Appeals dismissed due to flawed selection process and improper inclusion of Om Metals. Ministry justified in agreement cancellation.

The appeals were dismissed, affirming that the selection process was flawed, the inclusion of Om Metals was improper, and the Ministry of Home Affairs was justified in directing the cancellation of the agreement. The principles of promissory estoppel and legitimate expectation did not apply, and the appellants were not entitled to insist on the issuance of the SEZ notification. The principles of natural justice were not violated in the impugned actions.

---

---

Issues Involved:
1. Validity of the selection process by the Government of Puducherry for choosing the strategic partner for the SEZ project.
2. Legitimacy of including Om Metals Infra Projects Ltd. as a consortium partner after selecting SPML Infra Ltd.
3. Justification of the Ministry of Home Affairs directing the Government of Puducherry to cancel the agreement.
4. Applicability of the principles of promissory estoppel and legitimate expectation.
5. Entitlement of the appellants to insist on the issuance of Notification under Section 4(1) of the SEZ Act.
6. Violation of principles of natural justice in the impugned actions.

Detailed Analysis:

1. Validity of the Selection Process:
The Government of Puducherry's selection process for the SEZ project was flawed. The selection committee lacked technical members, and no Development Project Report (DPR) was prepared before selecting the developer. The process did not follow established technical and commercial criteria. The shortlisted companies were given only ten minutes for presentations, and there was no comparative assessment of their merits. The selection of SPML Infra Ltd. was made without any documented discussions or evaluations, making the process arbitrary and non-transparent. The judgment concluded that the selection was bad in law, as it did not adhere to the required norms and procedures.

2. Inclusion of Om Metals Infra Projects Ltd.:
Om Metals Infra Projects Ltd. was included as a consortium partner after the selection of SPML Infra Ltd., which was improper. The original application was submitted by SPML Infra Ltd. as a single company, not as a consortium. Om Metals did not participate in the selection process or make any presentation. Their inclusion was through a backdoor method, which was unjustified and not in accordance with the advertised criteria. The judgment held that this inclusion was invalid and could not be sustained.

3. Justification of the Ministry of Home Affairs' Directive:
The Ministry of Home Affairs initially granted ex-post-facto approval for the land transfer but later directed the cancellation of the agreement due to irregularities in the selection process. The Planning Commission's observations highlighted the lack of transparency and proper procedure in selecting the private developer. The Ministry of Home Affairs' reconsideration and directive to cancel the agreement were justified to safeguard public interest and ensure adherence to legal norms. The judgment supported the Ministry's action as being within its authority and justified by the circumstances.

4. Principles of Promissory Estoppel and Legitimate Expectation:
The appellants' claim of promissory estoppel and legitimate expectation was rejected. The judgment emphasized that these principles apply only when the initial action or promise was lawful and made in accordance with established procedures. Since the selection process was flawed and the inclusion of Om Metals was improper, the appellants could not claim these principles. The judgment cited various precedents to support the view that an action bad in inception cannot be validated later, and subsequent conduct cannot rectify the initial illegality.

5. Entitlement to Issuance of Notification under Section 4(1) of the SEZ Act:
The appellants were not entitled to insist on the issuance of Notification under Section 4(1) of the SEZ Act. The section provides discretion to the Central Government to notify an area as a Special Economic Zone only after satisfying certain requirements. Given the flawed selection process and the abandonment of the project by the Government of Puducherry, the appellants had no legal right to demand the issuance of such a notification. The judgment concluded that the appellants' request was untenable.

6. Violation of Principles of Natural Justice:
The principles of natural justice were not violated in this case. The judgment noted that issuing a notice to the appellants would have been an empty formality, as the decision to cancel the project was based on undeniable procedural flaws and the abandonment of the project by the Government of Puducherry. The judgment referenced legal precedents to assert that natural justice principles need not be followed when no other view is possible, and the outcome would remain unchanged.

Conclusion:
The appeals were dismissed, affirming the lower court's decision that the selection process was flawed, the inclusion of Om Metals was improper, and the Ministry of Home Affairs was justified in directing the cancellation of the agreement. The principles of promissory estoppel and legitimate expectation did not apply, and the appellants were not entitled to insist on the issuance of the SEZ notification. The principles of natural justice were not violated in the impugned actions.

---