TaxTMI 
TaxTMI 
2022 (10) TMI 465
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....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 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 ....
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....ication No.184 of 2017 and the learned Single Judge keeping in view the conduct of the applicant-party 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 appellant-Central 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 ....
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....he 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 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 3....
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....ed 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 appellant-CWC could not have been included in the SEZ areas. 15. Shri Maninder Singh submitted that from Clause 2.1 of the agreement da....
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....d 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. 18....
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.... 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 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 y....
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....s 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 appellant-CWC 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 appellant Corporation is using the leased area after making constructions for storage and for transportation of food grains, if abruptly they are stopped ....
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....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 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 ag....
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....is also requested to keep the Commission posted regarding the future developments in this regard. 3. Commission has further observed that there may be vested interest in shifting of CWC warehouse-apart from the cost involved and possibility of loosing business by CWC, hence, it will be desirable to have a close check on the issue and monitor its progress/developments." 31. The CVC has clearly observed that due to the presence of CWC warehouse, various kinds of developmental activities have been undertaken by other related government undertakings like Railway etc. It has further been observed that by shifting the warehouse to another place, GAPL will be unduly benefited and at the same time, the appellant-CWC will not only lose business but will also have to struggle afresh in creating the same kind of infrastructure at the new location. The CVC further observed that there could be a vested interest in shifting of the CWC warehouse. 32. It is further to be noted that, though the Ministry of C&I has been taking a stand that the delineation/denotification was not permissible, another Ministry of the Union of India has been taking a contrary stand. It will be relevant to....
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....b-leased premises of CWC from SEZ area. Since APSEZL did not take any action in this regard, CWC took up the matter with Ministry of Commerce on 10.04.2015 for de-lineation and de-notification of its plots. The Department of Food and Public Distribution also took up this matter on behalf of CWC before the Department of Commerce vide letters dated 17.07.2015 and 17.06.2016. (Annexure-2) (iv) With regard to minutes of meeting held on 17.01.2017 in Department of Commerce, wherein it has been stated that there was no possibility of de-lineation as there was no provision in SEZ Act and SEZ rules for such de-lineation, the Department of Food and PD is of the view that the stand of Department of Commerce is not correct. In fact, there are provisions for de-lineation/partial de-notification of areas within SEZ which have been circulated by Department of Commerce vide letter No. D.J2/4S/2009-SEZ dated 13.09.2013 (Annexure-3). However, as per these provisions, it is the responsibility of the developer i.e. APSEZL to take action for such de-lineation or partial de-notification. There is precedent for such partial de-notification, which has taken place in the SEZ at Jamnagar on the in....
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....-leased premises of the appellant-CWC in the SEZ areas by suppressing the facts. It is stated that, since the appellant-CWC has already taken possession of the plot on 1st August 2004, i.e., much before the date of SEZ notification dated 23rd June 2006, the said area could not have been included in the SEZ areas. It is stated that, since it was the obligation of APSEZL to take action to delineate/denotify the sub-leased area, and since it has taken no such steps, the appellant-CWC was required to take up the matter with the Ministry of C&I. The said communication clearly states that the view of the Ministry of C&I that there was no possibility of delineation/denotification was not a correct stand. It is also stated that there are also precedents of such partial denotifications taking place. It has been stated that the value of the plot of the appellant-CWC has appreciated several times due to development around it and the alternate land is not only of low value but also less suitable from a business point of view. It is stated that the appellant-CWC has also not agreed to this proposal for alternate land due to serious financial implications. A reference has also been made to the o....
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....as per existing) may be created by M/s. APSEZ as per the specification of CWC, within the period of twelve (12) months. (iii) M/s. APSEZ shall take the whole covered space so created along with remaining open area at CWC's existing public tariff with 6% annual escalation (compoundable) on dedicated warehousing basis for entire period of lease i.e. till 16.2.2031, underwriting the business and other risks of the Corporation and shall sign an agreement, giving suitable amount of bank guarantee to this effect." 38. It could thus be clear that APSEZL, in its proposal dated 9th March 2019, had agreed to underwrite the revenue risk of the appellant-CWC by taking the warehouse to a new location on rent as per the published tariff of the appellant-CWC for the balance period of lease, and the same was accepted by the appellant-CWC only with a rider that APSEZL shall sign an agreement giving a suitable amount of bank guarantee to the said effect. 39. However, after a period of almost three months, APSEZL retracted from its proposal dated 9th March 2019 vide its communication dated 10th June 2019, which reads thus: "Dear Sir, This has reference to our letter d....
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....uary 2021, the Division Bench goes on to observe that they were prima facie of the opinion that, while the first two conditions taken by the appellant-CWC in its meeting dated 12th June 2019 appeared to be fair and reasonable, the 3rd condition which also takes into account the future working escalation, costs etc. does not appear to be fair and may unnecessarily make the dispute linger on. After observing this and granting a short accommodation to the counsel for the appellant-CWC to take instructions from the MD of the appellant-CWC, the Division Bench observed thus: "9. We make it clear that any further delay in their decision-making will not be allowed and if the said settlement is not agreeable to the appellant - Central Warehousing Corporation, an Affidavit of the Managing Director of the appellant - Central Warehousing Corporation disclosing the reasons for the same may be submitted, on which, appropriate orders may be passed by this Court on next date." 45. The High Court, in effect, forces the MD of the appellant-CWC, which is a statutory body, to accept the first two conditions and leave the 3rd condition to be settled mutually through mediation. The offer giv....
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....o had opposed such a swapping. Rather than the High Court being surprised with the conduct of the appellant-CWC, it is we who are surprised with the observations made by the High Court. 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 appellant-CWC, 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. 48. In any event, the writ petitions before the learned Single Judge are very much pending. If the impugned order of the High Court remains in force, there remains nothing to be decided in the said writ petitions. The question as to whether the first writ petition is tenable or not will be a question that will have to be decided by the learned Single Judge. Undisputedly, the second writ petition which s....