The order of the Goa bench of the Bombay High Court squashing and setting aside the land allotment to developers of seven designated Special Economic Zones (SEZs) in the state has put the brakes, temporarily or not, on unplanned and mindless industrialisation. As of now the Goa Industrial Development Corporation has four months to make fresh allotments and if this is not done then the GIDC can take possession of the land.
This is a huge setback for the seven companies, three of which had got their SEZs notified. The High Court in its order observed that the land was allotted in undue haste, without proper scrutiny of applications and in an unfair manner. Although the High Court order comes as a relief to those agitating against SEZs, it is not the end of the matter. In all probability the seven companies will knock the doors of the Supreme Court, at least to recoup the investments made in the SEZs. The end is still a long way and the petitioners have a tougher battle ahead.
Of the seven SEZs, three were notified and the remaining had been granted approval to start, which was one step before notification. A crucial question that came up during the hearing of the case was whether the central government had powers to withdraw the notification. Although the Assistant Solicitor General of India submitted that the central government had the power, the High Court sidestepped the issue and did not give any ruling in this respect.
An allegation made by the companies was that the government had taken a decision to withdraw its SEZ policy after public outcry and its decision was arbitrary. This was not accepted by the court which held that the decision was taken after considering all facts like power requirement, water supply, availability of land, possibility of large scale migration and a report presented by the Task Force. The High Court also upheld the powers of the government to take policy decisions and reiterated the limitations of courts to interfere with it.
The High Court also went to great lengths to determine the norms under which the GIDC or government can dispose property and in doing so unearthed a can of worms. The order notes that four applications for allotment of land at Verna and Sancoale were received by the GIDC on April 12, 2006. Some portions were hand written and two were signed by the same person. Also one applicant attached a letter from the then chief minister which said, ‘please help these people.’ All four applications for land were cleared within seven days on April 19 the same year even though project reports were not submitted. Besides, one of the companies was incorporated after the land was allotted. The order exposed the hand of the then chief minister and industries minister. The court held that there was no application of mind on the part of the GIDC and no scrutiny of applications to ascertain the experience and financial capability of the companies. Hence the action of the GIDC in allotment of land was held to be without fairness and transparency and not in public interest.
The last and final question considered by the court is whether the government or the GIDC is liable to compensate the seven companies for the expenditure incurred by them on the SEZs. The court first held that the government had the right to withdraw the approval since it was based on public interest; the government and GIDC were not bound by any promise made to the companies. It allowed the GIDC to reconsider applications for allotment of the land, but not for setting up SEZs. Nevertheless, the High Court’s order does raise a number of issues about the decision-making regarding the allotment of land in the name of SEZs. Surely, a thorough investigation is called for to fix the responsibility for the speeding up of the allotment against public interest.