advocatemmmohan

My photo

ADVOCATEMMMOHAN -  Practicing both IN CIVIL, CRIMINAL AND FAMILY LAWS,Etc.,

WELCOME TO LEGAL WORLD

WELCOME TO MY LEGAL WORLD - FOR KNOWLEDGE IN LAW & FOR LEGAL OPINIONS - SHARE THIS

Friday, February 23, 2018

corporate laws - Section 5 of the Indian Ports Act, 1908, - notification dated 18th January, 2016, issued under Section 5 of the Indian Ports Act, 1908, by which the State Government of Gujarat expanded the port limits of Hazira port. = can not questioned - it has not been shown to us as to how the impugned notification is contrary to public interest. - the power of the Government to alter the limits of any port under Section 5(1) of the Indian Ports Act must be done only in public interest a commercial port’s limits were altered in public interest because the number of vessels at Hazira port were expected to increase dramatically and it was, therefore, necessary to make adequate facilities not only for anchorage of such vessels, but also for reasons of customs formalities, port conversion, general security etc. We are not, therefore, satisfied that the notification is ultra vires Section 5 of the Indian Ports Act. We have already seen that the Appellants have no ‘right’ to private property in view of the fact that the ownership of the captive jetty that has been constructed and the ownership of reclaimed land is with the GMB/State Government. For this reason also, the notification is intra vires as the alteration in the limits of Hazira Port does not affect any ‘right’ of the Appellants to private property.

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 2406 OF 2018
(Arising out of SLP (C) No.21364 of 2017)
ESSAR BULK TERMINAL LIMITED
& ANR. … APPELLANTS
VERSUS
STATE OF GUJARAT & ORS. … RESPONDENTS
J U D G M E N T
R.F. NARIMAN, J.
1. Leave granted.
2. The present appeal involves a challenge to a
notification dated 18th January, 2016, issued under
Section 5 of the Indian Ports Act, 1908, by which the
1
State Government of Gujarat expanded the port limits of
Hazira port. It is the case of the Appellants before us that
by doing so, the Appellants have been affected because
they have spent huge monies on lands reclaimed by
them, which would be directly affected by the expansion
of the aforesaid port limits.
3. The brief facts necessary for determining the
questions that arise in this appeal are as follows.
In 1994, the parent company of the Appellants entered
into an agreement with the Gujarat Maritime Board
(hereinafter referred to as “GMB”) for use of a captive
jetty in Magdalla port. Pursuant to a Port Policy framed
by the Government of Gujarat in 1995, and a Build, Own,
Operate and Transfer (BOOT) Policy framed for private
sector participation in development of the State’s ports in
1997, the GMB issued a Global Notice for Expression of
Interest for Development of Green Field Site Port
Facilities, inviting bids in the name of Hazira port project.
2
A consortium led by Shell Gas B.V. was selected to
develop, operate and maintain certain facilities on leased
area in the port on a BOOT basis, together with related
LNG facilities. Pursuant to the acceptance of its bid, Shell
Gas B.V. created two subsidiaries in Gujarat, namely,
Hazira Port Private Limited (HPPL) and Hazira LNG
Private Limited. A concession agreement dated 22nd
April, 2002 was entered into between the GMB, the State
Government and HPPL for the purpose of development,
operation and maintenance of Hazira port by HPPL. A
notification dated 23rd June, 2004 was issued by the State
Government notifying Hazira port and setting out its limits,
in exercise of powers under Section 4(2) of the Indian
Ports Act. This was carved out of the port limits of
Magdalla port, which was so reduced as to exclude the
aforesaid Hazira port.
4. Sometime in the year 2000, the Appellants had set
up a shallow draft captive jetty of 456 meters at the mouth
3
of the River Tapi, which connected to the sea at a
distance of about 7 kilometers. The initial depth of the
aforesaid draft captive jetty was about 3 to 4 meters.
5. As many as three Memorandums of Understanding
(MOU) were entered into between the Appellants, the
GMB and the State Government in the years 2007, 2011
and 2013, inter alia, for development of a RORO terminal
and development of the water-front of 3000 meters.
Each of these MOUs was only for a period of 12 months.
6. On 25th November, 2010, HPPL identified Adani
Hazira Port Private Limited (Adani) as its
sub-concessionaire, and entered into a sub-concession
agreement with Adani on the same date. On 21st July,
2014, HPPL requested the GMB for
amendment/extension of its port facilities. After entering
into an MOU with Adani, dated 27th February, 2015, for
exploring business opportunities, which fell through,
HPPL, by its letter dated 14th March, 2015, revised its
4
request for amendment of port facilities, citing the need
for additional back-up area, as a result of which a much
larger area than what was originally asked for was now
requested. This larger area would include lands reclaimed
and/or to be reclaimed by Essar by dumping earth out of
dredging the canal next to the captive jetty of the
Appellants. This proposal was approved by the GMB by
its resolution dated 19th March, 2015. Meanwhile, on 7th
April, 2015, Essar wrote a detailed representation to the
GMB stating its objections to the extension of port limits
on various grounds. On 21st April, 2015, the State
Government wrote a letter to the GMB, inter alia, asking it
to examine the aforesaid representation of the Appellants.
A similar representation dated 29th May, 2015 was also
made by the Appellants to the Chief Principal Secretary of
the State. By a detailed letter dated 16th July, 2015, the
GMB dismissed all the objections of the Appellants.
However, on 26th August, 2015, the State Government
requested the GMB to reconsider the issue of extension
5
of port facilities in its forthcoming board meeting, and
send its recommendations to the Government in relation
thereto. On 28th September, 2015, the GMB passed a
resolution in which it recommended the original proposal
submitted by HPPL on 21st July, 2014. However, on 5th
December, 2015, the Chief Principal Secretary to the
Chief Minister circulated a note stating that the number of
vessels at the port was expected to increase dramatically
from 30-40 to 70-80, and that the port limits need to be
extended to accommodate customs formalities, safety
etc. In view thereof, it was necessary to make adequate
facilities for anchorage of all the said vessels and that,
therefore, the GMB’s resolution of 19th March, 2015
should be strictly implemented. On 11th December, 2015,
the State Government then wrote to the GMB stating that
the port facilities will be extended in terms of the GMB
resolution dated 19th March, 2015. Following this, the
requisite notification dated 18th January, 2016, which has
been impugned by the Appellants in a writ petition before
6
the Gujarat High Court, was then issued under Section 5
of the Indian Ports Act.
7. Shri Mihir Joshi, learned senior counsel appearing
on behalf of the Appellants, has argued that the first
proposal alone, which was sent on 21st July, 2014, ought
to have been accepted by the GMB. The second
proposal for the increased area would directly impinge
upon the land that was reclaimed or to be reclaimed by
the Appellants, after spending huge monies for the same.
The learned senior counsel specifically stated that the
approval for the second proposal was done in great
haste, within a matter of four days. He went on to add
that the State Government had, by its letters dated 1st
June, 2013, recommended to the Ministry of Environment
to grant CRZ clearance to Essar for the proposed
expansion of port facilities, which included additional 334
hectares of land. It was his case that the said Ministry, on
6
th May, 2014, granted the aforesaid clearance, despite
7
which the expanded port limits would now eat into the
aforesaid area, as only an area of 140 hectares out of 195
hectares, which was reclaimed by the Appellants, could
be used by the Appellants. He argued that various
assurances were given and MOUs were entered into with
the Appellants, on the basis of which huge investments
were made, and at the very least the doctrine of legitimate
expectation would be attracted. He attacked the
notification stating that it was ultra vires Section 5 of the
Indian Ports Act, which required public interest alone to
be seen. Indirectly, the extension of the limits of Hazira
port would grant HPPL an extended port area without
bidding, which would be contrary to the Gujarat
Infrastructure Development Act, 1999. According to him,
the overlapping of area with Essar was only in the second
proposal, which was wholly arbitrarily recommended by
the GMB initially approving the second proposal of 2015,
and thereafter correctly approving only the first proposal
of 2014. The GMB’s resolution of 28th September, 2015
8
was the correct decision, which could not have been
arbitrarily interfered with by the Chief Principal Secretary
of the Chief Minister, on the basis of which the impugned
notification has been issued.
8. On the other hand, Shri Harish Salve, learned
senior counsel appearing on behalf of the State of
Gujarat, painstakingly took us through the Port Policy of
1995 and the BOOT Policy of 1997. According to the
learned senior counsel, since 13 berths were to be
constructed, out of which 5 berths have already been
constructed, a total of 1011 hectares was already
allocated for port related activities to HPPL. This would
be clear from a reading of the detailed project report
(DPR) of 2010, and this being the case, the expansion of
port limits by the impugned notification was well within the
originally conceived area of 1011 hectares. He referred to
and relied upon affidavits submitted by the State
Government as well as the GMB before the High Court, to
9
argue that Essar’s demands for reclaimed land had
nothing to do with the expansion of the limits of Hazira
port. They operated in two completely different spheres.
He further went on to state that no permission under
Section 35 of the Gujarat Maritime Board Act, 1981 has
been given to reclaim any land, which was a condition
precedent to Essar’s demands for further reclaimed land.
He also pointed out that, being a captive port, Essar’s
production was much less than what was projected and,
in fact, only 30% of the cargo that it was supposed to
handle was being handled. According to the learned
senior counsel, the objections to the expansion of Hazira
port’s limits are completely misconceived, inasmuch as
what the Appellants really sought was for their captive
port to become a commercial port by bypassing the
provisions of the Gujarat Infrastructure Development Act.
In any case, the Appellants’ captive jetty was grossly
underutilised and the Appellants demands for grant of
reclaimed land has nothing to do with HPPL demanding
10
an alteration to the limits of Hazria Port, so as to cater to
the increased traffic of a commercial port open to all.
9. Shri Tushar Mehta, learned Additional Solicitor
General appearing on behalf of the GMB, adopted the
arguments of Shri Salve. In addition, he defended the
GMB’s approval dated 19th March, 2015, stating that
despite the fact that the said approval came within four
days of the HPPL letter dated 14th March, 2015, this paled
into insignificance as nothing followed from this. Also,
according to the learned ASG, on an examination of the
official records, he found nothing in support of the GMB’s
turn-around on 28th September, 2015, which accepted
only the first and not the second proposal of HPPL.
According to him, finally what was done by the State
Government was in public interest and for good reason.
10. Shri Kapil Sibal, learned senior counsel appearing
on behalf of HPPL and Adani, painstakingly took us
through various letters written by the Appellants to the
11
GMB and permissions given. According to the learned
senior counsel, it was clear that from a reading of the
initial proposals of 2005 and 2006, and the later proposals
of the Appellants that their real aim was to conduct
commercial operations on their captive jetty, which would
circumvent the need for a global tender as required by the
Gujarat Infrastructure Development Act. In essence, he
also submitted that as the Appellants could claim no right
or expectation of any sort and as the present petition was
not a public interest litigation, the writ petition should have
been dismissed at the threshold as the Appellants could
show no right or expectation of any kind. Dr. Singhvi and
Shri Harin P. Raval broadly supported the contentions of
Shri Sibal.
11. Before dealing with the arguments of counsel, it is
important to set out some of the important provisions of
the relevant Acts before us. Sections 3(9), 4 and 5 of the
Indian Ports Act read as under:
12
“3(9). “Government”, as respects major ports,
for all purposes, and, as respects other ports
for the purposes of making rules under clause
(p) of section 6(1) and of the appointment and
control of port health officers under section 17,
means the Central Government, and save as
aforesaid, means the State Government.
4. Power to extend or withdraw the Act or
certain portions thereof
(1) Government may, by notification in the
Official Gazette.-
(a) extend this Act to any port in which this Act
is not in force or to any part of any navigable
river or channel which leads to a port and in
which this Act is not in force;
(b) specially extend the provisions of section
31 or section 32 to any port to which they
have not been so extended;
(c) withdraw this Act or section 31 or section
32 from any part thereof in which it is for the
time being in force.
(2) A notification under clause (a) or clause (b)
of subsection (1) shall define the limits of the
area to which it refers.
(3) Limits defined under sub-section (2) may
include any piers, jetties, landing-places,
wharves, quays, docks and other works made
on behalf of the public for convenience of
traffic, for safety of vessels or for the
improvement, maintenance or good
government of the port and its approaches
whether within or without high-water-mark,
13
and, subject to any rights of private property
therein, any portion of the shore or bank within
fifty yards of higher-water-mark.
(4) In sub-section (3) the expression
“high-water-mark” means the highest point
reached by ordinary tides at any season of the
year.
5. Alteration of limits of ports
(1) The Government may, subject to any rights
of private property, alter the limits of any port
in which this Act is in force.
Explanation.- For the removal of doubts, it is
hereby declared that the power conferred on
the Government by this sub-section includes
the power to alter the limits of any port by
uniting with that port any other port or any part
of any other port.
(2) When the Government alters the limits of a
port under sub-section (1), it shall declare or
describe, by notification in the Official Gazette,
and by such other means, if any, as it thinks
fit, the precise extend of such limits.
Section 35(1) of the Gujarat Maritime Board Act reads as
under :
“35. (1) No person shall make, erect or fix
within the limits of a port or port approaches,
any wharf, dock, quay, stage, jetty, pier, place
of anchorage, erection or mooring or
undertake any reclamation of foreshore within
the said limits except with the previous
14
permission in writing of the Board and subject
to such conditions, if any, as the Board may
specify.
(2) If any person makes, erects or fixes any
wharf, dock, quay, stage, jetty, pier, place of
anchorage, erection or mooring or undertakes
reclamation of foreshore in contravention of
sub-section (1), the Board may, by notice
require such person to remove it within such
time as may be specified in the notice and if
the person fails so to remove it, the Board
may cause it to be removed at the expense of
that person.”
Further, Sections 8, 9 and 10 of the Gujarat Infrastructure
Development Act read as under:
“Section 8 - Selection of a person
(1) A concession agreement for undertaking a
project may be entered into with a person who
is selected through a competitive public
bidding as provided in section 9 or by inviting
comparative bids as provided in section 10 or
by direct negotiation as provided in
section 10A.
(2) The matters relating to competitive
bidding, inviting comparative bids and direct
negotiation shall be such as may be
prescribed.
Section 9 - Selection of person by
competitive public bidding
15
On the acceptance of the recommendation of
the Board made under sub-section (2) of
section 5, the State Government, the
Government agency or, as the case may be,
the specified Government agency shall select
a developer for the project through
competitive public bidding in the manner as
may be prescribed.
Section 10 - Inviting comparative bids.
(1) Where a proposal for undertaking a project
and a proposed concession agreement
prepared by a person are submitted to the
State Government, the Government agency or
a specified Government agency, it may,
(a) consider the proposal and the proposed
concession agreement from all aspects
(including technical and financial) and if
necessary, modify the same in consultation
with the person who has submitted the
proposal and the proposed concession
agreement; and
(b) submit the proposal and the proposed
concession agreement to the Board, if - (i) the
cost of the project exceeds the limit provided
by regulations under sub-section (1) of section
5, and
(ii) the undertaking of the project does not
require financial assistance from the State
Government, the Government agency or the
specified Government agency.
(2) On acceptance of the recommendation of
the Board made under sub-section (2) of
section 5, the State Government, the
16
Government agency or, as the case may be,
the specified Government agency shall adopt
the proposal as the basis for selecting a
person with whom concession agreement for
undertaking the project may be entered into,
and for selecting such person, the State
Government, the Government agency or, as
the case may be, the specified Government
agency shall follow the procedure of
competitive public bidding prescribed under
section 9.
(3) Where a person is selected by following
the procedure of the competitive public
bidding (hereinafter referred to as “the
selected person”), the proposal of the selected
person shall be compared with the proposal
which is earlier submitted by a person to the
State Government, the Government agency
or, as the case may be, the specified
Government agency under sub-section
(1) (hereinafter referred to as “the earlier
proposer”).
(4) Where the proposal of the earlier proposer
is not preferable to the proposal of the
selected person, the earlier proposer shall be
given an opportunity to make his proposal
competitive with that of the selected person
within a period of thirty days from the date on
which he has been given the opportunity and
where the earlier proposer fails to do so within
the said period, the State Government, the
Government agency or, as the case may be,
the specified Government agency may enter
into a contract with the selected person.
17
(5) (a) Where a concession agreement has
not been entered into with the earlier
proposer, the cost of preparation of the
proposal and the concession agreement
incurred by him shall be reimbursed by the
State Government, the Government agency
or, as the case may be, the specified
Government agency and on such
reimbursement, the proposal and the
concession agreement submitted by the
earlier proposer shall be the property of the
State Government, the Government agency
or, as the case may be, the specified
Government agency.
(b) The cost of preparation of the proposal
and the concession agreement shall be
determined in such manner as may be
prescribed.”
12. It is also necessary to set out some parts of the Port
Policy of 1995 and the BOOT Policy of 1997.
“Gujarat Port Policy
Gujarat envisages an integrated port
development strategy, consisting of creation of
port facilities, industrialisation and
development of infrastructure facilities like
roads and railways in the hinterland. It is
estimated that around 3 billion dollars (Rs.
10,000 crores) would be required to create
new port facilities along with necessary
infrastructure in the coming 5 years. In view of
the fact that ships of large sizes are used in
the transportation, for the economies of scale
18
in international trade, ports would be
developed with direct berthing facilities and
speedy mechanical handling facilities, so as to
reduce waiting period of the ships and saving
in the cargo expenses. To expedite creation of
port facilities by 2000 AD, it is proposed to
have the participation of private enterprise in
the development of port infrastructure.
The following ports are identified for exclusive
investment by private sector:
1. Simar Power port
2. Mithiwirdi Steel and Automobile port
3. Dholera General Cargo port
4. Hazira Industrial port
5. Vansi-Borsi Petroleum & liquid chemical
 port
6. Maroli Industrial port
These ports will be privatised through a global
tender bid. Gujarat Maritime Board will do a
preliminary techno-economic feasibility report
of all these five locations except Dholera,
through a global bid to facilitate prospective
bidders. Dholera, being an ancient port and
privatisation bids were invited in the past, no
techno-economic feasibility will be done for
this location. Dholera port will be the first port
to be opened up for privatisation by global
tendering. For remaining locations based on
the preliminary techno-economic study, global
tenders will be invited for privatisation.
General guidelines are given below.
19
These port locations are to be given on BOMT
(Built, Operate, Maintain and Transfer) basis.
The investment in infrastructure projects like
ports being capital intensive, with higher
gestation period compared to other sectors of
investment, Government of Gujarat is very
particular that the port projects taken up by
private entrepreneurs should be a profitable
proposition to them. The viability of port
project depends upon the location, the
maritime conditions, scale of investment and
the kind of cargo to be handled. The port
project has to be assured at a reasonable rate
of return after accounting for capital recovery
and interest repayment. Hence, it is essential
that each port project is evaluated based on
an investment analysis; consisting of a capital
cost, revenue receipts, revenue expenditure
and capital recovery. Gujarat Maritime Board
will study the financing pattern adopted by the
World Bank and the Asian Development Bank
and other Financial Institutions to evolve a
comprehensive package.
Only the wharfage charges/waterfront charges
will be as per the schedule decided by Gujarat
Maritime Board. The promoters will be free to
charge any other service charges with the
prior approval of the Gujarat Maritime Board.
After BOMT period, the ownership of the port
and its assets will get transferred to Gujarat
Maritime Board and they will examine to give
it further on lease basis to the same promoter.
The terms and conditions will be finalised at
that time. The general guidelines for
investment analysis and capital recovery for
20
the port projects to determine BOMT period
will be announced within 2 months.
CAPTIVE JETTIES FOR INDUSTRIES
To ensure that the new port projects are
financially viable, permissions for captive
jetties would be given only in exceptional
cases, looking to the quantum of investment
and the need for specialised facilities. All
industrial units would be encouraged to make
use of new port facilities being set up.
To take care of the increasing traffic until the
completion of the new port projects, it is
decided to make use of the existing captive
jetties already constructed or under
construction, for which the permission has
already been given, to be utilized for specific
commercial cargos with the prior approval of
the Gujarat Maritime Board.
(1) This facility would be available for a
reasonable period till new ports become
operative. GMB will review the policy taking
into account the progress made in the new
ports.
(2) Gujarat Maritime Board would be entitled
to collect full wharfage charges on the cargos
handled, which are not captive to the industrial
units.
Looking to the huge amount of cargo handled
in a short period, captive Single Point Mooring
(SPM) facilities of industries located in Gujarat
will be charged at concessional rate of
21
wharfage for their captive consumption.
Nevertheless, for captive cargo for industries
located outside Gujarat and non-captive
commercial and industrial cargo, will be
charged full wharfage by Gujarat Maritime
Board.
Gujarat BOOT Policy
“Developer”- The word “Developer” has been
used in this document to convey the various
roles played by private parties at different
stages of the development of the port.
(III) OWNERSHIP RIGHTS OF DIFFERENT
PARTIES
1. Ownership rights
of the Government
The Government is vested with
sovereign rights as owner,
overseer and conservator of
the waterfront and licensor to
the Contract.
2. Ownership
Rights and
responsibilities of
the Developer
The Ownership rights of the
Developer would include:
• The right to mortgage,
hypothecate or to execute
such covenants as may be
required for effectively
vesting a charge on the port
assets in favour of a lender to
the project.
• The right to sell, convey or
transfer to another entity, the
right title and interest and
concession vested in the
Developer, on the request of
a lender to the project,
22
subject to contractual
documents. The new
Developer will be selected by
the lender in consultation with
the GMB, and if necessary,
the terms and conditions of
the concession Agreement
may be renegotiated.
xxx xxx xxx
6. Expansion of
facilities and
Competition
between ports
(a) Expansion of facilities
The developers would be
encouraged to add capacity over
and above the capacity
contracted in the concession
agreement. Such expansions will
be eligible for incentives by the
Government, such as land
acquisition, extension of royalty
holidays etc.
At the time of the signing of the
Concession Agreement, the
Developer will submit, and get
approved by GMB, a broad
perspective plan for the
development of the port in the
next fifteen to twenty years. The
Government will not place
restrictions on any expansion and
further development of the port
which is within the envisaged
perspective plan, subject to
statutory clearances. Expansions
outside the scope of this plan
would be subject to the approval
23
of the GMB.
(b) Competition between ports
The Government would
encourage competition between
ports. The following, however,
would be ensured:
• The development of the ten
ports would be appropriately
phased over a period.
• Permission to set up captive
jetties would not be granted,
save in exceptional
circumstances.
13. At this point, it is important to refer to the
correspondence between the Appellants and the GMB.
By their letters dated 11th July, 2005 and 13th October,
2006, the Appellants stated that as Essar Steel was in the
process of doubling its steel production capacity and that
it was proposed to handle cargo around 25 MMT, it would
require a captive jetty of 550 meters. This would be in
addition to the jetty which was already constructed of 592
meters plus 456 meters. In addition to the aforesaid, the
Appellants sought permission to deepen the navigational
24
channel upto 8 meters depth, so as to enable direct
berthing of deep draught vessels up to 75,000 dead
weight tonnage (DWT). For deepening the channel, the
dredged material would have to be dumped and the
Appellants sought permission, vide their letter dated 2nd
March, 2007, to dump the dredged material on an area of
about 252 hectares on the north side of the mangroves.
In addition to the 550 meters jetty, the Appellants also
requested the GMB to allot 38 hectares of back-up area.
By a letter dated 14th June, 2007, the GMB granted
in-principle approval for allotment of 400 meters
waterfront, with back-up area, so as to create a direct
berthing port, in which the channel could be dredged, so
as to obtain a draft of 8 meters. Apart from stating that
Essar will have to obtain all required permissions and
clearances, four conditions are of importance in this letter
and are set out hereinbelow:
“3. The new channel to be created by Essar
will be common user channel and will be
allowed to be used by all other users. Essar
25
shall not be entitled to recover any charges
from other users, if they use the new channel.
7. The ownership of reclaimed land shall vest
with the Government of Gujarat/Gujarat
Maritime Board.
8. Essar shall not claim for reimbursement of
any expenditure incurred for this reclamation.
10. Essar has to reclaim 319.86 hectares area
of inter tidal/mud flats except 67 hectares
allotted to M/s HPPL and the portion of area in
front of 67 hectares towards sea.”
14. Vide their letter dated 29th August, 2007, the
Appellants demanded that 1100 meters, in addition to the
550 meters waterfront that was applied for earlier, be
given. The Appellants also sought permission for
allotment of 252 hectares of land to be reclaimed as
back-up area. By their letter dated 1st October, 2012, the
GMB granted in-principle approval for allotment of 1100
meters waterfront to the Appellants.
15. By their letter dated 15th October, 2008, the
Appellants asked the GMB to allow them to dredge the
channel from 8 meters depth to 10 meters depth to
26
accommodate capesize vessels of 105,000 DWT. Since
material dredged from the channel would have to be
dumped, an additional area of 316 hectares, towards the
south of the mangroves, to dump the material and reclaim
the said area was applied for. No such permission was
granted by the GMB to go from a depth of 8 meters to 10
meters or to reclaim any area to the south of the
mangroves. Shri Mihir Joshi, however, pointed out a
completion certificate dated 11th February, 2010, in which
it was mentioned that the width and depth of the channel
is being increased to 300 meters and 10 meters below
CD respectively in Phase-2. However, this would clearly
not amount to permission for the same, as all that was
stated in the completion certificate was a reference to a
deep water berth of 8 meters depth below CD, the 10
meters depth being something which may be increased in
future.
27
16. Despite this, what is clear from the record is that the
Appellants appear to have actually dredged the channel
to a depth of 14 meters and appear to have reclaimed an
area of 164 hectares plus 170 hectares to the south of the
mangroves, without any permission at all. When this was
pointed out to Shri Mihir Joshi, the answer given was that
when permission is granted under Section 35(1) of the
Gujarat Maritime Board Act, a letter granting such
permission specifically says that it is permission that is
granted under Section 35(1) and for this purpose, a letter
dated 2nd August, 2008 was referred to. According to him,
therefore, the letter dated 14th June, 2007, which referred
only to an NOC for reclamation, could not be given the
status of permission under Section 35(1). According to
the learned counsel, therefore, if Section 35(1) were to be
read with Section 35(2), it would be clear that permission
for reclamation would only be necessary if a private asset
were to be created in the hands of a private person.
However, it is clear that the asset to be created belonged
28
only to the Government of Gujarat and it was for the GMB
to grant permission to the Appellants to use the same.
We are afraid that it is difficult for us to accept this line of
argument. Section 35(1) is couched in negative language
and does not refer to private rights being created.
Section 35(2) cannot be read so as to throw light on
Section 35(1), as under Section 35(2), the GMB is only
given a discretionary power to require a person, who has
acted in contravention of Section 35(1), to remove the
illegal erection. The wide language of Section 35(1)
cannot be whittled down by Section 35(2) in the manner
argued by Shri Joshi, as the GMB may or may not utilise
the discretionary power granted to it under Section 35(2).
The plain language of Section 35(1) cannot be curtailed
by reading by inference, into sub-section (2), the fact that
the GMB may, by notice, require a person to remove an
erection, only when it has been made without previous
permission, so as to create a private asset in the hands of
a private person. The wide language of Section 35(1)
29
makes it clear that any reclamation within the limits of the
GMB cannot be carried out except with the previous
permission in writing of the GMB. It is clear, therefore, that
dredging to a depth of below 8 meters and reclamation of
any area to the south of the mangroves was done by the
Appellants in the teeth of Section 35(1) of the Gujarat
Maritime Board Act.
17. Mr. Sibal laid great stress on the letter dated 15th
November, 2012 to show that, in point of fact, what the
Appellants were really angling for was to conduct
commercial operations beyond the captive requirements
of the Essar Steel plant at Hazira. This letter, while
asking for an addition of 3700 meters in addition to the
existing 1100 meters waterfront, also went on to speak of
developing a 700 meters berth, along with the GMB, for
handling commercial cargo. Apart from this, Essar
planned to build a world class container terminal and a
dry dock, which would serve the shipping industry
30
generally. It also proposed to reclaim a further 334
hectares land on the southern side with the additional
dredged material. A perusal of this letter would leave no
doubt about the fact that despite Essar Steel’s production
being at much less than what was projected, the
Appellants’ continued demands would show that the real
motive was to go beyond a captive jetty and to develop a
commercial port which, as we have seen, cannot be done
without a global tender under the Gujarat Infrastructure
Development Act.
18. As stated hereinabove, as many as three MOUs
were executed between the Appellants, the GMB and the
State Government, which MOUs were valid only for a
period of 12 months and were stated not to have granted
any right to the Appellants, who would incur all the
expenditure for the same. This being the case, it is a
little difficult to appreciate Shri Joshi’s contention that any
legitimate expectation could be based on any of the
31
aforesaid expired MOUs. The High Court is correct in its
conclusion that no such expectation could possibly have
arisen out of the aforesaid MOUs or the correspondence
between the Appellants and the GMB referred to.
19. It is also important to note from the correspondence
between the Appellants and the GMB, that the Appellants
were clearly told that the land to be reclaimed by the
Appellants would not only belong to the Government of
Gujarat, but also that the GMB could utilize the aforesaid
land for any purpose. What seems to emerge on a
reading of the letters between the parties is that the
Appellants wished to dredge the canal, at their own cost,
which was next to their captive jetty, for their own
purposes, for which they obtained the necessary
permission. However, since dumping of earth, which
would emerge as a consequence of dredging, into the
open sea would be extremely expensive, it was stated
that instead this earth could be dumped to create
32
reclaimed land next to the captive jetty, which would then
benefit both the Appellants and the GMB. In point of fact,
140 hectares out of 195 hectares that is reclaimed by the
Appellants is allocated to the Appellants for their own
purposes, the balance to be given as and when a jetty of
1100 meters plus 3700 meters of waterfront is
constructed. The argument that huge amounts had been
spent to reclaim land is wholly fallacious - huge amounts
were spent to dredge a canal which was permitted as the
Appellants alone were to bear the cost, and as an
increased draft would benefit all, as the canal was open to
all to use. Therefore, any plea as to a legitimate
expectation of reclaimed land being allocated for the
Appellants’ own use, thanks to large amounts being
spent, is contrary to the correspondence by the
Appellants themselves.
20. In point of fact, it is important at this stage to advert
to the GMB’s detailed reply, dated 16th July, 2015, to the
33
State Government, in which it examined the
representation made by the Appellants dated 7th April,
2015 and rejected the same. This letter expressly states
that it deals with the representation of Essar, with the
comments of the GMB on the side of the representation of
Essar. The following extracts from the aforesaid letter are
of great importance and are set out hereinbelow:
No. Representation of
Essar Ports Ltd. to
Hon’ble CM
Comments
1. EBTL through an
investment of more
than Rs. 2000 Cr. has
been operating deep
draft 550m jetty since
2010 and caters to the
Essar’s Steel plant
cargo requirement.
The steel plant is
expected to ramp up
its production in line
with its 10 MMTPA
capacity and would
require augmented
marine facility and
back up area for
handling its increased
cargo requirements.
The Proposed port limit
excludes the area of
550m jetty and back-up
area behind the jetty.
Hence, it has no effect.
The present capacity of
the steel plant is 10
MMTPA whereas the
actual steel production at
the plant in the year
2014-15 is only 3.15
MMTPA. No firm/definite
plans for augmentation
in steel production are
submitted.
34
2. GMB had given NOC
for reclamation of 319
ha. in June 2007,
pursuant to which
Essar started the
process for
development of back
up land for its
expansion. The
allotment of the
reclaimed land to
Essar was also
decided in the meeting
held under the
chairmanship of the
then Chief Secretary
in November 2009.
EBTL has developed a
channel of more than
7 km length with
capacity to handle up
to 11m draft vessel
and has plans to take
it up to 14m draft and
have waterfront of
more than 5 km.
GMB had granted NOC
to dump dredged
material for 310 Ha. of
land in the mudflat area
shown in the map
attached as Annexure 3.
However, as per the
DILR report, the actual
reclaimed area is only
approx. 195 Ha. Out of
this area approx. 98
hectares of reclaimed
land is excluded from the
proposed expansion of
port limit. Further, a
specific condition was
mentioned in the NOC of
GMB that the ownership
of the reclaimed land
shall vest with
GMB/GOG.
Further it is also be
noted that NOC granted
to EBTL for reclamation
is also beneficial to the
company. In case of
non-issuance of NOC
for dumping the dredged
material in the mudflat
area (very close to
dredged area) the
company had to dump
the dredged material in
the mid sea (very far)
which would have been
expensive.
3. In order to develop The proposal for
35
commercial port
facilities, EBTL
submitted a proposal
to GMB in 2008 and
signed MOU with
GMB for expansion by
3.7 km. waterfront
along with the
associated back up
land during vibrant
Gujarat 2013 in the
presence of Shri.
Narendra ModiHon’ble
Prime Minister
of India. Pursuant to
this Essar has
invested substantial
amount in terms of
time and money for
development of the
same. After the
necessary
recommendation from
the Government of
Gujarat EBTL has
received the
environment clearance
of 6th May 2014. EBTL
has made investment
of more than Rs.
15000 Cr. till date for
development of
waterfront and land
reclamation (233 Ha)
and is in the process
of reclaiming further in
order to undertake
development of
commercial ports
facilities was received.
But, the permission
granted to Essar is only
for captive purpose and
thus, without performing
bidding process, there is
no policy of GOG to
convert captive port
facilities into a
commercial port
terminal. Further HPPL
has already rights under
concession agreement to
develop common
commercial port facilities
cannot be accepted.
GMC or GOG has never
granted such permission
for commercial port
facilities development by
Essar.
36
their planned
expansion while their
application remains
pending.
6 The proposed
expansion of port
limits not only
constrains the
existing steel plant
operations but, also
infringe on EBTL
expansion as
explained above,
thereby jeopardizing
the proposed port
facilities for industry.
Any step which
restricts EBTL’s
development plans
would deprive a port
based industry of its
growth and realizing
its full potential.
The future plans of EBTL
are for commercial port
operation. There is no
policy to convert captive
port facilities into
commercial port facilities
as there is no bidding
process involved. Hence,
the same may not be
acceptable.
37
8. Essar plant at Hazira
is the largest
integrated steel plant
facility in India at a
single location and
any impact on the
operation of the same
would be lead to
substantial loss to the
exchequer. Essar
group has invested
more than INR 44500
Cr. in the Hazira
complex in its steel,
power and ports
business group
infrastructure.
Essar has following
captive port facilities
operational.
N
o.
Jetty Capacity
(MMTPA)
1. 456 m
lightera
ge Main
jetty
5
2. 592 m
lightera
ge (1st
expansi
on)
5
3. 550 m
deep
water
berth
(2nd
expansi
on)
15
Tota
l
1598 m 25
Further, GOG has
approved further 1100m
waterfront for deep water
jetty (3rd expansion) for
which construction
permission is yet to be
accorded by GMB.
Adding this 1100m
waterfront, total
jetty/wharf of 2698m will
be utilized by EBTL.
38
Against the capacity of
25 MMTPA, EBTL has
handled cargo as per
Annexure 4. It is seen
that during the last year
2014-15 Essar has
handled total 10 million
tons of cargo against the
existing capacity of 25
MMTPA.
Further, the company
has gradually reduced
usages of the main jetty
of 456m, the cost of
construction has already
been set off and full
wharfage is payable.
EBTL has reduced the
cargo handling at the
main jetty and it has
diverted to 550m deep
water jetty where the set
off of the cost is
available and thus, the
concessional wharfage
rate is payable.
In furtherance to the above, the following
points may please be seen:
(1)- (3) xxx xxx xxx
39
(4) ESSAR has submitted details vide letter
dated 7th April, 2015 of various proposals to
GMB for development of waterfront and
back-up area from time to time. GMB as a
regulatory authority scrutinizes every proposal
and submits to Govt. for necessary approval.
It is to be noted that GMB granted NOC for
dumping dredge material in mudflat area at
Magdalla to ESSAR vide letter dated 14th
June, 2007 (Annexure 5) with a condition that
the ownership of reclaimed land shall vest
with GMB/GOG (Condition No.7) and ESSAR
shall not claim reimbursement for any
expenditure, incurred for this reclamation
(Condition No 8).”
21. A perusal of the objections of Essar and the
comments offered by the GMB would show that, first and
foremost, actual steel production at the plant is way below
capacity, with no firm or definite plans for augmentation.
In fact, in the GMB’s affidavit filed in the High Court, it is
stated that only 30% of the total capacity of cargo sought
to be projected by the Appellants from 2011 onwards was,
in fact, being handled by the Appellants. Also, it was
noted that the reclaimed land will be of the ownership of
either the Government or the GMB, and, that it is
40
beneficial to the company, as otherwise the dredged
material would have to be dumped in the sea which would
have been very expensive. However, Shri Joshi referred
us to a statement, made in a rejoinder affidavit by the
Appellants in the High Court, to the effect that the cost of
dumping dredged material to reclaim land was at least
twice as much as the cost of dumping the dredged
material in the sea. This bald averment made in an
affidavit, without any supporting material, cannot be
accepted at its face value. The answer to objection 3 is
again of great importance, in that the GMB was alive to
the fact that Essar is really attempting to convert its
captive jetty into a commercial port, without entering into
any bidding process, contrary to the Gujarat Infrastructure
Development Act. Further, in answer to objection 8, the
GMB states that the jetty is 1598 meters long with the
further 1100 meters which the Government has approved
for a capacity of 25 MMTPA, against which Essar has
41
handled only 10 million metric tonnes of cargo in the year
2014-15.
22. At this point it is also important to note that the
GMB’s affidavit filed in the High Court also specifically
states that the reclaiming of 334 hectares of land by
dredging the channel to 14 meters’ depth was never
approved by the GMB. Thus, the argument that the area
of 170 hectares and 164 hectares of reclaimed land,
which the altered limits of the port has been said to
impinge upon, has no legs to stand, in view of the fact
that no prior permission has been taken under Section 35
of the Gujarat Maritime Board Act to add reclaimed land
to the main land, as has been stated hereinabove. Added
to this, the area of 195 hectares that has been reclaimed
is allocated to the Appellants for their own use – 140
hectares immediately and the balance only after approval
and construction of the further elongated jetty. It is clear
that even if the Appellants’ plea were to be accepted, the
42
alteration of the limits of the port cannot possibly be said
to affect the Appellants’ rights qua reclaimed land, which
has been reclaimed illegally i.e. without prior permission
under the Gujarat Maritime Board Act. Thus, the CRZ
clearance by the Ministry of Environment and Forests
dated 6th May, 2014 for reclamation of 334 hectares of
land does not further the Appellants’ case in any way.
23. We now come to the Appellants’ argument of the
haste that is shown by the GMB in recommending the
second proposal for altered limits. True, the GMB did act
within 4 days of the said proposal, but this fact, without
anything more, to demonstrate mala fides or lack of public
interest, cannot possibly hold water. It is also to be noted
that Shri Salve’s plea, that 13 berths would require 1011
hectares of adjacent land and that much less land than
1011 hectares has been allocated for the use of a
commercial port, has to be accepted.
43
24. The further plea, that the forest land to the north
consisting of 300 hectares, having now been acquired in
October, 2016, would enure to the benefit of HPPL, would
also not take the Appellants’ case any further, as even
these 300 hectares would be subsumed within the
requirement of 1011 hectares, as has been pointed out, in
the DPR of 2010.
25. There can be no doubt that Shri Joshi’s plea that
the power of the Government to alter the limits of any port
under Section 5(1) of the Indian Ports Act must be done
only in public interest is correct. However, it has not been
shown to us as to how the impugned notification is
contrary to public interest. The affidavits filed in the High
Court, by the State Government and the GMB, show that
a commercial port’s limits were altered in public interest
because the number of vessels at Hazira port were
expected to increase dramatically and it was, therefore,
necessary to make adequate facilities not only for
44
anchorage of such vessels, but also for reasons of
customs formalities, port conversion, general security etc.
We are not, therefore, satisfied that the notification is ultra
vires Section 5 of the Indian Ports Act. We have already
seen that the Appellants have no ‘right’ to private property
in view of the fact that the ownership of the captive jetty
that has been constructed and the ownership of reclaimed
land is with the GMB/State Government. For this reason
also, the notification is intra vires as the alteration in the
limits of Hazira Port does not affect any ‘right’ of the
Appellants to private property.
26. In conclusion, for the reasons given by us in the
present judgment, the appeal deserves to be dismissed.
The appeal is dismissed with no order as to costs.
……………………………J.
(R.F. Nariman)
……………………………J.
(Navin Sinha)
New Delhi;
February 22, 2018.
45

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.