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SUPREME COURT OF INDIA
B.R. GAVAI, C.T. RAVIKUMAR, JJ.
Central Warehousing Corporation – Appellant
Versus
Adani Ports Special Economic Zone Limited (APSEZL) and Others – Respondents
Civil Appeal Nos. 7277-7278 of 2022, SLP (C) Nos. 15548-15549 of 2021
Decided On : 13-10-2022
CENTRAL WAREHOUSING CORPORATION - SEZ ACT - SECTION 4, 7, 11, 17, 18, 19 - SEZ RULES - RULE 7, 11, 17, 18, 19 - The Supreme Court held that the High Court erred in castigating the appellant-CWC. The impugned judgment and order of the High Court is almost thrusting a part of the settlement on the appellant-CWC. The relocation of the warehouse to a new location on rent as per the published tariff of the appellant-CWC is not the solitary decision of an individual. 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.
Fact of the Case:
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 Corporation under the 1962 Act. In the year 2000-2001, the Gujarat Maritime Board (for short “GMB”) executed a Lease and Possession Agreement, thereby granting lease of an undeveloped land within New Mundra Port Limits to Gujarat Adani Port Limited (for short “GAPL”). The said lease was granted for a period of 30 years. Vide the said agreement, GMB also granted development rights under a Concession Agreement dated 17th February 2001 to GAPL to develop the port and other facilities. By an agreement dated 2nd June 2004, GAPL sub-leased a plot of land admeasuring about 34 acres to the appellant-CWC for the purpose of setting up a warehouse to be used for storage and handling of foodgrains, notified commodities and related activities. The lease of the land was for a term up to 16th February 2031. After the said agreement was executed and the possession of the said land was handed over to the appellant-CWC on 1st October 2004, the appellant-CWC set up two Godowns each with a capacity of 33,000 MT. The appellant-CWC also made payments at the rate of Rs.603 per sq. metre, i.e., about Rs. 8.29 crores for the development of infrastructure in the year 2005. The Special Economic Zones Act, 2005 (for short “SEZ Act”) came into force on 23rd June 2005. The Special Economic Zones Rules, 2006 (for short “SEZ Rules”) were also notified on 10th February 2006. Vide notification dated 23rd June 2006 issued by the Ministry of Commerce and Industry, Government of India (for short “Ministry of C & I), a vast area came to be notified as a Special Economic Zone (for short “SEZ”). The appellant-CWC made a representation dated 10th April 2015 to the Ministry of C&I for delineation/de-notification of the said 34 acres of land from the SEZ. Till the year 2017, there was no obstruction to the appellant-CWC in utilizing the said area.
Finding of the Court:
The Supreme Court held that the approach adopted by the Division Bench was, in fact, forcing the appellant-CWC, which is a statutory body, to accept the settlement. The offer given by APSEZL on 9th March 2019 was a composite one so also the acceptance thereof by the appellant-CWC was a composite one. The acceptance of the first two conditions was also dependent upon the 3rd condition. If the High Court was so concerned about settlement of the dispute, then, while compelling the appellant-CWC to accept the first two conditions, it also ought to have compelled APSEZL to accept the 3rd condition. The Supreme Court also held that the High Court erred in castigating the appellant-CWC. The impugned judgment and order of the High Court is almost thrusting a part of the settlement on the appellant-CWC. The relocation of the warehouse to a new location on rent as per the published tariff of the appellant-CWC is not the solitary decision of an individual. 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.
Issues: Whether the High Court erred in castigating the appellant-CWC and thrusting a part of the settlement on it.
Ratio Decidendi: The Supreme Court held that the High Court erred in castigating the appellant-CWC. The impugned judgment and order of the High Court is almost thrusting a part of the settlement on the appellant-CWC. The relocation of the warehouse to a new location on rent as per the published tariff of the appellant-CWC is not the solitary decision of an individual. 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.
Final Decision: The Supreme Court allowed the appeals, quashed and set aside the judgment and order dated 30th June 2021 passed by the Division Bench of the High Court in LPA No. 22 of 2017 in SCA No. 184 of 2017 with SCA No. 5816 of 2017, and remitted back the SCA Nos. 184 and 5816 of 2017 to the learned Single Judge of the High Court for consideration afresh, to be decided as expeditiously as possible and preferably within a period of six months from the date of this judgment. Until further orders are passed by the learned Single Judge, the interim order dated 26th April 2019 passed by the Division Bench in LPA No. 22 of 2017 shall continue to operate. The Supreme Court clarified that its order would not come in the way of the parties in arriving at a settlement which would be acceptable to both the parties.
JUDGMENT :
B.R. GAVAI, J.
1. Leave granted.
2. The appeals challenge the judgment and order dated 30th June 2021 passed by the High Court of Gujarat at Ahmedabad in Letters Patent Appeal (LPA) No. 22 of 2017 in Special Civil Application (SCA) No. 184 of 2017 with SCA No. 5816 of 2017, and Miscellaneous Civil Application No. 1 of 2021 in the above LPA, vide which the Division Bench of the High Court has issued 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.
(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 the Appellant-CWC on such terms and conditions in consonance with the previous Agreement between the parties vide Lease Agreement dated 2.6.2004 or under such mutually agreed terms as may be agreed afresh between the parties.
(iii) Once the completed construction on the land outside the SEZ Area, already identified and selected by CWC, is offered to the Appellant-CWC, the Appellant-CWC shall vacate the existing premises of the warehousing facility on the said 34 acres of land situated within SEZ area within three months of such communication of the Respondent-APSEZL and the Appellant-CWC shall be bound to hand over the peaceful and vacant possession of existing warehousing facility and land of 34 Acres in question to the Respondent-APSEZL within such period of three months of the communication of the Respondent-APSEZL that new warehousing facility on the land situated outside the SEZ area is ready to be taken in possession and occupied by CWC.
(iv) If the Appellant-CWC fails to hand over the vacant and peaceful possession to the Respondent, even thereafter, the Respondent-APSEZL shall be free to approach this Court or the concerned Development Commissioner or the learned Single Judge or other authorities of the State for appropriate execution of these directions of this Court.
(v) That regarding Proposal No. 3 about underwriting of the future business loss of CWC on the basis of published tariffs or market tariffs or otherwise, the parties are left free to make efforts for amicable settlement of this issue between themselves with the help of Development Commissioner or the Mediation process under Section 89 of Civil Procedure Code in the High Court annexed Mediation Centre, where services of Senior Trained Mediators can be made available to the parties at the appropriate point of time.
(vi) For the aforesaid period of 18 months of timeline involved in the aforesaid directions namely, three months under Clause (i) and one year or 12 months under Clause (ii) and three months for handing over the vacant possession under Clause (iii) aforesaid, the interim order granted by the coordinate bench of this Court on 11.1.2017 shall continue to operate
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