Case: K. Raheja Corporation Private Limited &amp; Another Vs. State of Goa Through Its Secretary (Industries) &amp; Others

will not preclude the GIDC from re-considering the applications for allotment made by the companies in accordance with law.100. In those cases, where approvals were granted under the SEZ Act but the SEZs were not notified, the show cause notices have been issued by the Central Government. We have already held that the Central Government has power to withdraw the approvals. It is for the concerned Companies to give reply to the show cause notices. The show cause notices will have to be decided by taking into consideration the fact that the allotment of lands by the GIDC is held to be illegal. In those cases where approvals are not granted under the SEZ Act, it is obvious that the applications/proposals cannot be processed further as the Government of Goa has withdrawn the recommendation. Therefore, no fault can be found with the decision of the Central Government holding that such proposals shall be treated as dropped in as much as the recommendation of the State Government is necessary for grant of approval. As far as three notified SEZs are concerned, the stand of the Central Government is that the Government of Goa should negotiate with the developers. The notifications have been issued on the basis of the allotment of lands by the GIDC. As the allotments of lands are held to be illegal, notifications cannot be acted upon now. In the petitions filed by the companies, there is a challenge to the direction issued by the Government of Goa to the GIDC to revoke the leases. There is also a challenge to the show cause notices issued by the GIDC on the basis of the said direction. As we have held that the allotments made to the said companies is illegal, it is not necessary to deal with the said challenges. In view of the finding recorded by us that the allotment of lands made to the companies is illegal, the possession of the lands will have to be restored to the GIDC. The original owners of the lands have not challenged the acquisition of the said lands. Hence, the player made in the Public Interest Writ Petitions for return of the lands to the original owners cannot be granted. As we have held that the applications for allotment of lands made by the said companies can be considered afresh in accordance with law, we are directing that the parties shall maintain status quo as of today in respect of the said lands for a period of 4 months from today. If the said companies are interested in fresh consideration of their applications for allotment, they are entitled to apply to the GIDC in that behalf. In such event, the applications of the companies shall be considered afresh by the GIDC in accordance with law notwithstanding the direction issued to maintain status quo as of today in respect of the said lands.SUMMARY OF FINDINGS101. The main findings recorded by us can be summarized as under:(i) On the basis of the consideration of the provisions of SEZ Act and the SEZ Rules, we hold that before the Board of Approval approves the proposal and before the Letter of Approval is issued by the Central Government, the State Government can always withdraw its recommendation in case the proposal is initiated under Sub-section (2) of Section 3 of the SEZ Act. In such a case, Approval cannot be granted on the basis of the recommendation which is withdrawn. Even after a Letter of Approval is issued, but before the notification under section 4(1) is issued, the Board of approval and/or the Central Government has a power to withdraw the approval on the basis of withdrawal of the recommendations by the State Government. However, the approval can be cancelled/withdrawn in such a case only after following the principles of natural justice. The fact that several steps have been taken by the developers on the basis of approval will certainly be a relevant consideration which will have to be taken into account by the board.(ii) Whether the Central Government can de-notify a notified SEZ without the consent of the developer is a question which need not be decided in the present Petitions inasmuch as the action of the Central Government of declining to de-notify the SEZ in three cases has not been specifically challenged before us in any of the Petitions.(iii) It is not possible to hold that the said policy decision of withdrawing the earlier SEZ policy is either arbitrary or illegal. The decision is legal which based on consideration of public interest.(iv)There was no direction issued by the State Government in exercise of powers under Section 16 of the GIDC Act to allot any land for the purposes of setting up SEZs.(v) The power under Clause (a) of Section 14 of the transfer of lands vesting in GIDC can be exercised only with a view to ensure establishment, growth and development of industries. Therefore, the exercise of power under Section 14 for grant of land for setting up SEZs will depend on the factual situation such as the purpose for which it is going to be used by the SEZ. If the land is to be allotted or transferred to SEZ predominantly for promoting or establishing or developing industries, then the power to allot can be lawfully exercised.(vi) The allotment of lands to the companies has been made in undue haste without proper scrutiny of their applications. The allotment of lands has been made arbitrarily. Procedure adopted in the allotment is not fair and transparent. The allotments made by the GIDC do not stand the test of reasonableness.(vii) In the present case, considering the decision of the Government of Goa of withdrawal of SEZ policy which based on consideration of public interest, it will be inequitable to hold the State Government or the GIDC to be bound by its alleged promise and representation.(viii) The Writ Petitions filed in public interest are no liable to be dismissed on the ground of delay and latches.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]CONSIDERATION OF QUESTIONS (a), (b) and (c)forwarding the proposal, the State government is required to attach the copies of the relevant notifications issued by it in this regard. Thus, unless recommendation of the State Government in accordance with(6) of Section 3 read with Rule 4 is received by the Board, an approval cannot be granted by the Board. In case of the second mode, where an application is directly made by the person to the Board, though the board can grant approval, without the concurrence of the State Government, the SEZ cannot be notified under(1) of Section 4. The power to grant recommendation will include power to withdraw the Recommendation. Thus, after recommending a proposal of a person, for the reasons recorded, the State Government can always withdraw its recommendation before the Board grants approval under(9) of Section 3. After recommendation is withdrawn, approval under9 of section 3 cannot be granted by the Board on the basis of the proposal under2 of section 3. Even if the recommendation is withdrawn, the person may make an application in accordance with(3) of Section 2 or even the Central Government can exercise power under the proviso to(4) of Section 3 of the SEZwithout such certificate from the State Government or its authorized agency, a notification under(1) of Section 4 cannot be issued even in case where the second mode has been adopted by the persons concerned. Thus, even after approval is granted, without certification by the State Government or its authorized agency, the Notification under Section 4(1) cannot beapproved units come into existence only after the approval is granted in accordance with Section 15 and, therefore, before publication of the notification under(1) of Section 4, no approved unit in the SEZ can be in existence. Therefore, the submission made that under(13) of Section 3, a developer can allocate space or built up area to the entrepreneur even before the Notification under(1) of Section 4 is issued cannot becopies of the agreements are not placed on record. Even in this petition, there is no pleading that approval has been granted under section 15 to the units proposed to be set up by the Cipla limited.The stand taken by the Assistant Solicitor General of India is that the Central Government has power to effect cancellation of the notification under section 4(1), but in the present case, in respect of three notified SEZs, it has been decided not to exercise the said powers. In fact, he has placed on record extracts of minutes of 41st meeting of the Board of Approval resolving toa particular SEZ at a particular place. Whether the Central Government cana notified SEZ without the consent of the developer is a question which need not be decided in the present Petitions inasmuch as the action of the Central Government of declining tothe SEZ in three cases has not been specifically challenged before us in any of the Petitions. Thus, on the basis of the consideration of the provisions of SEZ Act and the SEZ Rules, we hold that before the Board of Approval approves the proposal and before the Letter of Approval is issued by the Central Government, the State Government can always withdraw its recommendation in case the proposal is initiated under(2) of Section 3 of the SEZ Act. In such a case, Approval cannot be granted on the basis of the recommendation which is withdrawn. Even after a Letter of Approval is issued, but before the notification under section 4(1) is issued, the board and/or the Central Government has a power to withdraw the approval on the basis of withdrawal of the recommendations by the State Government. However, the approval can be cancelled or withdrawn in such a case only after following the principles of natural justice. The fact that several steps have been taken by the developer on the basis of approval will certainly be a relevant consideration which will have to be taken into account by thethe circumstances, it is not possible to hold that the decision of the State Government to withdraw from SEZ Policy is arbitrary and that it is based only on public outcry. An argument has been canvassed across the bar that the industrial policy adopted by the Government of Goa for the year 2003 makes a reference to the establishment of setting up of SEZs. It must be stated here that the said industrial policy was formulated prior to coming into force of the SEZ Act and the Policy of 2006 is a policy regarding setting up of SEZ in terms of the SEZ Act. After the SEZ Act came into force, the SEZs can be established only under the said Act. The Policy formulated in the year 2006 has been withdrawn by a subsequent policy decision approved by the Council ofthe present cases, the companies have not shown any breach of the constitutional provisions. The role played by a State Government under the scheme of SEZ Act is already discussed in detail. It is for the state to decide whether a recommendation can be made or consent can be given for setting up SEZ in the state and therefore, the state has power to formulate policy in that behalf. There are no mala fides alleged or shown. The policy decision is stated to be taken in public interest. It is based on consideration of reports and relevant factors. It is impossible to hold that the said policy decision of withdrawing the earlier policy is either arbitrary or illegal. Another question is whether the doctrine of promissory estoppel will prevent the State Government from applying the said decision to the said companies. The said aspect is discussedthe GIDC can hold lands which are either acquired under the said Act of 1894 or which are vested in it by the State Government. In the present case, we are concerned with the lands acquired under the said Act of 1984. Therefore, the lands which are available at the disposal of the GIDC are public properties and, therefore, the GIDC is under an obligation to sell or transfer the lands by acting fairly.Inview of the law laid down by the Apex Court, the GIDC cannot arbitrarily allot lands vested in it and the alienations made by the GIDC must stand the test of reasonableness. 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. Therefore, the action of allotment of large tracts of lands to the companies will have to be tested on the touchstone ofit can be safely concluded that there was no direction issued by the State Government in exercise of powers under Section 16 of the GIDC Act to allot any land for the purposes of setting upit is clear that none of the 3 applications made by the said company which were on record contained a request for grant of land for the purpose of setting up SEZ. It is not the case made out that any other application apart from the said 3 applications was made by the said company. Moreover, the board of the GIDC did not consider the application made by the said company on 2nd March 2006. From the resolution passed by the board it appears that what was considered by the board was a request made by the said company to the State Government to allot the land. There is no communication in writing by the state government in that behalf except for the noting made by the Industries Minister "in principle approval be given". There is a note of the Chief Secretary which records that the managing director should advise the said company to apply under the SEZ Act. There is no request either by the said company or by the State Government to allot the land for setting up a Special Economic Zone though the Resolution passed by the Board makes a reference to it. Even in this Case, there is nothing placed on record to show that any scrutiny of the application of the said Company was made. In fact the decision of the Board shows that the Application made by the said company to GIDC was not considered by the board and what was considered was the "request" of theis nothing on record to show that project reports were filed by the companies. There is nothing on record to show that any further documents showing their experience and financial capacity were placed before the GIDC. There is no application of mind by the GIDC. Before allotment of such large lands there was absolutely no scrutiny of the applications and the applicants with reference to their experience in the field and financialallotment is not in respect of small plots of land but allotment is in respect of the lands which exceed an area of 30,00,000 sq. meter to selected few companies. Assuming that in April, 2006, the Board was to hold a meeting and grant permission for setting up 100 SEZs, such huge public property could not have been allotted by the GIDC in such arbitrary and irrational manner. We are not even going to the controversy about the rates at which the lands were allotted. There is no transparency in the procedure for allotment of lands by the GIDC.There were extensive submissions made in the public interest litigation based on the report of the Comptroller and Auditor General of India. It is pointed out that serious irregularities and illegalities in the allotment of lands in favour of the Companies have been recorded in said report (hereinafter referred to as "the CAG Report.)" Reliance is placed on Chapter VII of the said CAG Report and it was contended that to the several irregularities and illegalities pointed out in the report, there is no answer by the GIDC. It must be noted at this stage that in view of Article 151 of the Constitution of India and in particular Clause (2) thereof, the report will have to be placed by the Honourable Governor before the Legislature of the State and it is for the Legislature for the State to take further steps in that behalf. The report is recommendatory in nature and as of today, the same is not placed before the Legislature. Therefore, the argument based on the CAG report cannot be taken intohave already held for the reasons recorded that the decision of the Government of Goa of the withdrawal of its Special Economic Zones policy is legal and valid. The said decision is guided by considerations of larger public interest. The State Government found that setting up of Special Economic Zones will not be in larger public interest. Various aspects including its effect on resources of the State and possibility of large scale migrations have been considered by the State Government. Therefore, in the present case, considering the decision of the Government of Goa of withdrawal of SEZ policy which is based on consideration of public interest, it will be inequitable to hold the State Government or the GIDC to be bound by its alleged promise and representation. Though the allotments made to the companies is illegal, their Applications can be considered afresh by the GIDC for allotment of the same lands for any lawful purpose except for setting up of special economic zones. If fresh allotment cannot be made, the GIDC will have to refund the amounts received towards deposit, lease premium, interest and rent as per notice dated 13th June 2008 at the time of the companies handing over the possession of lands.By carrying out amendment to the Writ Petitions Nos.310,314 and 316 of 2008, a challenge was also made to the grant of approvals and notifications under the SEZ Act. The Writ Petitions were filed in April, 2008 and therefore, it cannot be said that due to the alleged delay and latches on the part of the Petitioners in PIL Writ Petitions, the companies have materially changed their position. The Petitioners in the said three petitions filed the Petitions after securing copies of relevant documents by making applications under the Right to information Act. Therefore, there is no undue delay in filing these petitions. Considering the averments in the Petitions and material on record, the Petitioners have approached the Courtwe are not going into the legality and validity of the direction under However, this will not preclude the GIDC fromthe applications for allotment made by the companies in accordance with law.100. In those cases, where approvals were granted under the SEZ Act but the SEZs were not notified, the show cause notices have been issued by the Central Government. We have already held that the Central Government has power to withdraw the approvals. It is for the concerned Companies to give reply to the show cause notices. The show cause notices will have to be decided by taking into consideration the fact that the allotment of lands by the GIDC is held to be illegal. In those cases where approvals are not granted under the SEZ Act, it is obvious that the applications/proposals cannot be processed further as the Government of Goa has withdrawn the recommendation. Therefore, no fault can be found with the decision of the Central Government holding that such proposals shall be treated as dropped in as much as the recommendation of the State Government is necessary for grant of approval. As far as three notified SEZs are concerned, the stand of the Central Government is that the Government of Goa should negotiate with the developers. The notifications have been issued on the basis of the allotment of lands by the GIDC. As the allotments of lands are held to be illegal, notifications cannot be acted upon now. In the petitions filed by the companies, there is a challenge to the direction issued by the Government of Goa to the GIDC to revoke the leases. There is also a challenge to the show cause notices issued by the GIDC on the basis of the saidwe have held that the allotments made to the said companies is illegal, it is not necessary to deal with the said challenges. In view of the finding recorded by us that the allotment of lands made to the companies is illegal, the possession of the lands will have to be restored to the GIDC. The original owners of the lands have not challenged the acquisition of the said lands. Hence, the player made in the Public Interest Writ Petitions for return of the lands to the original owners cannot be granted. As we have held that the applications for allotment of lands made by the said companies can be considered afresh in accordance with law, we are directing that the parties shall maintain status quo as of today in respect of the said lands for a period of 4 months from today. If the said companies are interested in fresh consideration of their applications for allotment, they are entitled to apply to the GIDC in that behalf. In such event, the applications of the companies shall be considered afresh by the GIDC in accordance with law notwithstanding the direction issued to maintain status quo as of today in respect of the said lands.The main findings recorded by us can be summarized as under:(i) On the basis of the consideration of the provisions of SEZ Act and the SEZ Rules, we hold that before the Board of Approval approves the proposal and before the Letter of Approval is issued by the Central Government, the State Government can always withdraw its recommendation in case the proposal is initiated under(2) of Section 3 of the SEZ Act. In such a case, Approval cannot be granted on the basis of the recommendation which is withdrawn. Even after a Letter of Approval is issued, but before the notification under section 4(1) is issued, the Board of approval and/or the Central Government has a power to withdraw the approval on the basis of withdrawal of the recommendations by the State Government. However, the approval can be cancelled/withdrawn in such a case only after following the principles of natural justice. The fact that several steps have been taken by the developers on the basis of approval will certainly be a relevant consideration which will have to be taken into account by the board.(ii) Whether the Central Government cana notified SEZ without the consent of the developer is a question which need not be decided in the present Petitions inasmuch as the action of the Central Government of declining tothe SEZ in three cases has not been specifically challenged before us in any of the Petitions.(iii) It is not possible to hold that the said policy decision of withdrawing the earlier SEZ policy is either arbitrary or illegal. The decision is legal which based on consideration of public interest.(iv)There was no direction issued by the State Government in exercise of powers under Section 16 of the GIDC Act to allot any land for the purposes of setting up SEZs.(v) The power under Clause (a) of Section 14 of the transfer of lands vesting in GIDC can be exercised only with a view to ensure establishment, growth and development of industries. Therefore, the exercise of power under Section 14 for grant of land for setting up SEZs will depend on the factual situation such as the purpose for which it is going to be used by the SEZ. If the land is to be allotted or transferred to SEZ predominantly for promoting or establishing or developing industries, then the power to allot can be lawfully exercised.(vi) The allotment of lands to the companies has been made in undue haste without proper scrutiny of their applications. The allotment of lands has been made arbitrarily. Procedure adopted in the allotment is not fair and transparent. The allotments made by the GIDC do not stand the test of reasonableness.(vii) In the present case, considering the decision of the Government of Goa of withdrawal of SEZ policy which based on consideration of public interest, it will be inequitable to hold the State Government or the GIDC to be bound by its alleged promise and representation.(viii) The Writ Petitions filed in public interest are no liable to be dismissed on the ground of delay and latches.