The division bench of the High Court of Bombay at Goa constituting Mr Justice S B Deshmukh and Mr Justice F M Reis held on Friday that the allotment of land as special economic zones was illegal. Several petitions concerning the controversy of allotment of land at Verna as SEZ were disposed of. While several public interest litigations were filed by the villagers of Keri, Sancoale and Verna, challenging the GIDC’s decision.There were also petitions filed by the seven SEZ developers who assailed the show-cause notice issued to them by the GIDC as to why the land should not be allotted.
While the court allowed the PILs it dismissed the petitions filed by the SEZ developers. In the PILs the petitioners challenged the GIDC’s decision to allot land in their respective villages on lease agreements to the SEZ promoters. The villagers have complained that the land was allotted fraudulently.
It was the case of the six SEZ promoters viz – Meditab Specialities Pvt Ltd, Peninsular Pharma Research Centre Pvt Ltd, Paradigm Logistic & Distribution Private Ltd, Planetview Mercantile Company Pvt Ltd, Inox Mercantile Company Pvt Ltd and Maxgrow Finlease Pvt Ltd that the Goa Industrial Development Corporation served them show-cause notices arbitrarily calling for withdrawal of land allotted to them (promoters) after the state government changed its SEZ policy.
The SEZ promoters in their petitions pleaded that since they invested heavily in the projects, they suffered huge losses after stop-work orders were issued by the state government.
On June 15, 2009 the state government had withdrawn the SEZ policy following a cabinet decision.
In short, the case of the SEZ developers was that the allotment could not be withdrawn for the following reasons:
– The SEZ is notified by the central government and hence the state government has no authority to interfere.
– The SEZ Act does not vest any power in the government of India to cancel or revoke a notification issued under Section 4 (1) of the SEZ Act.
– There was no power vested in the state government to withdraw the recommendations.
– In case of change of SEZ policy, then the same shall have only prospective effect and hence it shall not affect the allotments already made.
– Moreover, termination of lease of the land so allotted as SEZ can only be made in the event of any breach of condition and not otherwise. In view of the investments made in pursuance of invitation of the government, a sudden change in the SEZ policy for no substantial and justifiable reason is nothing but arbitrary.
On the other hand, the case of the public interest litigants was:
– The bulk allotment of plots of land in Phase-IV of Verna Industrial Estate by the GIDC is arbitrary.
– The allotment of land to the SEZ developer viz Planetview Mercantile was made by the GIDC at a time when the said company was not even registered.
– No land could have been allotted as SEZs unless there was a direction issued under Section 16 of the GIDC Act and in case of these SEZ companies.
– The report of the Comptroller and Auditor General of India for the year 2008-09 highlights in Chapter VII therein, several illegalities and irregularities in the allotment of lands by the GIDC to the companies resulting in huge monetary loss.
– Moreover, public property cannot be transferred without inviting bids or quotations, a policy not followed in the allotment of land as SEZ.
However, it was submitted on behalf of the GIDC that in April 2006, the board was to consider and grant approval to around 100 SEZs in the country and to ensure that Goa get at least few SEZs, allotment of lands was required to be made hurriedly. GIDC has acted in terms of the directions of the state government.
Moreover, it was submitted that it has power to cancel SEZ even in a case where notification has been issued.
The Advocate General, Mr Subodh Kantak submitted that before taking the decision of withdrawal of the SEZ policy, the state government considered the white paper prepared by the Chief Secretary, the recommendations of the task force for the Regional Plan 2021 appointed by the state government and other relevant material. He submitted that the decision was based on considerations of public interest after the state government was satisfied that the SEZs will adversely affect the state. The state government has power to withdraw the recommendations made under section 3(6) of the SEZ Act, he pointed out.
The court has held in its 195-page judgment that the allotment of the public properties vested in the GIDC can be made only in a fair and transparent manner and that also in public interest. Such huge lands which are public properties were allotted to the said companies in a manner opposed to public policy. The court then declared the action of allotment of the land as SEZs as being illegal, arbitrary and unreasonable.