M/S. R. K. INDUSTRIES (UNIT-II) LLP versus S.C/S.T SHIPBREAKERS ASSOCIATION & ORS. on 16 July 2019

[2019] 10 S.C.R. 295

M/S. R. K. INDUSTRIES (UNIT-II) LLP

v.

S.C/S.T SHIPBREAKERS ASSOCIATION & ORS.

(Civil Appeal No.5609 of 2019)

JULY 16, 2019

[R.F. NARIMAN, SANJIV KHANNA AND SURYA KANT, JJ.]

Gujarat Maritime Board (Conditions and Procedures forGranting Permission for Utilizing Ship Recycling Plots) ShipRecycling Regulations, 2015:

Clause 5.4 – Allocation of plots for reserved categories –Whether reservation to be given out of the total plots or only out ofthe plots that were sought to be auctioned – Held: If clause 5.4 isinterpreted keeping in view the context of Clauses 5.1 and 5.2, theexpression “the plots” contained in clause 5.4 has reference onlyto plots that are sought to be auctioned – Therefore, reservation isto take place out of the plots sought to be auctioned and not out ofthe total plots.

Allowing the appeal, the Court

HELD: 1. The marginal note of clause 5.4 of the GujaratMaritime Board (Conditions and Procedures for GrantingPermission for Utilizing Ship Recycling Plots) Ship RecyclingRegulations, 2015 indicates the drift of the provision as“Allocationfor the reserved categories”. If one would ask thequestion as to what is to be allocated, the answer is to be found inclause 5.1 and 5.2. What is to be allocated, therefore, is onlyplots which are newly developed; plots which are already vacant;and plots which have fallen vacant on account of cancellation/termination of the permission. Clause 5.2 is even more explicitin its language. In that it states “All such plots” are to beauctioned. Once clause 5.4 is interpreted keeping in view thecontext of clauses 5.1 and 5.2, it is obvious that the expression“the plots” contained in clause 5.4 has reference only to plotsthat are to be auctioned, which are mentioned in clauses 5.1 and5.2. Once this is so, the expression “plots” must take colour

295

A

B

C

D

EF

G

H

Afrom the context in which it is placed. Indeed, the definitionclause is itself expressly subject to context to the contrary.Therefore, the opinion of the High Court that reservation is totake place only out of the total plots and not the plots to beauctioned, cannot be agreed to. [Paras 16, 17 and 18] [302-D-G]

B2. In the case of reservation of vacant plots of a smallernumber that are put to auction, it is for the Board to work thereservation policy contained in the 2015 Regulations in a non-arbitrary fashion, giving effect to reservation. The judgment ofthe High Court is set aside. However, it is made clear that therebeing no challenge by any General candidate to the reservationCmade out of the eight plots of six plots in favour of SC and STcandidates, this reservation will continue only for the purpose ofthe auction of eight plots. All future tenders/auctions will abideby the interpretation given in this judgment. [Para 18][303-A-B]

CIVIL APPELLATE JURISDICTION: Civil Appeal No.5609 ofD2019

From the Judgment and Order dated 16.04.2018 of the High Courtof Gujarat at Ahmedabad in Special Civil Application No. 5509 of 2017

Shekhar Naphade, Sr. Adv., Kunal Cheema, Ms. Aditi Parkhi,EAbhikalp P. Singh, Ms. Laxmi S. Iyer, Advs. for the Appellant.

Tushar Mehta, SG, Anupam Lal Das, Sr. Adv., Rajendra Singhvi,K. K. L. Gautam, Ms. Arundhati Chakraborty, Sanjeev Malhotra,Gursharan Virk, Nakul Mohta, Ms. Misha Rohatgi, Lalit Mohan, ApoorvShukla, Anirudh Singh, Krishanu Barua, Ms. Prabhleen Kaur, Advs. forFthe Respondents.

The Judgment of the Court was delivered by

R. F. NARIMAN, J. 1. Leave granted.

2. The challenge in the instant appeal is by a person who was nota party before the High Court. The reason why we have heard Mr.GShekhar Naphade, learned senior counsel appearing on behalf of theappellant, and why we have given his client leave to appeal, is only to setright the interpretation to The Gujarat Maritime Board (Conditions &Procedures for granting permission for Utilizing Ship Recycling Plots)

H

Ship Recycling Regulations, 2015 (hereinafter referred to as ‘2015Regulations’ for brevity).

3. The skeletal facts necessary to decide this case are as follows:

4. In February, 2017, the Gujarat Maritime Board issued a tenderfor auction of eight vacant plots at Alang-Sosiya Ship Recycling Yard,District Bhavnagar, for the reasons best known to it, as it chose to do sodespite the fact that on this date, 20 vacant plots were available forauction. Considering the 2015 Regulations supra, the Gujarat MaritimeBoard decided that out of these plots, four should be reserved for STcategory, two for SC category and two would go to the General category.Respondent Nos. 1, 2 and 3 before us, viz. the S.C./S.T. ShipbreakersAssociation, filed Special Civil Application No. 5509 of 2017 before theHigh Court of Gujarat at Ahmedabad on 14.03.2017 in which it challengedthe allocation of plots to SC and ST candidates stating that the Regulations,if properly read, would necessarily mean that the reservation of 14 percent and 7 per cent for ST category and SC category respectively, shouldbe of the total number of plots that are available and not merely thosethat are sought to be auctioned. If this were to be so, then all the eightplots would have to be reserved for SC and ST candidates inasmuch asthe total reservation quota as a percentage of the total number of plotshad not been reached. On 22.04.2017, the tender notice issued by theGujarat Maritime Board was stayed by the High Court, and by theimpugned judgment dated 16.04.2018, the High Court held that not onlywould all the eight plots that were subject matter of the auction notice bereserved for the ST and SC candidates but that, even for the remainingnumber, i.e., if 20 plots were to be taken as a block, all 20 would have tobe reserved for ST and SC candidates inasmuch as the quota for thesecandidates, going by the percentage of total plots, had not been reached.In this view of the matter, the High Court quashed the tender notice anddirected the Gujarat Maritime Board as follows:

“12. In view of the above and for the reasons stated above, SpecialCivil Application No. 5509 of 2017 is allowed. It is held anddirected that respondent GMB shall make reservation of 7% plotsbelonging to SC Category and 14% of plots to ST Category out of/considering the Total Plots and not Vacant Plots as on today (ascontended on behalf of the GMB). The respondent GMB is also A

BCD

EF

G

H

Adirected to simultaneously hold the auction of all the vacant plotsand apply the reservation as directed herein above i.e., includingall the vacant plots bigger size plots and / or smaller size plots.Consequently, the impugned tender at Annexure F (collectively)issued by the respondent no. 2 in February 2018 for 8 plots atAlang-Sosiya Ship Recycling Yards is hereby quashed and setBaside and the respondent GMB is directed to invite fresh tenders/bids in light of the present judgment and order. The said exerciseshall be completed at the earliest but not later than six monthsfrom today. Rule is made absolute to the aforesaid extent. Nocosts.”C

5. Shri Shekhar Naphade, learned senior counsel appearing onbehalf of the appellant herein, has attempted to argue his peculiar factsbefore us in which he sought to challenge the fact that the plot licensedto him has itself been set up for auction, together with the fact that sincehe wishes to amalgamate with the neighbouring plot, this amalgamationDwould become impossible if all vacant plots were to be reserved for STand SC categories, as was required by the impugned judgment. Wemay state that we are not going into the individual facts of Shri Naphade’sclient’s case. Suffice it is to state that we are granting his client alimited permission to file a special leave petition against the impugnedjudgment challenging its correctness. It will be open for him, in separateEproceedings, to challenge action taken against his client by the GujaratMaritime Board up to date, including action taken by the Maritime Boardpursuant to our judgment. All contentions in this behalf are left openboth to his client as well as to the Gujarat Maritime Board.

6. Shri Naphade has assailed the High Court’s interpretation ofFthe 2015 Regulations by painstakingly taking us though the history ofvarious regulations, pointing out the difference between the earlierregulations and the present Regulation, and ultimately pointing out thatclause 5.4 of the 2015 Regulations must be read as an adjunct to clauses5.1 and 5.2. As a result of this, clause 5.4 cannot be read torn out ofGcontext along with the definition of “plot” contained in the Regulationsso as to arrive at the result arrived at by the High Court. In his submission,therefore, having regard to the fact that the earlier Regulation of 2006specifically spoke of reservation “out of total plots” which language ismissing from the current Regulation, it is clear that the context of the H

current Regulation requires reservation only of the plots that are soughtto be auctioned.

7. To this, Shri Gursharan Virk, learned counsel appearing for theGujarat Maritime Board, argued that the issue today is really academicinasmuch as Shri Naphade’s client should not be allowed permission tofile the special leave petition at all. The Board has since taken a decisionto follow the Gujarat High Court’s judgment. He also argued before usthat if the Gujarat High Court’s judgment were not followed, incongruousresults might follow. He gave us an example, by which, assuming thatonly three plots were vacant and were auctioned, it would be impossibleto work out a reservation of 14 per cent and 7 per cent of these threeplots. So, obviously, what is meant by reservation is reservation only outof the total plots. Even otherwise, according to him, the appellant oughtnot to be granted any relief given the fact that he has woken only at thislate stage.

8. We have also heard Mr. Rajendra Singhvi, learned counselappearing for respondent Nos. 1-3, who has argued that the tender noticeof February, 2017, could be said to fall between two stools. It could onlybe upheld if, according to him, the High Court’s judgment were right,because it is only if reservation is taken of total plots – six out of eightplots would be reserved. If the contrary construction is adopted, it isobvious that, at best, perhaps, one plot could be reserved. The GujaratMaritime Board, therefore, though it ought to have reserved all eight,has really followed the principle of reservation from out of total numberof plots, which is the correct principle to be followed in the facts of thiscase.

9. Having heard learned counsel for all the parties, we mayfirst go to The Gujarat Maritime Board (Conditions and Procedure forgranting permission for Utilising Shipbreaking Plots) Regulations, 1994(hereinafter referred to as 1994 Regulations’ for brevity). In theseRegulations, paragraph 9 laid down reservation for ST and SC candidatesas follows:

“9. Out of plots which were vacant as on 3[rd] August, 1992 or fellvacant thereafter, or any new plot which is developed thereafter7 per cent of these plots shall be reserved for granting permissionto Co-operative Societies all of whose members belong to AB

C

DE

F

G

H

Scheduled Castes, and 14% plots shall be reserved for Co-operative Societies all of whose members belong to ScheduledTribes. All the terms and conditions specified in the Governmentof Gujarat, Roads & Buildings Department Vernaculars ResolutionNo. 2 LPW-1290-25435-GH dated 3[rd] August, 1992 shall be treatedas forming part of these Regulations ——————— ScheduledCaste/ Scheduled Tribe applicants included in the list from category—— in Regulation 4, shall be permitted to utilize plots on reservationbasis on fulfillment of ——— terms and conditions specified inthose Regulations and in the Schedule hereto and thereafter, ———— other applicants of SC/ST categories, permission forutilizing the plots shall be granted on tender-cum-auction basis.”

A

B

C

10. A perusal of paragraph 9 of the 1994 Regulations would showthat reservations were to be based only on three categories of plots viz.,those that were vacant on 03.08.1992; or those that fell vacant thereafter;or any new plot which is developed thereafter. A reading of theseDRegulations would show, therefore, that reservation at this juncture, wasnot from out of the total number of plots but only of the three categoriesmentioned hereinabove.

11. The 1994 Regulations were supplanted by the Gujarat MaritimeBoard (Conditions and Procedures for granting permission for UtilisingEShipbreaking Plots) Regulations, 2006 (hereinafter referred to as ‘2006Regulations’ for brevity) by clause 9 by which reservations for plotswere made as follows:

“9. Out of total plots 7 per cent of these plots shall be reserved forgranting permission to Co-operative Societies of all of whoseFmembers belong to Scheduled Castes, and 14% plots shall bereserved for Co-operative Societies of all of whose membersbelong to Scheduled Tribes. All the terms and conditions specifiedin the Government of Gujarat, Roads & Buildings DepartmentVernacular Resolution No. LPW-1290-25435-GH dated 3[rd] August,1992 and Government of Gujarat, Port & Fisheries DepartmentGResolution No. WKS-1099-CM, MLA 82 (17) GH dated 4/1/2000shall be treated as forming part of these Regulations.

Explanation for the purpose of these Regulations before calculating7% for the Co-operative Societies belonging to the members of Scheduled Caste and 14% for the Cooperative Societies belongingto the members of Scheduled Tribe categories, the Chief ExecutiveOfficer & Vice Chairman shall reserve 10 plots for grantingpermission for ship recycling activities on ship to ship basis asprovided in Regulation herein above.”

12. The scheme of these Regulations would clearly show thatthere has been a vital change in the reservation policy insofar as vacantplots to be auctioned are concerned. The vital change is contained inthe opening words of clause 9 which states “’Out of totalplots’………………………………….”

13. This situation obtained until the present 2015 Regulations wereenacted, substituting the 2006 Regulations. By these Regulations, a newChapter 5 was inserted. What is relevant for our purpose are paragraphs5.1 to 5.4 which read as under:

“5.1 The Chief Executive Officer may grant permission to useplots for ship recycling in respect of- a. a plot which is newly developed

b. a plot which his vacant

c. a plot which has fallen vacant on account of cancellation/termination of the permission.

5.2 Procedure : All such plots, shall be offered for use for shiprecycling after following the procedure of Tender-cum-Auction.

5.3 Tender-cum-Auction:

The upset price for tender cum auction will be Rs.540/- persqm per year. The terms and conditions of the tenderdocument shall be fixed by the Board.

5.4 Allocation for the Reserved Categories:

7% and 14% of the plots shall be reserved for ScheduledCastes and Scheduled Tribes respectively for grantingpermission for utilization of ship recycling plots.”

14. The bone of contention between the parties is, what is themeaning of the expression “the plots” contained in paragraph 5.4. The A

B

C

D

E

F

G

H

AHigh Court has held that “the plots” must be read with the definition of“plot” contained in the Regulations, which is contained in paragraph 15as follows:

15. “Plot” means piece of land adjacent to waterfront or otherwiseearmarked by the Board for the purpose of ship recycling havingBdimensions specified in the permission letter. This shall includeexisting plot or plots that may be developed in future within theship recycling yard under the Gujarat Maritime Board.”

15. If this interpretation is to be accorded, then the High Court isright in stating that the expression “the plots” would include total plotsCand not merely plots to be auctioned.

16. It is important to first notice the context of paragraph 5.4 ofthe 2015 Regulations. The marginal note of clause 5.4 indicates the driftof the provision as follows:

“Allocationfor the reserved categories”.D

17. If one would ask oneself the question as to what is to beallocated, the answer is to be found in clause 5.1 and 5.2. What is to beallocated, therefore, is only plots which are newly developed; plots whichare already vacant; and plots which have fallen vacant on account ofcancellation/termination of the permission. Clause 5.2 is even moreEexplicit in its language. In that it states “All such plots” are to be auctioned.Once clause 5.4 is interpreted keeping in view the context of clauses 5.1and 5.2, it is obvious that the expression “the plots” contained in clause5.4 has reference only to plots that are to be auctioned, which arementioned in clauses 5.1 and 5.2. Once this is so, the expression “plots”Fmust take colour from the context in which it is placed. Indeed, thedefinition clause is itself expressly subject to context to the contrary.

18. This being the case, it is a little difficult to agree with the HighCourt that reservation is to take place only out of the total plots and notthe plots to be auctioned. In point of fact, the 2015 Regulations are anexpress departure from the earlier Regulations of 2006, which, in turn,Gwere a departure from the earlier Regulations of 1994. The argumentof Mr. Virk that if only three vacant plots were to be auctioned, reservationof 21% of this figure would be impossible is an argument which flies inthe face of the express language of the 2015 Regulations, coupled withthe fact that the preceding 2006 Regulations, which had the words “Out H

of the total plots…….” is missing in the 2015 Regulations. In the caseof reservation of vacant plots of a smaller number that are put to auction,it is for the Board to work the reservation policy contained in the 2015Regulations in a non-arbitrary fashion, giving effect to reservation asauthored by us hereinabove. This being so, we set aside the judgment ofthe High Court. However, it is made clear that there being no challengeby any General candidate to the reservation made out of the eight plotsof six plots in favour of SC and ST candidates, this reservation willcontinue only for the purpose of the auction of eight plots. All futuretenders/auctions will abide by the interpretation given by us in our judgmenttoday.

19. With these observations the appeal is allowed.

19. With these observations the appeal is allowed.

20. The protection granted by our order dated 29.03.2019 willcontinue for a period of four weeks. The appellant, as has been statedhereinabove, is free to adopt whatever proceedings is available to him inlaw. Any challenge made by the appellant in proceedings hereafterwould be heard on its own merits. All the contentions therein are opento the appellant as well as the Gujarat Maritime Board.

Kalpana K. Tripathy

Appeal allowed.

A

B

C

D

E

F

G

H