TaxTMI 
TaxTMI 
2021 (6) TMI 1121
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....7 filed by CWC challenging the communication dated 5.1.2017 of the Private Respondent, APSEZL addressed to the Appellant - CWC. Since the learned Single Judge did not grant any Interim Relief to the Appellant - CWC, hence the present Letters Patent Appeal was filed by CWC, on 11.1.2017. 2. The present Appeal was filed by the Appellant in this Court on 11.1.2017 and on 11.1.2017 itself a Coordinate Bench of this Court passed an Interim Order in favour of the Appellant- CWC permitting the Appellant-Corporation to carry on its business activity of the storing and transportation of the commodities in and from the Warehouse situated within the Special Economic Zone (SEZ) developed by Private Respondent No.2 - GAPL (APSEZL). The said Interim Order was extended from time to time. 3. On 12.1.2021, the learned Counsels submitted before the Court that the parties are trying to settle the dispute out of Court and to finalise the same, some time may be granted. Accordingly, time prayed for was allowed and the hearing was adjourned. On 28.1.2021, this Court passed a detailed order impressing upon the parties to not to delay the settlement process or else the matter may be argued on merits....
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....pondent. Even before the notification was issued under the provisions of the SEZ Act, lease was granted in the year 2004 and the appellant-Corporation has put up construction in the year 2005 and since then they are using the warehouse for storing of food grains etc. 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 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. 5. Direct service today permitted. " Order da....
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....." 5. After hearing the learned counsel, we are, prima facie, of the opinion that while the first two decisions taken by the appellant - Central Warehousing Corporation vide para-6 quoted above appear to be fair and reasonable and which are also agreed to by the respondent No.2 represented by Mr. Kamal Trivedi, learned Senior Counsel, the condition No.3, which also takes into account the future workings and escalations of costs etc. of the appellant - Central Warehousing Corporation, does not appear to be fair and may unnecessarily linger on the dispute. 6. Before us also, on the last date, i.e. on 12.01.2021, the learned counsel for the parties submitted that the parties are likely to arrive at a Settlement and that may avoid the need to decide the appeal on merits. 7. After some submissions, Mr. Maulik Nanavati, learned counsel appearing for the appellant - Central Warehousing Corporation, prays for a short accommodation to take final instructions from the Managing Director of the appellant - Central Warehousing Corporation about the aforesaid condition No.3 and if that can be waived and deleted, the Settlement already arrived at between the parties can....
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.... constructed godown formed part of notified SEZ Area which was developed by APSEZL as Developer in terms of Special Economic Zone Act, 2005 and it was notified as SEZ Area in Gazette by Government of India on 23.6.2006 and as per provisions of SEZ Act and Rules framed there under, particularly, with reference to Rule 11(5) and 11(7) of the SEZ Rules, the Developer APSEZL was not allowed to lease land in SEZ to CWC unless they hold a valid Letter of Approval (LOA) issued by the Development Commissioner (DC) as a SEZ Unit for carrying out authorized activities and since the CWC has failed to obtain the required LOA from the DC, they do not have a legal right to occupy and continue their business activity in the godown on the 34 Acres of land given on sub-lease by the APSEZL to them under the earlier Agreement dated 2.6.2004. Therefore, the said communication asked the Appellant - CWC to either; (a) obtain LOA from the DC as a SEZ Unit in compliance with the provisions of SEZ Act or Rules; or (b) obtain specific permission from DC to carry out the activities of warehousing etc. in the said premise in SEZ by waiving the requirement of being approved as a Unit. 7. F....
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....this Court rightly granted the Interim Relief vide Order dated 11.1.2017, which deserves to be confirmed and the matter may be sent back to the learned Single Judge for decision on merits in accordance with law. 10. The learned counsel for the Appellant - CWCm Mr.Vikas Singh further submitted that the Respondent - APSEZL had approached the Appellant - CWC vide its Communication dated 26.3.2007 with the proposal that since they want to dedicate the said current CWC Area of 34 Acres to Liquid Cargo Business, they would make alternative arrangements for CWC and, therefore, proposed an equivalent plot in Bharat Zone Area outside this SEZ Area and even offered to construct the warehousing facility at their own cost for the Appellant - CWC on such alternative plot outside the SEZ Area for them so that CWC could shift from the SEZ Area. He also submitted that such a proposal was given by APSEZL because it did not disclose the encumbrance by way of sublease in favour of CWC under Agreement dated 2.6.2004 and obtained the Declaration as 'Developer' under SEZ Act from the Court in 2006. He further drew the attention of the Court towards another letter dated 9.3.2017 of the Respondent - AP....
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....and response in this regard. We solicit your kind intervention in the matter for an early conclusion and await your confirmation on the above. Thanking you, Yours faithfully, For Adani Ports and Special Economic Zone Limited sd/- Karan Adani Chief Executive Officer" 12. Mr.Vikas Singh, learned counsel therefore submitted that the Board of Directors of the Appellant - CWC considered the said proposal of the Respondent APSEZL dated 9.3.2019 and agreed in principle to the said proposals in its Board meeting dated 12.6.2019 [Not placed on Record]. This fact is stated in the Affidavit dated 13.6.2019 of Mr.Vishnuvardhan M, Regional Manager of the Appellant-CWC working in the Regional Office of Gujarat Region vide paragraphs 5 and 6 of the said Affidavit which are quoted below for ready reference. "5. I say that prior to the statement being made by the Adani Port Special Economic Zone in the pending court proceedings, as recorded in the order dated 26.4.2019, the Chairman of Adani Port Special Economic Zone held a personal meeting with the Managing Director of the Corporation and subsequent to the meeting sent a letter con....
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....as defined in Section 2 (zc) and has refused to either obtain the approval from the competent Board of Approval as "Co-Developer" or as a "SEZ Unit" defined in the provisions, it intends to continue its warehousing facility at the same place, even as a Non-SEZ law Compliant Unit. 15. Mr. Trivedi submitted that the said Act under Section 51 of the Act provides for overriding effect and notwithstanding anything inconsistent contained in other law or even any instrument like the sub-lease Agreement dated 2.6.2004 the provisions of the said Act and Rules framed thereunder, namely, SEZ Rules, 2006 will prevail and the Appellant cannot claim any immunity from such compliance with this law therefore, the Respondent is entitled to even cancel its lease and prohibit its unauthorized activities as warehousing godown on said 34 Acres of land in notified SEZ Area. 16. Mr. Kamal Trivedi, learned senior counsel further submitted that though APSEZL was under no legal obligation or any contractual obligation, the Respondent offered to undertake the construction of an alternative warehousing facility outside the SEZ Area for Appellant - CWC, on same size plot of land procured at its own cost,....
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....is taking undue advantage and is harassing the Respondent APSEZL contrary to the letter and spirit of the Act and Rules by playing a Big Brother role. He submitted that first two proposals are however still agreed between both the parties and the dispute revolves around only the third proposal which Appellant - CWC is imposing on APSEZL in its own manner. 18. Mr. Kamal Trivedi emphatically submitted that the letter dated 5.1.2017 only asked the Appellant to obtain Letter of Approval (LOA) from Development Commissioner as a SEZ Unit and nothing prevented CWC from doing so or in the alternative even to seek a waiver of such requirements from the Development Commissioner, but instead of becoming a law compliant, the Appellant, a Government of India Undertaking has chosen to involve not only the Respondent - APSEZL in this litigation but even its own Parent viz. the Central Government itself by way of filing another connected Special Civil Application No.5816 of 2017 seeking a delineation or exclusion of said 34 Acres from the SEZ Area notified already in 2006 in favour of the Respondent - APSEZL, for which, the Ministry of Commerce in its joint meeting of the parties had already de....
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....tions of DOC, you are directed to appear for personal hearing at 14.30 hrs on 28.05.2010 before the Development Commissioner, Mundra Port & SEZ at the above office address. Yours faithfully, sd/- (B.Pattanaik) Joint Development Commissioner Mundra Port & SEZ, Mundra." 19. Mr. Trivedi, learned senior counsel also drew our attention to the Minutes of the Meeting held under the Chairmanship of Mr. Alok Vardhan Chaturvedi, Additional Secretary, Department of Commerce on the issue of request of CWC for delineation dated 17.1.2017 which minutes are also quoted below for ready reference. "Minutes of meeting held on 17th January, 2017 at 04.00 PM in Room No.141, Udyog Bhavan, New Delhi under the Chairmanship of Sh. Alok Vardhan Chaturvedi, Additional Secretary, Department of Commerce on the issue request of Central Warehousing Corporation (CWC) for delineation of land occupied by it in APSEZ. List of participants is at Annexure-I 2. Explaining the background, DC, APSEZ informed that in Dec 2002, CWC had entered into MoU with APSEZ for two plots in the SEZ measuring 40 acres and 34 acres. Lease agreement for the plot....
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....from the warehouse within the SEZ. 4. The representatives of APSEZL informed that as per the agreement entered with the CWC, 30 years 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 fro 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 co-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. 6. The meeting ending with vote of thanks to the chair."....
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....etition under Article 226 would not lie, as the Respondent is not a 'State' within the meaning of Article 12 of the Constitution of India. He urged that scope of Letters Patent Appeal under Clause 15 of Letters Patent is much wider and even the Writ Petition filed by the petitioner should be dismissed being misconceived. He also submitted that the Respondent-Company is still willing to abide by the first two proposal given to construct warehouse on the same size at the alternative plot selected by the Appellant - CWC at its own cost, outside the SEZ Area and the Appellant should be directed to shift out of that area without insisting upon the underwriting of business losses vide Condition No.3 insisted by the Appellant which is highly unreasonable and illegal. 23. We have heard learned counsel at length and given out thoughtful consideration to the rival submissions. 24. We are little surprised and also pained at the reticent attitude of the Appellant - CWC, a Central Government Undertaking to have an insistent and persistent approach to remain non-compliant with law and trying to exert pressure on the private Respondent because of its own status. We fail to understand how a ....
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....h an offer in Proposal No.3 to CWC in its letter dated 9.3.2019 but it immediately retracted from the same and modified the said offer vide its letter dated 10.6.2019 to CWC that they cannot compensate on the basis of much higher published tariff of CWC but only on the basis of market tariff. Even that was not accepted by the Appellant- CWC and it expanded the Proposal No.3 of APSEZL in its own manner vide its Affidavit dated 13.6.2019 quoted above i.e. to require APSEZL to give Bank Guarantee for underwriting the business loss of CWC, if any with 6% compounding every year till the full period of its sub-lease upto 16.2.2031. Such a unanimous idea of CWC could not have been thrust upon Respondent - APSEZL, as its proposal on their part and then claim that all the three proposals as contained in letter dated 9.3.2019 were accepted by CWC in its Board Resolution dated 12.6.2019 without taking into account the subsequent letter dated 10.6.2019 of the Respondent - APSEZL and still APSEZL was bound by all the three proposals. There was no consensus ad idem, a sine qua non for a valid contract as far as Proposal No.3 is concerned. However on First and Second Proposal, the parties have su....
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.... communication dated 5.1.2017, prima facie, cannot be said to be any kind of illegal or unreasonable demand against the Appellant - CWC or a breach of the lease conditions of its Sub-Lease Deed dated 2.6.2004 in favour of CWC, which was challenged by the Appellant - CWC in the present Special Civil Application No. 184 of 2017. The aforequoted Minutes of the Meetings held by Ministry of Commerce also supports the case of the Respondent - APSEZL but instead of falling in line to comply with the provisions of the Act and Rules in its letter and spirit, the Appellant - CWC has chosen the war path of litigation against the Union of India as well as the private Respondent, for the reasons best known to it. The other contentions raised on behalf of the Respondent including its preliminary objections may have some force but we are not required to make any comments on the same because we are leaving it open for the learned Single Judge to decide the present Writ Petition as well as the connected Writ Petition against the Union of India. 29. This Court also allowed both the parties to amicably settle the aspect of Proposal No.3, namely underwriting of future business loss of CWC by APSEZL....
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....f material on record to balance the equities in terms of the SEZ Act and Rules and to the extent of agreed terms of Agreements and correspondence between the parties, while sending back both the Writ Petitions to the learned Single Judge for deciding the same in accordance with law. 33. After hearing both the sides at length and in the circumstances of the case, we therefore, issue 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 ....