Essar Bulk Terminial Limited vs The State Of Gujarat

2. The present appeal involves a challenge to a notification dated 18th January, 2016, issued under Digitally signed by Section 5 of the Indian Ports Act, 1908, by which the ASHA SUNDRIYAL Date: 2018.02.22 16:22:52 IST Reason: 1 State Government of Gujarat expanded the port limits of Hazira port. It is the case of the Appellants before us that by doing so, the Appellants have been affected because they have spent huge monies on lands reclaimed by them, which would be directly affected by the expansion of the aforesaid port limits.

3. The brief facts necessary for determining the questions that arise in this appeal are as follows. In 1994, the parent company of the Appellants entered into an agreement with the Gujarat Maritime Board (hereinafter referred to as “GMB”) for use of a captive jetty in Magdalla port. Pursuant to a Port Policy framed by the Government of Gujarat in 1995, and a Build, Own, Operate and Transfer (BOOT) Policy framed for private sector participation in development of the State’s ports in 1997, the GMB issued a Global Notice for Expression of Interest for Development of Green Field Site Port Facilities, inviting bids in the name of Hazira port project. 2 A consortium led by Shell Gas B.V. was selected to develop, operate and maintain certain facilities on leased area in the port on a BOOT basis, together with related LNG facilities. Pursuant to the acceptance of its bid, Shell Gas B.V. created two subsidiaries in Gujarat, namely, Hazira Port Private Limited (HPPL) and Hazira LNG Private Limited. A concession agreement dated 22 nd April, 2002 was entered into between the GMB, the State Government and HPPL for the purpose of development, operation and maintenance of Hazira port by HPPL. A notification dated 23rd June, 2004 was issued by the State Government notifying Hazira port and setting out its limits, in exercise of powers under Section 4(2) of the Indian Ports Act. This was carved out of the port limits of Magdalla port, which was so reduced as to exclude the aforesaid Hazira port.

4. Sometime in the year 2000, the Appellants had set up a shallow draft captive jetty of 456 meters at the mouth 3 of the River Tapi, which connected to the sea at a distance of about 7 kilometers. The initial depth of the aforesaid draft captive jetty was about 3 to 4 meters.

5. As many as three Memorandums of Understanding (MOU) were entered into between the Appellants, the GMB and the State Government in the years 2007, 2011 and 2013, inter alia, for development of a RORO terminal and development of the water-front of 3000 meters. Each of these MOUs was only for a period of 12 months.

6. On 25th November, 2010, HPPL identified Adani Hazira Port Private Limited (Adani) as its sub-concessionaire, and entered into a sub-concession agreement with Adani on the same date. On 21 st July, 2014, HPPL requested the GMB for amendment/extension of its port facilities. After entering into an MOU with Adani, dated 27 th February, 2015, for exploring business opportunities, which fell through, HPPL, by its letter dated 14 th March, 2015, revised its 4 request for amendment of port facilities, citing the need for additional back-up area, as a result of which a much larger area than what was originally asked for was now requested. This larger area would include lands reclaimed and/or to be reclaimed by Essar by dumping earth out of dredging the canal next to the captive jetty of the Appellants. This proposal was approved by the GMB by its resolution dated 19th March, 2015. Meanwhile, on 7 th April, 2015, Essar wrote a detailed representation to the GMB stating its objections to the extension of port limits on various grounds. On 21st April, 2015, the State Government wrote a letter to the GMB, inter alia, asking it to examine the aforesaid representation of the Appellants. A similar representation dated 29th May, 2015 was also made by the Appellants to the Chief Principal Secretary of the State. By a detailed letter dated 16 th July, 2015, the GMB dismissed all the objections of the Appellants. However, on 26th August, 2015, the State Government requested the GMB to reconsider the issue of extension 5 of port facilities in its forthcoming board meeting, and send its recommendations to the Government in relation thereto. On 28th September, 2015, the GMB passed a resolution in which it recommended the original proposal submitted by HPPL on 21st July, 2014. However, on 5th December, 2015, the Chief Principal Secretary to the Chief Minister circulated a note stating that the number of vessels at the port was expected to increase dramatically from 30-40 to 70-80, and that the port limits need to be extended to accommodate customs formalities, safety etc. In view thereof, it was necessary to make adequate facilities for anchorage of all the said vessels and that, therefore, the GMB’s resolution of 19th March, 2015 should be strictly implemented. On 11th December, 2015, the State Government then wrote to the GMB stating that the port facilities will be extended in terms of the GMB resolution dated 19th March, 2015. Following this, the requisite notification dated 18th January, 2016, which has been impugned by the Appellants in a writ petition before 6 the Gujarat High Court, was then issued under Section 5 of the Indian Ports Act.

Only the wharfage charges/waterfront charges will be as per the schedule decided by Gujarat Maritime Board. The promoters will be free to charge any other service charges with the prior approval of the Gujarat Maritime Board. After BOMT period, the ownership of the port and its assets will get transferred to Gujarat Maritime Board and they will examine to give it further on lease basis to the same promoter. The terms and conditions will be finalised at that time. The general guidelines for investment analysis and capital recovery for 20 the port projects to determine BOMT period will be announced within 2 months.

Looking to the huge amount of cargo handled in a short period, captive Single Point Mooring (SPM) facilities of industries located in Gujarat will be charged at concessional rate of 21 wharfage for their captive consumption. Nevertheless, for captive cargo for industries located outside Gujarat and non-captive commercial and industrial cargo, will be charged full wharfage by Gujarat Maritime Board.

draft 550m jetty since Hence, it has no effect. 2010 and caters to the The present capacity of Essar’s Steel plant the steel plant is 10 cargo requirement. MMTPA whereas the The steel plant is actual steel production at expected to ramp up the plant in the year its production in line 2014-15 is only 3.15 with its 10 MMTPA MMTPA. No firm/definite capacity and would plans for augmentation require augmented in steel production are marine facility and submitted.

back up area for handling its increased cargo requirements.

It is to be noted that GMB granted NOC for dumping dredge material in mudflat area at Magdalla to ESSAR vide letter dated 14 th June, 2007 (Annexure 5) with a condition that the ownership of reclaimed land shall vest with GMB/GOG (Condition No.7) and ESSAR shall not claim reimbursement for any expenditure, incurred for this reclamation (Condition No 8).”

26. In conclusion, for the reasons given by us in the present judgment, the appeal deserves to be dismissed. The appeal is dismissed with no order as to costs.

February 22, 2018.