Court quashes land allotment cancellation, directs re-consideration. Genuine difficulties considered.

The court quashed the order canceling the land allotment in the SEZ due to the petitioner's failure to commence production within the stipulated time. The court directed reconsideration of the petitioner's de-notification request, finding it feasible without significant prejudice to others in the SEZ. The petitioner's genuine difficulties were considered, leading to a directive for re-examination by the first respondent within six months, with steps taken under the Tamil Nadu Public Premises Act, 1975, being quashed.

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Issues Involved:

1. Validity of the cancellation of land allotment to the petitioner in the SIPCOT Hi-Tech SEZ.
2. Petitioner's request for de-notification of the SEZ unit.
3. Compliance with the terms and conditions of the allotment order and lease deed.
4. Feasibility of de-notifying the petitioner's unit from the SEZ.
5. Legal implications of the petitioner's failure to commence production within the stipulated time.

Detailed Analysis:

1. Validity of the Cancellation of Land Allotment:

The petitioner challenged the impugned order dated 29.09.2020, which canceled the allotment of land in the SIPCOT Hi-Tech SEZ. The cancellation was based on the petitioner's failure to commence construction and commercial production within the stipulated time as per the allotment order and lease deed. The court noted that the petitioner had breached several conditions, including the requirement to commence production within 30 months from the date of the allotment order.

2. Petitioner's Request for De-Notification:

The petitioner requested de-notification of its SEZ unit due to the unviability of operating under SEZ rules. The petitioner highlighted difficulties, including the exit of key customers and the need to supply to the domestic market. The court examined whether de-notification would cause prejudice to the respondents or other units in the SEZ. The court found that no significant prejudice would be caused and directed the first respondent to reconsider the de-notification request.

3. Compliance with Terms and Conditions:

The court reviewed the petitioner's compliance with the terms and conditions of the allotment order and lease deed. It was found that the petitioner had not commenced construction or production within the stipulated time, leading to the issuance of show cause notices and the eventual cancellation of the allotment. The court noted that the petitioner had faced genuine difficulties, including a global economic downturn and the exit of key customers.

4. Feasibility of De-Notifying the Petitioner's Unit:

The court examined the feasibility of de-notifying the petitioner's unit from the SEZ. The first respondent argued that de-notification was not feasible as the unit was located in the midst of the SEZ, and it would disrupt the contiguity of the SEZ area. The court, however, found that de-notification was possible without causing significant disruption and directed the first respondent to re-examine the issue.

5. Legal Implications of Failure to Commence Production:

The court considered the legal implications of the petitioner's failure to commence production within the stipulated time. The court noted that the petitioner had heavily invested in the unit and that de-notification would allow the petitioner to operate viably as a Domestic Tariff Area (DTA) unit. The court directed the first respondent to reconsider the de-notification request and recommend appropriate action to the Central Government.

Conclusion:

The court quashed the impugned order dated 29.09.2020 canceling the allotment of land and directed the first respondent to reconsider the petitioner's request for de-notification. The case was remitted back to the first respondent for re-examination, and the steps taken under the Tamil Nadu Public Premises (Eviction of Unauthorised Occupants) Act, 1975, were also quashed. The court directed the first respondent to complete the reconsideration process within six months.

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