TMI Blog2018 (2) TMI 1953X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 - the notification is intra vires as the alteration in the limits of Hazira Port does not affect any 'right' of the Appellants to private property. Appeal dismissed - decided against appellant. - Civil Appeal No. 2406 of 2018 (Arising out of SLP (C) No. 21364 of 2017) - - - Dated:- 22-2-2018 - Rohinton Fali Nariman and Navin Sinha, JJ. For Appellant: Mihir Joshi, Sr. Adv., Keyur Gandhi, Priyal Parikh, Divanshi Singh, Rudreshwar Singh and Kaushik Poddar, Advs. For Respondents: Tushar Mehta, ASG, Harish Salve, Neeraj Kishan Kaul, Kapil Sibal, Abhishek Manu Singhvi, Harin P. Raval, Sr. Advs., Hemantika Wahi, Vishakha, Samar Kachwaha, Chanan Parwani, Akash Lamba, Varun Mathur, Nikhil Goel, Naveen Goel, Ashutosh Ghade, R.N. Karanjawala, Ruby Singh Ahuja, Vishal Gehrana, Sahil Monga, Siddharth Gupta, Sandeep Singh, Manik Karanjawala, Advs. for Karanjawala Co. and Lawyer's Knit Co. JUDGMENT Rohinton Fali Narima ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 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, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition, 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 turnaround 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubts, 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 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 Sub-section (1), the Board may, by notice require such person to remove it within such time as may be speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 tothe 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. (5) (a) Where a concession agreement has not been entered i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on by global tendering. For remaining locations based on the preliminary techno-economic 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 packag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his 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 be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cord 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 grant permission to the Appellants to use the same. We are afraid that it is difficult for us to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18. As stated hereinabove, 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 is a little difficult to appreciate Shri Joshi's contention that any legitimate expectation could be based on any of the aforesaid expired MOUs. The High Court is correct in its conclusion that no such expectation could possibly have arisen out of the aforesaid MOUs or the correspondence between the Appellants and the GMB referred to. 19. It is also important to note from the correspondence between the 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 obtaine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Essar and the comments offered by the GMB would show that, first and foremost, actual steel production at the plant is way below capacity, with no firm or definite plans for augmentation. In fact, in the GMB's affidavit filed in the High Court, it is stated that only 30% of the total capacity of cargo sought to be projected by the Appellants from 2011 onwards was, in fact, being handled by the Appellants. Also, it was noted that the reclaimed land will be of the ownership of either the Government or the GMB, and, that it is beneficial to the company, as otherwise the dredged material would have to be dumped in the sea which would have been very expensive. However, Shri Joshi referred us to a statement, made in a rejoinder affidavit by the Appellants in the High Court, to the effect that the cost of dumping dredged material to reclaim land was at least twice as much as the cost of dumping the dredged material in the sea. This bald averment made in an affidavit, without any supporting material, cannot be accepted at its face value. The answer to objection 3 is again of great importance, in that the GMB was alive to the fact that Essar is really attempting to convert its captive j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6, would enure to the benefit of HPPL, would also not take the Appellants' case any further, as even these 300 hectares would be subsumed within the requirement of 1011 hectares, as has been pointed out, in the DPR of 2010. 25. There can be no doubt that Shri Joshi's plea that the power of the Government to alter the limits of any port Under Section 5(1) of the Indian Ports Act must be done only in public interest is correct. However, it has not been shown to us 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 Hazira 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 formalities, port conversion, general security etc. We are not, therefore, satisfied that the notification is ultra vires Section 5 of the Indian Ports Act. We have already seen that the Appellants have no 'right' to private property in view of the fact that the ownership ..... X X X X Extracts X X X X X X X X Extracts X X X X
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