Essar Bulk Terminial Limited vs The State Of Gujarat

CIVIL APPEAL NO. 2406 OF 2018 (Arising out of SLP (C) No.21364 of 2017)

ESSAR BULK TERMINAL LIMITED & ANR. … APPELLANTS

VERSUS

STATE OF GUJARAT & ORS. … RESPONDENTS

JUDGMENT

R.F. NARIMAN, J.

1. Leave granted.

2. The present appeal involves a challenge to a

notification dated 18th January, 2016, issued under Signature Not Verified Digitally signed by Section 5 of the Indian Ports Act, 1908, by which the ASHA SUNDRIYAL Date: 2018.02.22 16:22:52 IST Reason: 1 State Government of Gujarat expanded the port limits of

Hazira port. It is the case of the Appellants before us that

by doing so, the Appellants have been affected because

they have spent huge monies on lands reclaimed by

them, which would be directly affected by the expansion

of the aforesaid port limits.

3. The brief facts necessary for determining the

questions that arise in this appeal are as follows.

In 1994, the parent company of the Appellants entered

into an agreement with the Gujarat Maritime Board

(hereinafter referred to as “GMB”) for use of a captive

jetty in Magdalla port. Pursuant to a Port Policy framed

by the Government of Gujarat in 1995, and a Build, Own,

Operate and Transfer (BOOT) Policy framed for private

sector participation in development of the State’s ports in

1997, the GMB issued a Global Notice for Expression of

Interest for Development of Green Field Site Port

Facilities, inviting bids in the name of Hazira port project.

2 A consortium led by Shell Gas B.V. was selected to

develop, operate and maintain certain facilities on leased

area in the port on a BOOT basis, together with related

LNG facilities. Pursuant to the acceptance of its bid, Shell

Gas B.V. created two subsidiaries in Gujarat, namely,

Hazira Port Private Limited (HPPL) and Hazira LNG

Private Limited. A concession agreement dated 22 nd

April, 2002 was entered into between the GMB, the State

Government and HPPL for the purpose of development,

operation and maintenance of Hazira port by HPPL. A

notification dated 23rd June, 2004 was issued by the State

Government notifying Hazira port and setting out its limits,

in exercise of powers under Section 4(2) of the Indian

Ports Act. This was carved out of the port limits of

Magdalla port, which was so reduced as to exclude the

aforesaid Hazira port.

4. Sometime in the year 2000, the Appellants had set

up a shallow draft captive jetty of 456 meters at the mouth

3 of the River Tapi, which connected to the sea at a

distance of about 7 kilometers. The initial depth of the

aforesaid draft captive jetty was about 3 to 4 meters.

5. As many as three Memorandums of Understanding

(MOU) were entered into between the Appellants, the

GMB and the State Government in the years 2007, 2011

and 2013, inter alia, for development of a RORO terminal

and development of the water-front of 3000 meters.

Each of these MOUs was only for a period of 12 months.

6. On 25th November, 2010, HPPL identified Adani

Hazira Port Private Limited (Adani) as its

sub-concessionaire, and entered into a sub-concession

agreement with Adani on the same date. On 21 st July,

2014, HPPL requested the GMB for

amendment/extension of its port facilities. After entering

into an MOU with Adani, dated 27 th February, 2015, for

exploring business opportunities, which fell through,

HPPL, by its letter dated 14 th March, 2015, revised its

4 request for amendment of port facilities, citing the need

for additional back-up area, as a result of which a much

larger area than what was originally asked for was now

requested. This larger area would include lands reclaimed

and/or to be reclaimed by Essar by dumping earth out of

dredging the canal next to the captive jetty of the

Appellants. This proposal was approved by the GMB by

its resolution dated 19th March, 2015. Meanwhile, on 7 th

April, 2015, Essar wrote a detailed representation to the

GMB stating its objections to the extension of port limits

on various grounds. On 21st April, 2015, the State

Government wrote a letter to the GMB, inter alia, asking it

to examine the aforesaid representation of the Appellants.

A similar representation dated 29th May, 2015 was also

made by the Appellants to the Chief Principal Secretary of

the State. By a detailed letter dated 16 th July, 2015, the

GMB dismissed all the objections of the Appellants.

However, on 26th August, 2015, the State Government

requested the GMB to reconsider the issue of extension

5 of port facilities in its forthcoming board meeting, and

send its recommendations to the Government in relation

thereto. On 28th September, 2015, the GMB passed a

resolution in which it recommended the original proposal

submitted by HPPL on 21st July, 2014. However, on 5th

December, 2015, the Chief Principal Secretary to the

Chief Minister circulated a note stating that the number of

vessels at the port was expected to increase dramatically

from 30-40 to 70-80, and that the port limits need to be

extended to accommodate customs formalities, safety

etc. In view thereof, it was necessary to make adequate

facilities for anchorage of all the said vessels and that,

therefore, the GMB’s resolution of 19th March, 2015

should be strictly implemented. On 11th December, 2015,

the State Government then wrote to the GMB stating that

the port facilities will be extended in terms of the GMB

resolution dated 19th March, 2015. Following this, the

requisite notification dated 18th January, 2016, which has

been impugned by the Appellants in a writ petition before

6 the Gujarat High Court, was then issued under Section 5

of the Indian Ports Act.

7. Shri Mihir Joshi, learned senior counsel appearing

on behalf of the Appellants, has argued that the first

proposal alone, which was sent on 21 st July, 2014, ought

to have been accepted by the GMB. The second

proposal for the increased area would directly impinge

upon the land that was reclaimed or to be reclaimed by

the Appellants, after spending huge monies for the same.

The learned senior counsel specifically stated that the

approval for the second proposal was done in great

haste, within a matter of four days. He went on to add

that the State Government had, by its letters dated 1 st

June, 2013, recommended to the Ministry of Environment

to grant CRZ clearance to Essar for the proposed

expansion of port facilities, which included additional 334

hectares of land. It was his case that the said Ministry, on

6th May, 2014, granted the aforesaid clearance, despite

7 which the expanded port limits would now eat into the

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 entered into with

the Appellants, on the basis of which huge investments

were made, and at the very least the doctrine of legitimate

expectation would be attracted. He attacked the

notification stating that it was ultra vires Section 5 of the

Indian Ports Act, which required public interest alone to

be seen. Indirectly, the extension of the limits of Hazira

port would grant HPPL an extended port area without

bidding, which would be contrary to the Gujarat

Infrastructure Development Act, 1999. According to him,

the overlapping of area with Essar was only in the second

proposal, which was wholly arbitrarily recommended by

the GMB initially approving the second proposal of 2015,

and thereafter correctly approving only the first proposal

of 2014. The GMB’s resolution of 28th September, 2015

8 was the correct decision, which could not have been

arbitrarily interfered with by the Chief Principal Secretary

of the Chief Minister, on the basis of which the impugned

notification has been issued.

8. On the other hand, Shri Harish Salve, learned

senior counsel appearing on behalf of the State of

Gujarat, painstakingly took us through the Port Policy of

1995 and the BOOT Policy of 1997. According to the

learned senior counsel, since 13 berths were to be

constructed, out of which 5 berths have already been

constructed, a total of 1011 hectares was already

allocated for port related activities to HPPL. This would

be clear from a reading of the detailed project report

(DPR) of 2010, and this being the case, the expansion of

port limits by the impugned notification was well within the

originally conceived area of 1011 hectares. He referred to

and relied upon affidavits submitted by the State

Government as well as the GMB before the High Court, to

9 argue that Essar’s demands for reclaimed land had

nothing to do with the expansion of the limits of Hazira

port. They operated in two completely different spheres.

He further went on to state that no permission under

Section 35 of the Gujarat Maritime Board Act, 1981 has

been given to reclaim any land, which was a condition

precedent to Essar’s demands for further reclaimed land.

He also pointed out that, being a captive port, Essar’s

production was much less than what was projected and,

in fact, only 30% of the cargo that it was supposed to

handle was being handled. According to the learned

senior counsel, the objections to the expansion of Hazira

port’s limits are completely misconceived, inasmuch as

what the Appellants really sought was for their captive

port to become a commercial port by bypassing the

provisions of the Gujarat Infrastructure Development Act.

In any case, the Appellants’ captive jetty was grossly

underutilised and the Appellants demands for grant of

reclaimed land has nothing to do with HPPL demanding

10 an alteration to the limits of Hazria Port, so as to cater to

the increased traffic of a commercial port open to all.

9. Shri Tushar Mehta, learned Additional Solicitor

General appearing on behalf of the GMB, adopted the

arguments of Shri Salve. In addition, he defended the

GMB’s approval dated 19th March, 2015, stating that

despite the fact that the said approval came within four

days of the HPPL letter dated 14 th March, 2015, this paled

into insignificance as nothing followed from this. Also,

according to the learned ASG, on an examination of the

official records, he found nothing in support of the GMB’s

turn-around on 28th September, 2015, which accepted

only the first and not the second proposal of HPPL.

According to him, finally what was done by the State

Government was in public interest and for good reason.

10. Shri Kapil Sibal, learned senior counsel appearing

on behalf of HPPL and Adani, painstakingly took us

through various letters written by the Appellants to the

11 GMB and permissions given. According to the learned

senior counsel, it was clear that from a reading of the

initial proposals of 2005 and 2006, and the later proposals

of the Appellants that their real aim was to conduct

commercial operations on their captive jetty, which would

circumvent the need for a global tender as required by the

Gujarat Infrastructure Development Act. In essence, he

also submitted that as the Appellants could claim no right

or expectation of any sort and as the present petition was

not a public interest litigation, the writ petition should have

been dismissed at the threshold as the Appellants could

show no right or expectation of any kind. Dr. Singhvi and

Shri Harin P. Raval broadly supported the contentions of

Shri Sibal.

11. Before dealing with the arguments of counsel, it is

important to set out some of the important provisions of

the relevant Acts before us. Sections 3(9), 4 and 5 of the

Indian Ports Act read as under:

12

“3(9). “Government”, as respects major ports, for all purposes, and, as respects other ports for the purposes of making rules under clause

(p) of section 6(1) and of the appointment and control of port health officers under section 17, means the Central Government, and save as aforesaid, means the State Government.

4. Power to extend or withdraw the Act or certain portions thereof (1) Government may, by notification in the Official Gazette.-

(a) extend this Act to any port in which this Act is not in force or to any part of any navigable river or channel which leads to a port and in which this Act is not in force;

(b) specially extend the provisions of section 31 or section 32 to any port to which they have not been so extended;

(c) withdraw this Act or section 31 or section 32 from any part thereof 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 works made on behalf of the public for convenience of traffic, for safety of vessels or for the improvement, maintenance or good government of the port and its approaches whether within or without high-water-mark,

13 and, subject to any rights of private property therein, any portion of the shore or bank within fifty yards of higher-water-mark.

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

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 that the power conferred on the Government by this sub-section includes the power to alter the limits of any port by uniting with that 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 Gazette, and by such other means, if any, as it thinks fit, the precise extend 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 a port or port approaches, any wharf, dock, quay, stage, jetty, pier, place of anchorage, erection or mooring or undertake any reclamation of foreshore within the said limits except with the previous

14 permission in writing of the Board and subject to such conditions, if any, as the Board may specify.

(2) If any person makes, erects or fixes any wharf, dock, quay, stage, jetty, pier, place of anchorage, erection or mooring or undertakes reclamation of foreshore in contravention of sub-section (1), the Board may, by notice require such person to remove it within such time as may be specified in the notice and if the person fails so to remove it, the Board may cause it to be removed at the expense of that person.” Further, Sections 8, 9 and 10 of the Gujarat Infrastructure

Development Act read as under:

“Section 8 - Selection of a person

(1) A concession agreement for undertaking a project may be entered into with a person who is selected through a competitive public bidding as provided in section 9 or by inviting comparative bids as provided in section 10 or by direct negotiation as provided in section 10A.

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

Section 9 - Selection of person by competitive public bidding

15 On the acceptance of the recommendation of the Board made under sub-section (2) of section 5, the State Government, the Government agency or, as the case may be, the specified Government agency shall select a developer for the project through competitive public bidding in the manner as may be prescribed.

Section 10 - Inviting comparative bids. (1) Where a proposal for undertaking a project and a proposed concession agreement prepared by a person are submitted to the State Government, the Government agency or a specified Government agency, it may,

(a) consider the proposal and the proposed concession agreement from all aspects (including technical and financial) and if necessary, modify the same in consultation with the person who has submitted the proposal and the proposed concession agreement; and

(b) submit the proposal and the proposed concession agreement to the Board, if - (i) the cost of the project exceeds the limit provided by regulations under sub-section (1) of section 5, and

(ii) the undertaking of the project does not require financial assistance from the State Government, the Government agency or the specified Government agency.

(2) On acceptance of the recommendation of the Board made under sub-section (2) of section 5, the State Government, the

16 Government agency or, as the case may be, the specified Government agency shall adopt the proposal as the basis for selecting a person with whom concession agreement for undertaking the project may be entered into, and for selecting such person, the State Government, the Government agency or, as the case may be, the specified Government agency shall follow the procedure of competitive public bidding prescribed under section 9.

(3) Where a person is selected by following the procedure of the competitive public bidding (hereinafter referred to as “the selected person”), the proposal of the selected person shall be compared with the proposal which is earlier submitted by a person to the State Government, the Government agency or, as the case may be, 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 to the proposal of the selected person, the earlier proposer shall be given an opportunity to make his proposal competitive with that of the selected person within a period of thirty days from the date on which he has been given the opportunity and where the earlier proposer fails to do so within the said period, the State Government, the Government agency or, as the case may be, the specified Government agency may enter into a contract with the selected person.

17 (5) (a) Where a concession agreement has not been entered into with the earlier proposer, the cost of preparation of the proposal and the concession agreement incurred by him shall be reimbursed by the State Government, the Government agency or, as the case may be, the specified Government agency and on such reimbursement, the proposal and the concession agreement submitted by the earlier proposer shall be the property of the State Government, the Government agency or, as the case may be, the specified Government agency.

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

12. It is also necessary to set out some parts of the Port

Policy of 1995 and the BOOT Policy of 1997.

“Gujarat Port Policy Gujarat envisages an integrated port development strategy, consisting of creation of port facilities, industrialisation and development of infrastructure facilities like roads and railways in the hinterland. It is estimated that around 3 billion dollars (Rs. 10,000 crores) would be required to create new port facilities along with necessary infrastructure in the coming 5 years. In view of the fact that ships of large sizes are used in the transportation, for the economies of scale

18 in international trade, ports would be developed with direct berthing facilities and speedy mechanical handling facilities, so as to reduce waiting period of the ships and saving in the cargo expenses. To expedite creation of port facilities by 2000 AD, it is proposed to have the participation of private enterprise in the development of port infrastructure. The following ports are identified for exclusive investment by private sector:

1. Simar Power port

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

These ports will be privatised through a global tender bid. Gujarat Maritime Board will do a preliminary techno-economic feasibility report of all these five locations except Dholera, through a global bid to facilitate prospective bidders. Dholera, being an ancient port and privatisation bids were invited in the past, no techno-economic feasibility will be done for this location. Dholera port will be the first port to be opened up for privatisation by global tendering. For remaining locations based on the preliminary techno-economic study, global tenders will be invited for privatisation.

General guidelines are given below.

19 These port locations are to be given on BOMT (Built, Operate, Maintain and Transfer) basis. The investment in infrastructure projects like ports being capital intensive, with higher gestation period compared to other sectors of investment, Government of Gujarat is very particular that the port projects taken up by private entrepreneurs should be a profitable proposition to them. The viability of port project depends upon the location, the maritime conditions, scale of investment and the kind of cargo to be handled. The port project has to be assured at a reasonable rate of return after accounting for capital recovery and interest repayment. Hence, it is essential that each port project is evaluated based on an investment analysis; consisting of a capital cost, revenue receipts, revenue expenditure and capital recovery. Gujarat Maritime Board will study the financing pattern adopted by the World Bank and the Asian Development Bank and other Financial Institutions to evolve a comprehensive package.

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

20 the port projects to determine BOMT period will be announced within 2 months.

CAPTIVE JETTIES FOR INDUSTRIES

To ensure that the new port projects are financially viable, permissions for captive jetties would be given only in exceptional cases, looking to the quantum of investment and the need for specialised facilities. All industrial units would be encouraged to make use of new port facilities being set up.

To take care of the increasing traffic until the completion of the new port projects, it is decided to make use of the existing captive jetties already constructed or under construction, for which the permission has already been given, to be utilized for specific commercial cargos with the prior approval of the Gujarat Maritime Board.

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

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

Looking to the huge amount of cargo handled in a short period, captive Single Point Mooring (SPM) facilities of industries located in Gujarat will be charged at concessional rate of

21 wharfage for their captive consumption. Nevertheless, for captive cargo for industries located outside Gujarat and non-captive commercial and industrial cargo, will be charged full wharfage by Gujarat Maritime Board.

Gujarat BOOT Policy

“Developer”- The word “Developer” has been used in this document to convey the various roles played by private parties at different stages of the development of the port. (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 The Ownership rights of the Rights and Developer would include:

responsibilities of the Developer • 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 interest and concession vested in the Developer, on the request of a lender to the project,

22 subject to contractual documents. The new Developer will be selected by the lender in consultation with the GMB, and if necessary, the terms and conditions of the concession Agreement may be renegotiated.

xxx xxx xxx

6. Expansion of (a) Expansion of facilities facilities and Competition The developers would be between ports encouraged to 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 holidays 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 development 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 of this plan would be subject to the approval

23 of the GMB.

(b) Competition between ports

The Government would encourage competition between ports. The following, however, would be ensured:

• 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.

13. At this point, it is important to refer to the

correspondence between the Appellants and the GMB.

By their letters dated 11th July, 2005 and 13th October,

2006, the Appellants stated that as Essar Steel was in the

process of doubling its steel production capacity and that

it was proposed to handle cargo around 25 MMT, it would

require a captive jetty of 550 meters. This would be in

addition to the jetty which was already constructed of 592

meters plus 456 meters. In addition to the aforesaid, the

Appellants sought permission to deepen the navigational

24 channel upto 8 meters depth, so as to enable direct

berthing of deep draught vessels up to 75,000 dead

weight tonnage (DWT). For deepening the channel, the

dredged material would have to be dumped and the

Appellants sought permission, vide their letter dated 2 nd

March, 2007, to dump the dredged material on an area of

about 252 hectares on the north side of the mangroves.

In addition to the 550 meters jetty, the Appellants also

requested the GMB to allot 38 hectares of back-up area.

By a letter dated 14th June, 2007, the GMB granted

in-principle approval for allotment of 400 meters

waterfront, with back-up area, so as to create a direct

berthing port, in which the channel could be dredged, so

as to obtain a draft of 8 meters. Apart from stating that

Essar will have to obtain all required permissions and

clearances, four conditions are of importance in this letter

and are set out hereinbelow:

“3. The new channel to be created by Essar will be common user channel and will be allowed to be used by all other users. Essar

25 shall not be entitled to recover any charges from other users, if they use the new channel.

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

8. Essar shall not claim for reimbursement of any expenditure incurred for this reclamation.

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

14. Vide their letter dated 29th August, 2007, the

Appellants demanded that 1100 meters, in addition to the

550 meters waterfront that was applied for earlier, be

given. The Appellants also sought permission 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 the Appellants.

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

26 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 in Phase-2. However, 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.

27 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 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 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

28 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 sub-section (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) 29 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 15 th

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

30 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 Essar Steel’s production

being at much less than what was projected, the

Appellants’ continued 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 Shri Joshi’s contention that any

legitimate expectation could be based on any of the

31 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

32 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 fallacious - huge 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 the

Appellants’ own use, thanks to large amounts being

spent, is contrary to the correspondence by the

Appellants themselves.

20. In point of fact, it is important at this stage to advert

to the GMB’s detailed reply, dated 16 th July, 2015, to the

33 State Government, in which it examined the

representation made by the Appellants dated 7 th April,

2015 and rejected the same. This letter expressly states

that it deals with the representation of Essar, with the

comments of the GMB on the side of the representation of

Essar. The following extracts from the aforesaid letter are

of great importance and are set out hereinbelow:

No. Representation of Comments Essar Ports Ltd. to Hon’ble CM

1. EBTL through an The Proposed port limit investment of more excludes the area of than Rs. 2000 Cr. has 550m jetty and back-up been operating deep area behind the jetty.

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

back up area for handling its increased cargo requirements.

34

2. GMB had given NOC GMB had granted NOC for reclamation of 319 to dump dredged ha. in June 2007, material for 310 Ha. of pursuant to which land in the mudflat area Essar started the shown in the map process for attached as Annexure 3.

development of back However, as per the up land for its DILR report, the actual expansion. The reclaimed area is only allotment of the approx. 195 Ha. Out of reclaimed land to this area approx. 98 Essar was also hectares of reclaimed decided in the meeting land is excluded from the held under the proposed expansion of chairmanship of the port limit. Further, a then Chief Secretaryspecific condition was in November 2009. mentioned in the NOC of EBTL has developed aGMB that the ownership channel of more thanof the reclaimed land 7 km length with shall vest with capacity to handle up GMB/GOG.

to 11m draft vessel Further it is also be and has plans to takenoted that NOC granted it up to 14m draft and to EBTL for reclamation have waterfront of is also beneficial to the more than 5 km. 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 the dredged material in the mid sea (very far) which would have been expensive.

3. In order to develop The proposal for

35 commercial port development of facilities, EBTL commercial ports submitted a proposal facilities was received. to GMB in 2008 and But, the permission signed MOU with granted to Essar is only GMB for expansion by for captive purpose and 3.7 km. waterfront thus, without performing along with the bidding process, there is associated back up no policy of GOG to land during vibrant convert captive port Gujarat 2013 in the facilities into a presence of Shri. commercial port Narendra Modi- terminal. Further HPPL Hon’ble Prime Minister has already rights under of India. Pursuant to concession agreement to this Essar has develop common invested substantial commercial port facilities amount in terms of cannot be accepted.

time and money for GMC or GOG has never development of the granted such permission same. After the for commercial port necessary facilities development by recommendation from Essar. the Government of Gujarat EBTL has received the environment clearance of 6th May 2014. EBTL 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 further in order to undertake

36 their planned expansion while their application remains pending.

6 The proposed The future plans of EBTL expansion of port are for commercial port limits not only operation. There is no constrains the policy to convert captive existing steel plant port facilities into operations but, also commercial port facilities infringe on EBTL as there is no bidding expansion as process involved. Hence, explained above, the same may not be thereby jeopardizing acceptable. the proposed port facilities for industry. Any step which restricts EBTL’s development plans would deprive a port based industry of its growth and realizing its full potential.

37 8. Essar plant at Hazira Essar has following is the largest captive port facilities integrated steel plant operational. facility in India at a single location and N Jetty Capacity any impact on the o. (MMTPA) operation of the same 1. 456 m 5 would be lead to lightera substantial loss to the ge Main exchequer. Essar jetty group has invested 2. 592 m 5 more than INR 44500 lightera Cr. in the Hazira ge (1st complex in its steel, expansi power and ports on) business group 3. 550 m 15 infrastructure. deep water berth (2nd expansi on) Tota 1598 m 25 l

Further, GOG has approved further 1100m waterfront for deep water jetty (3rd expansion) for which construction permission is yet to be accorded by GMB. Adding this 1100m waterfront, total jetty/wharf of 2698m will be utilized by EBTL.

38 Against 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 10 million tons of cargo against the existing capacity of 25 MMTPA.

Further, the company has gradually reduced usages of the main 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 and 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.

In furtherance to the above, the following

points may please be seen:

(1)- (3) xxx xxx xxx

39 (4) ESSAR has submitted details vide letter dated 7th April, 2015 of various proposals to GMB for development of waterfront and back-up area from time to time. GMB as a regulatory authority scrutinizes every proposal and submits to Govt. for necessary approval.

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

21. 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 the GMB’s affidavit filed in the High Court, it is

stated that only 30% of the total capacity of cargo sought

to be projected by the Appellants from 2011 onwards was,

in fact, being handled by the Appellants. Also, it was

noted that the reclaimed land will be of the ownership of

either the Government or the GMB, and, that it is

40 beneficial to the company, as otherwise the dredged

material would have to be dumped in the sea which would

have been very expensive. However, Shri Joshi referred

us to a statement, made in a rejoinder affidavit by the

Appellants in the High Court, to the effect that the cost of

dumping dredged material to reclaim land was at least

twice as much as the cost of dumping the dredged

material in the sea. This bald averment made in an

affidavit, without any supporting material, cannot be

accepted at its face value. The answer to objection 3 is

again of great importance, in that the GMB was alive to

the fact that Essar is really attempting to convert its

captive jetty into a commercial port, without entering into

any bidding process, contrary to the Gujarat Infrastructure

Development Act. Further, in answer to objection 8, the

GMB states that the jetty is 1598 meters long with the

further 1100 meters which the Government has approved

for a capacity of 25 MMTPA, against which Essar has

41 handled only 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 affidavit filed in the High Court also specifically

states that the reclaiming of 334 hectares of land by

dredging the channel to 14 meters’ depth 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 the Appellants’ plea were to be accepted, the

42 alteration of the limits of the port cannot possibly be said

to affect the Appellants’ rights 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 the Appellants’ case in any way.

23. We now come to the Appellants’ argument 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 Shri Salve’s plea, 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.

43

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 the Appellants’ case 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 Shri Joshi’s plea 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 commercial port’s limits 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

44 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 no ‘right’ to 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 any ‘right’ of the

Appellants to private property.

26. In conclusion, for the reasons given by us in the

present judgment, the appeal deserves to be dismissed.

The appeal is dismissed with no order as to costs.

……………………………J. (R.F. Nariman)

……………………………J. (Navin Sinha) New Delhi;

February 22, 2018.

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