ESSAR BULK TERMINAL LIMITED & ANR. versus STATE OF GUJARAT & ORS. on 22 February 2018

ESSAR BULK TERMINAL LIMITED & ANR.

v.

STATE OF GUJARAT & ORS.

(Civil Appeal No. 2406 of 2018)FEBRUARY 22, 2018

[R. F. NARIMAN AND NAVIN SINHA, JJ.]

Indian Ports Act, 1908:

s.5 – Notification under – By State Government – Forexpansion of port limits – Challenged by appellant-Company (whowas using a captive jetty) stating that the expansion would affectthe lands reclaimed or to be reclaimed by them – Petition dismissedby High Court – On appeal, held: The Notification for expansionof Port limits issued u/s. 5 was in public interest and hence was notultra vires s. 5 – The alteration/expansion of the limits of the Portcannot be said to affect appellant-Company’s rights qua reclaimedlands as the lands were reclaimed illegally i.e. without priorpermission under s.35(1) of Gujarat Maritime Board Act – In thefacts of the case the appellant-Company cannot be said to havelegitimate expectation – The land reclaimed by the appellant-Company not only belonged to the State Government, but the samealso could be utilized by Maritime Board for any purpose – Therefore,appellant-Company has no right to private property – Thus, theNotification also does not affect any rights of the appellant-Company to private property – Gujarat Maritime Board Act, 1981– s.35(1) – Gujarat Infrastructure Development Act, 1999 – ss. 8, 9and 10 – Doctrine of Legitimate expectation.

Gujarat Maritime Board Act, 1981:

s.35(1) – Interpretation of.

Dismissing the appeal, the Court

HELD: 1. It is not correct to say that if Section 35(1) ofGujarat Maritime Board Act, 1981 were to be read with Section35(2), it would be clear that permission for reclamation wouldonly be necessary if a private asset were to be created in thehands of a private person. The asset to be created belonged only

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Ato the Government of Gujarat and it was for the Gujarat MaritimeBoard (GMB) to grant permission to the Appellants to use thesame. Section 35(1) is couched in negative language and doesnot refer to private rights being created. Section 35(2) cannotbe read so as to throw light on Section 35(1), as under Section35(2), the GMB is only given a discretionary power to require aBperson, who has acted in contravention of Section 35(1), to removethe illegal erection. The wide language of Section 35(1) cannotbe whittled down by Section 35(2), as the GMB may or may notutilise the discretionary power granted to it under Section 35(2).The plain language of Section 35(1) cannot be curtailed by readingCby inference, into sub-section (2), the fact that the GMB may, bynotice, require a person to remove an erection, only when it hasbeen made without previous permission, so as to create a privateasset in the hands of a private person. The wide language ofSection 35(1) makes it clear that any reclamation within the limitsof the GMB cannot be carried out except with the previousDpermission in writing of the GMB. It is clear, therefore, thatdredging to a depth of below 8 meters and reclamation of anyarea to the south of the mangroves was done by the Appellants inthe teeth of Section 35(1) of the Gujarat Maritime Board Act.[Para 16] [351-G-H; 352-A-D]

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2. Despite appellant-Company’s production being at muchless than what was projected, the Appellants’ continued demandswould show that the real motive was to go beyond a captive jettyand to develop a commercial port which cannot be done withouta global tender under the Gujarat Infrastructure Development FAct. [Para 17] [352-G]

3. As many as three MOUs were executed between theAppellants, the GMB and the State Government, which MOUswere valid only for a period of 12 months and were stated not to havegranted any right to the Appellants, who would incur all the expenditureGfor the same. This being the case, it cannot said that any legitimateexpectation could be based on any of the aforesaid expired MOUs.Therefore, no such expectation could possibly have arisen out ofthe aforesaid MOUs or the correspondence between theAppellants and the GMB. [Para 18] [352-H; 353-A-B]

4. It is evident from the correspondence between the H

Appellants and the GMB, that the Appellants were clearly toldthat the land to be reclaimed by the Appellants would not onlybelong to the Government of Gujarat, but also that the GMBcould utilize the aforesaid land for any purpose. What seems toemerge on a reading of the letters between the parties is that theAppellants wished to dredge the canal, at their own cost, whichwas next to their captive jetty, for their own purposes, for whichthey obtained the necessary permission. However, since dumpingof earth, which would emerge as a consequence of dredging, intothe open sea would be extremely expensive, it was stated thatinstead this earth could be dumped to create reclaimed land nextto the captive jetty, which would then benefit both, the Appellantsand the GMB. The argument that huge amounts had been spentto reclaim land is wholly fallacious - huge amounts were spent todredge a canal which was permitted, as the Appellants alone wereto bear the cost, and as an increased draft would benefit all, asthe canal was open to all to use. Therefore, any plea as to alegitimate expectation of reclaimed land being allocated for theAppellants’ own use is contrary to the correspondence by theAppellants themselves. [Para 19] [353-C-F]

5. Even if the Appellants’ plea were to be accepted, thealteration of the limits of the port cannot possibly be said to affectthe Appellants’ rights qua reclaimed land, which has beenreclaimed illegally i.e. without prior permission under the GujaratMaritime Board Act. Thus, the CRZ clearance by the Ministryof Environment and Forests dated 6[th] May, 2014 for reclamationof 334 hectares of land does not further the Appellants’ case inany way. [Para 22] [358-H; 359-A-B]

6. It is correct that the power of the Government to alterthe limits of any port under Section 5(1) of the Ports Act must bedone only in public interest. However, it has not been shown tothe Court as to how the impugned notification is contrary to publicinterest. The affidavits filed in the High Court, by the StateGovernment and the GMB, show that a commercial port’s limitswere altered in public interest because the number of vessels atthe port were expected to increase dramatically and it was,therefore, necessary to make adequate facilities not only foranchorage of such vessels, but also for reasons of customs AB

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Aformalities, port conversion, general security etc. Therefore, thenotification is not ultra vires Section 5 of the Ports Act. TheAppellants have no ‘right’ to private property in view of the factthat the ownership of the captive jetty that has been constructedand the ownership of reclaimed land is with the GMB/StateGovernment. For this reason also, the Notification is intra viresBas the alteration in the limits of the Port does not affect any ‘right’of the Appellants to private property. [Para 25] [359-E-H]CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2406of 2018.

CFrom the Judgment and Order dated 25.04.2017 of the High Courtof Gujarat at Ahmedabad in SPLCA No. 8356 of 2016.

Mihir Joshi, Sr. Adv., Kyur Gandhi, Ms. Priyal Parikh, Ms. DivanshiSingh, Rudreshwar Singh, Kaushik Poddar, Advs. for the Appellants.

Tushar Mehta, ASG, Harish N. Salve, Neeraj Kishan Kaul, KapilDSibal, Dr. A.M. Singhvi, Harin P. Raval, Sr. Advs., Ms. Hemantika Wahi,Ms. Vishakha, Samar Kachwaha, Ms. Chanan Parwani, Akash Lamba,Varun Mathur, Nikhil Goel, Ms. Naveen Goel, Ashutosh Ghade, R. N.Karanjawala, Ms. Ruby Singh Ahuja, Vishal Gehrana, Sahil Monga,Siddhant Gupta, Sandeep Singhi, Mrs. Manik Karanjawala (For M/s.EKaranjawala & Co.), M/s. Lawyer’s Knit & Co, Advs. for theRespondents.

The Judgment of the Court was delivered by

R. F. NARIMAN, J. 1. Leave granted.2. The present appeal involves a challenge to a notification datedF18[th] January, 2016, issued under Section 5 of the Indian Ports Act, 1908,by which the State Government of Gujarat expanded the port limits ofHazira port. It is the case of the Appellants before us that by doing so,the Appellants have been affected because they have spent huge monieson lands reclaimed by them, which would be directly affected by theGexpansion of the aforesaid port limits.

3. The brief facts necessary for determining the questions thatarise in this appeal are as follows.

In 1994, the parent company of the Appellants entered into an agreementwith the Gujarat Maritime Board (hereinafter referred to as “GMB”)H

for use of a captive jetty in Magdalla port. Pursuant to a Port Policyframed by the Government of Gujarat in 1995, and a Build, Own, Operateand Transfer (BOOT) Policy framed for private sector participation indevelopment of the State’s ports in 1997, the GMB issued a Global Noticefor Expression of Interest for Development of Green Field Site PortFacilities, inviting bids in the name of Hazira port project. A consortiumled by Shell Gas B.V. was selected to develop, operate and maintaincertain facilities on leased area in the port on a BOOT basis, togetherwith related LNG facilities. Pursuant to the acceptance of its bid, ShellGas B.V. created two subsidiaries in Gujarat, namely, Hazira Port PrivateLimited (HPPL) and Hazira LNG Private Limited. A concessionagreement 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 notificationdated 23[rd] June, 2004 was issued by the State Government notifyingHazira port and setting out its limits, in exercise of powers under Section4(2) of the Indian Ports Act. This was carved out of the port limits ofMagdalla port, which was so reduced as to exclude the aforesaid Haziraport.

4. Sometime in the year 2000, the Appellants had set up a shallowdraft captive jetty of 456 meters at the mouth of the River Tapi, whichconnected to the sea at a distance of about 7 kilometers. The initialdepth 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 StateGovernment in the years 2007, 2011 and 2013, inter alia, for developmentof 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 25[th] November, 2010, HPPL identified Adani Hazira PortPrivate Limited (Adani) as its sub-concessionaire, and entered into asub-concession agreement with Adani on the same date. On 21[st] July,2014, HPPL requested the GMB for amendment/extension of its portfacilities. After entering into an MOU with Adani, dated 27[th] February,2015, for exploring business opportunities, which fell through, HPPL, byits letter dated 14[th] March, 2015, revised its request for amendment ofport facilities, citing the need for additional back-up area, as a result ofwhich a much larger area than what was originally asked for was nowrequested. This larger area would include lands reclaimed and/or to be AB

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Areclaimed by Essar by dumping earth out of dredging the canal next tothe captive jetty of the Appellants. This proposal was approved by theGMB by its resolution dated 19[th] March, 2015. Meanwhile, on 7[th] April,2015, Essar wrote a detailed representation to the GMB stating itsobjections to the extension of port limits on various grounds. On 21[st]April, 2015, the State Government wrote a letter to the GMB, inter alia,Basking it to examine the aforesaid representation of the Appellants. Asimilar representation dated 29[th] May, 2015 was also made by theAppellants to the Chief Principal Secretary of the State. By a detailedletter dated 16[th] July, 2015, the GMB dismissed all the objections of theAppellants. However, on 26[th] August, 2015, the State GovernmentCrequested the GMB to reconsider the issue of extension of port facilitiesin its forthcoming board meeting, and send its recommendations to theGovernment in relation thereto. On 28[th] September, 2015, the GMBpassed a resolution in which it recommended the original proposalsubmitted by HPPL on 21[st] July, 2014. However, on 5[th] December, 2015,the Chief Principal Secretary to the Chief Minister circulated a noteDstating that the number of vessels at the port was expected to increasedramatically from 30-40 to 70-80, and that the port limits need to beextended to accommodate customs formalities, safety etc. In view thereof,it was necessary to make adequate facilities for anchorage of all thesaid vessels and that, therefore, the GMB’s resolution of 19[th] March,E2015 should be strictly implemented. On 11[th] December, 2015, the StateGovernment then wrote to the GMB stating that the port facilities will beextended in terms of the GMB resolution dated 19[th] March, 2015.Following this, the requisite notification dated 18[th] January, 2016, whichhas been impugned by the Appellants in a writ petition before the GujaratHigh Court, was then issued under Section 5 of the Indian Ports Act.F

7. Shri Mihir Joshi, learned senior counsel appearing on behalf ofthe Appellants, has argued that the first proposal alone, which was senton 21[st] July, 2014, ought to have been accepted by the GMB. The secondproposal for the increased area would directly impinge upon the landthat was reclaimed or to be reclaimed by the Appellants, after spendingGhuge monies for the same. The learned senior counsel specifically statedthat the approval for the second proposal was done in great haste, withina matter of four days. He went on to add that the State Governmenthad, by its letters dated 1[st] June, 2013, recommended to the Ministry ofEnvironment to grant CRZ clearance to Essar for the proposed expansionHof port facilities, which included additional 334 hectares of land. It was

his case that the said Ministry, on 6[th] May, 2014, granted the aforesaidclearance, despite which the expanded port limits would now eat intothe aforesaid area, as only an area of 140 hectares out of 195 hectares,which was reclaimed by the Appellants, could be used by the Appellants.He argued that various assurances were given and MOUs were enteredinto with the Appellants, on the basis of which huge investments weremade, and at the very least the doctrine of legitimate expectation wouldbe attracted. He attacked the notification stating that it was ultra viresSection 5 of the Indian Ports Act, which required public interest alone tobe seen. Indirectly, the extension of the limits of Hazira port wouldgrant HPPL an extended port area without bidding, which would becontrary to the Gujarat Infrastructure Development Act, 1999. Accordingto him, the overlapping of area with Essar was only in the second proposal,which was wholly arbitrarily recommended by the GMB initially approvingthe second proposal of 2015, and thereafter correctly approving only thefirst proposal of 2014. The GMB’s resolution of 28[th] September, 2015was the correct decision, which could not have been arbitrarily interferedwith by the Chief Principal Secretary of the Chief Minister, on the basisof which the impugned notification has been issued.

8. On the other hand, Shri Harish Salve, learned senior counselappearing on behalf of the State of Gujarat, painstakingly took us throughthe Port Policy of 1995 and the BOOT Policy of 1997. According to thelearned senior counsel, since 13 berths were to be constructed, out ofwhich 5 berths have already been constructed, a total of 1011 hectareswas already allocated for port related activities to HPPL. This would beclear from a reading of the detailed project report (DPR) of 2010, andthis being the case, the expansion of port limits by the impugnednotification was well within the originally conceived area of 1011 hectares.He referred to and relied upon affidavits submitted by the StateGovernment as well as the GMB before the High Court, to argue thatEssar’s demands for reclaimed land had nothing to do with the expansionof the limits of Hazira port. They operated in two completely differentspheres. He further went on to state that no permission under Section35 of the Gujarat Maritime Board Act, 1981 has been given to reclaimany land, which was a condition precedent to Essar’s demands for furtherreclaimed land. He also pointed out that, being a captive port, Essar’sproduction was much less than what was projected and, in fact, only30% of the cargo that it was supposed to handle was being handled.According to the learned senior counsel, the objections to the expansion AB

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Aof Hazira port’s limits are completely misconceived, inasmuch as whatthe Appellants really sought was for their captive port to become acommercial port by bypassing the provisions of the Gujarat InfrastructureDevelopment Act. In any case, the Appellants’ captive jetty was grosslyunderutilised and the Appellants demands for grant of reclaimed landhas nothing to do with HPPL demanding an alteration to the limits ofBHazria Port, so as to cater to the increased traffic of a commercial portopen to all.

9. Shri Tushar Mehta, learned Additional Solicitor Generalappearing on behalf of the GMB, adopted the arguments of Shri Salve.In addition, he defended the GMB’s approval dated 19[th] March, 2015,Cstating that despite the fact that the said approval came within four daysof the HPPL letter dated 14[th] March, 2015, this paled into insignificanceas nothing followed from this. Also, according to the learned ASG, on anexamination of the official records, he found nothing in support of theGMB’s turn-around on 28[th] September, 2015, which accepted only theDfirst and not the second proposal of HPPL. According to him, finallywhat was done by the State Government was in public interest and forgood reason.

10. Shri Kapil Sibal, learned senior counsel appearing on behalf ofHPPL and Adani, painstakingly took us through various letters writtenEby the Appellants to the GMB and permissions given. According to thelearned senior counsel, it was clear that from a reading of the initialproposals of 2005 and 2006, and the later proposals of the Appellantsthat their real aim was to conduct commercial operations on their captivejetty, which would circumvent the need for a global tender as requiredby the Gujarat Infrastructure Development Act. In essence, he alsoFsubmitted that as the Appellants could claim no right or expectation ofany sort and as the present petition was not a public interest litigation,the writ petition should have been dismissed at the threshold as theAppellants could show no right or expectation of any kind. Dr. Singhviand Shri Harin P. Raval broadly supported the contentions of Shri Sibal.G11. Before dealing with the arguments of counsel, it is importantto set out some of the important provisions of the relevant Acts beforeus. Sections 3(9), 4 and 5 of the Indian Ports Act read as under:

“3(9). “Government”, as respects major ports, for all purposes,and, as respects other ports for the purposes of making rules underHclause (p) of section 6(1) and of the appointment and control of port health officers under section 17, means the CentralGovernment, and save as aforesaid, means the State Government.

4. Power to extend or withdraw the Act or certain portionsthereof

(1) Government may, by notification in the Official Gazette.- (a) extend this Act to any port in which this Act is not in force orto any part of any navigable river or channel which leads to a portand in which this Act is not in force; (b) specially extend the provisions of section 31 or section 32 toany port to which they have not been so extended;

(c) withdraw this Act or section 31 or section 32 from any partthereof in which it is for the time being in force.

(2) A notification under clause (a) or clause (b) of subsection (1)shall define the limits of the area to which it refers.

(3) Limits defined under sub-section (2) may include any piers,jetties, landing-places, wharves, quays, docks and other worksmade on behalf of the public for convenience of traffic, for safetyof vessels or for the improvement, maintenance or goodgovernment of the port and its approaches whether within orwithout high-water-mark, and, subject to any rights of privateproperty therein, any portion of the shore or bank within fifty yardsof higher-water-mark.

(4) In sub-section (3) the expression “high-water-mark” meansthe highest point reached by ordinary tides at any season of theyear.

5. Alteration of limits of ports

(1) The Government may, subject to any rights of private property,alter the limits of any port in which this Act is in force.

Explanation.- For the removal of doubts, it is hereby declared thatthe power conferred on the Government by this sub-sectionincludes the power to alter the limits of any port by uniting withthat port any other port or any part of any other port.

(2) When the Government alters the limits of a port under sub-section (1), it shall declare or describe, by notification in the Official A

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[2018] 2 S.C.R.

AGazette, and by such other means, if any, as it thinks fit, the preciseextend of such limits.

Section 35(1) of the Gujarat Maritime Board Act reads as under :

“35. (1) No person shall make, erect or fix within the limits of aport or port approaches, any wharf, dock, quay, stage, jetty, pier,place of anchorage, erection or mooring or undertake anyreclamation of foreshore within the said limits except with theprevious permission in writing of the Board and subject to suchconditions, if any, as the Board may specify.

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(2) If any person makes, erects or fixes any wharf, dock, quay,Cstage, jetty, pier, place of anchorage, erection or mooring orundertakes reclamation of foreshore in contravention of sub-section (1), the Board may, by notice require such person toremove it within such time as may be specified in the notice and ifthe person fails so to remove it, the Board may cause it to beDremoved at the expense of that person.”

Further, Sections 8, 9 and 10 of the Gujarat Infrastructure DevelopmentAct read as under:

“Section 8 - Selection of a person

(1) A concession agreement for undertaking a project may beEentered into with a person who is selected through a competitivepublic bidding as provided in section 9 or by inviting comparativebids as provided in section 10 or by direct negotiation as providedin section 10A.

(2) The matters relating to competitive bidding, inviting comparativeFbids and direct negotiation shall be such as may be prescribed.

Section 9 - Selection of person by competitive public bidding On the acceptance of the recommendation of the Board madeunder sub-section (2) of section 5, the State Government, theGGovernment agency or, as the case may be, the specifiedGovernment agency shall select a developer for the project throughcompetitive public bidding in the manner as may be prescribed.

Section 10 - Inviting comparative bids.

(1) Where a proposal for undertaking a project and a proposedHconcession agreement prepared by a person are submitted to the State Government, the Government agency or a specifiedGovernment agency, it may, (a) consider the proposal and the proposed concession agreementfrom all aspects (including technical and financial) and if necessary,modify the same in consultation with the person who has submittedthe proposal and the proposed concession agreement; and (b) submit the proposal and the proposed concession agreementto the Board, if - (i) the cost of the project exceeds the limit providedby regulations under sub-section (1) of section 5, and

(ii) the undertaking of the project does not require financialassistance from the State Government, the Government agencyor the specified Government agency.

(2) On acceptance of the recommendation of the Board madeunder sub-section (2) of section 5, the State Government, theGovernment agency or, as the case may be, the specifiedGovernment agency shall adopt the proposal as the basis forselecting a person with whom concession agreement forundertaking the project may be entered into, and for selectingsuch person, the State Government, the Government agency or,as the case may be, the specified Government agency shall followthe procedure of competitive public bidding prescribed undersection 9.

(3) Where a person is selected by following the procedure of thecompetitive public bidding (hereinafter referred to as “the selectedperson”), the proposal of the selected person shall be comparedwith the proposal which is earlier submitted by a person to theState Government, the Government agency or, as the case maybe, the specified Government agency under sub-section(1) (hereinafter referred to as “the earlier proposer”).

(4) Where the proposal of the earlier proposer is not preferable tothe proposal of the selected person, the earlier proposer shall begiven an opportunity to make his proposal competitive with thatof the selected person within a period of thirty days from the dateon which he has been given the opportunity and where the earlierproposer fails to do so within the said period, the State Government,the Government agency or, as the case may be, the specifiedGovernment agency may enter into a contract with the selected person.

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A(5) (a) Where a concession agreement has not been entered intowith the earlier proposer, the cost of preparation of the proposaland the concession agreement incurred by him shall be reimbursedby the State Government, the Government agency or, as the casemay be, the specified Government agency and on suchreimbursement, the proposal and the concessionBagreement submitted by the earlier proposer shall be the propertyof the State Government, the Government agency or, as the casemay be, the specified Government agency.

(b) The cost of preparation of the proposal and the concessionagreement shall be determined in such manner as may beprescribed.”

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12. It is also necessary to set out some parts of the Port Policy of1995 and the BOOT Policy of 1997.

“Gujarat Port Policy

DGujarat envisages an integrated port development strategy,consisting of creation of port facilities, industrialisation anddevelopment of infrastructure facilities like roads and railways inthe hinterland. It is estimated that around 3 billion dollars (Rs.10,000 crores) would be required to create new port facilitiesalong with necessary infrastructure in the coming 5 years. In viewEof the fact that ships of large sizes are used in the transportation,for the economies of scale in international trade, ports would bedeveloped with direct berthing facilities and speedy mechanicalhandling facilities, so as to reduce waiting period of the ships andsaving in the cargo expenses. To expedite creation of port facilitiesFby 2000 AD, it is proposed to have the participation of privateenterprise in the development of port infrastructure.

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The following ports are identified for exclusive investment by privatesector:

1. Simar Power port

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2. Mithiwirdi Steel and Automobile port

3. Dholera General Cargo port

4. Hazira Industrial port

5. Vansi-Borsi Petroleum & liquid chemical port

6. Maroli Industrial port

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These ports will be privatised through a global tender bid. GujaratMaritime Board will do a preliminary techno-economic feasibilityreport of all these five locations except Dholera, through a globalbid to facilitate prospective bidders. Dholera, being an ancientport and privatisation bids were invited in the past, no techno-economic feasibility will be done for this location. Dholera portwill be the first port to be opened up for privatisation by globaltendering. For remaining locations based on the preliminary techno-economic study, global tenders will be invited for privatisation.General guidelines are given below.

These port locations are to be given on BOMT (Built, Operate,Maintain and Transfer) basis. The investment in infrastructureprojects like ports being capital intensive, with higher gestationperiod compared to other sectors of investment, Government ofGujarat is very particular that the port projects taken up by privateentrepreneurs should be a profitable proposition to them. Theviability of port project depends upon the location, the maritimeconditions, scale of investment and the kind of cargo to be handled.The port project has to be assured at a reasonable rate of returnafter accounting for capital recovery and interest repayment.Hence, it is essential that each port project is evaluated based onan investment analysis; consisting of a capital cost, revenuereceipts, revenue expenditure and capital recovery. GujaratMaritime Board will study the financing pattern adopted by theWorld Bank and the Asian Development Bank and other FinancialInstitutions to evolve a comprehensive package.

Only the wharfage charges/waterfront charges will be as per theschedule decided by Gujarat Maritime Board. The promoters willbe free to charge any other service charges with the prior approvalof the Gujarat Maritime Board. After BOMT period, the ownershipof the port and its assets will get transferred to Gujarat MaritimeBoard and they will examine to give it further on lease basis to thesame promoter. The terms and conditions will be finalised at thattime. The general guidelines for investment analysis and capitalrecovery for the port projects to determine BOMT period will beannounced within 2 months.

CAPTIVE JETTIES FOR INDUSTRIES

To ensure that the new port projects are financially viable,permissions for captive jetties would be given only in exceptional AB

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cases, looking to the quantum of investment and the need forspecialised facilities. All industrial units would be encouraged tomake use of new port facilities being set up.

To take care of the increasing traffic until the completion of thenew port projects, it is decided to make use of the existing captivejetties already constructed or under construction, for which thepermission has already been given, to be utilized for specificcommercial cargos with the prior approval of the Gujarat MaritimeBoard.

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(1) This facility would be available for a reasonable period tillnew ports become operative. GMB will review the policy takinginto account the progress made in the new ports.

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(2) Gujarat Maritime Board would be entitled to collect fullwharfage charges on the cargos handled, which are not captiveto the industrial units.

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

Gujarat BOOT Policy

“Developer”- The word “Developer” has been used in thisdocument to convey the various roles played by private parties atdifferent stages of the development of the port.

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(III) OWNERSHIP RIGHTS OF DIFFERENT PARTIES

1. Ownership rights The Government is vested with of the Government sovereign rights as owner, overseer and conservator of the waterfront and licensor to the Contract.2. Ownership Rights The Ownership rights of the and responsibilities Developer would include: of the Developer G

A The right to mortgage, hypothecate or to execute such covenants as may be required for effectively vesting a charge on the port assets in favour of a lender to the project. The right to sell, convey or transfer to another entity, the right title and Binterest and concession vested in the Developer, on the request of a lender to the project, subject to contractual documents. The new Developer will be selected by the lender in consultation with the GMB, and if Cnecessary, the terms and conditions of the concession Agreement may be renegotiated. xxx xxx xxx6. Expansion of (a) Expansion of facilities facilities and DCompetition The developers would be encouraged to between ports add capacity over and above the capacity contracted in the concession agreement. Such expansions will be eligible for incentives by the Government, such as land acquisition, extension of royalty Eholidays etc. At the time of the signing of the Concession Agreement, the Developer will submit, and get approved by GMB, a broad perspective plan for the Fdevelopment of the port in the next fifteen to twenty years. The Government will not place restrictions on any expansion and further development of the port which is within the envisaged perspective plan, subject to statutory clearances. Expansions outside the scope Gof this plan would be subject to the approval of the GMB. (b) Competition between ports The Government would encourage competition between ports. The following, however, would be ensured: H

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The development of the ten ports would be appropriately phased over a period. Permission to set up captive jetties would not be granted, save in exceptional circumstances.

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13. At this point, it is important to refer to the correspondencebetween the Appellants and the GMB. By their letters dated 11[th] July,2005 and 13[th] October, 2006, the Appellants stated that as Essar Steelwas in the process of doubling its steel production capacity and that itwas proposed to handle cargo around 25 MMT, it would require a captiveCjetty of 550 meters. This would be in addition to the jetty which wasalready constructed of 592 meters plus 456 meters. In addition to theaforesaid, the Appellants sought permission to deepen the navigationalchannel upto 8 meters depth, so as to enable direct berthing of deepdraught vessels up to 75,000 dead weight tonnage (DWT). For deepeningthe channel, the dredged material would have to be dumped and theDAppellants sought permission, vide their letter dated 2[nd] March, 2007, todump the dredged material on an area of about 252 hectares on thenorth side of the mangroves. In addition to the 550 meters jetty, theAppellants also requested the GMB to allot 38 hectares of back-up area.By a letter dated 14[th] June, 2007, the GMB granted in-principle approvalEfor allotment of 400 meters waterfront, with back-up area, so as to createa direct berthing port, in which the channel could be dredged, so as toobtain a draft of 8 meters. Apart from stating that Essar will have toobtain all required permissions and clearances, four conditions are ofimportance in this letter and are set out hereinbelow:

“3. The new channel to be created by Essar will be common userFchannel and will be allowed to be used by all other users. Essarshall not be entitled to recover any charges from other users, ifthey use the new channel.

7. The ownership of reclaimed land shall vest with the Governmentof Gujarat/Gujarat Maritime Board.

G8. Essar shall not claim for reimbursement of any expenditureincurred for this reclamation.

10. Essar has to reclaim 319.86 hectares area of inter tidal/mudflats except 67 hectares allotted to M/s HPPL and the portion ofarea in front of 67 hectares towards sea.”

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14. Vide their letter dated 29[th] August, 2007, the Appellantsdemanded that 1100 meters, in addition to the 550 meters waterfrontthat was applied for earlier, be given. The Appellants also soughtpermission for allotment of 252 hectares of land to be reclaimed as back-up area. By their letter dated 1[st] October, 2012, the GMB granted in-principle approval for allotment of 1100 meters waterfront to theAppellants.

15. By their letter dated 15[th] October, 2008, the Appellants askedthe GMB to allow them to dredge the channel from 8 meters depth to 10meters depth to accommodate capesize vessels of 105,000 DWT. Sincematerial dredged from the channel would have to be dumped, an additionalarea of 316 hectares, towards the south of the mangroves, to dump thematerial and reclaim the said area was applied for. No such permissionwas granted by the GMB to go from a depth of 8 meters to 10 meters orto reclaim any area to the south of the mangroves. Shri Mihir Joshi,however, pointed out a completion certificate dated 11[th] February, 2010,in which it was mentioned that the width and depth of the channel isbeing increased to 300 meters and 10 meters below CD respectively inPhase-2. However, this would clearly not amount to permission for thesame, as all that was stated in the completion certificate was a referenceto a deep water berth of 8 meters depth below CD, the 10 meters depthbeing something which may be increased in future.

16. Despite this, what is clear from the record is that the Appellantsappear to have actually dredged the channel to a depth of 14 meters andappear to have reclaimed an area of 164 hectares plus 170 hectares tothe south of the mangroves, without any permission at all. When thiswas pointed out to Shri Mihir Joshi, the answer given was that whenpermission is granted under Section 35(1) of the Gujarat Maritime BoardAct, a letter granting such permission specifically says that it is permissionthat is granted under Section 35(1) and for this purpose, a letter dated2[nd] August, 2008 was referred to. According to him, therefore, the letterdated 14[th] 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 beread with Section 35(2), it would be clear that permission for reclamationwould only be necessary if a private asset were to be created in thehands of a private person. However, it is clear that the asset to be createdbelonged only to the Government of Gujarat and it was for the GMB to A

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Agrant permission to the Appellants to use the same. We are afraid that itis difficult for us to accept this line of argument. Section 35(1) is couchedin 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), asunder Section 35(2), the GMB is only given a discretionary power torequire a person, who has acted in contravention of Section 35(1), toBremove the illegal erection. The wide language of Section 35(1) cannotbe 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 itunder Section 35(2). The plain language of Section 35(1) cannot becurtailed by reading by inference, into sub-section (2), the fact that theCGMB may, by notice, require a person to remove an erection, only whenit has been made without previous permission, so as to create a privateasset in the hands of a private person. The wide language of Section35(1) makes it clear that any reclamation within the limits of the GMBcannot be carried out except with the previous permission in writing ofthe GMB. It is clear, therefore, that dredging to a depth of below 8Dmeters and reclamation of any area to the south of the mangroves wasdone by the Appellants in the teeth of Section 35(1) of the GujaratMaritime Board Act.

17. Mr. Sibal laid great stress on the letter dated 15[th] November,2012 to show that, in point of fact, what the Appellants were reallyEangling for was to conduct commercial operations beyond the captiverequirements of the Essar Steel plant at Hazira. This letter, while askingfor an addition of 3700 meters in addition to the existing 1100 meterswaterfront, also went on to speak of developing a 700 meters berth,along with the GMB, for handling commercial cargo. Apart from this,FEssar planned to build a world class container terminal and a dry dock,which would serve the shipping industry generally. It also proposed toreclaim a further 334 hectares land on the southern side with the additionaldredged material. A perusal of this letter would leave no doubt about thefact that despite Essar Steel’s production being at much less than what was projected, the Appellants’ continued demands would show that theGreal motive was to go beyond a captive jetty and to develop a commercialport which, as we have seen, cannot be done without a global tenderunder the Gujarat Infrastructure Development Act.

18. As stated hereinabove, as many as three MOUs were executedbetween the Appellants, the GMB and the State Government, whichH

MOUs were valid only for a period of 12 months and were stated not tohave granted any right to the Appellants, who would incur all theexpenditure for the same. This being the case, it is a little difficult toappreciate Shri Joshi’s contention that any legitimate expectation couldbe based on any of the aforesaid expired MOUs. The High Court iscorrect in its conclusion that no such expectation could possibly havearisen out of the aforesaid MOUs or the correspondence between theAppellants and the GMB referred to.

19. It is also important to note from the correspondence betweenthe Appellants and the GMB, that the Appellants were clearly told thatthe land to be reclaimed by the Appellants would not only belong to theGovernment of Gujarat, but also that the GMB could utilize the aforesaidland for any purpose. What seems to emerge on a reading of the lettersbetween the parties is that the Appellants wished to dredge the canal, attheir own cost, which was next to their captive jetty, for their own purposes,for which they obtained the necessary permission. However, sincedumping of earth, which would emerge as a consequence of dredging,into the open sea would be extremely expensive, it was stated that insteadthis earth could be dumped to create reclaimed land next to the captivejetty, which would then benefit both the Appellants and the GMB. Inpoint of fact, 140 hectares out of 195 hectares that is reclaimed by theAppellants is allocated to the Appellants for their own purposes, thebalance to be given as and when a jetty of 1100 meters plus 3700 metersof waterfront is constructed. The argument that huge amounts had beenspent to reclaim land is wholly fallacious - huge amounts were spent todredge a canal which was permitted as the Appellants alone were tobear the cost, and as an increased draft would benefit all, as the canalwas open to all to use. Therefore, any plea as to a legitimate expectationof reclaimed land being allocated for the Appellants’ own use, thanks tolarge amounts being spent, is contrary to the correspondence by theAppellants themselves.

20. In point of fact, it is important at this stage to advert to theGMB’s detailed reply, dated 16[th] July, 2015, to the State Government, inwhich it examined the representation made by the Appellants dated 7[th]April, 2015 and rejected the same. This letter expressly states that itdeals with the representation of Essar, with the comments of the GMBon the side of the representation of Essar. The following extracts fromthe aforesaid letter are of great importance and are set out hereinbelow:

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NoRepresentation of Essar Comments . Ports Ltd. to Hon’ble CM 1.EBTL through an The Proposed port limit investment of more than excludes the area of 550m BRs. 2000 Cr. has been jetty and back-up area operating deep draft 550m behind the jetty. Hence, it jetty since 2010 and caters has no effect. The present to the Essar’s Steel plant capacity of the steel plant is cargo requirement. The 10 MMTPA whereas the steel plant is expected to actual steel production at Cramp up its production in the plant in the year 2014-line with its 10 MMTPA 15 is only 3.15 MMTPA. capacity and would require No firm/definite plans for augmented marine facility augmentation in steel and back up area for production are submitted. Dhandling its increased cargo requirements. 2. GMB had given NOC for GMB had granted NOC to reclamation of 319 ha. in dump dredged material for June 2007, pursuant to 310 Ha. of land in the which Essar started the mudflat area shown in the Eprocess for development of map attached as Annexure back up land for its 3. However, as per the expansion. The allotment DILR report, the actual of the reclaimed land to reclaimed area is only Essar was also decided in approx. 195 Ha. Out of this the meeting held under the area approx. 98 hectares of Fchairmanship of the then reclaimed land is excluded Chief Secretary in from the proposed November 2009. EBTL expansion of port limit. has developed a channel of Further, a specific condition more than 7 km length was mentioned in the NOC with capacity to handle up of GMB that the ownership Gto 11m draft vessel and has of the reclaimed land shall plans to take it up to 14m vest with GMB/GOG. draft and have waterfront Further it is also be noted of more than 5 km. that NOC granted to EBTL for reclamation is also H

ESSAR BULK TERMINAL LIMITED & ANR. v. STATE OFGUJARAT & ORS. [R. F. NARIMAN, J.]

Abeneficial to the company. In case of non-issuance of NOC for dumping the dredged material in the mudflat area (very close to dredged area) the company had to dump Bthe dredged material in the mid sea (very far) which would have been expensive. 3In order to develop The proposal for development . commercial port facilities, of commercial ports facilities EBTL submitted a proposal to was received. But, the CGMB in 2008 and signed permission granted to Essar is MOU with GMB for only for captive purpose and expansion by 3.7 km. thus, without performing waterfront along with the bidding process, there is no associated back up land during policy of GOG to convert vibrant Gujarat 2013 in the captive port facilities into a Dpresence of Shri. Narendra commercial port terminal. Modi- Hon’ble Prime Minister Further HPPL has already of India. Pursuant to this Essar rights under concession has invested substantial agreement to develop amount in terms of time and common commercial port Emoney for development of the facilities cannot be accepted. same. After the necessary GMC or GOG has never recommendation from the granted such permission for Government of Gujarat EBTL commercial port facilities has received the environment development by Essar. clearance of 6[th] May 2014. FEBTL has made investment of more than Rs. 15000 Cr. till date for development of waterfront and land reclamation (233 Ha) and is in the process of reclaiming Gfurther in order to undertake their planned expansion while their application remains pending. H

A6The proposed expansion of The future plans of EBTL port limits not only are for commercial port constrains the existing steel operation. There is no plant operations but, also policy to convert captive infringe on EBTL port facilities into Bexpansion as explained commercial port facilities above, thereby jeopardizing as there is no bidding the proposed port facilities process involved. Hence, for industry. Any step the same may not be which restricts EBTL’s acceptable. development plans would Cdeprive a port based industry of its growth and realizing its full potential.8.Essar plant at Hazira is the Essar has following captive largest integrated steel plant port facilities operational. Dfacility in India at a single No. Jetty Capacity location and any impact on (MMTPA)the operation of the same 1. 456 m 5 would be lead to substantial Lighterage Main loss to the exchequer. Essar jetty group has invested more 2. 592 m 5 Ethan INR 44500 Cr. in the LighterageHazira complex in its steel, (1[st]power and ports business expansion)group infrastructure. 3. 550 m 15 deep water Fberth (2[nd]expansion) Total 1598 m 25 GFurther, GOG has approved further 1100m waterfront for deep water jetty (3[rd] expansion) for which H

ESSAR BULK TERMINAL LIMITED & ANR. v. STATE OFGUJARAT & ORS. [R. F. NARIMAN, J.]

Aconstruction permission is yet to be accorded by GMB. Adding this 1100m waterfront, total jetty/wharf of 2698m will be utilized by EBTL. BAgainst the capacity of 25 MMTPA, EBTL has handled cargo as per Annexure 4. It is seen that during the last year 2014-15 Essar has handled total C10 million tons of cargo against the existing capacity of 25 MMTPA. Further, the company has gradually reduced usages of the Dmain jetty of 456m, the cost of construction has already been set off and full wharfage is payable. EBTL has reduced the cargo handling at the main jetty Eand it has diverted to 550m deep water jetty where the set off of the cost is available and thus, the concessional wharfage rate is payable. F

In furtherance to the above, the following points may please beseen:

(1)- (3) xxx xxx xxx

(4) ESSAR has submitted details vide letter dated 7[th] April, 2015of various proposals to GMB for development of waterfront andback-up area from time to time. GMB as a regulatory authorityscrutinizes every proposal and submits to Govt. for necessaryapproval. It is to be noted that GMB granted NOC for dumpingdredge material in mudflat area at Magdalla to ESSAR vide letterdated 14[th] June, 2007 (Annexure 5) with a condition that the G

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Aownership of reclaimed land shall vest with GMB/GOG (ConditionNo.7) and ESSAR shall not claim reimbursement for anyexpenditure, incurred for this reclamation (Condition No 8).”

21. A perusal of the objections of Essar and the comments offeredby the GMB would show that, first and foremost, actual steel productionBat the plant is way below capacity, with no firm or definite plans foraugmentation. In fact, in the GMB’s affidavit filed in the High Court, itis stated that only 30% of the total capacity of cargo sought to be projectedby the Appellants from 2011 onwards was, in fact, being handled by theAppellants. Also, it was noted that the reclaimed land will be of theownership of either the Government or the GMB, and, that it is beneficialCto the company, as otherwise the dredged material would have to bedumped in the sea which would have been very expensive. However,Shri Joshi referred us to a statement, made in a rejoinder affidavit by theAppellants in the High Court, to the effect that the cost of dumpingdredged material to reclaim land was at least twice as much as the costDof dumping the dredged material in the sea. This bald averment made inan affidavit, without any supporting material, cannot be accepted at itsface value. The answer to objection 3 is again of great importance, inthat the GMB was alive to the fact that Essar is really attempting toconvert its captive jetty into a commercial port, without entering into anybidding process, contrary to the Gujarat Infrastructure Development Act.EFurther, in answer to objection 8, the GMB states that the jetty is 1598meters long with the further 1100 meters which the Government hasapproved for a capacity of 25 MMTPA, against which Essar has handledonly 10 million metric tonnes of cargo in the year 2014-15.

22. At this point it is also important to note that the GMB’s affidavitFfiled in the High Court also specifically states that the reclaiming of 334hectares of land by dredging the channel to 14 meters’ depth was neverapproved by the GMB. Thus, the argument that the area of 170 hectaresand 164 hectares of reclaimed land, which the altered limits of the porthas been said to impinge upon, has no legs to stand, in view of the factGthat no prior permission has been taken under Section 35 of the GujaratMaritime Board Act to add reclaimed land to the main land, as has beenstated hereinabove. Added to this, the area of 195 hectares that hasbeen reclaimed is allocated to the Appellants for their own use – 140hectares immediately and the balance only after approval and constructionof the further elongated jetty. It is clear that even if the Appellants’ pleaH

were to be accepted, the alteration of the limits of the port cannot possiblybe said to affect the Appellants’ rights qua reclaimed land, which hasbeen reclaimed illegally i.e. without prior permission under the GujaratMaritime Board Act. Thus, the CRZ clearance by the Ministry ofEnvironment and Forests dated 6[th] May, 2014 for reclamation of 334hectares of land does not further the Appellants’ case in any way.

23. We now come to the Appellants’ argument of the haste that isshown by the GMB in recommending the second proposal for alteredlimits. True, the GMB did act within 4 days of the said proposal, but thisfact, without anything more, to demonstrate mala fides or lack of publicinterest, cannot possibly hold water. It is also to be noted that Shri Salve’splea, that 13 berths would require 1011 hectares of adjacent land andthat much less land than 1011 hectares has been allocated for the use ofa commercial port, has to be accepted.

24. The further plea, that the forest land to the north consisting of300 hectares, having now been acquired in October, 2016, would enureto the benefit of HPPL, would also not take the Appellants’ case anyfurther, as even these 300 hectares would be subsumed within therequirement of 1011 hectares, as has been pointed out, in the DPR of2010.

25. There can be no doubt that Shri Joshi’s plea that the power ofthe Government to alter the limits of any port under Section 5(1) of theIndian 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 contraryto public interest. The affidavits filed in the High Court, by the StateGovernment and the GMB, show that a commercial port’s limits werealtered in public interest because the number of vessels at Hazira portwere expected to increase dramatically and it was, therefore, necessaryto make adequate facilities not only for anchorage of such vessels, butalso for reasons of customs formalities, port conversion, general securityetc. We are not, therefore, satisfied that the notification is ultra viresSection 5 of the Indian Ports Act. We have already seen that theAppellants have no ‘right’ to private property in view of the fact that theownership of the captive jetty that has been constructed and theownership of reclaimed land is with the GMB/State Government. Forthis reason also, the notification is intra vires as the alteration in thelimits of Hazira Port does not affect any ‘right’ of the Appellants toprivate property.

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A26. In conclusion, for the reasons given by us in the presentjudgment, the appeal deserves to be dismissed. The appeal is dismissedwith no order as to costs.

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Appeal dismissed.

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