demand notice issued demanding to pay due amount on affixing less stamps= Though under Clause 30(iv) the office which accepts the posting is required to check the bundles franked for correct postage and also to tally the total value of the articles, before dispatch of the article, there is failure on the part of the office of the Postal Authority as noticed by the Division Bench of the High Court and for that the sender company cannot be made liable. 36. The Postal Authority mislead the sender company which caused charging of lesser amount for the bills is evident from the letters written by the Director, as quoted in the preceding paragraphs. The failure on the part of the Postal Authority to ensure correct postage as per Clause 30(iv) is also not in dispute. The mistake having been committed by the Postal Authority and there being failure on the part of office of the Postal Authority to check the postal articles and postage for recovering the amount from the addressee, it is not open for the Postal Authority to pass on such liability on the sender-company or to recover the same from the Company. The demand notice being not proper was rightly held to be illegal by the learned Single Judge. The question thus raised in this case is answered in negative and against the respondents. 37. In the result, the appeals are allowed. The demand notice and the order passed by the Division Bench of the High Court is set aside; the last portion of the direction given by the learned Single Judge authorizing the Postal Authority to decide the issue afresh and allowing them to retain the amount of Rs. 50 lakhs till such decision is also set aside. The respondents are directed to refund the amount of Rs.50 lakhs deposited by the Company pursuant to the interim order passed by the High Court along with 6% interest within three months from today. There will be no order as to costs.

                                                                  REPORTABLE

                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO. 2606 OF 2006

CESC LTD.                                      ….  APPELLANT

                                   Versus

CHIEF POST MASTER GENERAL & ORS.      .… RESPONDENTS

                                    WITH

                        CIVIL APPEAL NO. 2607 OF 2006

CESC LTD.                                      ….  APPELLANT

                                   Versus

CHIEF POST MASTER GENERAL & ORS.      .… RESPONDENTS


                               J U D G M E N T


SUDHANSU JYOTI MUKHOPADHAYA, J.

      These appeals have been  preferred  by  the  appellant-  CESC  Limited
(hereinafter referred to as the “Company”)  against  the  common  order  and
judgment dated 20.1.2004 whereby the Division Bench  of  the  Calcutta  High
Court allowed the appeal preferred by the first respondent- the  Chief  Post
Master General, West Bengal Circle and others (hereinafter  referred  to  as
the “Postal Authority”) and dismissed the appeal preferred by  the  Company.



2.    The order impugned before the Division Bench was passed  in  the  Writ
Petition No. 2282 of 1999 preferred by the Company against a  demand  notice
dated 10.9.1999 issued by Postal Authority  asking the Company to deposit  a
sum of Rs.1,83,89,410/-.  The learned Single Judge by order dated  7.11.2000
had allowed the  writ  petition  and  held  that  the  demand  notice  dated
10.9.1999 is contrary to Section 11(2) of the Indian Post Office  Act,  1898
(hereinafter referred to as “the  Act”)  and  remitted  the  matter  with  a
direction to the Postal Authority to  consider  the  representation  of  the
Company after giving it a hearing and with a further direction  that,   till
the matter is decided,  the entire deposit of Rs.50 lacs as was made by  the
Company  in  terms  of  the  interim  direction  be  kept  with  the  Postal
Authority.  In case, it was decided that the amount was not payable  by  the
Company, the Postal Authority would refund the same, but in the event it  is
found that the amount was  due  and  payable  by  the  Company,  the  Postal
Authority shall adjust the same against the dues.

3.    Against the said order, an appeal was preferred by the Company as  the
learned Single Judge allowed the Postal Authority to retain  the  amount  of
Rs. 50 lakhs deposited by the Company in terms of the  interim  order  while
another was preferred by the Postal Authority against the said order of  the
learned Single Judge since the notice of demand was quashed and the  learned
Single Judge held that the Postal Authority had  no  power  to  demand  such
amount.

4.    The case of the appellant is  that  it  is  a  ‘company’  incorporated
under  the provisions of  the Companies Act and is conducting  the  business
of supplying electricity. The  Company  has  about  26  lakh  of  registered
consumers which is increasing continuously.  The consumption bills are  sent
by the Company to its consumers, every month through the Post  Office.   For
the purpose of sending monthly consumption bills by post,  a  specific  area
has been allotted to the Post Office in the South-west  Regional  Office  of
the Company at Taratola for carrying out the necessary operations,  commonly
known as the “Taratola  Sorting  Office”  of  the  Postal  Department.  This
practice is being followed by the  company  for  a  considerable  period  of
time.  The Officials of  the  Postal  Department  are  posted  at  the  said
Taratola Sorting Office and  a  sub-office  has  been  set  up  in  a  space
provided by the appellant company exclusively for the purpose  of  receiving
‘franked’ monthly electricity consumption bills as is made by the  officials
posted there. The appellant company had installed  the  requisite  ‘franking
machines’ for this purpose which are operated  by  the  appellant  company’s
staff.

5.    The dispute relates to the  period  between  1.6.1997  to  29.10.1998,
during which, the monthly consumption bills, upon being folded, were  marked
with the requisite postal stamp of Rs.1/- per bill using franking  machines.
The monthly consumption bills thus franked, were made over  to  the  counter
of  the  Postal  Department  located  in  the  said  premises.   Upon  being
satisfied with  the  franking  marks  and  the  value  thereof,  the  Postal
Officials accepted  and  took  the  postal  articles,  namely,  the  monthly
consumption bills for being dispatched to  the  addressee  consumers.   Till
then there were no  disputes  that  the  appellant  had  ever  breached  the
franking conditions as enshrined under the license. The monthly  consumption
bills are printed on a sheet of paper  which  are  then  merely  folded  for
convenience.  The consumption bills are not sealed at either  end  and  when
posted, are not enclosed in any envelop or wrapper.  The  consumption  bills
are also not stitched or  stapled  anywhere.  Under  the  prescribed  postal
tariff as prevailing with effect from June 1, 1997,  a charge of Rs.1/-  per
letter was prescribed for ‘letter  cards’  under  ‘Serial  No.  3’  and  for
‘Book’, ‘Pattern’ and ‘Sample Packets’ under ‘Serial No.  5’  thereof.   The
monthly consumption bills of the appellant company weighs much less than  50
grams.

6.    By letter dated 29.5.1997, the Director  of  Postal  Service  informed
the Company that as per revised postal tariff w.e.f 1st June, 1997,  charges
for   ‘Book’, ‘Pattern’ and ‘Sample packets’ for first 50 gms.  or  fraction
thereof is Rs.1/-. For every  additional 50 gms.  or  fraction  thereof   in
excess of 50 gms. is Rs.2/-. Monthly consumption bill, if it  is  posted  as
‘Book’, ‘Pattern’ and ‘Sample packets’  the revised   postal  tariff  w.e.f.
1st June, 1997,  as mentioned above will be applicable.

7.    Accordingly, from June 1997 to October 29, 1998, the appellant sent  a
total of  1,63,60,121 Bills, based  on  the  aforesaid  communication  dated
29.5.1997, treating the posts as ‘book post’, affixing Rs.1/-,  per   postal
articles.  The posts were cleared  by  the  postal  department  without  any
objection and were also delivered to the respective addressee consumers.
8.    All of a sudden on 29.10.1998, the appellant, by  another  letter  was
informed that the letter dated 29th May, 1997 was treated  as  cancelled  by
the Postal Authority with further intimation that the  ‘Monthly  Consumption
Bill’ does not come under the category of ‘book post’/  ‘book  packets’  and
that such type of ‘bills’ could be posted  by  affixing  postage  stamps  as
applicable to the  ‘letter  mail’  with  immediate  effect.   The  appellant
objected to the cancellation and requested  the  postal  authorities  for  a
review of  the  decision  and  to  restore  the  status  quo.   However,  in
compliance with the aforementioned letter the Company  started  posting  the
consumption  bills  affixing  Rs.3/-  stamps  under  protest   and   without
prejudice.

9.    Suddenly the Vigilance Officer, Department of  Post  by  letter  dated
18.6.1999 made additional claim for Rs. 1,83,89,410/- for  the  period  from
1st June, 1997 to 29th October, 1998 during which  a  total  of  1,69,60,121
bills were despatched by the company affixing franking stamp of  Rs.1/-  per
bill.  Such claim was made on the ground of  postage  rate  from  1st  June,
1997  was Rs.2/- per Book Post and from 30th  August,  1998   the  rate  was
Rs.3/- per  Book Post.

10.   The  Company  replied  on  30.10.98,   that  under  Section  11,   the
liability is not of the Company to pay but that of the  addressee  consumers
as the posts have already been delivered by  the  Postal  Authority  without
any objection and hence  no such objection can be raised at this stage.   It
was informed that neither was  there  any  objection  taken  by  the  Postal
Authority at the time of entrustment  of  the  posts  nor  at  the  time  of
delivery, when they were actually delivered to the addressee.   This  demand
was raised long after  the  posts  had  been  delivered  to  the  respective
addressees and hence it requested to review the decision.

11.   Pursuant to the said letter the Postal Authority informed the  company
by letter dated 26.7.1999 that the case  was  reviewed  by  the  appropriate
authority and reiterated the demand for  Rs.1,83,89,410/-  thereby  rejected
the prayer for review as is evident from  the  said  letter.   The  relevant
portion of which is quoted hereunder:
           “The case was reviewed by the appropriate authority. Though  the
           approval of the Department was given confirming  the  rates  for
           sending electricity bills by Book Post as Rs.1/-, the  same  was
           given by mistake.   The question remains  that  the  electricity
           bills were posted at Book post rate i.e. @  Rs.1/-  bill  during
           the period from June 1997 to 29.8.1998 and @ Rs.3/-  during  the
           period from 30.8.1998 to 29.10.1998.
                 It is once again requested kindly to  deposit  the  deficit
           amount of postage of Rs. 1,83,89,410/- in respect of posting  of
           electric bills during the period from June 1997 to  29.10.98  at
           any Post Office and  intimate the particulars of deposit to this
           office.
                 If the deficient amount of postage of Rs. 1,83,89,410/-  is
           not deposited, the same will be treated as due to the  Govt.  of
           India from C.E.S.C. Limited.”



12.   As the Postal Authority continued to  make  the  demand,  the  Company
preferred the Writ Petition No. 2282 of 1999 mainly on the ground  that  the
demand   notice  dated  10.9.1999   asking   the   appellant   to    deposit
Rs.1,83,89,410/-,  is contrary to Section 11(2) of the  Indian  Postal  Act,
1898.  The learned Single Judge by order dated 7.11.2000  allowed  the  writ
petition affirming that the demand notice is contrary to  Section  11(2)  of
the Indian Postal Act, 1898.  The learned Single Judge found that  the  pre-
requisite of fastening liability on the sender of the post under Section  11
is not permissible.  Therefore, the  Company  cannot  be  saddled  with  the
responsibility to pay.  Furthermore, it  was  also  found  that  the  person
issuing the demand notice did  not  have  the  authority  to  issue  such  a
notice.  However, the learned Single Judge of the Writ Court did  not  order
the refund of Rs. 50 lacs, which was deposited by the  Company  pursuant  to
the interim order, and held that the said refund would  be  subject  to  the
decision of the respondent authorities.

13.   The Division Bench by the  impugned  judgment  held  that  the  Postal
Authority  through  the  Post  Master  General,  West  Bengal   Circle   was
completely empowered by Clause 11.5 (xv) and 34 of  the  Post  Office  Guide
read with Section 12 of the Act to recover the  outstanding  sum  remaining,
due by the licensee Company to the Postal Authority.  At the same  time  the
Post Master General was also  competent  enough  to  direct  the  denial  of
acceptance of postal  articles  from  the  Company,  unless  and  until  the
outstanding is paid and the finding of  the  learned  Single  Judge  to  the
contrary on that score is wrong and  was  thereby  set  aside.   The  demand
notice was upheld, but the direction of the learned Single Judge,  directing
the authorities to decide  the  representation  of  the  Company  by  giving
personal hearing was upheld.  The Division Bench upheld the order passed  by
learned Single Judge, while directing  the  continuance of  deposit  of  the
above sum of Rs.50 lacs as and by way of  an  interim  measure.   Therefore,
the Division Bench refused to interfere with that part of the order  of  the
learned Single Judge.

14.   The learned counsel appearing on behalf of the Company submitted  that
the Company was guided by the  Postal  Department  for  franking  and  their
office staff were present at the site of the  Company  where  franking  were
made.  The manner of posting the bills was as per  the  instructions  issued
by the Postal Authorities.  In this regard, there is no  difference  between
a ‘normal post’ and ‘franked’  one and the breach of  the  franking  license
conditions was not even alleged.

15.   It was also contended that liability under Section  11  is  only  upon
the addressee while the liability of the sender is contingent  on  the  pre-
requisites  which  had   not  happened.   The  demand  was  raised   without
adjudicating or ascertaining the dues.  This apart,  the  authority  issuing
the demand was not competent to issue the same.  It  was  further  submitted
that the letter dated 18.6.1999 issued by the Vigilance Officer  shows  that
not only were the authorities making a demand from  the  wrong  person,  the
right person under Section 11 being the addressee, but were also asking  the
Company to pay for the “mistake” which was committed  by  them.   Till  that
date, the Postal Authority had  not  produced  the  so  called  notification
dated 27.8.1997.  Therefore, the appellant was seriously prejudiced by  non-
production of that document.

16.   It was further contended that the postal charges for despatch  of  the
electricity bill is recovered by  the  sender  along  with  the  electricity
tariff, which could only be  done  while  preparing  the  bill.   Since  the
Company had no means of recovering any amount  and  subsequently  it  cannot
pass-on this liability on the addressees, the claim of the postal  authority
was denied.  It was also contended that there  is  no  provision  whatsoever
for levying arrears on postal charges and without complying with  the  terms
and mandate of Section 12 of  the  Act,   the  Vigilance  Officer  issued  a
demand notice for Rs. 1,83,89,410/- with a threat that unless the  aforesaid
amount is deposited within 30 days, a  direction would  be  given  that  all
postal  services  conveying  articles,   except  the   government   services
despatched by the Company,  be withheld.   Therefore,  the  demand  was  ex-
facie illegal.

17.   The learned counsel  appearing  on  behalf  of  the  Postal  Authority
contended that the postal tariff was revised with effect from  1.6.1997  and
again from 1st August 1998.  On 29.10.1998, the  mistake  committed  by  the
department was detected and, therefore,  the  Postal  Authority  immediately
cancelled their letter dated 29.5.1997 whereby the authorities informed  the
Company that for the monthly consumption bills,  if posted  as  ‘book  post’
and ‘sample packets’  the revised tariff  of Rs.1/-  will be applicable.

18.   On 30.10.1998, the Company made a request to review the  decision  and
thereafter, the Postal Authority  made  their  demand  on  18.6.1999  and  a
further demand was made on 18.8.1999 and finally on 10.9.1999,   the  threat
of panel action was also conveyed through the said  letter.   Attention  was
also drawn to a  letter  dated  5.11.1998  wherein  the  Company  themselves
agreed to bear the cost as may be required, on demand.   On  18.6.1999,  the
demand for deficit postage was asked  for,  by  the  Postal  Authority.   On
26.7.1999 a demand for deficit postage and a threat was made to recover  the
same as Government duty  followed by another demand dated  18.8.1999  and  a
threat of penal action under the Act.  It was contended that  those  letters
are not under challenge and in the writ petition, only the letter of  demand
dated 10.9.1999 has been challenged and is the subject matter  of  the  writ
petition.

19.   The learned counsel for the Postal Authority referred to  Rule  17  of
the Indian Post Office Rules, 1933  which  defines  “Book  Packets”.   While
Rule 19  stipulates the articles which cannot be posted as  “book  packets”.
According to him, the monthly consumption bills satisfied Rule  17  and  are
not covered under Rule 19.

20.   Further according to the counsel for the Postal Authority,  ‘the  Post
Office Guide’ is an administrative instruction issued to  fill  up  gaps  if
any,  in the Indian Post Office Rules and therefore it has a binding  force.
 The Company having  accepted  the  classification,   and  by  affixing  the
postal stamps of Rs.3/- per  bill  by  franking  since  29.10.1998,   cannot
object to pay the prescribed rate which was due since 1st June,1997.

21.   We have heard the learned counsel for the parties and  have  carefully
perused the Indian Post Office Act,  1898  and  the  Post  Office  Guide  as
relied by them.

22.   The present dispute  pertains  to  the  period  between  1.6.1997  and
29.10.1998,  and as the  Company  has  been  affixing  the  postal  franking
stamps as per the demanded rate  since  30.10.1998,   there  is  no  dispute
regarding the subsequent period.

23.    The  only  question  arising  for  consideration   is   whether   the
respondents have the authority and power under the Indian Post  Office  Act,
1898 or the Post Office Guide or any other  Rule/guidelines  to  demand  the
alleged deficit amount of postage from the “sender” of the postal  articles,
after receiving the same from the “sender”  without  any  objection  to  the
deficit amount and after delivering the postage articles  to  the  addressee
without claiming any deficit amount from the “addressee”.

24.   Clause 11(10) (xv) of the Post Office Guide, relates  to  recovery  of
an amount in the event of a breach of the  conditions  of  the  license  and
reads as under:-
       “11.Franking Machine.- A  postal  franking  machine  is  a  stamping
       machine intended to stamp impressions of dies of approved design  on
       private and official postal  articles  in  payment  of  postage  and
       postal fees.  A commission of 1-1/2 per cent  is  permitted  on  the
       value of franks used.


            2.   x  x  x          x  x  x          x  x  x
                 x  x  x          x  x  x          x  x  x


       (10) The licence is granted to the following conditions.


           (xv) In the event of a breach of any condition of  the  licence,
       the licence will be forthwith cancelled by the head  of  the  Postal
       Circle who will not be responsible for any loss which  the  licensee
       incurs thereby.  Any sum that may be due to the  licensee on account
       of postage advanced will, however, be refunded to him  and  any  sum
       that may be due to the Department on  account  of  postage  will  be
       recovered from him.”



25.   Clause 34 of the said Guide stipulates cancellation of  a  license  in
the event of a  breach of any prescribed condition, as quoted hereunder:-
       “34. In the event of breach of any of the prescribed conditions  the
       license will be forthwith cancelled by the licensing  authority  who
       will not be responsible for any loss which the  licensee  may  incur
       thereby.  Any sum that be due to the licensee on account of  postage
       advance will, however, be refunded to him and any sum  that  may  be
       due to the Department on account of postage will be  recovered  from
       him.”

26.   In this case, it has not been alleged by  the  Postal  Authority  that
the Company has breached any of the conditions of license.  In  the  absence
of any such allegation relating  to  a  breach,  the  provisions  of  Clause
11(10) (xv) or Clause 34 of the Post Office Guide are not attracted.

27.   The applicability of Clause 34 is conditions  precedent  such  as  (a)
breach of any of the conditions of license to use the franking machine   (b)
cancellation of the license to use the franking machine (c)  a  sum  due  to
the department on  account  of  postage.   Such  conditions  have  not  been
fulfilled in this case nor any averment has been made and no such stand  has
been taken by the Postal Authority.  Therefore, Clause 11(10)(xv) or  Clause
34 is not applicable in the present case.  The Division Bench  of  the  High
Court erred in holding that the provisions of Clause 11(10) (xv) and  Clause
34 are attracted in the present case.

28.   Section 11 of the Act,  1898  stipulates  “liability  for  payment  of
postage” and  reads as under:-
      “11. Liability  for payment of postage.-(1) The addressee of a  postal
      article on which postage or any other sum chargeable under this Act is
      due shall be bound to pay the postage or  sum  so  chargeable  on  his
      accepting delivery of the postal article, unless he forthwith  returns
      it unopened:


            Provided that,  if  any  such  postal  article  appears  to  the
      satisfaction of the Post Master General to have been maliciously  sent
      for the purpose of annoying the addressee,  he may remit the postage.


        2) If any  postal  article  on  which  postage  or  any  other  sum
           chargeable under this act is due,  is  refused  or  returned  as
           aforesaid, or if the addressee is dead or cannot be found,  then
           the sender shall be bound to pay the postage or sum due  thereon
           under this Act.”



29.   Section 12 of the said Act, 1898  empowers  the  Postal  Authority  to
recover the postage and other sums due, in respect of postal articles  which
reads as under:-
      “12. Recovery of postage and other  sums  due  in  respect  of  postal
      articles.-  If any person refuses to pay any postage or other sum  due
      from him under this Act in respect of any postal article,  the sum  so
      due may, on application  made  by  an  officer  of  the  Post  Officer
      authorised in this behalf by the written  order  of  the  Post  Master
      General, be recovered for the use of the Post Office from  the  person
      so refusing,  as if it were a fine imposed under  this  Act,   by  any
      Magistrate having jurisdiction where that  person  may  for  the  time
      being be resident, and the Post Master General may further direct that
      any other postal article, not being on (Government) Service, addressed
      to that person shall be withheld  from him until the  sum  so  due  is
      paid or recovered as aforesaid.”

30.   Thus from Section 11 it is clear that the ‘addressee’ will  be  liable
to pay the deficit postal charges, if any, once the  addressee  accepts  the
postal article or  opens it.   On the  other  hand,  the  ‘sender’  will  be
liable to be charged for the deficit postage, if it is detected at the  time
of postage or if the addressee refuse  or  return  the  postage  or  if  the
addressee is dead or cannot be found.  If such amount is found due from  the
sender, the Postal Authority is empowered to recover the sum dues  from  the
sender under Section 12 of the Act.

31.   It is not the case of the Postal Authority that  any  of  the  postage
has been refused or returned by any of  the addressee or  any  addressee  is
dead or  could not be found.  In absence of any such  allegation  no  charge
can be made from the sender-company under Section 11 and the Company  cannot
be made liable to pay the postage or sum due  thereon  for  franking  Rs.1/-
per bill for postage and for that there was no occasion  for  the  authority
to exercise power under Section 12 to recover  such  due  from  the  sender-
company.
32.   Admittedly, the Director of  Postal  Services   by  his  letter  dated
29.5.1997 informed the Company that as per the  revision  of  postal  tariff
w.e.f. 1.6.1997, the electricity  bills  can  be  posted  by  paying  Rs.1/-
w.e.f. 1.6.1997,  whether the post sent either as  ‘Book’  or  ‘Pattern’  or
‘Sample Packet’. The said letter reads as follows:-
                         “DEPARTMENT OF POST, INDIA


     OFFICE OF THE CHIEF POST MASTER GENERAL, W.B. CIRCLE, YOGAYOG BHAWAN,
                             CALCUTTA – 700 012
      To


      The Deputy Manager(Com)
      C.E.S.C. House,
      Chowrighee Square
      Calcutta 700 001


      No. Tech/Z-27/9/90
                                             Dated the 29.5.1997


      SUB: Revision  of  Tariffs  in  respect  of    certain  Inland  Postal
           Services with effect from 01.6.1997.


      REF:  Your letter No. Nil dated 28.9.1997


      Sir,
            As per revised Postal Tariff w.e.f. 01.6.1997 charges for  Book,
      pattern and sample packets for first  50 Gms or  fraction  thereof  is
      Re.1/-.  For every additional 50 Gms or fraction thereof in excess  of
      50 Gms. is Rs.2/.  Monthly consumption bill, if it is posted as  Book,
      pattern  and  sample  packets  the  revised  Postal   Tariffs   w.e.f.
      01.6.1997, as mentioned above, will be applicable.


      Thanking you,
                                        Yours faithfully
                                                Sd/-
                                        (MRS. A. GHOSH)
                                         Director of Postal Services
                                         Calcutta Region/Cal-12”




        In view of the letter dated 29.5.1997, the Company charged  Rs.  1/-
per Bill for the period from 1.6.1997 till by letter dated 29.10.1998,   the
Company was informed of cancellation of such letter as  evident  and  quoted
hereunder:
                         “DEPARTMENT OF POST, INDIA


     OFFICE OF THE CHIEF POST MASTER GENERAL, W.B. CIRCLE, YOGAYOG BHAWAN,
                             CALCUTTA – 700 012


   From     O/O the Chief P.M.G.        To  The Deputy Manager
           West Bengal Circle                (Commercial)      ,
            Yogayog Bhawan              Victoria House
            Calcutta 700 012            Chowrighee Square
                                       Calcutta 700 001


   No. Tech/Z-27/9/90             Dated at Calcutta-700012 the 29.10.1998


                                   Subject


   Sir,


      I am directed to inform you that this office earlier  letter  of  even
   no. dtd. 29.5.97 is hereby treated  as  cancelled.   Monthly  consumption
   bill is not under the category of Book  Post/Book  Packets  as  per  this
   office rule. This type of bill can be posted affixing the  postage  stamp
   as applicable on the letter mail with immediate effect.


                                              Yours faithfully
                                                Sd/-
                                              (S.C. Sahu)
                                        A.D.P.S. (Technical)
                             For Chief Postmaster-General, Cal-12”


33.  Thus it is apparent that due to a wrong intimation given by the  Postal
Authority, the  Company  affixed  the  postal  stamp  of  Rs.1/-  per  bill,
treating it as ‘book post’ and the staff of the  Postal  Department  without
any objection cleared and  delivered to the respective addressees.
34.   Clause 30(iv) of Post Office Guide reminds the office  of  the  Postal
Authority to check the bundles to ensure proper check of  franking  articles
and reads as under:-
       “30. The following procedure must be insisted  upon  and  should  be
       strictly endorsed in all the offices:
       (iv) Office which accepts the posting should check  the  bundles  to
       see if various articles have been franked for  correct  postage  and
       also the total value of the articles tallies with the details  given
       in the dispatch slip and that entries in col.1 to 3 of the  Franking
       Machines register of posting have correctly been made.   A  separate
       dispatch slip should be there for articles  franked  with  different
       machines.  He will then put his initials, date and date stamp in the
       Franking Machine Register of postings and return  the  same  to  the
       licensee or his agent.”


35.   Though under Clause 30(iv) the office which  accepts  the  posting  is
required to check the bundles franked for correct postage and also to  tally
the total value of the articles, before dispatch of the  article,  there  is
failure on the part of the office of the Postal Authority as noticed by  the
Division Bench of the High Court and for that the sender company  cannot  be
made liable.

36.   The Postal Authority mislead the sender company which caused  charging
of lesser amount for the bills is evident from the letters  written  by  the
Director, as quoted in the preceding paragraphs.  The failure  on  the  part
of the Postal Authority to ensure correct postage as per  Clause  30(iv)  is
also not in dispute.  The  mistake  having  been  committed  by  the  Postal
Authority and there being failure on  the  part  of  office  of  the  Postal
Authority to check the  postal  articles  and  postage  for  recovering  the
amount from the addressee, it is not open for the Postal Authority  to  pass
on such liability on the sender-company or to  recover  the  same  from  the
Company.   The demand notice  being  not  proper  was  rightly  held  to  be
illegal by the learned Single Judge. The question thus raised in  this  case
is answered in negative and against the respondents.

37.   In the result, the appeals are allowed.  The  demand  notice  and  the
order passed by the Division Bench of the High Court is set aside; the  last
portion of the direction given by the learned Single Judge  authorizing  the
Postal Authority to decide the issue afresh  and  allowing  them  to  retain
the amount of Rs. 50 lakhs till  such  decision  is  also  set  aside.   The
respondents are directed to refund the amount of Rs.50  lakhs  deposited  by
the Company pursuant to the interim order passed by  the  High  Court  along
with 6% interest within three months from today.  There will be no order  as
to costs.

                                 ……………………………………………….J.
                                  ( R.M. LODHA )


                             ……………………………………………….J.
                            ( SUDHANSU JYOTI MUKHOPADHAYA)


NEW DELHI,
MAY 11, 2012

Beach Resort- the High Court of Kerala at Ernakulam whereby the High Court has directed the appellants to process the applications made by respondent No.1-Seashells Beach Resort, hereinafter referred to as respondent, for all clearances including finalisation of CRZ norms and pending final decision on the same, to permit the respondent to run the resort established by it at Agatti. The High Court has further directed the appellants to issue travel permits and entry passes required by tourists making use of the accommodation in the said resort. where the very erection of the building to be used as a resort violated the CRZ requirements or the conditions of land use diversion. No one could in the teeth of those requirements claim equity or present the administration with a fait accompli. The resort could not be commissioned under a judicial order in disregard of serious objections that were raised by the Administration, which objections had to be answered before any direction could issue from a writ Court. We have, therefore, no hesitation in holding that the order passed by the High Court is legally unsustainable. Question No. 1 is accordingly answered in the negative, and the impugned order set aside

                                                          REPORTABLE





                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

              CIVIL APPEAL NOS.                         OF 2012
              (Arising out of SLP (Civil) No.5967-5968 of 2012)




Union Territory of Lakshadweep & Ors.        …Appellants

                                   Versus

Seashells Beach Resort & Ors.                …Respondents












                                  O R D E R



1.    Leave granted.

2.    These appeals have been filed by the Union  Territory  of  Lakshadweep
against an order dated 16th January,  2012  passed  by  the  High  Court  of
Kerala at Ernakulam whereby the High Court has directed  the  appellants  to
process the applications made by  respondent  No.1-Seashells  Beach  Resort,
hereinafter  referred  to  as  respondent,  for  all  clearances   including
finalisation of CRZ norms and pending final decision on the same, to  permit
the respondent to run the resort established  by  it  at  Agatti.  The  High
Court has further directed the appellants to issue travel permits and  entry
passes required by tourists making use of  the  accommodation  in  the  said
resort.

3.    Lakshadweep Administration finds fault with the  direction  issued  by
the High Court on several grounds including the ground that  respondent-writ
petitioner before the High Court had no licence from the Tourism  Department
and  no  clearance  from  the  Coastal  Zone  Regulatory  Authority  or  the
Pollution Control Board to run the resort established by it.  It is  alleged
that the direction issued by  the  High  Court  amounts  to  permitting  the
respondent to run a resort sans legal permission and authority  and  without
any check, control or regulation regarding its affairs.  The  Administration
also points out that diversion of land use qua different survey  numbers  in
Agatti  was  obtained  by  one  of  the  partners  of  the  respondent   for
construction of dwelling  houses  and  not  for  establishing  a  commercial
establishment like a tourist resort and that  respondent  No.1  had  misused
the said permission by constructing a resort  in  the  No  Development  Zone
(NDZ) falling within 50 metres of High Tide Line and  thereby  violated  the
CRZ norms. The respondent has, according to the Administration,  constructed
cottage at a distance of 28 metres from the High Tide Line  on  the  western
side of the sea and thus violated the terms of the permission given  to  it.
The  Administration  further  alleges  that  it  had  never  permitted   the
respondent to run a resort and that it had on  the  basis  of  a  permission
obtained from the local panchayat, which had  no  authority  to  issue  such
permission, started bringing tourists, including foreign  tourists,  to  the
resort on the pretext that the accommodation was  in  the  nature  of  ‘home
stay’. The Administration  asserts  that  neither  the  Union  Territory  of
Lakshadweep nor the Government of  India  have  taken  any  policy  decision
regarding permitting home stay arrangements on the Lakshadweep  islands  and
that the High Court had completely overlooked the fact that all  development
in relation to the said islands shall have to  be  in  accordance  with  the
Integrated Island Management Plan and  the  CRZ  norms.  The  Administration
also relies upon a Notification  dated  6th  January,  2011  issued  by  the
Government of India in exercise  of  its  powers  under  Section  3  of  the
Environment  (Protection)  Act,  1986  which  notification  is  intended  to
promote conservation and protection of the Island’s unique  environment  and
its marine area and to promote development through a sustainable  integrated
management plan based on scientific  principles,  taking  into  account  the
vulnerability of the coast to natural hazards.

4.    When these petitions came before us for  preliminary  hearing  on  2nd
March 2012, this Court while issuing notice to the  respondent  and  staying
the operation of the impugned order passed by the High Court,  directed  the
petitioner and respondent No.2  to  furnish  the  following  information  on
affidavit:

     1) Whether the proposed Integrated Island  Management  Plan  has  been
        finalised for the Union Territory of Lakshadweep  and  whether  CRZ
        for the said territory has been notified?

     2) If the CRZ  has  not  been  notified  or  the  plan  has  not  been
        finalised, the reasons for delay and the stage at which the  matter
        rests at present and the particulars of the authority with whom the
        matter is pending.

     3) The  total  number  of  the  applications  received  by  the  Union
        Territory of Lakshadweep for setting up of  resorts  and  stage  at
        which the said applications are pending/being processed.

     4) The nature and extent of the violations which the administration of
        the Union Territory of Lakshadweep have  noticed  in  the  proposed
        resorts  and  the  action,  if  any,  taken  for  removal  of  such
        violations. If no action has been taken/initiated  for  removal  of
        the violation, the reasons for the failure of the authorities to do
        so and the persons responsible for the omission/inaction.

     5)  The particulars of unauthorised resorts being operated in any part
        of the Union Territory of the Lakshadweep and the  action  proposed
        to be taken for closure/removal of such resorts.

5.    In compliance with the above directions, the Administrator of  the  UT
of Lakshadweep has filed an affidavit, inter-alia, stating:

      i)  The proposed Integrated Island Management Plan (IIMP)  for  Agatti
         Island in pursuance of the notification dated 6th January, 2011  of
         Ministry of Environment and Forests has not been finalized  as  yet
         and  is  under  finalization  with  the  Administration  of   Union
         Territory  of  Lakshadweep.  The  Coastal  Regulation  Zone   (CRZ)
         Notification for the whole country including the UT of  Lakshadweep
         Island has been notified by the Ministry of Environment &  Forests,
         Government of India vide CRZ Notification  S.O.  No.  114(E)  dated
         19th February, 1991.

     ii) In exercise of the  powers  conferred  under  Section  3(3)(i)  and
         3(3)(ii) of CRZ Notification dated 19th February,  1991  a  Coastal
         Zone Management Plan for UT of Lakshadweep was also notified by the
         Administration on 22nd August, 1997 which is in force till date and
         shall be in force until 6th January, 2013.

    iii) The Government of India vide Notification S.O. No. 20(E) dated  6th
         January, 2011 provided that the Lakshadweep Island shall be managed
         on the basis of an Integrated Island Management Plan (IIMP)  to  be
         prepared as per the  guidelines  given  in  the  notification.  The
         notification stipulates that the Lakshadweep Island  Administration
         shall,  within  a  period  of  one  year  from  the  date  of  this
         notification, prepare the IIMPs, inter-alia specifying therein  all
         the  existing   and   proposed   developments,   conservation   and
         preservation  schemes,  dwelling  units  including   infrastructure
         projects such as schools, markets, hospitals, public facilities and
         the like.  The Administration may, if it considers necessary,  take
         the  help  of   research   institutions   having   experience   and
         specialisation in Coastal Resource Management in the preparation of
         IIMPs,  taking  into  account  the  guidelines  specified  in   the
         notification.

     iv) Since the Administration of Union Territory of Lakshadweep did  not
         have  the  required  expertise  for  the  preparation  of  such   a
         comprehensive Integrated Island Management Plan  (IIMP)  for  which
         lot of scientific inputs are required,  Centre  for  Earth  Science
         Studies (CESS), Trivandrum was approached for preparing  the  IIMPs
         for all inhabited and uninhabited  islands.  The  said  Centre  is,
         according to the Administration, a  prestigious  institution  under
         the Ministry of Earth Sciences having experience and specialisation
         in  coastal  resource  management  and  has  extensive   scientific
         database on Lakshadweep.

      v) The CESS informed the Administration that  IIMP  will  be  prepared
         within a period of  one  year.  Work  relating  to  preparation  of
         Integrated Island Management Plan for Agatti and Chetlat Island  in
         the first phase of the study have been completed and the draft plan
         for Agatti  and  Chetlat  Islands  have  been  submitted  to  Union
         Territory of Lakshadweep Administration on 2nd  January,  2012  and
         the study of remaining islands viz.  Kavaratti,  Andrott,  Minicoy,
         Kalpeni, Kiltan, Kadmat, Amini and Bitra have already  started  and
         are in progress.

     vi) The Administration has initiated action for giving  wide  publicity
         to the draft Integrated Island Management Plan for Agatti Island by
         uploading it on Lakshadweep website and will be  published  in  two
         newspapers inviting comments/suggestions from the public as well as
         other  stake  holders  in  the   island.    On   receipt   of   the
         comments/suggestions,  the   Island   Administration   shall   make
         necessary changes/modification in the draft plan  if  required  and
         final IIMP shall be submitted to the Ministry  of  Environment  and
         Forests, Government of India.

    vii) It is expected that the IIMP for Agatti and Chetlat Island will  be
         finalised by 6th January 2013 as per the time limit  given  in  the
         Notification and until that time the CRZ notification of  1991  and
         its Rules i.e. Coastal Zone Management Plan 1997  shall  apply,  as
         clearly stated in clause 3(ii) of the notification.

6.    It is evident from the above assertions made in the affidavit  of  the
Administrator  that  while  the  process  of  formulation   of   IIMPs   for
Lakshadweep has started, the draft plan received from the CESS is yet to  be
evaluated by the Administrator and sent for approval to  the  Government  of
India. In the meantime, another development has intervened in  the  form  of
UT of Lakshadweep, Department of Tourism, issuing a Notification dated  28th
January, 2010 inviting proposals from  local  entrepreneurs  and  registered
organisations from Lakshadweep group of islands for setting  up  of  tourist
resorts at Agatti Island fulfilling the prescribed  requirements.  The  case
of  the  Administration  is  that  in  response  to  this  Notification  the
Department  has  received  nine  applications  for  setting  up  of  tourist
resorts, which were to be submitted along with:

    (a) Environmental clearance from  the  Department  of  Environment  and
         Forests;

    (b) Land use diversion certificate from SDO/DC/Local Panchayat;

    (c)  Clearance from Lakshadweep Pollution Control Committee;

    (d) Clearance from Coastal Zone Management Authority.




7.     Despite  reminders  issued  to  the  applicants,  none  of  them  has
fulfilled the above conditions till  date.  In  the  result,  all  the  nine
applications are awaiting complete details from the applicants.   Respondent
also happens to be one of the applicants, out of the nine applicants,  three
of whom have started some  construction  activity  which  are  at  different
stages of completion. Respondent is one of  the  three  applicants  who  has
started raising a construction. The  case  of  the  Administration  is  that
neither the respondent nor the  other  applicants  have  complied  with  the
requisite  conditions  including  the  coastal  zone  clearance.  No   final
approval to any one of the  applicants  has,  therefore,  been  granted,  or
could be granted having regard to  the  fact  that  as  many  as  five  huts
constructed by  the  respondent  are  located  in  the  NDZ  area  and  are,
therefore, in violation of  the  CRZ  Notification  1991  and  Coastal  Zone
Management Plan, 1997, in which the entire area within 50 meters  from  High
Tide  Line  from  both  sides,  western  and  eastern,  is  declared  as  No
Development Zone.  According  to  the  Administration,  the  respondent  has
violated the conditions of the land use diversion certificate,  inasmuch  as
the land use  diversion  certificate,  permitted  construction  of  dwelling
houses away from the NDZ whereas the respondent  has  set  up  a  commercial
enterprise like a tourist resort, which was  not  authorised.  According  to
the affidavit of the Administration, the Administration proposes to  conduct
a detailed inquiry to fix responsibility of officials for not taking  action
while construction of  five  huts  in  NDZ  was  being  carried  on  by  the
respondent. The affidavit refers to  a  show  cause  notice  issued  to  the
respondent to remove the  construction  in  Sy.  Nos.  1300/1,  1301/1A  and
1301/1 Part.  Writ Petition No. 1312/2012 was filed  by  respondent  against
the said notice in  which  the  High  Court  has  directed  the  parties  to
maintain status quo in respect of the building in question.

8.    The affidavit further states  that  a  tourist  resort  owned  by  the
Administration at Agatti is closed with  effect  from  4th  February,  2012.
The affidavit also refers  to  five  resorts  owned  by  the  Department  of
Tourism, UT of  Lakshadweep,  that  the  Administration  runs  at  different
islands which were constructed during 1980s and 1990s.  The  affidavit  goes
on to state that there is no “home stay” policy and the  Administration  has
not authorised any owner of house to run a home stay.   On  an  experimental
basis, the ‘Home based  tourism’  was  started  in  Agatti  during  October-
December 2011 by the Administration. The  Administration,  it  is  asserted,
had hired few houses in the village  Agatti  which  were  lying  vacant  and
owners of the said houses were paid on daily user basis whenever the  guests
were staying. That  arrangement  has  now  been  stopped  as  a  section  of
islanders had objected to  the  same.   The  Administration  is  engaged  in
discussing with various sections of society to  frame  a  policy  for  “home
stay”, based on the Bed and Breakfast scheme of Government  of  India  which
will be applicable to the houses in the village area and  resorts  will  not
be covered under any such policy.

9.     An  affidavit  has  been  filed  by  Deputy  Director,  Ministry   of
Environment and Forests, Paryavaran Bhawan, CGO Complex, New Delhi  ,  which
has taken the same line of argument as set up by the  Administrator  in  his
affidavit especially as regards the finalisation of IIMPs with the  help  of
CESS, the issue of Government of India’s  Notification  dated  6th  January,
2011 and any construction in Coastal Regulation Zone between 50  meters  and
500  meters  from  the  High  Tide  Line  being  in  violation  of  the  CRZ
Notification hence  liable  to  be  proceeded  against  by  the  Lakshadweep
Coastal Zone Management Authority as per the provisions of  the  Environment
(Protection) Act, 1986.

10.   The Director, Tourism in UT of Lakshadweep  has  separately  filed  an
affidavit stating only one tourist resort owned by the  Union  Territory  is
operating in Agatti.

11.   Respondents No.1 and 2 have also filed an affidavit  in  reply,  sworn
by Mohd. Kasim H.K., S/o Syed Mohammed, one of the  partners  of  respondent
No.1. In this affidavit, the respondent  clearly  emphasises  that  although
the width of the ‘No Development  Zone’  in  respect  of  Agatti  Island  is
uniformly 50 meters from the high tide line,  the  high  tide  line  is  not
demarcated till  date  and  the  assertion  that  the  respondent  No.1  has
violated  the  CRZ  notification  and  raised  construction   in   the   ‘No
Development Zone’ is without any basis. The respondent has  also  relied  on
the certificates issued by the PWD of the Lakshadweep  Administration  which
according to the respondent show that the construction does not fall in  the
‘No Development Zone’.  It is  further  stated  that  the  respondents  have
obtained the requisite clearance like the occupancy  certificate  issued  by
the district Panchayat, No Objection Certificate issued by  the  Lakshadweep
Pollution  Control  Committee,  in  principle  approval   granted   by   the
petitioner-Administration,   environmental   clearance   granted   by    the
Department of Environment and Forests, provisional clearance granted by  the
Tourism  Department,  no  objection  certificate  granted  by  the   village
Panchayat and no objection certificate granted by the district Panchayat.

12.   The allegation that  the  land  use  diversion  certificate  has  been
violated,  is  also  denied.  The  Administration  was,  according  to   the
respondent, aware from the inception that the respondent proposed to set  up
tourist accommodation over the land held by them through a  valid  lease  in
their favour. The respondent had submitted an application seeking  grant  of
the  land  use  diversion  certificate   for   the   above   project.    The
Administration had prior knowledge of the proposed project and  had  granted
the  approval  to  the  same.  Since  the  certificate   wrongly   mentioned
construction of a dwelling house as the purpose of land  use  diversion  the
error was brought to the notice of the Administration.  The respondent  was,
however, informed that the certificate had been granted in a general  format
and should not cause any worry to the respondent. The  respondent  has  also
vehemently disputed the assertion of the Administration that no resorts  are
functional at Agatti.  The affidavit refers to Agatti Island  Beach  Resort,
which has been leased out in the year 1996 by the Administration to  one  T.
Muthukoya.  It also refers to  multi-storeyed  tourist  accommodation  being
operated on Agatti Island. Photographs of  these  establishments  have  been
placed on record.  It  enlists  as  many  as  six  different  establishments
which, according to the respondent, are being run as  tourist  resorts.  The
affidavit also disputes the assertion of the Administration  that  the  Home
Stay has been discontinued w.e.f. February 2012.  The  affidavit  refers  to
what is described as  parallel  tourism  resorts  set  up  with  the  active
permission of the Administration.

13.   The Administration has filed an affidavit in rejoinder  sworn  by  one
Asarpal Singh, Deputy Resident Commissioner for UT. Apart  from  reiterating
the assertion made by the Administration in the affidavit, it  alleges  that
the use of local  material  is  forbidden  in  Lakshadweep  islands  as  the
locally available sand being coral dust  is  not  allowed  to  be  used  for
building purposes.  All the building material is, therefore,  imported  from
the mainland.  The thatched roof over the hutments is also a  false  roofing
as the cottages  are  air-conditioned  and  the  thatched  roof  is  only  a
camouflage.  The  rooms  visible  in  the  photographs  are  actually  pucca
constructions.  The  structures  are  made  of  cement  and  concrete.   The
accommodation is according to the  Administration  advertised  for  a  price
ranging between Rs.6000-12000/- per day.

14.   We have referred copiously to the pleadings of  the  parties  only  to
draw the contours of the controversy before us. Broadly  speaking  only  two
questions arise for our determination in the backdrop set out above.   These
are:

      1) Whether the High Court was in the facts and  circumstances  of  the
         case correct in allowing the interim prayer of the  respondent  and
         permitting him to run the resort? and

      2) If the answer to question No. 1 be in the negative, what is the way
         forward?

      We shall deal with the questions ad-seriatim.

Re. Question No. 1

15.   Appearing for the  appellant-UT  Administration  of  Laskshdweep,  Mr.
H.P. Raval, learned Additional Solicitor General  of  India  contended  that
the High Court had without adverting to the several aspects that  arose  for
consideration permitted the respondent to run the resort simply because  the
respondent is alleged to have engaged 47 employees who  were  likely  to  be
affected if the resort was shut down.  Mr. Raval submitted  that  permitting
the respondent to run a resort which was established in  complete  violation
of the CRZ regulations and contrary to the land  use  diversion  certificate
granted in its favour was tantamount to placing a premium on  an  illegality
committed by the said respondent.




16.   Mr. Giri, learned senior counsel appearing  for  the  respondents,  on
the other hand argued that the Administration was adopting double  standards
inasmuch as they were  permitting  certain  resorts  to  operate  while  the
resort which had secured the  requisite  permissions,  was  being  prevented
from doing its legitimate business. It was contended that in the absence  of
a policy forbidding  ‘home  stay’  arrangement  for  tourists  visiting  the
Islands the refusal of the Administration to permit  the  resort  for  being
used even as ‘home stay’ was arbitrary. It was  also  contended  that  while
there were allegations of breach of the conditions,  subject  to  which  the
authorities had granted clearances,  such  allegations  were  levelled  only
after the respondent had approached the High Court for redress.

17.   The High Court has not indeed done justice to  the  issues  raised  by
the parties, whether the same relate to the alleged violations committed  by
the respondent-entrepreneur in setting up of a resort or the  Administration
  permitting  similar  resorts  to  operate  in  the  garb  of  ‘home  stay’
arrangement while preventing the respondent from doing so.  The  High  Court
has not even referred to the Notification dated 6th January, 2011 issued  by
the Government under Section 3 of the Environment (Protection) Act, 1986  or
the effect thereof on the establishment of the project that does not so  far
have a  final  clearance  and  completion  certificate  from  the  competent
authority and is being accused  of  serious  violations.  The  High  Court’s
order proceeds entirely on humanitarian  and  equitable  considerations,  in
the process neglecting equally, if not more, important questions  that  have
an impact on the  future  development  and  management  of  the  Lakshadweep
Islands.  We are not, therefore, satisfied with  the  manner  in  which  the
High Court has proceeded in the matter.  The High Court obviously failed  to
appreciate  that  equitable  considerations  were  wholly  misplaced  in   a
situation where the very erection of the building to be  used  as  a  resort
violated the CRZ requirements or the conditions of land  use  diversion.  No
one could in the teeth of those requirements claim  equity  or  present  the
administration with a fait accompli.  The resort could not  be  commissioned
under a judicial order in disregard of serious objections that  were  raised
by the Administration, which  objections  had  to  be  answered  before  any
direction could issue from a writ Court.  We have, therefore, no  hesitation
in  holding  that  the  order  passed  by  the   High   Court   is   legally
unsustainable.  Question No. 1 is accordingly answered in the negative,  and
the impugned order set aside.

Re. Question No. 2

18.   Lakshadweep or  Laccadive  is  a  cluster  of  islands  situate  at  a
distance ranging from two hundred to four hundred and forty  kms.  from  the
main land known  for  their  natural  beauty  but  fragile,  ecological  and
environmental balance. Most of the islands  are  not  inhabited,  the  total
population living on the islands including Agatti, which is the  largest  in
size, being just about sixty thousand. The island  is  of  great  attraction
for tourists both  domestic  and  international  who  approach  this  unique
destination by sea as also by air. The islands  are  centrally  administered
and  have  been  the  concern  of  the  Administrators  as   much   as   the
environmentalists.  All  the  same  there  has  not  been  much  development
activity in the area largely because of absence of any  vision  plan  as  to
the manner and extent and the kind of development that would suit  the  area
keeping in view its locational advantages and  disadvantages.   Progress  in
this direction is so slow that it is often overtaken by the pressure of  the
up market forces that push tourism inflow in these areas  to  higher  levels
with every passing year.  While entrepreneurs may  be  keen  to  invest  and
develop facilities for tourists and infrastructure for locals living on  the
islands, the  question  is  whether  such  pressure  ought  to  disturb  the
Administration’s  resolve  to  permit  only  a   planned   development   and
management of these islands  on  a  basis  that  is  both  ecologically  and
economically sustainable.

19.   Given the fact that no vision or master plan for  the  development  of
the islands has been prepared so far, developments made over  the  past  few
decades,  may  be  haphazard.  Mr.  Raval,  however,  submitted   that   the
Government of India was conscious of the importance of the  region  and  had
in terms of Notification dated 6th January, 2011  directed  the  preparation
of an integrated management plan for the  islands.  While  broad  guidelines
were available in the said Notification, the details have to be  worked  out
by experts not only in science, environment and  the  like  but  also  town-
planners who will have a major role  to  play  in  how  the  islands  should
develop. Having said that Mr. Raval fairly conceded  that  the  draft  IIMPs
for two of the islands  received from the CESS have not  been  evaluated  by
the U.T. Administration nor does the Administration have the  assistance  of
any  expert  body  that  can  look  into  the  draft   IIMPs   and   suggest
modifications, improvements or alterations  in  the  same.   That  being  so
neither the Lakshadweep Administration nor  the  Government  of  India  were
according to Mr. Raval averse to the constitution  of  an  expert  Committee
that could assist the Lakshadweep Administration in finalising the IIMPs  so
that the same is submitted to the Government of India for  approval  at  the
earliest.

20.   Mr. Giri, learned counsel for the respondents too had no objection  to
the appointment of a committee of experts to do  the  needful.   He  however
urged that since the committee could be requested to examine  other  aspects
of the controversy also the same could be headed by a former Judge  of  this
Court.

21.   Notification dated 6th January,  2011  issued  by  the  Government  of
India under Section 3 of the Environment (Protection) Act,  1986  read  with
sub-rule (3) of Rule 5 of the Environment (Protection)  Rules,  1986,  inter
alia, provides for the preparation of Integrated  Islands  Management  Plans
for each of the islands in Lakshadweep.  These IIMPs  have  to  specify  all
the  existing  and  proposed  developments,  conservation  and  preservation
schemes, dwelling units including dwelling infrastructure projects such  as,
schools,  markets,  hospitals,  public  facilities  and   the   like.    The
notification further provides that  development  activities  in  the  island
shall be included in the IIMPs in accordance with the rules and  regulations
and building bye-laws of local town and country planning for the time  being
in force in the islands and that all activities  in  the  islands  including
the  aquatic  area  shall  be   regulated   by   the   Lakshadweep   Islands
Administration on the basis of the IIMPs.  Notification also  gives  certain
guidelines which have to be kept in  view  while  preparing  the  IIMPs.  It
makes the UT Coastal Zone Management  Authority  responsible  for  enforcing
and monitoring the notification and assisting in the  task  of  constituting
District Level Committees under  the  Chairmanship  of  District  Magistrate
concerned with at least three representatives of local  traditional  coastal
communities.  Notification also enumerates  the  activities  that  shall  be
prohibited on the islands including destruction of corals,  mining  of  sand
in and around coral areas, construction of shore protection works,  disposal
of untreated sewage or effluents, and disposal  of  solid  wastes  including
fly ash, industrial waste, medical waste etc. It also permits setting up  of
new industries and expansion of existing industries  except  those  directly
related to waterfront or directly needing offshore facilities.   Suffice  it
to say that the Notification draws  the  contours  of  the  IIMPs  envisaged
thereunder, but leaves the details to  be  worked  out  by  the  Lakshadweep
Administration if necessary  with  the  help  of  experts  in  the  relevant
fields.

22.   The issue of the Notification, in our view, is a step forward  in  the
direction of providing an integrated sustainable development of the  islands
along planned and  scientific  lines,  taking  into  consideration  all  the
relevant factors. As noticed in the earlier part of this order  draft  IIMPs
for two islands, one of which  happens  to  be  Agatti,  have  already  been
submitted which are yet to be finalised by the Lakshadweep Administration.

23.   In the light of the above we  have  no  difficulty  in  directing  the
constitution of an Expert Committee with a request to it to  look  into  the
matters set out in the terms of reference which we are  setting  out  herein
below. The Lakshadweep Administration has proposed that the Committee  could
comprise of four expert members from different  fields  named  in  the  memo
filed  by  the  Administration  under  the  chairmanship  of  Justice   R.V.
Raveendran, former Judge of  Supreme  Court  of  India.   Mr.  Giri  has  no
objection to the composition of the Committee  being  as  proposed.  We  are
also inclined to accept the  proposal  submitted  in  this  regard.  We  are
hopeful that the setting up of the Committee will not  only  provide  expert
assistance to the Lakshadweep Administration and eventually  the  Government
of India in the preparation and approval of the IIMPs  for  the  islands  in
question but also expedite the entire process for  the  general  benefit  of
the people living on the islands as also for those  visiting  the  place  as
tourists. Once the IIMPs are in place, all development activities will  have
to be regulated in accordance with the said plans  which  will  make  it  so
much easy for the Administration  to  grant  approvals  and  clearances  for
activities that are permissible under such plans for the areas reserved  for
the same. It will  also  provide  for  a  broad  framework  for  the  future
development  of  the  islands   without   disturbing   the   ecological   or
environmental balance and affecting the beauty of the area.

24.   That brings us to yet another aspect which has been  debated  at  some
length by learned counsel for the parties before us concerning  the  alleged
violation of CRZ and the land use diversion certificate by  the  respondent.
It is not possible for us to  express  any  opinion  on  any  one  of  those
aspects for the same would require inspection and verification of  facts  on
the spot apart from examination of the relevant record concerning the  issue
of the permission and the alleged violation of  the  conditions  subject  to
which they were  issued.   That  exercise  can,  in  our  opinion,  be  more
effectively undertaken by the Expert Committee not only in relation  to  the
respondent but  also  in  relation  to  all  other  resorts  and  commercial
establishments being run on the islands. So also the question,  whether  the
Administration committed any violation of the CRZ  Regulations  by  granting
permission to any resort in the name of ‘home stay’ or committed  any  other
irregularity or adopted any unfair or discriminatory  approach  towards  any
one or more resorts or commercial establishments is a  matter  that  can  be
looked into by the Committee.

25.   Suffice it to say that allegations  and  counter-allegations  made  by
the parties against each other in regard to the violation  of  the  CRZ  and
other irregularities in  the  matter  of  establishment  and/or  running  of
resorts and ‘home stay’ and  grant  of  permits  to  tourists  visiting  the
islands can also be examined by the Expert Committee  and  action,  if  any,
considered appropriate by it recommended in the Report to  be  submitted  to
this Court. While doing so, the Committee shall  also  examine  whether  any
official  of  the  Lakshadweep  Administration  has  wilfully  or  otherwise
neglected the discharge of his duties whether the same related to  violation
of CRZ norms or any other act of omission or commission. The  Committee  may
examine whether there is any criminal element in any such neglect or act  of
omission or  commission  on  the  part  of  any  of  the  officials  in  the
Lakshadweep Administration.

26.   We are told that CBI had been at one stage asked to look into  certain
violations alleged in relation to the affairs of the islands. The  Committee
may  examine  the  said  report  also  and  recommend,  if  necessary,   any
investigation to be conducted  by  the  CBI  into  the  alleged  blameworthy
conduct of the officers if there be any need for such investigation.

27.   In the result, we appoint the following Committee of experts:

|Justice R.V. Raveendran,                    |Chairman               |
|Former Judge, Supreme Court of India        |                       |
|Dr. M. Baba,                                |Member                 |
|Executive Director, Advance Training Centre |                       |
|for Earth System Sciences and Climate,      |                       |
|Indian Institute of Tropical Meteorology    |                       |
|(IITM), Pune                                |                       |
|                                            |                       |
|Mr. B.R. Subramaniam,                       |Member                 |
|Project Director                            |                       |
|Integrated Coastal and Marine Area          |                       |
|Management (ICMAM)                          |                       |
|Project under Ministry of Earth Sciences,   |                       |
|Govt. of India                              |                       |
|                                            |                       |
|Prof. M.M. Kamath                           |Member                 |
|Chief Engineer (Civil) (retd.)              |                       |
|Vice-Chairman, Expert Appraisal Committee on|                       |
|CRZ/Infrastructure Projects Constituted by  |                       |
|Ministry of Environment and Forests         |                       |
|                                            |                       |
|Prof. E.F.N. Ribeiro                        |Member                 |
|School of Planning and Architecture,        |                       |
|New Delhi                                   |                       |
|                                            |                       |


28.   Director, Science and Technology,  Lakshadweep  Administration,  shall
be  the  nodal  officer,  responsible  for  organising  and  providing   the
necessary administrative, secretarial and logistic support required  by  the
Committee. The Committee shall endeavour to  work  on  the  following  broad
terms of reference:

(I)   The Committee shall use its expertise  for  evaluation  of  the  draft
    IIMPs received from CESS or others that may be received in due  course,
    and make such additions or alterations in the same as it  may  consider
    proper  having regard, inter alia, to the following:

    (a)     The  development  already   in   existence   and   the   future
         developments, conservation and  preservation  of  the  entire  area
         keeping in view the statutory Notification dated 6th January,  2011
         issued by the Government of  India  under  the  provisions  of  the
         Environment Protection Act, 1986.

    (b)    The impact of the proposed  development  on  the  livelihood  of
         indigenous population and the various vulnerability issues.

    (c)    Reservation/identification of suitable locations and  areas  for
         creation of public and semi-public facilities  for  development  of
         tourism in the islands.

    (d)     Redevelopment/sustainable  development  of   inhabited   and/or
         uninhabited areas of each island as independent and self  contained
         units or as part of a  larger  development  plan  along  scientific
         lines.

 (II)The Committee may consider and recommend  incorporation  in  the  IIMP,
    Development Control Regulations governing the developmental activity in
    accordance with the final proposals on the  IIMP  for  the  purpose  of
    islanders’ seeking clearances for permissible development activities on
    the islands.  Such regulations  may  also  include  setting  up  of  an
    appellate authority for the grievance redressal of the  islanders  with
    respect to such clearances.  The Committee may suggest  an  outer  time
    frame  within  which  the  Authority  may  have  to  respond   to   the
    applications  of  the  islanders  seeking  permission  for  development
    activities.

(III) The Committee may examine the  desirability  and  the  feasibility  of
    running ‘home stays’ for tourism purpose in the islands and may suggest
    the same to be incorporated in the IIMPs. The Committee may examine and
    suggest necessary guidelines keeping in  mind  environmental,  economic
    and security considerations for running of such  Home  stays  including
    norms/rules for such ‘home stays’ and the number of ‘home stays’ to  be
    permitted,  the  number  of  permits  to  be  granted,  the  norms  for
    identification of houses  for  homestays,  and  the  facilities  to  be
    offered etc.

(IV)  The Committee may in its wisdom and  discretion  make  suggestions  on
    any other issue concerning the islands which it may deem fit.

29.   The Committee shall examine allegations  regarding  violation  of  the
CRZ and other  irregularities  committed  by  the  respondent  or  by  other
individuals/entities in relation to  establishment  and/or  running  resorts
and ‘home stays’ in the islands.  Allegations  regarding  irregularities  in
the matter of grant of permits to the tourists visiting the islands as  also
in regard to permissions granted to the resort owners/home stays to  operate
on the islands shall also  be  examined  by  the  Committee.  So,  also  the
Committee shall be free to examine whether any official of  the  Lakshadweep
Administration has been guilty of any act of omission or commission  in  the
discharge of his official  duties  and  if  considered  necessary  recommend
action against such officials.

30.   The remuneration payable to  the  Chairman  and  the  members  of  the
Committee is not being determined by us.  We  deem  it  fit  to  leave  that
matter to be decided by the Committee keeping in view the nature of work  to
be undertaken by it and the time required to accomplish the same.

31.   The Chairman of  the  Committee  may,  in  his  discretion  co-opt  or
associate with the  Committee,  any  other  expert  member  from  any  field
considered relevant by it or  take  the  assistance  of  any  scientific  or
expert body considered necessary for completion of the assignment.

32.   The Committee shall evolve its own procedure including the  place  and
time of the meetings, division of work, powers, duties and  responsibilities
of members etc.

33.   The Lakshadweep Administration shall  provide  to  the  Committee  the
requisite information, documents,  material,  infrastructure  or  any  other
requirement for the successful  implementation  of  the  objectives  of  the
Committee.

34.     The   expenses   incurred   directly   or   indirectly    for    the
functioning/management  of   the   Committee   shall   be   borne   by   the
Administration.

35.   The Committee is requested to submit a preliminary  report  about  the
steps taken by it as far as possible within a period of two months from  the
date of receipt of a copy of this order.

36.   The matter shall be posted for  orders  before  the  Court  after  the
receipt of the preliminary report.





                                                          ……………………….……..……J.
                                                       (T.S. THAKUR)




                                                          ………………………….…..……J.
New Delhi                               (GYAN SUDHA MISRA)
May 11, 2012