Order allowing Adani to acquire 34 acres set aside
A bench, headed by justice BR Gavai, held that the June 2021 order of the Gujarat high court thrust upon CWC a settlement that was to the detriment of the statutory corporation and to the advantage of a private entity.
The Supreme Court on Thursday set aside a judicial order that allowed Adani Ports Special Economic Zone Ltd (APSEZL) to acquire 34 acres of land adjacent to Mundra Port in Gujarat if the State-run Central Warehousing Corporation (CWC) failed to obtain approval or waiver of its warehousing facility as an SEZ-compliant unit within three months.
A bench, headed by justice BR Gavai, held that the June 2021 order of the Gujarat high court thrust upon CWC a settlement that was to the detriment of the statutory corporation and to the advantage of a private entity.
“When an issue involved the balancing of interests of a statutory corporation and a private company, the approach of the high court ought to have been a balanced one,” said the bench, as it ordered a fresh adjudication of the dispute between APSEZL and CWC by the high court over the piece of land where the latter operates a warehousing facility since 2006 under a sublease valid till February 2031. The high court was asked to decide the matter preferably within six months.
The bench, which also included justice CT Ravikumar, also expressed surprise that the high court directed CWC to comply with two out of the three conditions of the 2019 settlement between them and APSEZL on the shifting of the warehouse elsewhere, but allowed the developer to unilaterally wriggle out of the third condition. The third condition obligated APSEZL to underwrite the revenue risk for CWC for the warehouse at new location on rent.
“The approach adopted by the division bench was, in fact, forcing CWC to accept the settlement... If the high court was so concerned about settlement of the dispute, then, while compelling the CWC to accept the first two conditions, it also ought to have compelled APSEZL to accept the third condition,” it underlined.
The top court further referred to a 2010 finding of the Central Vigilance Commission (CVC) that the shifting the warehousing facility to a new site outside the SEZ area would cause serious financial implications and also that there could be various vested interests involved.
In its judgment, the court also decried discordant voices of two ministries of the central government, asking the Centre to evolve a mechanism where conflicting views are resolved before the matter reaches the court. The statement was made after Union ministries of consumer affairs, food and public distribution maintained that a piece of land can be denotified from an SEZ whereas the commerce ministry claimed such a waiver was not allowed under the law.
“It does not augur well for the Union of India to speak in two contradictory voices. The two departments of the Union of India cannot be permitted to take stands which are diagonally opposite,” said the bench, requesting the Attorney General to look into the issue.
APSEZL and CWC are at loggerheads over the 34-acre plot of land, which the statutory corporation alleges, was included in the SEZ notification despite not being a vacant land due to the developer’s suppression of material facts.
Senior advocate Maninder Singh, representing CWC, had pointed out that the ministry of consumer affairs, clearly said through a communication in 2017 that 34 acres could be denotified from the SEZ area, but the commerce ministry wrongly took a view that such a waiver was not possible. Singh claimed that such requests with respect to other chunks of land, however, were allowed by the commerce ministry at the instance of APSEZL. The counsel added that the commerce ministry’s decision in 2017 to reject CWC’s request for denotifying the plot of land was under a cloud of doubt because it was turned down on the same day when the high court was supposed to hear the case.
Appearing for APSEZL, senior advocate Shyam Divan rebutted all the accusations, adding that CWC could not be allowed to allege suppression of facts when the SEZ notification of 2006 was not under challenge. He said that the continuation of the warehousing facility was in contravention of the SEZ Act and that APSEZL had given the proposal to CWC for an equivalent plot at an alternative location in 2007 itself. About the requirement of having a vacant land for notification as a SEZ, Divan said that the developer submitted the application in 2004 and a such the 2005 SEZ Act and 2006 Rules will not apply.
