CENTRAL WAREHOUSING CORPORATION versus ADANI PORTS SPECIAL ECONOMIC ZONE LIMITED (APSEZL) AND OTHERS

Citation: [2022] 9 S.C.R. 1003 · Decided: 13-10-2022 · Supreme Court of India · Bench: BHUSHAN RAMKRISHNA GAVAI · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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   [2022] 9 S.C.R. 1003
1003
CENTRAL WAREHOUSING CORPORATION
v.
ADANI PORTS SPECIAL ECONOMIC ZONE LIMITED
(APSEZL) AND OTHERS
(Civil Appeal Nos.7277-7278 of 2022)
OCTOBER 13, 2022
[B. R. GAVAI AND C. T. RAVIKUMAR, JJ.]
Infrastructure Project – Special Economic Zone – Gujrat
Maritime Board (GMB) executed Lease and Possession Agreement
thereby granting lease of undeveloped land to Gujarat Adani Port
Limited (GAPL) for 30 years – GMB also granted development rights
under a Concession Agreement to GAPL to develop port and other
facilities – GAPL vide agreement dated 2nd June, 2004 sub-leased a
plot of land admeasuring about 34 acres to appellant-CWC, a
statutory Corporation under the 1962 Act, for setting up a warehouse
for storage and handling of foodgrains, notified commodities and
related activities – CWC set up two Godowns and also made
payments for development of infrastructure – Meanwhile, the
Special Economic Zones Act, 2005 came into force and vast area of
the leased land came to be notified as a Special Economic Zone
(SEZ) vide notification issued by Ministry of Commerce and Industry,
Government of India (Ministry of C & I) – Appellant-CWC made
representation to Ministry of C & I for de-notification of said 34
acres of land from the SEZ – Meanwhile, respondent no.1-Adani
Ports Special Economic Zone Limited (APSEZL) addressed
communication to appellant-CWC informing that it would not permit
the latter to continue warehouse activities and declined to issue
gate pass for transportation stating that it had violated conditions
enumerated in agreement dated 2nd June, 2004 – CWC filed writ
petition – Single Judge of the High Court did not grant interim
relief while issuing notice – CWC filed LPA – Division Bench granted
ad-interim relief and directed respondents to allow CWC to carry
out activities and to issue gate pass for transportation – In the
meantime, request of CWC for delineation / de-notification of 34
acres of land rejected by Ministry of C & I – Appellant filed another
writ petition – Attempts made by parties to amicably settle the matter
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SUPREME COURT REPORTS
[2022] 9 S.C.R.
– Proposal for settlement made by APSEZL that equivalent plot of
land outside the SEZ zone would be earmarked, whereupon a
godown of similar size would be constructed – Board of Directors
of CWC accepted the settlement proposal on three conditions –
APSEZL agreed on all the three conditions – However, it unilaterally
resiled from the 3rd condition subsequently – Both parties thereafter
informed the High Court that settlement was not possible – High
Court held that though CWC was bound by the first two conditions
as agreed between the parties, the second respondent was not bound
by the 3rd condition offered by APSEZL and subsequently retracted
by it – High Court held that, since there was a consensus on the
first two conditions and no consensus on the 3rd condition, CWC
was bound by the first two conditions and insofar as the 3rd
condition was concerned, it was open for the parties to settle the
same amicably between themselves or through mediation – On
appeal, held: Approach adopted by High Court was not tenable –
Offer given by respondent no.1-APSEZL was a composite one so
also acceptance thereof by appellant-CWC was also composite –
Acceptance of the first two conditions was also dependent upon the
third condition – If High Court was so concerned about settlement
of the dispute, then, while compelling appellant-CWC to accept the
first two conditions, it also ought to have compelled respondent
no.1-APSEZL to accept the third condition – When an issue involved
the balancing of interests of a statutory Corporation and a private
company, the approach of the High Court ought to have been
balanced – The High Court ought to have taken into consideration
that, unless all the three conditions were complied with, the interest
of appellant-CWC, which is a statutory Corporation, could not have
been safeguarded – Judgment of High Court not sustainable –
Warehousing Corporation Act, 1962.
Statutory Corporation – Dispute between statutory
corporation and a private entity – Settlement – Effect of – Held:
Unless the settlement arrived is found to be in the interest of both
the parties, it cannot be thrust upon a statutory Corporation to its
detriment and to the advantage of a private entity.
Government litigation – Two departments of the Union of
India cannot be permitted to take stands which are diagonally
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