THE HON’BLE Ms. JUSTICE G. ROHINI WRIT PETITION No.19360 OF 2006 Dated: 15.02.2010 Between: The Visakha Petro Infrastructure Pvt. Ltd., 39.2.20, Vishnu Vardhanapuram Labbipeta, Vijayawada, rep.by its Chairman and Director. .. Petitioner And 1. The Visakhapatnam Port Trust, Port Area, Visakhpatnam, rep. by its Chairman and Two others. .. Respondents THE HON’BLE Ms. JUSTICE G. ROHINI WRIT PETITION No.19360 OF 2006 ORDER: The writ petitioner which is a company incorporated under the Companies Act, 1956 was allotted 25 acres of Port land situated in Exim Park, Visakhapatnam Port Trust (for short, ‘VPT’) vide proceedings of the 1st respondent dated 13.11.1995 for grant of lease for a period of 30 years for the purpose of creating LPG Storage and Handling facility. As per the terms and conditions of allotment, the petitioner was required to make provisional payment of Rs.14,11,344/- which included one year advance rent, refundable security deposit and premium within a period of 30 days. Accordingly, the petitioner paid the said amount of Rs.14,11,344/- within the time granted. It is claimed that the petitioner was also put in symbolic possession of the land in question by order dated 23.10.1998 and thereafter the petitioner had cleared the bushes & trees and got the land levelled spending more than Rs.35 lakhs. However, no further steps could be taken up since the tie-up arrangement with M/s. Hindustan Petroleum Corporation Limited (for short, ‘M/s. HPCL’) for the purpose of utilizing its pipelines and etc., was not finalized in spite of the sincere efforts made by the petitioner. It is pleaded that there was no default on the part of the petitioner in pursuing the matter for obtaining the tie-up facilities with M/s. HPCL, and even Visakhapatnam Port Trust made a lot of correspondence with M/s. HPCL requesting it to make necessary arrangements to enable the parallel marketers including the petitioner, to utilize their pipelines. However, the 1st respondent by order dated 22.02.2002 cancelled the allotment alleging that the petitioner had failed to obtain tap-off facilities from M/s. HPCL and did not create the Storage and Handling facilities. The petitioner was also made liable to pay the lease rent for the period from 13.11.1995 to 1.9.1999 i.e., the date of refusal of environmental clearance by A.P. Pollution Control Board, after forfeiting the amounts already paid by them. The petitioner requested the VPT to re-consider the issue and to grant permission to utilize the land in question for handling food grains and fertilizers since there was no default on its part to obtain the tie-up arrangement with M/s. HPCL. However, by Resolution dated 29.03.2004 the Board of Directors of VPT resolved to adhere to the earlier communication of cancellation of allotment dated 22.02.2002. The said fact was informed to the petitioner vide 1st respondent’s letter dated 15.04.2004. Though a further representation was made by the petitioner in April, 2006, its request for regularization of allotment was not concurred and ultimately by letter dated 8.8.2006 the documents pertaining to the termination of the allotment in favour of the petitioner were returned by the VPT. Aggrieved by the same, the present Writ Petition is filed with the following prayer : “… … this Hon’ble Court may be pleased to issue an appropriate writ, order or direction, more particularly one in the nature of Writ of Mandamus declaring the action of the respondents in issuing the Order dt. 15.04.2004 in Proceedings No.ESTATE/VPPL/SA/730 and in confirming the earlier orders dated 22.2.2002 vide resolution No.116/2003-2004 dt. 29.03.2004 as invalid, void abinitio, and further declare that issuing memo dated 8.8.2006 as highly arbitrary, illegal, unjust, capricious, high handed action and amounts to colourable exercise of power and consequentially set aside the same while giving effect to the allotment dated 13.11.1995 and pass such other order or orders as are deemed fit and proper in the circumstances of the case.” It is contended in the writ petition that the impugned action of the respondents in cancelling the allotment dated 13.11.1995 on the ground that the petitioner had failed to obtain the tie-up arrangement with M/s. HPCL was extremely unfair and arbitrary. It is also contended that the cancellation of the allotment on the ground of the alleged failure of the petitioner to obtain the tie-up arrangement with M/s. HPCL was contrary to the terms of the Allotment letter dated 13.11.1995 since as per the said terms and conditions, the lease was liable to be cancelled only on the failure to pay the prescribed advance amounts. It is further contended that the defect or failure, if any, to obtain tie-up with M/s. HPCL could not be attributed to the petitioner since the petitioner was assured that VPT itself would get the tie-up with HPCL which was also a party to the policy decision of the Government of India. Thus, the law of Promissory Estoppel and doctrine of legitimate expectation are attracted and the impugned action is liable to be declared as arbitrary and illegal on that ground also. A detailed counter-affidavit has been filed on behalf of the 1st respondent - Visakhapatnam Port Trust (VPT) stating that the petitioner company failed to fulfil all the requirements as per the terms and conditions of allotment including registration and execution of lease agreement and that the possession of the land was never delivered to it. It is also contended that it is for the petitioner to obtain the permission from the 2nd respondent Corporation for the tap off facilities and other infrastructure facilities to its proposed storage terminals in the leased land. Since the petitioner failed to obtain such permission from the 2nd respondent Corporation, the allotment of land was rightly cancelled. The petitioner was issued a notice dated 14.10.1996 calling upon to show-cause as to why the offer of the allotment should not be cancelled duly forfeiting the amount deposited. In response to the same, the petitioner in its letter dated 20.10.1996 requested to condone the delay on its part in executing the agreement as the delay was not intentional and sought permission to execute and register the lease deed. In turn, the VPT addressed a letter dated 11.11.1996 making it clear that the execution of the lease agreement cannot be allowed without finalisation of tie-up arrangements of pipeline with the 2nd respondent Corporation and called upon the petitioner to submit its latest position with regard to tie- up arrangements. Despite the same, the petitioner failed to make any progress with regard to tie-up facilities with the 2nd respondent Corporation. Since strict compliance with the terms and conditions, including obtaining of tie-up facility from the 2nd respondent Corporation, is essential as per the guidelines issued by the Government of India on Land Policy Management and since the petitioner failed to comply with the same even after a period of seven (7) years from the date of proposed allotment, the 1st respondent was constrained to pass the order of cancellation dated 22.2.2002. The petitioner’s allegation that instead of responding to its request to revoke the order of cancellation the VPT had returned the documents on 8.8.2006 has been denied and it is explained that the petitioner company itself made a request on 22.07.2006 to furnish the relevant documents pertaining to termination of lease and also paid the prescribed fee of Rs.10/- payable under the Right to Information Act, 2005. In response to the same, the VPT has supplied the copies of documents sought for vide its letter dated 8.8.2006. After receiving the said documents, the petitioner filed the present writ petition with false and incorrect allegations and raising untenable contentions. The writ petition itself is misconceived and not bona fide and therefore the same is liable to be dismissed. A separate counter-affidavit has been filed on behalf of the 2nd respondent – M/s. HPCL – stating that M/s. HPCL obtained an extent of 50 acres of land in Exim Park from VPT under Lease Agreement dated 31.12.1996 and the said land was proposed to be used for the purpose of establishing the Corporation’s new LPG Storage and Handling facility in view of the shifting of LPG Import Handling Operations from the Inner Harbour to Outer Harbour where VPT had constructed a new LPG Jetty. The possession of the leased land was taken over by the Corporation on 29.04.1997. The proposed project envisioned extension of the Corporation’s LPG Import Pipeline from Visakha Outer Harbour to the Refinery Area in the Exim Park. Though the fact that VPT insisted that HPCL should provide a hook-up from its proposed pipeline extension facilities laid to the leased land in Exim Park to other entrepreneurs such as the petitioner who were also allotted the lands in Exim Park based on mutually agreeable Techno- commercial Terms & Conditions is not disputed, it is explained that the application of M/s. HPCL for the statutory approval of the A.P. Pollution Control Board for setting up of LPG Handling facilities upon the leased site in Exim Park was rejected by order dated 24.08.1999. In the circumstances, M/s. HPCL could not proceed any further with the project and the leased land of 50 acres was returned to VPT on 31.03.2002. Thus there was no feasibility of providing any tie-up facilities to neighbouring private entrepreneurs, including the petitioner, from the extension pipelines of HPCL which would have been laid if the Corporation’s project had materialized. Therefore, there is no cause of action against M/s. HPCL and the writ petition is liable to be dismissed against the 2nd respondent. Before adverting to the rival contentions raised by the parties, it is necessary to notice some more factual aspects as reflected from the material placed before this Court. The 1st respondent – Visakhapatnam Port Trust - earmarked about 800 acres of Port land situated in between Port parallel bridges and N.H.5 Road as EXIM Park area and proposed to lease out the same to the entrepreneurs for creating LPG Storage facilities, bottling plants, bulk fluid storage tanks, etc. It is to be noticed that in terms of the liberalized import policy, the Government of India permitted private sector to import and market LPG and Kerosene at market determined prices under the Parallel Marketing Scheme for Petro-products. The writ petitioner which applied for distribution of petroleum products, LPG / Kerosene for the State of Andhra Pradesh under the Parallel Marketing Scheme, requested the VPT to provide 15 acres of land nearer to berths in the Port area so as to enable it to carry on the operations. Having considered the petitioner’s request dated 24.02.1993 as well as the requests received from various other entrepreneurs, the Board of Trustees of VPT in its meeting held on 25.2.1995, resolved to approve to grant lease of different to three entrepreneurs, including the writ petitioner, for a period of 30 years, subject to approval of the Government of India. Such approval under Section 34 of the Major Port Trusts Act, 1963 for allotment of 25 acres of land in favour of the petitioner for creation of new handling and storage facilities for LPG was granted by the Government of India, Ministry of Surface Department by letter dated 13.9.1995 subject to terms and conditions specified therein. Pursuant thereto, by letter dated 13.11.1995 VPT informed the petitioner that 25 acres of Port land in Exim Park area will be leased out for the purpose of LPG storage and handling facilities for a period of thirty (30) years from the date of registration of the lease deed subject to the terms and conditions specified therein and called upon the petitioner to signify its acceptance. The petitioner conveyed its acceptance vide its letter dated 2.12.1995 and paid the required amounts totalling Rs.14,11,344/- within the time specified. It is to be noticed that the entrepreneurs in whose favour the Port land was allotted on lease basis, included M/s. Hindusthan Petroleum Corporation Limited (for short, ‘HPCL’). An extent of 50 acres of Port land was allotted to HPCL for the purpose of establishing its new LPG and storage handling facilities in view of the shifting of the LPG import handling operations from the inner Harbour to the outer Harbour where the VPT had constructed a new LPG Jetti. The said project included extension of the HPCL’s LPG import pipeline from Visakha Outer Harbour to the Refinery area in the Exim Park. By letter, dated 5.5.1995, the VPT requested HPCL to accord necessary permission to the firms to whom the Port land was allotted to utilize the proposed LPG pipelines and other connected infrastructure facilities of HPCL and also to accord permission for tap off to the respective storage terminals of the said firms as per its terms and conditions keeping in view the liberalized economic scenario of the Government of India for importing Petroleum Products under Parallel Marketing Scheme. Similar letters dated 13.2.1997, 26.7.1997, 25.8.1997, 7.10.1997, 18.7.1998 and 6.10.1998 were addressed by the VPT requesting HPCL to make necessary arrangements by planning tap off facility to the parallel marketeers in the Exim Park area and also for having tie-up for sharing the pipeline and connected facilities on mutually agreed terms. The material on record reveals that HPCL was also agreeable to the said request made by VPT and there was exchange of correspondence in that regard with VPT as well as the writ petitioner. However, HPCL could not obtain the statutory approvals from the A.P. Pollution Control Board and the Ministry of Environment and Forests, Government of India for setting up its LPG handling facilities upon the leased land in Exim park area. The A.P. Pollution Control Board vide its order dated 24.08.1999 rejected the request of HPCL for grant of consent for establishment of Storage and Bottling facilities of LPG in Exim Park area of VPT and consequently HPCL could not proceed further with its proposed project in the Port land. Subsequently the Port land leased out to HPCL, measuring 50 acres was returned to VPT on 31.03.2002. In the meanwhile the writ petitioner was issued a show-cause notice by VPT on 14.10.1996 calling upon the petitioner to show- cause as to why the offer of allotment should not be cancelled for its failure to get the lease deed executed and registered within a period of 2 months from the date of receipt of the draft agreement. It was also mentioned in the show-cause notice that the fact that the petitioner failed to furnish the tie-up particulars with HPCL regarding pipeline facility showed that they were not interested to take up VPT land on lease for setting up the proposed project. It is to be noticed that the writ petitioner paid a total sum of Rs.14,11,334/- on 10.01.1996 towards advance rent and security deposit and thereupon VPT sent the draft lease agreement to the petitioner vide its letter dated 15.05.1996 requesting the writ petitioner for engrossing the same on appropriate value of stamp paper as assessed by the District Registrar, Visakhapatnam at its cost and submit the same to VPT for check and return. The receipt of the said letter dated 15.05.1996 together with the draft lease agreement was acknowledged by the petitioner by its letter dated 12.10.1996 wherein it was explained that they could not execute the lease agreement due to some unavoidable circumstances. However, it was added that the draft lease agreement was agreeable to the petitioner. The VPT was further requested to inform the value of the amount for execution of the lease agreement deed and the appropriate value of stamp papers for the same stating that on hearing from it, the petitioner would be deputing their General Manager by name M. Veerabhadra Rao for execution of the lease deed. The same was reiterated by the writ petitioner in its subsequent letter dated 30.10.1996 explaining that since its Chairman and some of the Directors went abroad on business commitments, the lease agreement could not be executed within the stipulated period of two months. While expressing that they were very much interested in taking over the land and complete the project within the period of 18 months as stipulated in the agreement, the petitioner requested the VPT to condone the delay and permit it to execute the lease deed and register the same on intimation of the approximate amount to be deposited towards stamp and registration expenses. The said request of the petitioner was not accepted by the VPT and the same was informed to the petitioner by letters dated 11.11.1996 and 21.01.1997. However, no further steps were taken by VPT as proposed in its show-cause notice dated 14.10.1996, but on the other hand there was exchange of correspondence asking the petitioner to inform the progress with regard to its tie-up arrangement of pipelines with HPCL. It is also clear from the VPT’s letter dated 20.10.1998 that the writ petitioner was asked to make arrangements for making a joint survey for handing over the possession of subject land to it. In the said letter, dated 20.10.1998 the petitioner was again called upon to get the draft lease agreement engrossed on non-judicial stamp paper as assessed by the District Registrar, Visakhapatnam and get it registered at its cost. On a request made by the writ petitioner to hand over the land to it pending registration of the regular lease deed so as to facilitate it to clear the thorny bushes existing on the land to avoid loss of time, by letter dated 23.10.1998 VPT permitted the petitioner to clear the thorny bushes. In the said letter dated 23.10.1998, the petitioner was again requested to arrange the execution and registration of the lease deed. However, the petitioner failed to execute and register the lease deed even upto the year 2002. Ultimately by letter dated 22.2.2002 VPT cancelled the allotment of the 25 acres of land made in favour of the petitioner. Having received the said letter of cancellation, the petitioner did not choose to challenge the same on any ground whatsoever. On the other hand, the petitioner addressed a letter after about one and a half years on 2.8.2003 requesting VPT to accord permission to utilize the land allotted to it for a different purpose. The said request was rejected by the Board of Directors of VPT by its resolution dated 29.03.2004 and the same was informed to the petitioner by letter dated 15.04.2004. Even then the petitioner did not choose to challenge the action of the respondents. Long thereafter on 22.7.2006 i.e., after more than two years from the VPT’s Resolution dated 29.03.2004, the petitioner addressed a letter to the VPT purportedly under the provisions of the Right to Information Act, 2005 requesting to issue documents pertaining to the allotment of 25 acres in its favour. In response to the same, the VPT furnished the documents vide letter dated 8.8.2006. Thereafter, on 15.09.2006 the present writ petition has been filed with a prayer which included a declaration that the memo/letter of VPT, dated 8.8.2006 is arbitrary and illegal and amounts to colourable exercise of power. It is apparent from the events narrated above that the VPT’s Letter/Memo, dated 8.8.2006 furnishing the documents sought by the petitioner was only in response to the petitioner’s request made under the Right to Information Act, 2005 and it did not affect the rights of the petitioner in any manner as sought to be contended by the petitioner. Thus it is clear that the petitioner is virtually challenging the proceedings of VPT dated 22.02.2002 and 29.03.2004 cancelling the allotment of Port land in favour of the petitioner and rejecting the petitioner’s further request to utilize the said land for a different purpose respectively. In the light of the above noticed facts borne out of the record, the question that arises for consideration is whether the impugned order dated 22.02.2002 as well as the subsequent decision of VPT dated 29.03.2004 suffered from any illegality or arbitrariness warranting interference by this Court in exercise of jurisdiction under Article 226 of the Constitution of India. Sri S. Ramachandra Rao, the learned Senior Counsel appearing for the petitioner contended that the condition imposed by VPT in the allotment letter dated 13.11.1995 that the petitioner shall obtain tie-up with M/s. HPCL for usage of pipeline facility was not in conformity with the terms prescribed by the Central Government while granting the sanction under Section 34 of the Major Port Trusts Act, 1963. The learned Senior Counsel while submitting that the terms and conditions prescribed by the Central Government while granting the sanction under Section 34 of the Major Port Trusts Act, 1963 alone governed the field, further contended that the condition to obtain tie-up with M/s. HPCL for usage of its pipeline facility, being alien to the statutory sanction was neither valid nor binding on the petitioner and therefore the impugned cancellation of allotment for the failure of the petitioner to fulfil the said condition was arbitrary and illegal. The learned Senior Counsel further contended that since the petitioner, based on the statutory sanction and the consequential allotment made by the VPT, had complied with the terms in accordance with the statutory sanction, including the payment of advance rents and altered its position to its detriment, the VPT is estopped from going back on the promise and withdrawing the allotment. While citing the decisions of the Supreme Court in UNION OF INDIA v. ANGLO AFGAN AGENCIES[1], CENTURY SPG. AND MFG. CO. LTD. v. ULHASNAGAR MUNICIPAL COUNCIL[2], MOTILAL PADAMPAT SUGAR MILLA CO. LTD. v. STATE OF U.P.[3], BHIM SINGH v. STATE OF HARYANA[4], GUJARAT STATE FINANCIAL CORPN. V. LOTUS HOTELS (P) LTD.[5], SURYA NARAIN YADAV v. BIHAR STATE ELECTRICITY BOARD[6], UNION OF INDIA v. GODFREY PHILLIPS INDIA LTD.[7], D.C.M. v. UNION OF INDIA[8], RATHI ALLOYS AND STEEL LTD. v. CCE[9], AMRIT BANASPATI CO. LTD. v. STATE OF PUNJAB[10] and STATE OF ORISSA AND OTHERS v. MANGALAM TIMBER PRODUCTS LTD. with STATE OF ORISSA AND OTHERS v. J.K. CORPORATION LTD. AND ANOTHER[11], it is contended by the learned Senior Counsel that this is a fit case to invoke the principle of Promissory Estoppel compelling the VPT to carry out its obligation. It is also contended by the learned Senior Counsel that the conduct of the 2nd respondent – M/s. HPCL - in not taking necessary steps to share its pipelines with the petitioner was not bona fide and the stand taken by it that it was not feasible to give tie-up facility to the petitioner was contrary to the policy of the Central Government to promote Parallel Marketing Scheme for petro-products as a part of economic liberalisation. I have also heard the learned Counsel appearing for the 1st respondent – VPT and the learned Counsel for the 2nd respondent – M/s. HPCL. The impugned order dated 22.02.2002 shows that the cancellation of allotment of Port land in favour of the petitioner was on two grounds namely (1) that the petitioner could not obtain tap off facilities from HPCL; and (2) that the petitioner could not construct LPG Storage and Handling facilities after the land was offered to them. So far as the first ground that the petitioner failed to obtain tap off facilities from HPCL is concerned, the petitioner contends that the said condition (incorporated as Condition No.66 in the Annexure-A to the allotment letter dated 13.11.1995) itself is not valid and not binding on the petitioner and therefore the cancellation on the ground of alleged non-compliance of the said condition is arbitrary and illegal. It is contended that the said Condition No.66 being alien to the terms and conditions subject to which the statutory approval under Section 34 of the Major Port Trusts Act, 1963 was granted, it was not open to the VPT to insist upon its compliance. It is true that Condition No.66 i.e., the condition with regard to tie up with HPCL was not one of the conditions subject to which the approval under Section 34 of the Major Port Trusts Act, 1963 was granted by the Central Government. However there is no substance in the petitioner’s contention that the said condition itself is invalid and not binding on the petitioner. Section 34 of the Major