Case: Essar Bulk Terminal Limited &amp; Another Vs. State of Gujarat &amp; Others

2. The present appeal involves a challenge to a notification dated 18th January, 2016, issued under Section 5 of the Indian Ports Act, 1908, by which the 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 asfor 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 theports 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. 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 22nd 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 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 theof 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 itsand entered into aagreement with Adani on the same date. On 21st July, 2014, HPPL requested the GMB for amendment/extension of its port facilities. After entering into an MOU with Adani, dated 27th February, 2015, for exploring business opportunities, which fell through, HPPL, by its letter dated 14th March, 2015, revised its request for amendment of port facilities, citing the need for additionalarea, 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 7th 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 16th 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 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 from0, 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, theresolution 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 the Gujarat High Court, was then issued under Section 5 of the Indian Ports Act.

Court's reasoning:
15. By their letter dated 15th October, 2008, the Appellants asked the GMB to allow them to dredge the channel from 8 meters depth to 10 meters depth to accommodate capesize vessels of 105,000 DWT. Since material dredged from the channel would have to be dumped, an additional area of 316 hectares, towards the south of the mangroves, to dump the material and reclaim the said area was applied for. No such permission was granted by the GMB to go from a depth of 8 meters to 10 meters or to reclaim any area to the south of the mangroves. Shri Mihir Joshi, however, pointed out a completion certificate dated 11th February, 2010, in which it was mentioned that the width and depth of the channel is being increased to 300 meters and 10 meters below CD respectively inHowever, this would clearly not amount to permission for the same, as all that was stated in the completion certificate was a reference to a deep water berth of 8 meters depth below CD, the 10 meters depth being something which may be increased in future.16.Despite this, what is clear from the record is that the Appellants appear to have actually dredged the channel to a depth of 14 meters and appear to have reclaimed an area of 164 hectares plus 170 hectares to the south of the mangroves, without any permission at all. When this was pointed out to Shri Mihir Joshi, the answer given was that when permission is granted under Section 35(1) of the Gujarat Maritime Board Act, a letter granting such permission specifically says that it is permission that is granted under Section 35(1) and for this purpose, a letter dated 2nd August, 2008 was referred to. According to him, therefore, the letter dated 14th June, 2007, which referred only to an NOC for reclamation, could not be given the status of permission under Section 35(1). According to the learned counsel, therefore, if Section 35(1) were to be read with Section 35(2), it would be clear that permission for reclamation would only be necessary if a private asset were to be created in the hands of a private person. However, it is clear that the asset to be created belonged only to the Government of Gujarat and it was for the GMB to grant permission to the Appellants to use the same.We are afraid that it is difficult for us to accept this line of argument. Section 35(1) is couched in negative language and does not refer to private rights being created. Section 35(2) cannot be read so as to throw light on Section 35(1), as under Section 35(2), the GMB is only given a discretionary power to require a person, who has acted in contravention of Section 35(1), to remove the illegal erection. The wide language of Section 35(1) cannot be whittled down by Section 35(2) in the manner argued by Shri Joshi, as the GMB may or may not utilise the discretionary power granted to it under Section 35(2). The plain language of Section 35(1) cannot be curtailed by reading by inference, into(2), the fact that the GMB may, by notice, require a person to remove an erection, only when it has been made without previous permission, so as to create a private asset in the hands of a private person. The wide language of Section 35(1) makes it clear that any reclamation within the limits of the GMB cannot be carried out except with the previous permission in writing of the GMB. It is clear, therefore, that dredging to a depth of below 8 meters and reclamation of any area to the south of the mangroves was done by the Appellants in the teeth of Section 35(1) of the Gujarat Maritime Board Act.17.Mr. Sibal laid great stress on the letter dated 15th November, 2012 to show that, in point of fact, what the Appellants were really angling for was to conduct commercial operations beyond the captive requirements of the Essar Steel plant at Hazira.This letter, while asking for an addition of 3700 meters in addition to the existing 1100 meters waterfront, also went on to speak of developing a 700 meters berth, along with the GMB, for handling commercial cargo. Apart from this, Essar planned to build a world class container terminal and a dry dock, which would serve the shipping industry generally. It also proposed to reclaim a further 334 hectares land on the southern side with the additional dredged material. A perusal of this letter would leave no doubt about the fact that despite Essarproduction being at much less than what was projected, thecontinued demands would show that the real motive was to go beyond a captive jetty and to develop a commercial port which, as we have seen, cannot be done without a global tender under the Gujarat Infrastructure Development Act.18. As stated hereinabove, as many as three MOUs were executed between the Appellants, the GMB and the State Government, which MOUs were valid only for a period of 12 months and were stated not to have granted any right to the Appellants, who would incur all the expenditure for the same. This being the case, it is a little difficult to appreciate Shricontention that any legitimate expectation could be based on any of the aforesaid expired MOUs. The High Court is correct in its conclusion that no such expectation could possibly have arisen out of the aforesaid MOUs or the correspondence between the Appellants and the GMB referred to.19. It is also important to note from the correspondence between the Appellants and the GMB, that the Appellants were clearly told that the land to be reclaimed by the Appellants would not only belong to the Government of Gujarat, but also that the GMB could utilize the aforesaid land for any purpose. What seems to emerge on a reading of the letters between the parties is that the Appellants wished to dredge the canal, at their own cost, which was next to their captive jetty, for their own purposes, for which they obtained the necessary permission. However, since dumping of earth, which would emerge as a consequence of dredging, into the open sea would be extremely expensive, it was stated that instead this earth could be dumped to create reclaimed land next to the captive jetty, which would then benefit both the Appellants and the GMB. In point of fact, 140 hectares out of 195 hectares that is reclaimed by the Appellants is allocated to the Appellants for their own purposes, the balance to be given as and when a jetty of 1100 meters plus 3700 meters of waterfront is constructed. The argument that huge amounts had been spent to reclaim land is wholly fallacioushuge amounts were spent to dredge a canal which was permitted as the Appellants alone were to bear the cost, and as an increased draft would benefit all, as the canal was open to all to use. Therefore, any plea as to a legitimate expectation of reclaimed land being allocated for theown use, thanks to large amounts being spent, is contrary to the correspondence by the Appellants themselves.A perusal of the objections of Essar and the comments offered by the GMB would show that, first and foremost, actual steel production at the plant is way below capacity, with no firm or definite plans for augmentation. In fact, in theAt this point it is also important to note that theaffidavit filed in the High Court also specifically states that the reclaiming of 334 hectares of land by dredging the channel to 14depth was never approved by the GMB. Thus, the argument that the area of 170 hectares and 164 hectares of reclaimed land, which the altered limits of the port has been said to impinge upon, has no legs to stand, in view of the fact that no prior permission has been taken under Section 35 of the Gujarat Maritime Board Act to add reclaimed land to the main land, as has been stated hereinabove. Added to this, the area of 195 hectares that has been reclaimed is allocated to the Appellants for their own use – 140 hectares immediately and the balance only after approval and construction of the further elongated jetty. It is clear that even if theplea were to be accepted, the alteration of the limits of the port cannot possibly be said to affect therights qua reclaimed land, which has been reclaimed illegally i.e. without prior permission under the Gujarat Maritime Board Act. Thus, the CRZ clearance by the Ministry of Environment and Forests dated 6th May, 2014 for reclamation of 334 hectares of land does not further thecase in any way.23. We now come to theargument of the haste that is shown by the GMB in recommending the second proposal for altered limits. True, the GMB did act within 4 days of the said proposal, but this fact, without anything more, to demonstrate mala fides or lack of public interest, cannot possibly hold water. It is also to be noted that Shriplea, that 13 berths would require 1011 hectares of adjacent land and that much less land than 1011 hectares has been allocated for the use of a commercial port, has to be accepted.24. The further plea, that the forest land to the north consisting of 300 hectares, having now been acquired in October, 2016, would enure to the benefit of HPPL, would also not take thecase any further, as even these 300 hectares would be subsumed within the requirement of 1011 hectares, as has been pointed out, in the DPR of 2010.25. There can be no doubt that Shriplea that the power of the Government to alter the limits of any port under Section 5(1) of the Indian Ports Act must be done only in public interest is correct. However, it has not been shown to us as to how the impugned notification is contrary to public interest. The affidavits filed in the High Court, by the State Government and the GMB, show that a commerciallimits were altered in public interest because the number of vessels at Hazira port were expected to increase dramatically and it was, therefore, necessary to make adequate facilities not only for anchorage of such vessels, but also for reasons of customs formalities, port conversion, general security etc. We are not, therefore, satisfied that the notification is ultra vires Section 5 of the Indian Ports Act. We have already seen that the Appellants have noto private property in view of the fact that the ownership of the captive jetty that has been constructed and the ownership of reclaimed land is with the GMB/State Government. For this reason also, the notification is intra vires as the alteration in the limits of Hazira Port does not affect anyof the Appellants to private property.