tapi, which
connected to the sea at a distance of about 7 kilometers. The initial
depth of the aforesaid draft captive jetty was about 3 to 4 meters.
5. As many as three Memorandums of Understanding (MOU)
were entered into between the Appellants, the GMB and the State
Government in the years 2007, 2011 and 2013, inter alia, for development
of a RORO terminal and development of the water-front of 3000 meters.
Each of these MOUs was only for a period of 12 months.
6. On 25th November, 2010, HPPL identified Adani Hazira Port
Private Limited (Adani) as its sub-concessionaire, and entered into a
sub-concession agreement with Adani on the same date. On 21st July,
2014, HPPL requested the GMB for amendment/extension of its port
facilities. After entering into an MOU with Adani, dated 27th February,
2015, for exploring business opportunities, which fell through, HPPL, by
its letter dated 14th March, 2015, revised its request for amendment of
port facilities, citing the need for additional back-up area, as a result of
which a much larger area than what was originally asked for was now
requested. This larger area would include lands reclaimed and/or to be
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reclaimed by Essar by dumping earth out of dredging the canal next to
the captive jetty of the Appellants. This proposal was approved by the
GMB by its resolution dated 19th March, 2015. Meanwhile, on 7th April,
2015, Essar wrote a detailed representation to the GMB stating its
objections to the extension of port limits on various grounds. On 21st
April, 2015, the State Government wrote a letter to the GMB, inter alia,
asking it to examine the aforesaid representation of the Appellants. A
similar representation dated 29th May, 2015 was also made by the
Appellants to the Chief Principal Secretary of the State. By a detailed
letter dated 16th July, 2015, the GMB dismissed all the objections of the
Appellants. However, on 26th August, 2015, the State Government
requested the GMB to reconsider the issue of extension of port facilities
in its forthcoming board meeting, and send its recommendations to the
Government in relation thereto. On 28th September, 2015, the GMB
passed a resolution in which it recommended the original proposal
submitted by HPPL on 21st July, 2014. However, on 5th December, 2015,
the Chief Principal Secretary to the Chief Minister circulated a note
stating that the number of vessels at the port was expected to increase
dramatically from 30-40 to 70-80, and that the port limits need to be
extended to accommodate customs formalities, safety etc. In view thereof,
it was necessary to make adequate facilities for anchorage of all the
said vessels and that, therefore, the GMB's resolution of 19th March,
2015 should be strictly implemented. On 11th December, 2015, the State
Government then wrote to the GMB stating that the port facilities will be
extended in terms of the GMB resolution dated 19th March, 2015.
Following this, the requisite notification dated 18th January, 2016, which
has been impugned by the Appellants in a writ petition before the Gujarat
High Court, was then issued under Section 5 of the Indian Ports Act.
7. Shri Mihir Joshi, learned senior counsel appearing on behalf of
the Appellants, has argued that the first proposal alone, which was sent
on 21st July, 2014, ought to have been accepted by the GMB. The second
proposal for the increased area would directly impinge upon the land
that was reclaimed or to be reclaimed by the Appellants, after spending
huge monies for the same. The learned senior counsel specifically stated
that the approval for the second proposal was done in great haste, within
a matter of four days. He went on to add that the State Government
had, by its letters dated 1st June, 2013, recommended to the Ministry of
Environment to grant CRZ clearance to Essar for the proposed expansion
of port facilities, which included additional 334 hectares of land. It was
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his case that the said Ministry, on 6th May, 2014, granted the aforesaid
clearance, despite which the expanded port limits would now eat into
the aforesaid area, as only an area of 140 hectares out of 195 hectares,
which was reclaimed by the Appellants, could be used by the Appellants.
He argued that various assurances were given and MOUs were entered
into with the Appellants, on the basis of which huge investments were
made, and at the very least the doctrine of legitimate expectation would
be attracted. He attacked the notification stating that it was ultra vires
Section 5 of the Indian Ports Act, which required public interest alone to
be seen. Indirectly, the extension of the limits of Hazira port would
grant HPPL an extended port area without bidding, which would be
contrary to the Gujarat Infrastructure Development Act, 1999. According
to him, the overlapping of area with Essar was only in the second proposal,
which was wholly arbitrarily recommended by the GMB initially approving
the second proposal of 2015, and thereafter correctly approving only the
first proposal of 2014. The GMB's resolution of 28th September, 2015
was the correct decision, which could not have been arbitrarily interfered
with by the Chief Principal Secretary of the Chief Minister, on the basis
of which the impugned notification has been issued.
8. On the other hand, Shri Harish Salve, learned senior counsel
appearing on behalf of the State of Gujarat, painstakingly took us through
the Port Policy of 1995 and the BOOT Policy of 1997. According to the
learned senior counsel, since 13 berths were to be constructed, out of
which 5 berths have already been constructed, a total of 1011 hectares
was already allocated for port related activities to HPPL. This would be
clear from a reading of the detailed project report (DPR) of 2010, and
this being the case, the expansion of port limits by the impugned
notification was well within the originally conceived area of 1011 hectares.
He referred to and relied upon affidavits submitted by the State
Government as well as the GMB before the High Court, to argue that
Essar's demands for reclaimed land had nothing to do with the expansion
of the limits of Hazira port. They operated in two completely different
spheres. He further went on to state that no permission under Section
35 of the Gujarat Maritime Board Act, 1981 has been given to reclaim
any land, which was a condition precedent to Essar's demands for further
reclaimed land. He also pointed out that, being a captive port, Essar's
production was much less than what was projected and, in fact, only
30% of the cargo that it was supposed to handle was being handled.
According to the learned senior counsel, the objections to the expansion
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of Hazira port's limits are completely misconceived, inasmuch as what
the Appellants really sought was for their captive port to become a
commercial port by bypassing the provisions of the Gujarat Infrastructure
Development Act. In any case, the Appellants' captive jetty was grossly
underutilised and the Appellants demands for grant of reclaimed land
has nothing to do with HPPL demanding an alteration to the limits of
Hazria Port, so as to cater to the increased traffic of a commercial port
open to all.
9. Shri Tushar Mehta, learned Additional Solicitor General
appearing on behalf of the GMB, adopted the arguments of Shri Salve.
In addition, he defended the GMB's approval dated 19th March, 2015,
stating that despite the fact that the said approval came within four days
of the HPPL letter dated 14th March, 2015, this paled into insignificance
as nothing followed from this. Also, according to the learned ASG, on an
examination of the official records, he found nothing in support of the
GMB's turn-around on 28th September, 2015, which accepted only the
first and not the second proposal of HPPL. According to him, finally
what was done by the State Government was in public interest and for
good reason.
10. Shri Kapil Sibal, learned senior counsel appearing on behalf of
HPPL and Adani, painstakingly took us through various letters written
by the Appellants to the GMB and permissions given. According to the
learned senior counsel, it was clear that from a reading of the initial
proposals of 2005 and 2006, and the later proposals of the Appellants
that their real aim was to conduct commercial operations on their captive
jetty, which would circumvent the need for a global tender as required
by the Gujarat Infrastructure Development Act. In essence, he also
submitted that as the Appellants could claim no right or expectation of
any sort and as the present petition was not a public interest litigation,
the writ petition should have been dismissed at the threshold as the
Appellants could show no right or expectation of any kind. Dr. Singhvi
and Shri Harin P. Raval broadly supported the contentions of Shri Sibal.
11. Before dealing with the arguments of counsel, it is important
to set out some of the important provisions of the relevant Acts before
us. Sections 3(9), 4 and 5 of the Indian Ports Act read as under:
"3(9). "Government", as respects major ports, for all purposes,
and, as respects other ports for the purposes of making rules under
clause (p) of section 6(1) and of the appointment and control of
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port health officers under section 17, means the Central
Government, and save as aforesaid, means the State Government.
4. Power to extend or withdraw the Act or certain portions
thereof
(1) Government may, by notification in the Official Gazette.-
(a) extend this Act to any port in which this Act is not in force or
to any part of any navigable river or channel which leads to a port
and in which this Act is not in force;
(b) specially extend the provisions of section 31 or section 32 to
any port to which they have not been so extended;
(c) withdraw this Act or section 31 or section 32 from any part
thereof in which it is for the time being in force.
(2) A notification under clause (a) or clause (b) of subsection (1)
shall define the limits of the area to which it refers.
(3) Limits defined under sub-section (2) may include any piers,
jetties, landing-places, wharves, quays, docks and other works
made on behalf of the public for convenience of traffic, for safety
of vessels or for the improvement, maintenance or good
government of the port and its approaches whether within or
without high-water-mark, and, subject to any rights of private
property therein, any portion of the shore or bank within fifty yards
of higher-water-mark.
(4) In sub-section (3) the expression "high-water-mark" means
the highest point reached by ordinary tides at any season of the
year.
5. Alteration of limits of ports
(1) The Government may, subject to any rights of private property,
alter the limits of any port in which this Act is in force.
Explanation.- For the removal of doubts, it is hereby declared that
the power conferred on the Government by this sub-section
includes the power to alter the limits of any port by uniting with
that port any other port or any part of any other port.
(2) When the Government alters the limits of a port under subsection (1), it shall declare or describe, by notification in the Official
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Gazette, and by such other means, if any, as it thinks fit, the precise
extend of such limits.
Section 35(1) of the Gujarat Maritime Board Act reads as under :
"35. (1) No person shall make, erect or fix within the limits of a
port or port approaches, any wharf, dock, quay, stage, jetty, pier,
place of anchorage, erection or mooring or undertake any
reclamation of foreshore within the said limits except with the
previous permission in writing of the Board and subject to such
conditions, if any, as the Board may specify.
(2) If any person makes, erects or fixes any wharf, dock, quay,
stage, jetty, pier, place of anchorage, erection or mooring or
undertakes reclamation of foreshore in contravention of subsection (1), the Board may, by notice require such person to
remove it within such time as may be specified in the notice and if
the person fails so to remove it, the Board may cause it to be
removed at the expense of that person."
Further, Sections 8, 9 and 10 of the Gujarat Infrastructure Development
Act read as under:
"Section 8 - Selection of a person
(1) A concession agreement for undertaking a project may be
entered into with a person who is selected through a competitive
public bidding as provided in section 9 or by inviting comparative
bids as provided in section 10 or by direct negotiation as provided
in section 10A.
(2) The matters relating to competitive bidding, inviting comparative
bids and direct negotiation shall be such as may be prescribed.
Section 9 - Selection of person by competitive public bidding
On the acceptance of the recommendation of the Board made
under sub-section (2) of section 5, the State Government, the
Government agency or, as the case may be, the specified
Government agency shall select a developer for the project through
competitive public bidding in the manner as may be prescribed.
Section 10 - Inviting comparative bids.
(1) Where a proposal for undertaking a project and a proposed
concession agreement prepared by a person are submitted to the
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State Government, the Government agency or a specified
Government agency, it may,
(a) consider the proposal and the proposed concession agreement
from all aspects (including technical and financial) and if necessary,
modify the same in consultation with the person who has submitted
the proposal and the proposed concession agreement; and
(b) submit the proposal and the proposed concession agreement
to the Board, if - (i) the cost of the project exceeds the limit provided
by regulations under sub-section (1) of section 5, and
(ii) the undertaking of the project does not require financial
assistance from the State Government, the Government agency
or the specified Government agency.
(2) On acceptance of the recommendation of the Board made
under sub-section (2) of section 5, the State Government, the
Government agency or, as the case may be, the specified
Government agency shall adopt the proposal as the basis for
selecting a person with whom concession agreement for
undertaking the project may be entered into, and for selecting
such person, the State Government, the Government agency or,
as the case may be, the specified Government agency shall follow
the procedure of competitive public bidding prescribed under
section 9.
(3) Where a person is selected by following the procedure of the
competitive public bidding (hereinafter referred to as "the selected
person"), the proposal of the selected person shall be compared
with the proposal which is earlier submitted by a person to the
State Government, the Government agency or, as the case may
be, the specified Government agency under sub-section
(1) (hereinafter referred to as "the earlier proposer").
(4) Where the proposal of the earlier proposer is not preferable to
the proposal of the selected person, the earlier proposer shall be
given an opportunity to make his proposal competitive with that
of the selected person within a period of thirty days from the date
on which he has been given the opportunity and where the earlier
proposer fails to do so within the said period, the State Government,
the Government agency or, as the case may be, the specified
Government agency may enter into a contract with the selected person.
ESSAR BULK TERMINAL LIMITED & ANR. v. STATE OF
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(5) (a) Where a concession agreement has not been entered into
with the earlier proposer, the cost of preparation of the proposal
and the concession agreement incurred by him shall be reimbursed
by the State Government, the Government agency or, as the case
may be, the specified Government agency and on such
reimbursement, the proposal and the concession
agreement submitted by the earlier proposer shall be the property
of the State Government, the Government agency or, as the case
may be, the specified Government agency.
(b) The cost of preparation of the proposal and the concession
agreement shall be determined in such manner as may be
prescribed."
12. It is also necessary to set out some parts of the Port Policy of
1995 and the BOOT Policy of 1997.
"Gujarat Port Policy
Gujarat envisages an integrated port development strategy,
consisting of creation of port facilities, industrialisation and
development of infrastructure facilities like roads and railways in
the hinterland. It is estimated that around 3 billion dollars (Rs.
10,000 crores) would be required to create new port facilities
along with necessary infrastructure in the coming 5 years. In view
of the fact that ships of large sizes are used in the transportation,
for the economies of scale in international trade, ports would be
developed with direct berthing facilities and speedy mechanical
handling facilities, so as to reduce waiting period of the ships and
saving in the cargo expenses. To expedite creation of port facilities
by 2000 AD, it is proposed to have the participation of private
enterprise in the development of port infrastructure.
The following ports are identified for exclusive investment by private
sector:
1. Simar Power port
2. Mithiwirdi Steel and Automobile port
3. Dholera General Cargo port
4. Hazira Industrial port
5. Vansi-Borsi Petroleum & liquid chemical port
6. Maroli Industrial port
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These ports will be privatised through a global tender bid. Gujarat
Maritime Board will do a preliminary techno-economic feasibility
report of all these five locations except Dholera, through a global
bid to facilitate prospective bidders. Dholera, being an ancient
port and privatisation bids were invited in the past, no technoeconomic feasibility will be done for this location. Dholera port
will be the first port to be opened up for privatisation by global
tendering. For remaining locations based on the preliminary technoeconomic study, global tenders will be invited for privatisation.
General guidelines are given below.
These port locations are to be given on BOMT (Built, Operate,
Maintain and Transfer) basis. The investment in infrastructure
projects like ports being capital intensive, with higher gestation
period compared to other sectors of investment, Government of
Gujarat is very particular that the port projects taken up by private
entrepreneurs should be a profitable proposition to them. The
viability of port project depends upon the location, the maritime
conditions, scale of investment and the kind of cargo to be handled.
The port project has to be assured at a reasonable rate of return
after accounting for capital recovery and interest repayment.
Hence, it is essential that each port project is evaluated based on
an investment analysis; consisting of a capital cost, revenue
receipts, revenue expenditure and capital recovery. Gujarat
Maritime Board will study the financing pattern adopted by the
World Bank and the Asian Development Bank and other Financial
Institutions to evolve a comprehensive package.
Only the wharfage charges/waterfront charges will be as per the
schedule decided by Gujarat Maritime Board. The promoters will
be free to charge any other service charges with the prior approval
of the Gujarat Maritime Board. After BOMT period, the ownership
of the port and its assets will get transferred to Gujarat Maritime
Board and they will examine to give it further on lease basis to the
same promoter. The terms and conditions will be finalised at that
time. The general guidelines for investment analysis and capital
recovery for the port projects to determine BOMT period will be
announced within 2 months.
CAPTIVE JETTIES FOR INDUSTRIES
To ensure that the new port projects are financially viable,
permissions for captive jetties would be given only in exceptional
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cases, looking to the quantum of investment and the need for
specialised facilities. All industrial units would be encouraged to
make use of new port facilities being set up.
To take care of the increasing traffic until the completion of the
new port projects, it is decided to make use of the existing captive
jetties already constructed or under construction, for which the
permission has already been given, to be utilized for specific
commercial cargos with the prior approval of the Gujarat Maritime
Board.
(1) This facility would be available for a reasonable period till
new ports become operative. GMB will review the policy taking
into account the progress made in the new ports.
(2) Gujarat Maritime Board would be entitled to collect full
wharfage charges on the cargos handled, which are not captive
to the industrial units.
Looking to the huge amount of cargo handled in a short period,
captive Single Point Mooring (SPM) facilities of industries located
in Gujarat will be charged at concessional rate of wharfage for
their captive consumption. Nevertheless, for captive cargo for
industries located outside Gujarat and non-captive commercial and
industrial cargo, will be charged full wharfage by Gujarat Maritime
Board.
Gujarat BOOT Policy
"Developer"- The word "Developer" has been used in this
document to convey the various roles played by private parties at
different stages of the development of the port.
(III) OWNERSHIP RIGHTS OF DIFFERENT PARTIES
1. Ownership rights
of the Government
The
Government
is
vested
with
sovereign rights as owner, overseer and
conservator of the waterfront and
licensor to the Contract.
2. Ownership Rights
and responsibilities
of the Developer
The
Ownership
rights
of
the
Developer would include:
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 xxx
 xxx
 xxx
with
and
and
he
 The right to mortgage, hypothecate
or to execute such covenants as may
be required for effectively vesting a
charge on the port assets in favour of
a lender to the project.
 The right to sell, convey or transfer
to another entity, the right title and
interest and concession vested in the
Developer, on the request of a lender
to the project, subject to contractual
documents. The new Developer will
be
selected
by
the
lender
in
consultation with the GMB, and if
necessary, the terms and conditions
of the concession Agreement may be
renegotiated.
6. Expansion of
facilities and
Competition
between ports
(a) Expansion of facilities
The developers would be encouraged to
add capacity over and above the capacity
contracted in the concession agreement.
Such expansions will be eligible for
incentives by the Government, such as
land acquisition, extension of royalty
holidays etc.
At the time of the signing of the
Concession Agreement, the Developer
will submit, and get approved by GMB, a
broad
perspective
plan
for
the
development of the port in the next
fifteen to twenty years. The Government
will not place restrictions on any
expansion and further development of the
port which is within the envisaged
perspective plan, subject to statutory
clearances. Expansions outside the scope
of this plan would be subject to the
approval of the GMB.
(b) Competition between ports
The
Government
would
encourage
competition
between
ports.
The
following, however, would be ensured:
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13. At this point, it is important to refer to the correspondence
between the Appellants and the GMB. By their letters dated 11th July,
2005 and 13th October, 2006, the Appellants stated that as Essar Steel
was in the process of doubling its steel production capacity and that it
was proposed to handle cargo around 25 MMT, it would require a captive
jetty of 550 meters. This would be in addition to the jetty which was
already constructed of 592 meters plus 456 meters. In addition to the
aforesaid, the Appellants sought permission to deepen the navigational
channel upto 8 meters depth, so as to enable direct berthing of deep
draught vessels up to 75,000 dead weight tonnage (DWT). For deepening
the channel, the dredged material would have to be dumped and the
Appellants sought permission, vide their letter dated 2nd March, 2007, to
dump the dredged material on an area of about 252 hectares on the
north side of the mangroves. In addition to the 550 meters jetty, the
Appellants also requested the GMB to allot 38 hectares of back-up area.
By a letter dated 14th June, 2007, the GMB granted in-principle approval
for allotment of 400 meters waterfront, with back-up area, so as to create
a direct berthing port, in which the channel could be dredged, so as to
obtain a draft of 8 meters. Apart from stating that Essar will have to
obtain all required permissions and clearances, four conditions are of
importance in this letter and are set out hereinbelow:
"3. The new channel to be created by Essar will be common user
channel and will be allowed to be used by all other users. Essar
shall not be entitled to recover any charges from other users, if
they use the new channel.
7. The ownership of reclaimed land shall vest with the Government
of Gujarat/Gujarat Maritime Board.
8. Essar shall not claim for reimbursement of any expenditure
incurred for this reclamation.
10. Essar has to reclaim 319.86 hectares area of inter tidal/mud
flats except 67 hectares allotted to M/s HPPL and the portion of
area in front of 67 hectares towards sea."

The development of the ten ports
would be appropriately phased over a
period.

Permission to set up captive jetties
would not
be granted,
save in
exceptional circumstances.
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14. Vide their letter dated 29th August, 2007, the Appellants
demanded that 1100 meters, in addition to the 550 meters waterfront
that was applied for earlier, be given. The Appellants also sought
permission for allotment of 252 hectares of land to be reclaimed as backup area. By their letter dated 1st October, 2012, the GMB granted inprinciple approval for allotment of 1100 meters waterfront to the
Appellants.
15. By their letter dated 15th October, 2008, the Appellants asked
the GMB to allow them to dredge the channel from 8 meters depth to 10
meters depth to accommodate capesize vessels of 105,000 DWT. Since
material dredged from the channel would have to be dumped, an additional
area of 316 hectares, towards the south of the mangroves, to dump the
material and reclaim the said area was applied for. No such permission
was granted by the GMB to go from a depth of 8 meters to 10 meters or
to reclaim any area to the south of the mangroves. Shri Mihir Joshi,
however, pointed out a completion certificate dated 11th February, 2010,
in which it was mentioned that the width and depth of the channel is
being increased to 300 meters and 10 meters below CD respectively in
Phase-2. However, this would clearly not amount to permission for the
same, as all that was stated in the completion certificate was a reference
to a deep water berth of 8 meters depth below CD, the 10 meters depth
being something which may be increased in future.
16. Despite this, what is clear from the record is that the Appellants
appear to have actually dredged the channel to a depth of 14 meters and
appear to have reclaimed an area of 164 hectares plus 170 hectares to
the south of the mangroves, without any permission at all. When this
was pointed out to Shri Mihir Joshi, the answer given was that when
permission is granted under Section 35(1) of the Gujarat Maritime Board
Act, a letter granting such permission specifically says that it is permission
that is granted under Section 35(1) and for this purpose, a letter dated
2nd August, 2008 was referred to. According to him, therefore, the letter
dated 14th June, 2007, which referred only to an NOC for reclamation,
could not be given the status of permission under Section 35(1).
According to the learned counsel, therefore, if Section 35(1) were to be
read with Section 35(2), it would be clear that permission for reclamation
would only be necessary if a private asset were to be created in the
hands of a private person. However, it is clear that the asset to be created
belonged only to the Government of Gujarat and it was for the GMB to
ports
ver a
etties
in
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grant permission to the Appellants to use the same. We are afraid that it
is difficult for us to accept this line of argument. Section 35(1) is couched
in negative language and does not refer to private rights being created.
Section 35(2) cannot be read so as to throw light on Section 35(1), as
under Section 35(2), the GMB is only given a discretionary power to
require a person, who has acted in contravention of Section 35(1), to
remove the illegal erection. The wide language of Section 35(1) cannot
be whittled down by Section 35(2) in the manner argued by Shri Joshi,
as the GMB may or may not utilise the discretionary power granted to it
under Section 35(2).