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TMI Blog2021 (6) TMI 1121X X X X Extracts X X X X X X X X Extracts X X X X ..... ation 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. The said Interim Order dated 28.1.2021 is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 dated 26.04.2019: "1. Heard learned advocate for the parties. 2. On behalf of respondent No.2, following statem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... poration 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 be finalised as the agreed Settlement of Dispute between the parties and the appeal can be disposed of in terms of the aforesaid terms. 8. In the interest of justice, we grant said s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia 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. Feeling aggrieved by the said Communication of the Private Respondent - APSEZL, the CWC approached the learned Single Judge by way of aforesaid Writ Petition (Special Civil Application No.184 of 2017) on which the afores ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned 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 - APSEZL, in which, three proposals were given to the Appellant - CWC for shifting to another warehousing facility to be constructed by Respondent - APSEZL outside the SEZ Area. The said three proposals from letter dated 9.3.2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore 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 containing similar proposal. A copy of the said letter is annexed herewith and marked as Annexure AA-1. 6. I say that the proposal submitted by Adani Port Special Economic Zone was included as an agenda item for discussion in the meeting of the Board of Directors of the Corporation held on 12.6.2019. The members of the board, after due deliberation, have resolved to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing 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, taking a fair and benevolent view so that APSEZL could to carry out its SEZ development activities in a lawful and appropriate manner in accordance provisions of the said Act and Rules. It offered to construct such alternative facility for the Appellant - CWC outside the said SEZ Area at a place chosen and selected by CWC only and despite agreeing to the same, the Appellant - CWC is now trying to unne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 decided on 10.5.2010 that it was not possible to do so. This would be clear from communication dated 19.5.2010 of the Ministry of Commerce, Government of India, New Delhi, addressed to Appellant - CWC which is quoted below for ready reference. "GOVERNMENT OF INDIA MINISTRY OF COMMERCE & INDUSTRY, OFFICE OF THE DEVELOPMENT COMMISSIONER, 4TH FLOOR, "C" WING, PORT USER'S BUILDING, MUNDRA PORT AND SPEC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... WC 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 for 34 acres, which is now in dispute, was signed in June 2004. CWC took possession of the same but did not get the agreement registered with the Revenue authorities. He informed that subsequently, on 23.06.2006, Mundra SEZL, now APSEZL, was notified which included the 34 acres with CWC. CWC constructed its warehouse on the piece of land. In September, 2008, DC, APSEZ issued notice to CWC for non-compliance of provisions of SEZ Act and Rules and requested APSEZL to initiate action to exclude the plots with CWC from SEZ limits. CWC, on 14.10.2008, requested A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion 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." 20. Mr. Trivedi, learned senior counsel therefore, submitted that these Minutes dated 17.1.2017 of Ministry have also been challenged by the Appellant - CWC in separate Special Civil Application No.5816 of 2017 against the Union of India and the Respondent -APSEZL. 21. Mr. Kamal Trivedi, drew the attention of the Court towards the SEZ Rules, 2006 particularly, Rule 7 which requires Details to be furnished for issuing of Notification for declaration of an area as Special Economic Zone which inter alia requires a Developer to give a declaration that the said area is free from all encumbrances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 body corporate of the stature of CWC can have any 'Ego' which is a vice of a human being and a juristic person, of course managed by human beings, can definitely have a better democratic and consensual decision making process at its top level. The CWC in the present case, is not only in this spree of litigation against the private Respondent - APSEZL but also against its own parent, namely, the Central Government challenging its action of not agreeing with the CWC to exclude its existing area of Warehouse from the SEZ Area, which was allotted to the private Respondent - APSEZL and is being developed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase 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 such a mutual consensus ad idem and therefore a valid Agreement to that extent can be said to have come into existence between them. 27. A bare perusal of the scheme of SEZ Act, 2005 would indicate that this is an overriding special law to promote exports and to create specially carved out Economic Zones within the country, which can be developed by Developer as defined in the Act and who may be either Central Government, State Government or even a private party having land available with it. Section 53 of the Act provides that the SEZ area will be deemed to be a territory outside the customs territory of In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst 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 in the matter and as the Court proceedings would indicate that on quite a few occasions, the matter was adjourned to allow the top level management meetings for both corporate bodies and to arrive at an amicable settlement but unfortunately it could not happen and that is why the present Appeal itself was required to be heard on its own merit. 30. We are therefore of the opinion that both the parties can now start working upon the mutually agreed first two proposals, namely, providing of land of the same size by the Respondent - APSEZL to Appellant - CWC outside the SEZ zone at the cost of APSEZL and to constru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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