1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION APPEAL FROM ORDER NO. 179 OF 2008 APPEAL FROM ORDER NO. 179 OF 2008 APPEAL FROM ORDER NO. 179 OF 2008 WITH CIVIL APPLICATION NO. 217 OF 2008 IN NOTICE OF MOTION NO. 326 OF 2008 IN S.C. SUIT NO. 272 OF 2008 Tara Ultimo Private Limited ) a company incorporated in ) accordance with the provisions of ) Indian Companies Act, 1956 having ) its Registered Office at Plot No.29-P ) & 30P, Sub lot No. a, SEEPZ, Special ) Economic Zone, Andheri (East), ) Bombay 400 096. )..Appellant (Org. Defendant No.3) Versus 1. SHABBIR HASAN KHAN, ) Proprietor of M/s. Good Luck ) Trading Corporation, having his ) Office at Shivaji Kutir Mandir, ) Gulab Shah Estate, 3rd Lane, ) 2 Shop No.40, L.B.S. Marg, ) Kurla (West), Bombay 400 070. )..Respondent (Org.Plaintiff) 2. The Maharashtra Industrial ) Development Corporatioon, ) Through its Chief Executive ) Officer, (CEO), having his Office ) of Udyog Saarthi, Mahakali ) Caves Road, Andheri (East), ) Bombay 400 093. ) 3. The Development Commissioner ) Seepz, Special Econiomic Zone, ) Ministry of Commerce & ) Industries, Andheri (East), ) Bombay 400 096. )..Respondents (Org.Defts. Nos. 1 & 2) Mr. Y.S.Jahagirdar, Senior Counsel, a/w Mr. R.C.Kaushik, Advocate for the appellant. Mr. S.U.Kamdar, Advocate a/w. Mr. J.Rais & Mr.Bipin Joshi, Advocates, for Respondent No.1. Mr. Prashant Chawan a/w. Mr. Suhas Patil, Advocates for Respondent No.2. 3 CORAM: J.H.BHATIA,J. CORAM: J.H.BHATIA,J. CORAM: J.H.BHATIA,J. DATE: 17th March,2008. DATE: 17th March,2008. DATE: 17th March,2008. JUDGMENT JUDGMENT JUDGMENT 1. Heard learned Counsel for the parties. Perused their pleadings, documents relied upon by them and the impugned order. 2. To state in brief, the respondent No.1, who is the plaintiff, is a contractor to whom licence has been given by the respondent Nos. 2 and 3, the original defendant Nos. 1 and 2, for removal of waste material, garbage, etc. from SEEPZ, Special Economic Zone (SEZ) area at Andheri in Mumbai. The appellant is the original defendant No.3 and runs a unit for making jewellery in the SEEPZ area. Respondent No.3 is the Development Commissioner, SEEPZ, Special Economic Zone, while the respondent No.2 MIDC is an Authority under the State of Maharashtra and has been authorised by the Development Commissioner to discharge certain functions on behalf of the Development Commissioner under Section 47 of the Special Economic Zones Act, 2005 (hereinafter referred to as "the said Act"). 2A. In the year 2006, respondent No.2 invited sealed 4 tenders for the work of disposal of garbage, debris, waste material generated in the SEEPZ area. Respondent No.1/plaintiff was one of many persons who had submitted their quotations. The quotation of the respondent No.1 being the highest, was accepted and an agreement for the contract was executed between the respondent Nos. 1 and 2 on 29.1.2007. The actual Work Order was issued in favour of respondent No.1 on 22.2.2007, but it was effective from 23.1.2007 to 22.1.2008. This period was extended from 23.1.2008 to 22.1.2008 by an order dated 21.1.2008 and as no new contractor has been appointed, this period has been further extended. The said contract is still in force. 3. According to the respondent No.1, under the contract given to him by the respondent NO.2, he is entitled to remove and dispose of the garbage, debris, waste material generated in whole of the SEEPZ area, including the septic tank attached to the individual units operating in that area. According to him, the present appellant is obstructing him from cleaning the septic tank attached to its units and from removing the garbage, debris or waste material or silt from the said septic tank and he intended to engage some other contractor for this purpose. According to him, under the contract, during the period when the contract in his favour is in force, neither the respondent Nos. 2 and 3 nor the appellant can appoint any other contractor nor 5 they can remove any garbage or waste material from any part of the SEEPZ area including the septic tanks attached to the individual unit. He contends that for this contract, he has paid huge contract amount of Rs.7,86,92,000/- for a period of one year. As this contract is still in force, the appellant cannot be allowed to engage any other contractor nor he can obstruct the respondent No.1 from carrying out his functions as per the said contract. With these pleadings, Respondent No.1 - the original plaintiff filed S.C.Suit No.272 of 2008 seeking declaration of certain rights in his favour and also perpetual injunction restraining the respondents from obstructing the plaintiff from removal of waste material from the SEEPZ - SEZ,area Andheri, Mumbai, including the Septic Tank of the unit of defendant No.3, who is the present appellant. He also took out Notice of Motion No.326 of 2008 seeking temporary injunction of the same nature pending the final hearing and disposal of the suit. Besides that, he also sought a temporary injunction restraining the respondents from appointing any other contractor for removal of the waste material from the SEEPZ area until the expiry of his contract. 4. According to the appellant, the contract was only in respect of garbage, debris, waste material generated in SEEPZ Area and under the terms of the contract, the respondent No.1 could remove such material 6 only from the designated spots or dustbins shown in the route map annexed to the contract. The individual septic tank, particularly the septic tank of unit of the appellant is not one of such designated points or spots or the dustbins and therefore, respondent NO.1 does not get any right to remove silt from the said septic tank. It is contended that the appellant is running its unit for making jewellery. In the form of dust, precious metals like platinum, gold, silver also reach the septic tank through the toilet blocks or the wash-basin, etc. Similarly, the small pieces and particles of the diamonds also pass in septic tank. All these are the valuable material which can be retrieved and collected back by the unit holder. This material is subject to payment of customs duty and such material cannot be removed from SEEPZ area to the Domestic Tariff Area without permission and without payment of duty to the Customs Authorities. The contract entered into by the respondent Nos. 2 and 3 with the respondent No.1 does not give him authority to remove such material which is subject to customs duty and, in any case, the respondent No.1 has no right, title or claim over the valuable property of the appellant, which may pass into the septic tank in the form of dust or particles and, therefore, respondent No.1 has no right to clean the septic tank nor he can remove any material from the septic tank. 7 5. The learned trial Court passed the impugned order on 20.2.2008 on the Notice of Motion declaring that the plaintiff/respondent No.1 is entitled to remove the silt accumulated in the septic tank of defendant No.3 till 22.2.2008, when the contract was in force. The defendant No.3 - present appellant was restrained from obstructing the plaintiff from removing the same. With that order, the Notice of Motion came to be disposed of. This order is challenged by the appellant before this Court. 6. The learned Senior Counsel for the appellant strongly attacked the impugned order contending that the trial Court has not considered the terms and conditions of the contract as well as the provisions of the Special Economic Zones Act and the Special Economic Zones Rules before passing the impugned order. On the other hand, the learned Counsel for the respondent No.1 supported the order and he contended that even interpretation of the terms of the contract by the respondent Nos. 2 and 3 supports the claim of the respondent No.1 and, therefore, he is entitled to remove the entire garbage, waste material, debris including the silt from the septic tank attached to the unit of the appellant. It is contended that no other contractor could enter within the SEEPZ Area for the purpose of removal of any article which is covered under this contract and, therefore, the trial Court was justified 8 in passing the impugned order. 7. To appreciate the rival contentions of the parties and the arguments advanced by the learned Counsel, it will be necessary to peruse the relevant documents. 8. There is no dispute that in the month of September 2006, a tender notice was issued by the respondent No.2 calling tenders for the work of disposal of garbage/debris/waste material generated in SEEPZ, Andheri and in response to that notice, the respondent No.1 had submitted his tender. His tender being the highest was accepted and the contract was entered into with him. There is no dispute that as per the terms of the contract, respondent No.1 has paid huge amount to the respondent No.1. With the tender document, the terms and conditions of the contract were attached. Some of the terms and conditions are relevant and they are reproduced hereinbelow :- "5(a) A large number of units in the field of gems & jewellery, hardware & software are operating in SEEPZ SEZ within the framework of Govt. of India / SEZ notification issued from time to time. All waste materials & packing materials are dumped at the designated places in SEEPZ - SEZ as permitted by SEEPZ authority / 9 MIdC." "b) The garbage, debris & all waste material should be lifted on "as is where is" basis." "c) The garbage contractor has to lift the permissible waste/packing materials/canteen waste/ leave/debris on day to day basis dumped at the designated places from time to time & dispose off the same at approved dumping site of MCGM." "d) The garbage contractor shall not dump or accumulate the above materials in SEEPZ-sEZ premises for sorting/segregation at any cost." "e) Garbage contractor will have no claim over the valuable scrap/furniture of the unit holders unless & until contractor has been given such materials by the unit holders for removal." "f) SEEPZ - SEZ administration reserves the right, to retain such items from the garbage which are not considered as garbage or such items which do not form a part of garbage. In this regard SEEPZ-SEZ administration’s or MIDC’s decision will be final & binding on the contractor." 10 "j) No dutiable goods shall be collected or removed." "k) The contractor shall not raise any dispute whatsoever on account of availability of garbage/debris/waste material whether saleable at any of the garbage lifting points." "8. a) MIDC will issue route map of the dustbins from where the debris/garbage/waste materials etc. are to be lifted. The truck allowed for lifting of garbage shall not be moved to other places unless & until the materials of the first dustbin is lifted & after lifting the materials of the first dustbin the contractor will be allowed to lift the garbage/waste material from other dustbins in other places as designated by MIDC." 9. It is material to note that before the tenders were actually opened, several interested parties had made queries with the respondent No.2 about the nature of work, the classification and clarification of the waste material which could be lifted. To these queries, replies were given by the Respondent No.2 - MIDC. In response to a query made by M/s. Sahyog Refinery Pvt.Ltd. about clarification and classification of the 11 waste material, the MIDC had replied on 13.10.2006 that such waste materialwould be "Packing material viz. cardboard/hard board/thermocol/old furniture/canteen waste & all disposable materials certified by SEEPZ-SEZ Authority." It indicated that such material could be removed. In response to another query, the respondent No.2 replied that dutiable goods cannot be taken out under this tender. 10. After the tender of the respondent NO.1 was accepted, an agreement was executed on 29.1.2007. The terms and conditions attached to the tender document as well as certain clarifications given by the respondent No.2 to the queries were incorporated in the said contract. Condition Nos. 25, 26 and clause (b) to condition No.27 are relevant and may be reproduced here: "25. MIDC will issue a route map of the dustbins from where you will lift the garbage/waste materials etc. The truck allowed for lifting of garbage will not be moved to other place unless & until the materials of the first dustbins is lifted & after lifting the materials of the first dustbins he will be allowed to lift the garbage/waste material from other dustbins in other place as designed by MIDC." 12 "26. You will have to claim over the valuable scrap/furniuture of the unit holder unless & until you have been given such material by the unit holder for removal." 27.(b) No dutiable goods shall be collected or removed. Goods which are dutiable shall be collected after paying the duties." 11. If all these documents are taken into consideration, it becomes clear that the contract was given only for removal of waste, packing material, canteen materials, debris, etc. dumped at the designated places from time to time. These designated places were also addressed as "Dustbins". A route map showing the said dustbins was to be attached to the agreement. It may be noted that as per the terms in the tender document no dutiable goods could be collected and removed by the contractor and the contractor would have no claim over the valuable scrap/furntirue of unit holders unless and until the contractor has been given such material by the unit holders for removal. From the clarification given by the respondent No.2, it is clear that the garbage would include packing material like cardboard, hardboard, thermocol, old furniture, canteen waste and other disposable material certified by SEEPZ. As large number of units are functioning and carrying on business within the SEEPZ area and huge garbage in the 13 form of packing material, etc. generated. The contractor can lift such garbage from different designated points or dustbins which were expected to be shown in the route map attached to the deed of contract. The contractor does not have any right on any unit or the septic tanks of the units which are not shown in the said route map attached to the contract. It is material to note that such route map has not been placed before the trial Court or before this Court. During the arguments, I specifically asked the respondents to show the route map, which was prepared under the said contract, but the learned Counsel for the respondents expressed their inability to produce such route map saying that it does not appear to have been prepared. The route map would be an important document which would explain and specify the designated places or the dustbins from which the respondent No.1 could lift the waste material or the garbage, etc.Garbage or waste material is such material which is thrown away by the unit holders and naturally, it is not expected to be valuable property. It is to be noted that as per clause 26 of the contract the respondent NO.1 would have no claim over the valuable scrap or the furniture of the unit holders unless such material is given to the respondent by the unit holder. 12. The dispute in the present case is about the silt to be removed from the septic tank attached to the 14 unit of the appellant. Admittedly, the silt which may accumulate in the septic tank of the appellant may have dust of gold, platinum and silver, and may have also small particles of diamonds as jewellery is prepared in the unit and at the time of polishing the same, dust of such precious metals may pass to the washbasins and accumulated in the septic tank. According to the appellant, such valuable material may be retrieved from the septic tank. This may be done by the appellant itself or through some other contractor, but certainly the silt itself may consist of huge valuable material. This may be clear from one factor. As per the order passed by the trial Court, the respondent No.1/plaintiff had offered to pay Rs.77,00,786/- to the appellant to give him right to remove the silt of the septic tank and that too for a period of one month beginning with 23.1.2008. This indicates how valuable the silt may be. 13. The learned Counsel for the respondents could not point out any provisions of law, rules or contract entered into between the Development Commissioner or the MIDC on the one hand and the unit holders on the other whereby such valuable silt from the septic tank of units running business of jewellery could be removed by them. The Development Commissioner of SEEPZ or the MIDC cannot have any legal right or title over such valuable property of the unit holders and naturally in the form of a contract for keeping the SEEPZ area clean, MIDC or 15 the Development Commissioner could not give the right to the contractor to remove such valuable property. This fact is made clear by clause 26 of the contract referred above. This clause was incorporated because there are units in SEEPZ area who carry on business of jewellery and silt which may accumulate in the septic tank may have huge value in terms of money. By no stretch of imagination such silt cannot be equated with the garbage or waste material like the cardboards or other packing material which are generally thrown away. 14. as per the terms of the contract annexed with the tender document, it was made clear that no dutiable goods shall be collected or removed and this fact was also clarified by the MIDC in response to the queries by one of the proposed contractors. However, in sub-clause (b) of clause 27 of the contract executed by the respondents 1 and 2, it was stated "No dutiable goods shall be collected or removed. Goods which are dutiable shall be collected after paying the duties". In view of the language of this sub-clause, two contradictory terms have been incorporated. First part of the said clause shows that respondent No.1 could not collect or remove any dutiable goods, while the second part shows that such dutiable goods shall be collected after payment of the duties. Learned Counsel for the appellant vehemently contended that second part of this sub-clause has been wrongly incorporated or it has been added later 16 on just to support the claim of the plaintiff No.1. In May 2007, several complaints were received by the MIDC in respect of the terms of the contract and thereafter the Executive Engineer, MIDC, addressed a letter dated 25.5.2007 to the Development Commissioner, SEEPZ - SEZ and in para 2 of that letter, he stated that the waste material also includes waste removed from the septic tank, gutter, etc. for which the contractor is paying the amount of Rs.7,86,92,000/- annually. According to him, this practice has been followed since last so many years. By this letter, the Executive Engineer, MIDC tried to state that the contractor could remove the silt from the septic tank or gutters of the different unit holders and thus could take away the valuable property belonging to the unit holders. This statement in the letter dated 25.5.2007 is contrary to the terms of the contract as well as the terms and conditions attached to the tender documents. By no stretch of imagination, it can be believed that the MIDC could give such a legal right to the contractor to remove the valuable property in the form of silt from the septic tank of the units carrying on business of jewellery of platinum, gold, silver, diamonds, etc. as such eright is not vested in SEEPZ or MIDC itself. This statement of the Executive Engineer, MIDC appears to have been made in order to support the claim of the respondent No.1, which could not be otherwise supported in the light of the terms and conditions of the contract. It is true that it is the 17 responsibility of the SEEPZ or MIDC to keep the SEEPZ area clean and this falls within the purview of section 47 of the Special Economic Zones Rules, 2006, but that does not give them authority to take away the valuable property of the unit holders and that too without authorisation from them. In view of clause 26 of the contract, it was clear that respondent NO.1 could have no claim on the valuable scrap or material of the unit holders unless the unit holder authorises him to remove the same. Therefore, authority to remove such valuable material flows to the contractor not from the contract entered with the respondent Nos.2 and 3, but from the authority which may be given to him by the unit holder. The respondent NO.1 appears to be aware of this term of the contract and that is why he had offered huge amount of Rs.77,00,786/- to the appellant for removal of silt from the septic tank for the period of one month only. That indicates that the total value of the silt which may accumulate in one unit, itself may be running in crores of rupees in one year and there may be several such units in SEEPZ area. The plaintiff No.1 cannot claim right or title on such valuable material accumulated in the silt of septic tank of such different units. 15. Sub-rules (1) & (2) of Rule 47 of the Special Economic Zones Rules 2006 are relevant. They read as follows :- 18 "47. Sales in Domestic Tariff Area - (1) A Unit may sell goods and services including rejects or wastes or scraps or remnants or broken diamonds or by products arising during the manufacturing process or in connection therewith, in the Domestic Tariff Area on payment of Customs duties under section 30, subject to the following conditions, namely :- (a) Domestic Tariff Area sale under sub-rule (1), of goods manufactured by a Unit shall be on submission of import licence, as applicable to the import of similar goods into India, under the provisions of the Foreign Trade Policy: provided that goods imported or procured from the Domestic Tariff Area and sold as such without being subjected to any manufacturing process shall be subject to the provisions of the Foreign Trade Policy as applicable to import of similar goods into India. (b) Domestic Tariff Area sale under sub-rule (1) of rejects or scrap or waste or remnants arising during the manufacturing process or in connection therewith by the Unit shall not be 19 subject to the provisions of the Import Trade Control (Harmonized System) of Classification of Export and Import Items: Provided that the Central Government may notify restrictions, as it deems fit on all or any class of such goods contained under this clause. (2) Scrap or dust or sweeping of gold or silver or platinum may be sent to Government of India Mint or Private Mint from a Unit and returned in standard bars in accordance with the procedure specified by Customs authorities or may be sold in the Domestic Tariff Area on payment of duty on the gold or silver or platinum content in the said scrap: Provided that the value of samples of gold or silver or platinum sweepings or scrap or dust taken at the time of clearance and sent to the Government Mint or Private Mint for assaying and assessment shall be finalized on the basis of reports received from the Government Mint or Private Mint, as the case may be." 16. From this Rule, it is clear that a unit may sell goods including rejects or wastes or scraps or remnants 20 or broken diamonds or by products in the Domestic Tariff Area on payment of duty. It is material to note that the units which are operating within the Special Economic Zones are exempt from payment of customs duties and this facility is given to support and provide encouragement to the export of finished goods from