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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SCA/4571/2011 19/ 19 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL
CIVIL APPLICATION No.4571 of 2011
===================================================
DIAMOND
& GEM DEVELOPMENT CORPN. & 1-Petitioner(s)
Versus
UNION
OF INDIA - THROUGH SECRETARY & 4 - Respondent(s)
===================================================
Appearance
:
MR
MIHIR H JOSHI, SENIOR COUNSEL, with MR
ABHISHEK M MEHTA for Petitioner(s) : 1 - 2.
MR PS CHAMPANERI for
Respondent(s) : 1-3,
MR RJ OZA for Respondent(s) : 4,
MR
VIRENDRA M GOHIL for Respondent(s) :
5,
===================================================
CORAM
:
HONOURABLE
MS.JUSTICE HARSHA DEVANI
and
HONOURABLE
MR.JUSTICE R.M.CHHAYA
Date
: 19/04/2011
ORAL
ORDER
(Per
: HONOURABLE MS.JUSTICE HARSHA DEVANI)
Being
aggrieved by the order dated 31st
March, 2011 passed the respondent No.2-Development Commissioner
reviewing the appointment of the petitioner No.1 company as
custodian under section 45 of the Customs Act, 1962 and appointing
the respondent No.5-M/s.MMTC Limited, Mumbai as custodian for the
Surat Special Economic Zone, the petitioner has filed the present
petition.
The
petitioner No.1, a company, (hereinafter referred to as the
petitioner company) is engaged in the business/activity of
development of industrial parks and special economic zones. The
petitioner company is also appointed as “Custodian”
under the provisions of the Customs Act, amongst others, for Surat
Economic Zone situated at Surat.
Assailing
the impugned order Mr.Mihir Joshi, learned Senior Advocate appearing
on behalf of the petitioner submitted that the impugned order dated
31.03.2011 is in colourable exercise of power and authority not
vested with the respondent No.2 Development Commissioner and amounts
to usurping the authority under section 45 of the Customs Act by
appointing a custodian under the guise of reviewing the appointment
of the petitioner company made by the Commissioner of Customs,
Gujarat vide Notification No.2/95 (CCP) dated 20.10.1995 followed by
Customs Notification No.14/1998 dated 18.06.1998. It was submitted
that the petitioner was appointed as a custodian in the year
1995/1998 by the aforesaid notifications issued by the Commissioner
of Customs in exercise of powers under sub-section (1) of section 45
of the Customs Act and had continued to remain custodian since the
last fifteen years. That all of a sudden, the respondent No.2
Development Commissioner has decided to review the appointment of
the petitioner company and in its place appoint the respondent No.5
as custodian. Referring to the public notice inviting proposals to
work as custodian, it was pointed out that the respondent No.2 has
placed reliance on the Circular No.128/95-Customs dated 14.12.1995
issued by the CBEC, for the purpose of reviewing the appointment of
the petitioner as custodian. The attention of the court was drawn to
the standard set of guidelines for appointment of custodians of
EPZs/ICDs/CFSs/ as contained in the said Circular No.128/95-CUS and
more particularly to the clause 17 of the Annexure thereto, which
says that the duration of the appointment shall initially remain for
five years and subject to the satisfaction of the Commissioner of
Customs. Commissioner of Customs shall have the right to terminate
the appointment at any time after assigning specific reasons and
after giving an opportunity to the custodian to explain his case;
and that the appointment shall be reviewed every five years
thereafter.
Inviting attention to the notification appointing the petitioner as
a custodian, it was pointed out that the appointment of the
petitioner as custodian was not for a limited period. According to
the learned counsel, the scheme indicates that the appointment was
to continue indefinitely subject to periodic review every five years
as laid down in the guidelines. In view of clause 17 of the
guidelines the termination could be for valid reasons and after
giving opportunity of hearing to the custodian. It was submitted
that in the present case no notice as regards review had been issued
by the respondent No.2 prior to terminating the custodianship of the
petitioner nor was the petitioner called upon to tender any
explanation. It was submitted that in fact there was no order of
termination, but only an order appointing M/s.MMTC Ltd. as
custodian. Moreover, the impugned order does not disclose any reason
whatsoever for reviewing the custodianship of the petitioner company
nor does it disclose any reasons whatsoever for appointing the
respondent No.5 in place of the petitioner company. It was pointed
out that over and above appointing M/s. MMTC Ltd. as custodian the
respondent No.2 has also proceeded to appoint transporters for
transporting the precious goods on behalf of the custodian, who, in
terms of the public notice were required to be appointed by the
custodian. It was urged that there is no reason or justification for
termination, which, even otherwise, is in breach of the principles
of natural justice and that there is no statutory basis for bringing
an end to the term of the petitioner as custodian. It was contended
that the scheme indicates adverse review as a ground for
termination; however, no such reason has been stated in the present
case.
Inviting
attention to the provisions of section 45 of the Customs Act, it was
submitted that under the said provision it is the Commissioner of
Customs who has been vested with the power to appoint a custodian
and that the respondent No.2 does not have the authority or
jurisdiction to appoint a custodian. It was submitted the impugned
order indicates that the same has been passed in exercise of powers
under section 12 of the Special Economic Zones Act, 2005
(hereinafter referred to as “the SEZ Act”). Referring
to, sub-section (2) of section 12 of the Act, it was submitted that
any power of the Development Commissioner to act under the
provisions of section 45 of the Customs Act can be traced to clause
(e) of the said sub-section, which provides for discharge of such
other functions as may be assigned to the Development Commissioner
by the Central Government under the SEZ Act or any other law for the
time being in force. It was submitted that there is nothing in the
impugned order to show that the Central Government has in fact
assigned to the Development Commissioner the functions under the
Customs Act and more particularly under section 45 thereof, hence,
the impugned order passed by the Development Commissioner is in
excess of the authority vested in him and without any jurisdiction.
It was accordingly urged that the petitioner has a strong prima
facie case justifying the grant of interim relief. It was further
submitted that the petitioner company has been holding the
custodianship of the Surat Special Economic Zone since the last
fifteen years and has never violated any of the provisions of the
notification appointing the petitioner company as custodian and has
also followed the guidelines scrupulously and diligently without
there being any complaints against the petitioner. It was submitted
that the petitioner is also the developer of Surat Special Economic
Zone and has the required/requisite infrastructure behind it. The
petitioner company has also been handling enormous quantity of cargo
running into billions of US dollars and has developed the SEZ by
making enormous investments over the years and as such the balance
of convenience also leans heavily in favour of the petitioner
entitling the petitioner to the grant of interim relief. It was,
accordingly, urged that the petition be admitted and the interim
relief as prayed for be granted.
The
petition is vehemently opposed by Mr.P.S. Champaneri, learned
Additional Solicitor General appearing on behalf of respondents
No.1, 2 and 3. The learned counsel submitted that by virtue of the
provisions of sub-section (1) of section 53(1) of the SEZ Act, a
special economic zone, on and from the appointed day, is deemed to
be a territory outside the customs territory of India for
the purposes of
undertaking authorized operations. Sub-section (2) of section 53 of
the SEZ Act provides that the Central Government may notify a
Special Economic Zone as a deemed port/airport/land station, etc.
under section 7 of the Customs Act. It was submitted that these
provisions have been made in order to facilitate regular import and
export activities from a special economic zone as it is deemed to be
a territory outside the customs territory of India. That similar
provisions have been made in sub-rule (11) of rule 11 of the Special
Economic Zones Rules, 2006 (hereinafter referred to as “the
SEZ Rules”) which lays down that the Special Economic Zone
shall be deemed to be a port, airport, inland container depot, land
customs station under section 7 of the Customs Act in accordance
with the provisions
of section 53, from the date notified in this behalf. It was further
submitted by the learned counsel that the SEZ Rules provide that the
Specified Officer may designate any area or areas in the Special
Economic Zone as
an area for loading and unloading of import and export cargo and
that as per rule 2(1)(zd) of the SEZ Rules, Specified Officer, in
relation to a Special Economic Zone means a Joint or Deputy or
Assistant Commissioner, for the time being in force posted in the
Special Economic Zone. Thus, it is amply clear that for
the purpose of
regular customs work in a special economic zone, there is a separate
set-up of officers who are posted in the special economic zone on
deputation basis and are under the administrative control of the
Development Commissioner, in-charge of the Zone by virtue of
sections 11 and 12 of the SEZ Act read with rule 20 of the SEZ
Rules. According to the learned counsel, in view of the said
provisions, the customs authority having jurisdiction over the
domestic tariff area (outside the Special Economic Zone) have no
administrative control and jurisdiction over the area falling under
a special economic zone declared by the Central Government under
section 4 of the SEZ Act.
The
next submission advanced by the learned counsel for the respondent
No.2 was that the appointment of a custodian in a special economic
zone is purely in relation to handling of the import-export cargo
from port/airport to Zone and vice-a-versa, as well as its storage
in the designated area (the customs area) as specified by the
Specified Officer of the special economic zone. Therefore, all
matters pertaining to special economic zone are to be dealt with by
the Development Commissioner in-charge of the zone being the
administrative head of the Zone. It was submitted that the
appointment of the respondent No.5 as custodian by the respondent
No.2 Development Commissioner is in accordance with law.
Inviting
attention to the changes brought in the Customs Act by introducing
the provisions of Chapter-XA in the Customs Act dealing exclusively
with the special economic zones to contend that by virtue of the
provisions of section 76A thereof, the special economic zone came to
be treated as a different territory outside the purview of the
Customs Act. Placing emphasis on the provisions of section 76B it
was submitted that by virtue of the said provision, the provisions
of Chapter XA had an overriding effect over the other provisions of
the Customs Act and that in case of any conflict the provisions of
Chapter XA would prevail and as such on and from the year 2002 the
provisions of Chapter XA prevailed over the provisions of the
Customs Act. The learned counsel further submitted that under the
provisions of section 76C, the Central Government was empowered to
make rules specifying the requirements relating to goods or class of
goods admissible to a special economic zone, the nature of
operations to which such goods or class of goods may be subjected
and the conditions to be fulfilled and the procedure in this regard.
It was contended that the expression “admissible” also
means custody and that by virtue of the said provision, the
provisions of section 45 of the Act were no longer applicable to the
special economic zone. The learned counsel next submitted that the
provisions of Chapter XA (containing sections 76A to 76N) came to be
omitted by Act 22 of 2007 and came to be replaced by the SEZ Act.
According to the learned counsel, a special economic zone is a
floating sovereign placed under the authority of the Development
Commissioner under section 12 of the SEZ Act which was treated as
being outside the customs territory of India and as such, the same
was not governed by the provisions of the Customs Act. Insofar as
the powers of the Development Commissioner to appoint a custodian
are concerned, the learned Counsel placed reliance on the provisions
of section 12 of the Act to submit that under the said provision,
the Development Commissioner was duly empowered to appoint even a
custodian as the administrative control and supervision of the
officers appointed under sub-section (2) of section 11 (including
the officers deputed to such special economic zone) was vested in
him.
The
next submission advanced by Mr.Champaneri was that rule 2(1)(h) of
the Rules defines “custodian” to mean any person
referred to in section 45 of the Customs Act and that after the
enactment of Special Economic Zone Act, 2005 and the Special
Economic Zone Rules, 2006 an instruction No.6/2006 dated 03.08.2006
was issued by the Ministry of Commerce & Industry Department of
Commerce, Government of India, to the effect that all the activities
relating to Special Economic Zones shall be guided by the provisions
contained the Act and the Rules and as such the action of the
respondent No.2 Development Commissioner was within the bounds of
his authority.
Strong
emphasis was laid on the fact that the respondent No.2 had as early
as on 6th
January, 2011 informed the petitioner that he had decided to review
the appointment of the petitioner as custodian and had directed the
petitioner to issue a public notice, inviting fresh proposals from
interest eligible parties to work as a custodian for Diamonds, Gems,
Jewellery, Precious and Semi-precious stones etc. in the Surat,
Special Economic Zone, pursuant to which the petitioner had got such
public notice published. The petitioner had himself submitted an
application
pursuant to the said application
and as such it had acquiesced with the action of the respondent
No.2. It was submitted that the petitioner having taken part in the
process of appointment of custodian is now estopped from challenging
the same. It was urged that the conduct of the petitioner subsequent
to passing of the impugned order also requires to be deprecated
inasmuch as despite the fact that the petitioner was directed to
make necessary arrangements for handing over the strong room to the
respondent No.5 M/s. MMTC Ltd. with effect from 15.04.2011, the
petitioner had resisted the same. It was submitted that despite the
fact that the petitioner was fully aware that in the eventuality of
non handing over the strong room at Surat SEZ, the export-import
activities of the precious cargo may get paralyzed resulting in
irreparable loss to the industries in the Zone and also to the
nation, the petitioner had failed to hand over the same to the
respondent No.5. It was submitted that the conduct of the
petitioner, therefore, dis-entitles the petitioner from the grant of
any of the reliefs prayed for in the
petition.
Another
submission advanced by Mr.Champaneri was that the respondent No.2
had put the petitioner to notice as early as on 06.01.2011 that its
custodianship was being reviewed and that fresh proposals for
appointment of custodians were being invited, hence, the petitioner
at the relevant point of time could have challenged the same if it
so deemed fit. However, the petitioner, instead of challenging the
said action at the relevant point of time, has acquiesced with the
same by issuing the public notice as directed by the respondent No.2
and also taking part in the process of appointment of custodian.
That it was only after the respondent No.5 was appointed as
custodian, that the petitioner has approached this Court challenging
the impugned order, in the circumstances, the petition is also
barred by delay, laches and acquiescence and as such deserves to be
dismissed on this ground alone.
On
behalf of M/s. MMTC Ltd., Mr.C.Z.Sankhla, learned advocate submitted
that pursuant to passing of the impugned order, the respondent No.5
has taken charge as custodian.
In
rejoinder, Mr. Joshi, for the petitioner submitted that the
interpretation of section 53(1) of the Act, as put forth by the
learned counsel for the respondent is not a correct interpretation.
Reliance was placed on the decision of a Division Bench of this High
Court in the case of Union of India Vs. Oswal Agricomm Private
Limited and others, rendered on 06.07.2010 in Letters Patent Appeal
No.256 of 2010 and cognate matters, wherein the Court had held thus:
“34. But Section 53
being limited to that extent of ‘authorized officer’, who was earlier
empowered to perform certain jobs under Chapter XA, the power of the
Customs authorities under the Customs Act, including the power to
confiscate and impose penalty under Sections 111 to 114, as
enumerated in Chapter XIV of the Customs Act, is not taken away.
35. Thus, we hold that the
competent authorities under the Customs Act are still empowered to
confiscate any goods under Sections 111 and 112 and impose penalty
under Sections 113 and 114, in appropriate case, even with regard to
the units situated within the Special Economic Zone. The competent
authorities are also empowered to take penal action under any other
Central Act, if such violation is found to have been committed by any
or other unit of SEZ including the writ petitioners, with regard to
which no notification has been issued either under sub-section (1) or
sub-section (2) of Section 21 or sub-section (1) or sub-section (2)
of Section 22 of the SEZ Act, 2005.”
It was
submitted that the said decision squarely covers the issue involved
in the
present
case, viz., the powers of the customs authority under the Customs Act
are not taken away even in respect of special economic zones and as
such the power of the Commissioner of Customs to appoint a custodian
under section 45 of the Act would prevail even after the coming into
the force of the SEZ Act. It was further submitted that rule 2(1)(h)
of the Rules refers to “custodian” to mean any person
referred to in section 45 of the Customs Act, hence, even under the
SEZ Act and the SEZ Rules reference to custodian means a custodian
who is appointed under section 45 of the Customs Act. In the
circumstances, the Development Commissioner has no powers under
section 12 of the SEZ Act to appoint a custodian.
Having
heard learned Counsel for the respective parties the court is of the
opinion that the matter requires consideration. Hence, RULE
returnable on 20.06.2011.
In the meanwhile, the parties shall complete all pleadings on or
before 15.06.2011.
On
the question of grant of interim
relief,
a perusal of the provisions of section 45 of the Customs Act, under
which the petitioner was appointed as custodian the above referred
vide notifications issued in 1995/1998 show that the said provision
empowers the Commissioner of Customs to approve of such person in
whose custody all imported goods unloaded in a customs area shall
remain until they are cleared for home consumption or are warehoused
or are transshipped in accordance with provisions of Chapter-VIII of
the Act. “Customs area” has been defined under section
2(11) of the Customs Act to mean the area of a customs station and
includes any area in which imported goods or export goods are
ordinarily kept before clearance by Customs Authorities. Customs
area is defined under section 2(11) of the Customs Act to mean the
area of a customs station and includes any area in which imported or
export goods are ordinarily kept before clearance by Customs
authorities. The proviso to rule 28 of the SEZ Rules speaks of
transfer of high value imported goods through the airport to the
custodian who shall transfer the same to a designated Customs Area
located inside the Processing Area designated by the Specified
Officer for further delivery to the unit or developer. Thus, the SEZ
Rules also envisage a customs area even within the processing area.
On behalf the respondent No.2 it is sought to be canvassed that in
view of the provisions of sub-section (1) of section 53 of the SEZ
Act, the special economic zone is deemed to be a territory outside
the customs territory of India and as such falls outside the
jurisdiction of the customs department. However,
the said contention fails to take care of what follows thereafter,
viz., “for the purposes of undertaking authorised operations”.
Thus the words outside the customs territory of India cannot be
divorced from the words “for the purposes of undertaking
authorised operations” and not for all purposes. As
to what are the authorized operations is laid down under section
2(c) of the Act to mean operations which may be authorized
under sub-section (2) of section 4 and sub-section (9) of section
15. Sub-section (2) of section 4 provides that after the appointed
day, the Board may, authorise the Developer to undertake in a
special economic zone, such operations which the Central Government
may authorize. Thus, sub-section (2) relates to such operations
which the Central Government may authorize the developer to
undertake in a Special Economic Zone.
Sub-section
(9) of section 15 of the Act provides that the Development
Commissioner may, after approval of the proposal referred to in
sub-section (3), grant a letter of approval to the person concerned
to set up a Unit and undertake such operations which the Development
Commissioner may authorise and every such operation so authorised
shall be mentioned in the letter of approval. Thus, sub-section (9)
of section 15 pertains to granting approval for setting up of a unit
undertaking such operation as may be authorised by the Development
Commissioner. Sub-section (1) of section 53 of the Act is therefore,
required to be read in the light of the expression “authorised
operations”. On a plain reading of section 53(1) of the Act, it
appears what is contemplated under the said provision is that the
area of a special economic zone is deemed to be a territory outside
the customs territory of India for
the purposes of
undertaking the “authorised operations” as contemplated
in section 4(2) and 15(9) of the Act. The said provision however,
does not take the special economic zone out of the purview of the
provisions of the Customs Act, except in respect of the authorized
operations. This position is made clear by the decision of the
Division Bench of this Court referred to hereinabove, on which
reliance has been placed on behalf of the petitioner, which clearly
lays down that Special Economic Zone is deemed to be a territory
outside the Customs area only for
the purposes of
undertaking the authorized operations which means that the Customs
Authorities, who were empowered under section 76G (repealed since
11.05.2007), had no power to authorise any developer to undertake any
operation in the special economic zone nor had the power to approve
any proposal for setting up any unit within the special economic
zone. However, section 53 being limited to the extent of “authorized
officer”, who was earlier empowered to perform certain jobs
under Chapter XA and power of the Customs authorities under the
Customs Act, including the power to confiscate and impose penalty
under Sections 111 to 114, as enumerated in Chapter-XIV of the
Customs Act, is not taken away.
In the
light of the clear provisions of section 53(1) of the SEZ Act as well
as in the light of the ratio laid down in the aforesaid decision,
reliance placed upon sub-section (1) of section 53 of the SEZ Act by
the respondent No.2 appears to be misplaced as the same does not in
any manner curtail the power of the Commissioner of Customs to
appoint a custodian under section 45 of the Act in respect of a
special economic zone.
A
perusal of the provisions of the SEZ Act shows that the same does
not contain any express provision for appointment of custodian. The
power to appoint a custodian can be traced only to section 45 of the
Customs Act, which expressly confers the power of appointment of
custodian on the Commissioner of Customs alone. The case of the
respondent No.2 Development Commissioner is that he has exercised
powers under section 12 of the Act. In this regard it may be
necessary to refer to the provisions of section 12 of the Act which
read thus:
“12. Functions of
Development Commissioner.–(1)
Every Development Commissioner shall take all steps in order to
discharge his functions under this Act to ensure speedy development
of the Special Economic Zone and promotion of exports therefrom.
(2) Without prejudice to the
generality of the foregoing provisions, the Development Commissioner
shall–
(a) guide
the entrepreneurs for setting up of Units in the Special Economic
Zone;
(b) ensure
and take suitable steps for effective promotion of exports from the
Special Economic Zone;
(c) ensure
proper co-ordination with the Central Government or State Government
Departments concerned or agencies with respect to, or for the
purposes, of clauses (a)
and (b);
(d) monitor
the performance of the Developer and the Units in a Special Economic
Zone;
(e) discharge
such other functions as may be assigned to him by the Central
Government under this Act or any other law for the time being in
force; and
(f) discharge
such other functions as may be delegated to him by the Board.
(3) Every Development
Commissioner shall be overall in charge of the Special Economic Zone
and shall exercise administrative control and supervision over the
officers and employees appointed under sub-section (2) of Section 11
(including the officials deputed to such Special Economic Zone) to
discharge any of the functions under this Act.
(4) Without prejudice to the
provisions of sub-sections (1) to (3), every Development Commissioner
shall discharge such functions and exercise such powers as may be
delegated to him by a general or special order by the Central
Government or the State Government concerned, as the case may be.
(5) Every Development
Commissioner may call for such information from a Developer or Unit
from time to time as may be necessary to monitor the performance of
the Developer or the Unit, as the case may be.
(6) The Development
Commissioner may delegate any or all of his powers or functions to
any of the officers employed under him.”
On
a plain reading of sub-section (1) of section 12 of the Act, it
appears that the Development Commissioner is required to generally
discharge functions for ensuring speedy development of the Special
Economic Zone and promotion of exports therefrom and in particular
the functions enumerated in section 12(2) of the Act. Clause (e) of
sub-section (2), which is relevant for the present purpose, empowers
the Development Commissioner to discharge such other functions as
may be assigned to him by the Central Government under the Act or
any other law for the time being in force. Thus, the Development
Commissioner may exercise powers under section 45 of the Act if such
functions have been specifically assigned to him by the Central
Government as contemplated under clause (e) of sub-section (2) of
section 12 of the SEZ Act. However, in the
present case,
that is not the position, inasmuch as no such assignment of powers
has been pointed out on behalf of the respondent No.2 nor it is the
case of the respondent No.2 that he has exercised such powers. As
regards Instruction No.6 dated 3rd
August, 2006 of the Government of India, Ministry of Commerce and
Industries, Department of Commerce which finds reference in the
affidavit-in-reply filed on behalf of the respondent No.2, a perusal
of a copy thereof (which has been placed on record by the learned
advocate for the petitioner) shows that the same has no relevance to
the facts of the present case. The main plank of the submissions
advanced by the learned Counsel for the respondent No.2-Development
Commissioner is that the Development Commissioner is vested with all
administrative powers in respect of the special economic zone and as
such under the provisions of section 12 of the Act he is duly
empowered to appoint a custodian.
Another
significant aspect of the matter is that rule 2(1)(h) of the SEZ
Rules defines “custodian” to be a custodian referred to
in section 45 of the Customs Act, 1962. Hence, any reference to
custodian under the Rules would mean a custodian referred to in
section 45 of the Customs Act. It has been argued on behalf of the
respondent No.2 that the words used in the said rule are “person
referred to in section 45 of the Customs Act”, which is not
same as the person appointed under the Customs Act. The said
contention is fallacious inasmuch as even if one goes by the express
language of rule 2(1)(h) of the SEZ Rules, which speaks of the
custodian as being the person referred to in section 45 of the
Customs Act, the custodian would be the person referred to in
section 45 of the Customs Act, meaning thereby the person approved
by the Commissioner of Customs. Thus, for all intents and purposes a
custodian under the provisions of the SEZ Act and the SEZ Rules is a
custodian as envisaged under section 45 of the Customs Act. Once
that is the position, any person appointed as a custodian otherwise
than under the provisions of section 45 of the Customs Act would not
be a custodian within the meaning of rule 2 (1)(h) of the Rules so
as to be competent to discharge the duties of a custodian in the
special economic zone.
In
light of the aforesaid discussion, the court is of the prima facie
view that section 12 of the SEZ Act does not empower the Development
Commissioner to appoint a custodian under section 45 of the Customs
Act, inasmuch as the powers under the Customs Act are required to
be expressly assigned to the Development Commissioner under clause
(e) of sub-section (2) of section 12 of the Act. The power under
section 45 of the Customs Act is specifically conferred on the
Commissioner of Customs, who is the only authority in whom the power
of appointing a custodian under sub-section (1) thereof is vested.
Thus, the action of the respondent No.2 in appointing the respondent
No.5 M/s MMTC Ltd. as custodian in place of the petitioner prima
facie appears to be without jurisdiction and authority of law. The
appointment of custodian by the respondent No.2 having been made
under section 12 of the SEZ Act, the person so appointed would not
be a custodian as contemplated under rule 2(1)(h) of the SEZ Rules
so as to be competent to discharge functions of a custodian under
the said Rules. From the facts as appearing from the record, the
petitioner is the developer of the special economic zone and has
also established necessary infrastructure for discharging the
functions of the custodian. The petitioner has been acting as a
custodian with effect from the time of its appointment vide
notifications issued in 1995/1998 till 15.04.2011 and nothing has
been brought on record by the respondents to indicate any breach of
the provisions of its appointment or that any complaint of
whatsoever nature has been made against the petitioner. The
petitioner has been appointed as custodian by the Commissioner of
Customs in exercise of powers under section 45(1) of the Customs
Act, which are duly vested in him. Whereas the impugned order has
been passed by the respondent No.2 in exercise of powers under
section 12 of the SEZ Act, which prima facie does not confer any
such power on the Development Commissioner. Moreover, the petitioner
company’s custodianship has been terminated without assigning
any reasons whatsoever, without issuing any notice for review,
without calling for an explanation from the petitioner, and without
affording any opportunity of hearing to the petitioner in complete
violation of the principles of natural justice. In the
circumstances, the balance of convenience weighs heavily in favour
of the petitioner company. Moreover, non-grant of interim relief
would cause irreparable injury to the petitioner. On behalf of the
respondent No.2 it has been contended that the petition is barred by
delay, laches and acquiescence. Insofar as delay and laches are
concerned, it is true that the petitioner did not file the petition
at the earliest point of time when it was asked to issue public
notice. However, the facts on record indicate that the petitioner
was duly pursuing the matter with the respondent No.2 and even after
the impugned order was passed the petitioner had made a
representation to the respondent No.2 to reconsider his decision.
The petitioner company has, thereafter, before the date on which the
impugned order was to take effect, approached this Court by way of
the present petition. Hence the contention that the petition is
barred by delay and laches is prima facie not substantiated. Insofar
as the question of acquiescence on the part of the petitioner
company is concerned, the petitioner company has emphatically denied
the said contention. Moreover, it is a well-settled position of law
that acquiescence or waiver would not vest in an authority a power
which is otherwise not vested in it. In the circumstances, in view
of the findings recorded hereinabove, the said contention also does
not merit acceptance.
In
the light of the aforesaid discussion, the petitioner has made out a
strong prima facie case, the balance of convenience also leans
heavily in favour of the petitioner and non grant of interim relief
as prayed for would cause irreparable injury to the petitioner.
Moreover, the Court has also prima facie found the appointment of
the respondent No.5 M/s MMTC Ltd to be without any authority and
jurisdiction. The Court is accordingly of the view that the
petitioner is entitled to interim
relief
prayed for in the
petition.
Hence, by way of interim
relief,
the execution, operation and implementation of impugned order dated
31.03.2011 (at Annexure-A) is hereby stayed till the final disposal
of the
present petition.
At
this stage Mr. P.S. Champaneri, learned Assistant Solicitor General
has requested that this order be stayed for a period of three weeks
from today so as to enable the respondents to avail of remedy before
the higher forum. In the facts and circumstances of the case, the
request is turned down. Direct service is permitted.
Sd/-
Sd/-
[H.N.
DEVANI, J] [R.M. CHHAYA, J]
Bhavesh*
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