K. Raheja Corporation Pvt. Ltd. vs State of Goa

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2010 Supreme(Bom) 1655

IN THE HIGH COURT OF JUDICATURE AT BOMBAY (PANAJIBENCH)
A. S. OKA & F. M. REIS, JJ.
K. Raheja Corporation Pvt. Ltd. & Anr.
Vs.
State of Goa & Ors.
Writ Petition No.349 of 2008 WITH Writ Petition No.50 1,507,380,436 to 438, 263, 310, 3 14, 316 of 2008 WITH Misc. Application No.391 of 2009
Decided on: 26th November, 2010.

Advocates:
S/Shri. RA VI KADAM, Sr. Adv. with SURESH GUPTE, Ms. HEMLATAJAIN, Dr. BIRENDRA SARAF, R. G. RAMANI, RANJIT SHETTY and LUCKYRAJ INDORKAR, for the Petitioners.
Shri. S. S. KANT AK, Advocate General with Shri. ABHIJEET KAMAT, Additional Government Advocate for Respondent Nos.l, 4 and 5.
S/Shri. BOMI ZAIWALLA, Sr. Adv. with A. D. BHOBE, for Respondent Nos.2 and 3.
Shri. C. A. FERREIRA, Assistant Solicitor General for Respondent No.6.

Headnote:Special Economic Zones Act, 2005 - Sections 3(6), 3(10) and 4(1)-Recommendations of Board-Withdrawal of by State Government under Section 3(6) of Act-Recommendations can be withdrawn before grant of approval by Board of Approval under Section 3(10) and before issuance of Notification under Section 4(1) of Act-Recommendations cannot be withdrawn after grant of approval and issuance of Notification.-On the basis of the consideration of the provisions of SEZ Act and the SEZ Rules, we hold that before the Board of Approval approves the proposal and before the Letter of Approval is issued by the Central Government, State Government can always withdrawn its recommendation in case the proposal is initiated under sub-section (2) of Section 3 of the SEZ Act. In such a case, Approval cannot be granted on the basis of the recommendation which is withdrawn. Even after a Letter of Approval is issued, but before the notification under Section 4(1) is issued, the Board of Approval and/or the Central Government has a power to withdraw the approval on the basis of withdrawal of the recommendations by the State Government. However, the approval can be cancelled/withdrawn in such a case only after following the principles of natural justice. The fact that several steps have been taken by the developers of the basis of approval will certainly be a relevant consideration which will have to be taken into account by the board.
       Special Economic Zones Act, 2005 - Sections 3(9), (10)-Notified SEZ-De-notification of-Power of Central Government-Whether Central Government can de-notify a notified SEZ without consent of developer-Such a question need not be decided in this petition.-Whether the Central Government can be notify a notified SEZ without the consent of the developer is a question which need not be decided in the present petitions inasmuch as the action of the Central Government of declining to de-notify the SEZ in three cases has not been specifically challenged before us in any of the petition.
       Special Economic Zones Act, 2005 - Section 3-SEZ policy-Withdrawal of-Policy decision of withdrawing earlier SEZ policy-Decision taken after considering reports and relevant factors in public interest-Decision not mala fide-Said decision neither arbitrary nor illegal-Decision just and legal.-In the present cases, the companies have not shown any breach of the constitutional provisions. The role played by a State Government under the scheme of SEZ Act is already discussed in detail. It is for the state to decide whether a recommendation can be made or consent can be given for setting up SEZ in the state and therefore, the state has power to formulate policy in that behalf. There are no mala fides alleged or shown. The policy decision is stated to be taken in public interest. It is based on consideration of reports and relevant factors. It is impossible to hold that the said policy decision of withdrawing the earlier policy is either arbitrary or illegal.
       It is not possible to hold that the said policy decision of withdrawing the earlier SEZ policy is either arbitrary or illegal. The decision is legal which is based on consideration of public interest.
       Evidence Act, 1872 - Section 115-Estoppel-Applica-bility of promissory estoppel-Allotment of land for setting up Special Economic Zones-Withdrawn of SEZ Policy by Government guided by considerations of larger public interest-State Government bound by its alleged promise and representation.-In the present case, considering the decision of the Government of Goa of withdrawal of SEZ policy which is based on consideration of public interest, it will be inequitable to hold the State Government or the GIDC to be bound by its alleged promise and representation.
       Goa Industrial Development Act, 1965 - Section 13, 14, 16 and 28-Allot-ment of land-Acquisition of land under Land Acquisition Act for Industrial development-Lands vested in GIDC-Public properties-GIDC cannot allot such land arbitrarily-Lands can be allotted in a fair and transparent manner and in public interest.-In view of the law laid down by the Apex Court the GIDC cannot arbitrarily allot hand vested in it and the alienations made by the GIDC must stand the test of reasonableness. The allotment of the public properties vested in the GIDC can be made only in a fair and transparent manner and that also in public interest. Therefore, the action of allotment of large tracts of land to the companies will have to be tested on the touchstone of reasonableness.
       Constitution of India - Article 151-Report of Comptroller and Auditor General of India-Recording serious irregularities and illegalities in allotment of lands acquired-Said report, recommendatory in nature-Action can be taken pursuant to it only after it is placed before Legislature.-There were extensive submissions made in the public interest litigation based on the report of the Comptroller and Auditor General of India. It is pointed out that serious irregularities and illegalities in the allotment of lands in favour of the Companies have been recorded in said report (hereinafter referred to as "the CAG Report"). Reliance is placed on Chapter VII of the said CAG Report and it was contended that to the several irregularities and illegalities pointed out in the report, there is no answer by the GIDC. It must be noted at this stage that in view of Article 151 of the Constitution of India and in particular Clause (2) thereof, the report will have to be placed by the Honourable Governor before the Legislature of the State and it is for the Legislature for the State to take further steps in that behalf. The reported is recommendatory tin nature and as of today, the same is not placed before the Legislature. Therefore, the argument based on the CAG report cannot be taken into consideration.
       Constitution of India - Article 226-Public Interest Litigation (PIL)-Delay and latches- Irregularities and illegalities in allotment of land for setting up Special Economic Zones, alleged by petitioner-Delay in filing petition caused due to time spent in obtaining copies of lease deeds etc. by applying under Right to Information Act-Allotments made in 2006-Petition filed in 2008-No undue day in making petition.

A. S. OKA, J.:- These Writ Petitions can be disposed of by a common judgment. The issues involved in these Petitions relate to setting up of Special Economic Zones in the State of Goa. A decision was taken by the Government of Goa to set up the Special Economic Zones ( for short "SEZs") in the State of Goa. Allotment of lands for setting up of SEZs in the State of Goa was made by the Goa Industrial Development Corporation (for short "GIDC") established under the Goa Industrial Development Act, 1965 (for short "GIDC Act"). On the basis of the provisions of the Special Economic Zones Act, 2005 (for short "SEZ Act"), the Central Government granted approvals in certain cases. In three cases, SEZs were notified. Later on, the Government of Goa cancelled the policy of setting up of SEZs in the State ofGoa. On the basis of the withdrawal of the policy, the State of Goa cancelled the recommendations made under the SEZ Act. The Government of Goa issued certain directions on the basis of the cancellation of recommendations. On the basis of the said Directions, the GIDC issued show cause notices to the

companies/developers who were allotted lands on lease for setting up of SEZs.

There were show cause notices issued by the GIDC calling upon the companies/developers to show cause as to why leases should not be cancelled. Writ Petition Nos.349 0[,2008,380 of 2008, 436 of 2008, 437 of 2008, 438 of 2008, 50 I of 2008 and 507 of 2008 have been filed by the companies/developers. The Petitioners in these Petitions have been referred as "Companies" in some parts of this Judgment.

Writ Petition Nos.263 of 2008, 310 of 2008, 314 of 2008 and 316 of 2008 have been purportedly filed in public interest for challenging the allotment of the lands to the companies for setting up of the SEZs. In some of these Petitions, the challenge is to the approvals granted/notifications issued by the Central Government under the SEZ Act.

2. Most of the facts are common to all the Writ Petitions. Sometime prior to the year 1997, Verna Area in Goa was notified by the GIDC for the purposes of setting up industries. The industrial area was set up in Phases - I, II. III and IV. In the year 2000-2001, under Section 4 of the Land Acquisition Act, 1894, notifications were issued for acquisition of various lands for the purpose of the expansion of Verna Industrial Estate. In the year 20002001, the policy of the Union of India for establishments of SEZs came into existence as a part of import and export policy of the year 2000-2001. In the year 2002, the Customs Act was amended by the Union of India by incorporating Chapter XA under the title "Special Provisions relating to the Special Economic Zones". Under the provisions of the said Chapter, the Central Government was empowered to make a suitable provision for establishment of and control of levies and exemptions in SEZs. The Central Government was also empowered to grant exemption in the SEZs. In the year 2003, the acquisition of the lands for Verna Industrial Estate was completed by declaration of awards. In the year 2003, the Goa Industrial Policy was announced. The policy provided for Information Technology and Information Technology enabled services as thrust areas for promotion of industries and development of Goa as an Export and Import Hub. The policy provided for setting up of Software Technology Parks/SEZs. In the year 2005, the Information Technology & Information Technology enabled services Policy of Go a (IT & ITES Policy) was notified by the Government of Goa which, inter alia, envisaged setting up of SEZs with special emphasis on Information Technology Sector. On 23rd June. 2005. the SEZ Act was enacted. Sections 1 0 19, 25 to 30 and 42 to 58 came into force on 10th February, 2006. Sections 31 to 41 came into force on 1st October, 2008. In June 2006, the Government of Goa formulated its own SEZ policy which was duly notified.

3. According to the case of the companies, some of them and other well known developers we

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2010 Supreme(Bom) 1655

Cases Referred (10)