Union to evolve mechanism to ensure conflicting stands of different departments should be resolved at governmental level itself: Supreme Court

The Supreme Court ordered the Union Government to evolve a mechanism to ensure conflicting stands of different departments should be resolved at governmental level itself.

Background 

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 1962, the Warehousing Corporation Act, 1962 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 executed a Lease and Possession Agreement, thereby granting lease of an undeveloped land within New Mundra Port Limits to Gujarat Adani Port Limited. The said lease was granted for a period of 30 years. 

A communication came to be addressed by the respondent-Adani Ports Special Economic Zone Limited to the appellant-CWC stating therein that, the appellant-CWC had violated Clause 4.2.3 of the agreement, which required the appellant-CWC to obtain and comply with all approvals, consent and permits under the applicable law pertaining to the sub-leased premises and activities proposed to be carried out by the appellant-CWC. Vide the said communication, the appellant-CWC was informed that APSEZL has taken a decision of discontinuing the issuance of gatepasses, and further that it would not permit the appellant-CWC to continue the warehousing activities. 

Arguments 

Senior Advocate Maninder Singh, appearing for the appellant-CWC, submitted that the Division Bench has failed to take into consideration that the area admeasuring 34 acres in possession of the appellant-CWC could not have been included in the SEZ areas. 

He contended that that as per Rule 7 of the SEZ Rules, the developer is required to furnish to the Central Government, particulars required under sub-section (1) of Section 4 with regard to the area referred to in sub-section (2) or sub-section (4) of Section 3 of the SEZ Act.

Senior Advocate Shyam Divan, appearing for the respondents, submitted that APSEZL is not a public body and as such, a writ against it would not be tenable.

He contended that there is no challenge made by the appellant-CWC to the notification of 2006. The said notification has been issued in accordance with the provisions of the SEZ Act. 

He submitted that a perusal of Rule 17 of the SEZ Rules would reveal that a proposal has to be submitted for approval to the Development Commissioner for setting up of a Unit in SEZ. 

Decision 

The division bench of Justice B.R. Gavai and Justice C.T. Ravikumar noted that the appellant-CWC is a statutory corporation. It cannot act as per the independent decisions of any officer and has to act in accordance with the resolution of the BoD. 

It was further noted that the APSEZL, in its proposal, had agreed to underwrite the revenue risk of the appellant-CWC by taking the warehouse to a new location on rent as per the published tariff of the appellant-CWC for the balance period of lease, and the same was accepted by the appellant-CWC only with a rider that APSEZL shall sign an agreement giving a suitable amount of bank guarantee to the said effect.

The bench 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. 

It was stated that the Division Bench goes on to observe that they were prima facie of the opinion that, while the first two conditions taken by the appellant-CWC in its meeting appeared to be fair and reasonable, the 3rd condition which also takes into account the future working escalation, costs etc. does not appear to be fair and may unnecessarily make the dispute linger on. 

The court said that the High Court, in effect, forces the MD of the appellantCWC, which is a statutory body, to accept the first two conditions and leave the 3rd condition to be settled mutually through mediation. 

The court found the observations of the Division Bench totally unwarranted. 

“The High Court ought to have taken into consideration that the appellant-CWC was a statutory body. There are already observations made by the CVC as early as in the year 2010 that the swapping of the warehousing facility from the present site to a changed site would cause serious financial implications and also that there could be various vested interests involved” the bench added.

The court quashed and set aside the judgment and order passed by the Division Bench of the High Court.

The bench remitted back the matter to the Single Judge of the High Court for consideration afresh, to be decided as expeditiously as possible and preferably within a period of six months.

Case title: Central Warehousing Corporation v/s Adani Ports Special Economic Zone Limited (APSEZL) and Others 

Citation: SLP(C) Nos. 15548-49 of 2021  

Click here to read the Order/Judgment 

JurisHour
JurisHour
JurisHour is the fastest online portal for Indian legal news.

Leave a Reply

Your email address will not be published. Required fields are marked *