CWC vs Adani Ports SEZ: SC sets aside Gujarat HC order directing CWC to seek waiver as SEZ compliant

The Supreme Court on Thursday set aside the Gujarat High Court order, which asked the Central Warehousing Corporation (CWC) to obtain approval or a waiver as a SEZ compliant unit from the competent authority in respect of its warehouse facility situated in 34 acres within SEZ Area developed by Adani Ports Special Economic Zone (APSEZL).

A bench comprising Justices B.R. Gavai and C.T. Ravikumar said: “We are… of the considered view that the impugned judgment and order of the High Court dated 30th June 2021 is not sustainable in law.”

The top court said the high court forced the MD of the CWC, which is a statutory body, to accept the first two conditions and leave the third condition to be settled mutually through mediation.

It noted that the offer given by the APSEZL on March 9, 2019 was a composite one so also the acceptance thereof by the 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 the APSEZL to accept the 3rd condition,” said the bench, adding that the observations of the high court’s division bench were totally unwarranted.

It also expressed concern at diagonally opposite stands taken by two ministries — Ministry of Commerce & Industry and Ministry of Consumer Affairs, Food and Public Distribution — of the Union of India in the matter.

“We are of the considered view that 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 top court. The bench directed the registry to furnish a copy of this judgment to the Attorney General to use his good offices and do the needful.

The top court said the division bench totally ignored the stand taken by the Ministry of Consumer Affairs, Food, and Public Distribution, which too had opposed such a swapping (the warehouse facility from the present site to a changed site). “Rather than the High Court being surprised with the conduct of the appellant – CWC, it is we who are surprised with the observations made by the High Court. When an issue involves 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,” it said.

It added that the high court ought to have taken into consideration that, unless all the three conditions were complied with, the interest of the appellant – CWC, which is a statutory corporation, could not have been safeguarded. “If a settlement was to be arrived at, unless the same was found to be in the interest of both the parties, it could not have been thrust upon a statutory corporation to its detriment and to the advantage of a private entity,” it noted.

The CWC, which is operating a warehouse comprising two units with a total capacity of 66,000 MTs at the 34-acre plot, challenged the unlawful inclusion of its land in the SEZ area.

The high court had given three months time to the CWC to either seek and obtain approval as a SEZ compliant unit from the competent authority under the SEZ Act or obtain a waiver of the conditions to comply with the provisions of SEZ Act as a SEZ Unit. If he CWC failed to get such approval within three months, the APSEZ was directed to acquire the land of the same size outside SEZ area for the construction of a warehouse facility within one year. The high court asked the CWC to vacate and give possession of its existing warehousing facility and the land within three months after a new alternative arrangement was made by the APSEZ.

The apex court remitted back pleas by the CWC to the single judge of the high court for consideration afresh, and also 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 single judge, the interim order dated 26th April 2019 passed by the Division Bench in LPA No. 22 of 2017 shall continue to operate. We clarify that our order would not come in the way of the parties in arriving at a settlement which would be acceptable to both the parties,” it said.

20221013-195004

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