Essar Bulk Terminal Limited & Anr. v. State of Gujarat & Ors.
R. F. NARIMAN, J. 1. Leave granted.
2. The present appeal involves a challenge to a notification dated
18 th January, 2016, issued under Section 5 of the Indian Ports Act, 1908,
by which the State Government of Gujarat expanded the port limits of
Hazira port. It is the case of the Appellants before us that by doing so,
the Appellants have been affected because they have spent huge monies
on lands reclaimed by them, which would be directly affected b y the
expansion of the aforesaid port limits.
3. The brief facts necessary for determining the questions t hat
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”)
339
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. A consortium
led by Shell Gas B.V. was selected to develop, operate an d 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 co ncession
agreement dated 22 nd April, 2002 was entered into between the GMB,
the State Government and HPPL for the purpose of devel opment,
operation and maintenance of Hazira port by HPPL. A noti fication
dated 23 rd 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 l imits of
Magdalla port, which was so reduced as to exclude the aforesaid Hazira
port.
4. Sometime in the year 2000, the Appellants had set up a shallow
draft captive jetty of 456 meters at the mouth of the River Tapi, which
connected to the sea at a distance of about 7 kilometers. The initial
depth of the aforesaid draft captive jetty was about 3 to 4 mete rs.
5. As many as three Memorandums of Understanding (MOU)
were entered into between the Appellants, the GMB an d 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 25 th November, 2010, HPPL identified Adani Hazira Port
Private Limited (Adani) as its sub-concessionaire, and ente red 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 por t
facilities. After entering into an MOU with Adani, dated 27th February,
2015, for exploring business opportunities, which fell through, HPPL, by
its letter dated 14 th March, 2015, revised its 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
ESSAR BULK TERMINAL LIMITED & ANR. v. STATE OF
GUJARAT & ORS. [R. F. NARIMAN, J.]
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 19 th March, 2015. Meanwhile, on 7 th April,
2015, Essar wrote a detailed representation to the GMB sta ting its
objections 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,
asking it to examine the aforesaid representation of the Appellants. A
similar representation dated 29 th 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 26 th August, 2015, the State Government
requested the GMB to reconsider the issue of extension of port facilities
in its forthcoming board meeting, and send its recommendations to the
Government in relation thereto. On 28 th September, 2015, the GMB
passed a resolution in which it recommended the origin al proposal
submitted by HPPL on 21 st July, 2014. However, on 5 th December, 2015,
the Chief Principal Secretary to the Chief Minister ci rculated 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 19 th March,
2015 should be strictly implemented. On 11 th 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 19 th March, 2015.
Following this, the requisite notification dated 18 th January, 2016, which
has been impugned by the Appellants in a writ petition before the Gujarat
High Court, was then issued under Section 5 of the Indian Ports Act.
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 Gover nment
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
341
his case that the said Ministry, on 6 th May, 2014, granted the aforesaid
clearance, despite which the expanded port limits would now ea t 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 Hazir a port would
grant HPPL an extended port area without bidding, which would b e
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 28 th September, 2015
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 construct ed, 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 ar gue 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 fac t, only
30% of the cargo that it was supposed to handle was being ha ndled.
According to the learned senior counsel, the objections to the expansion
ESSAR BULK TERMINAL LIMITED & ANR. v. STATE OF
GUJARAT & ORS. [R. F. NARIMAN, J.]
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 reclaim ed land
has nothing to do with HPPL demanding 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 19 th 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 28 th 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 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 Appellan ts
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 ess ence, 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 threshol d 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:
“3(9). “Government”, as respects major ports, for all purpos es,
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
343
port health officers under section 17, means the Ce ntral
Government, and save as aforesaid, means the State Government.
4. Power to extend or withdraw the Act or certain portion s
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 p art
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 g ood
government of the port and its approaches whether within or
without high-water-mark, and, subject to any rights of priv ate
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” me ans
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-s ection
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 su b-
section (1), it shall declare or describe, by notification in the Official
ESSAR BULK TERMINAL LIMITED & ANR. v. STATE OF
GUJARAT & ORS. [R. F. NARIMAN, J.]
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 undertak e any
reclamation of foreshore within the said limits except wit h the
previous 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, qua y,
stage, jetty, pier, place of anchorage, erection or mooring or
undertakes reclamation of foreshore in contravention of s ub-
section (1), the Board may, by notice require such perso n 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 t o 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
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 speci fied
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 prop osed
concession agreement prepared by a person are submitted to the
345
State Government, the Government agency or a specif ied
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 f inancial
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
Government agency or, as the case may be, the speci fied
Government agency shall adopt the proposal as the basis f or
selecting a person with whom concession agreement f or
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 t o the
State Government, the Government agency or, as the case m ay
be, the specified Government agency under sub-secti on
(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 specifi ed
Government agency may enter into a contract with the selected person.
ESSAR BULK TERMINAL LIMITED & ANR. v. STATE OF
GUJARAT & ORS. [R. F. NARIMAN, J.]
(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 concessio n
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 st rategy,
consisting of creation of port facilities, industrialisat ion and
development of infrastructure facilities like roads and railways in
the hinterland. It is estimated that around 3 billion dollar s (Rs.
10,000 crores) would be required to create new port facilitie s
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 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
347
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 a ncient
port and privatisation bids were invited in the past, no techn o-
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.
These port locations are to be given on BOMT (Built, Ope rate,
Maintain and Transfer) basis. The investment in infrastructur e
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 rat e of return
after accounting for capital recovery and interest re payment.
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 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 financiall y viable,
permissions for captive jetties would be given only in exceptional
ESSAR BULK TERMINAL LIMITED & ANR. v. STATE OF
GUJARAT & ORS. [R. F. NARIMAN, J.]
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 p eriod 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 collec t full
wharfage charges on the cargos handled, which are not captiv e
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 wharf age for
their captive consumption. Nevertheless, for captive car go 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
of the Government
The Government is vested with
sovereign rights as owner, overseer and
conservator of the waterfront and
licensor to the Contract.
2. Ownership Rights
and responsibilities
of the Developer
The Ownership rights of the
Developer would include:
349
xxx xxx xxx
The Government is vested with
sovereign rights as owner, overseer and
conservator of the waterfront and
The Ownership rights of the
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, 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.
6. Expansion of
facilities and
Competition
between ports
(a) Expansion of facilities
The developers would be 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 of the GMB.
(b) Competition between ports
The Government would encourage
competition between ports. The
following, however, would be ensured:
ESSAR BULK TERMINAL LIMITED & ANR. v. STATE OF
GUJARAT & ORS. [R. F. NARIMAN, J.]
13. At this point, it is important to refer to the correspo ndence
between the Appellants and the GMB. By their letters dated 11 th July,
2005 and 13 th 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 jett y which was
already constructed of 592 meters plus 456 meters. In addition to t he
aforesaid, the Appellants sought permission to deepen the navigational
channel upto 8 meters depth, so as to enable direct berthi ng 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 j etty, the
Appellants 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 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 w ill have to
obtain all required permissions and clearances, four condi tions 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
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 expendit ure
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.”
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.
351
14. Vide their letter dated 29 th August, 2007, the Appellants
demanded that 1100 meters, in addition to the 550 meters waterf ront
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 wat erfront to the
Appellants.
15. By their letter dated 15 th October, 2008, the Appellants asked
the GMB to allow them to dredge the channel from 8 meters depth to 10
meters depth to accommodate capesize vessels of 105,000 DWT. Since
material dredged from the channel would have to be dumped, an additional
area of 316 hectares, towards the south of the mangroves, to dump the
material and reclaim the said area was applied for. No such permission
was granted by the GMB to go from a depth of 8 meters to 10 meters or
to reclaim any area to the south of the mangroves. Shri Mihir Joshi,
however, pointed out a completion certificate dated 11 th 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.
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 th is
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 Se ction 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 cre ated in the
hands of a private person. However, it is clear that the asset to be created
belonged only to the Government of Gujarat and it was for the GMB to
The development of the ten ports
would be appropriately phased over a
set up captive jetties
would not be granted, save in
ESSAR BULK TERMINAL LIMITED & ANR. v. STATE OF
GUJARAT & ORS. [R. F. NARIMAN, J.]
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 pow er to
require a person, who has acted in contravention of Section 35(1), t o
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) 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 G ujarat
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 r eally
angling for was to conduct commercial operations beyond the captive
requirements of the Essar Steel plant at Hazira. This letter, while asking
for an addition of 3700 meters in addition to the existing 1100 meters
waterfront, also went on to speak of developing a 700 meters berth,
along with the GMB, for handling commercial cargo. Apart from this,
Essar planned to build a world class container terminal and a dry dock,
which would serve the shipping industry generally. It also proposed to
reclaim a further 334 hectares land on the southern side with the additional
dredged material. A perusal of this letter would leave no doubt about the
fact that despite 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, wh ich
353
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 a ll the
expenditure for the same. This being the case, it is a li ttle difficult to
appreciate Shri Joshi’s contention that any legitimate expectation could
be based on any of the aforesaid expired MOUs. The High Court is
correct in its conclusion that no such expectation could poss ibly have
arisen out of the aforesaid MOUs or the correspondence betwee n 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. Howe ver, since
dumping of earth, which would emerge as a consequence of dredging,
into the open sea would be extremely expensive, it was stated that instead
this earth could be dumped to create reclaimed land next to the captive
jetty, which would then benefit both the Appellants and the GMB. In
point of fact, 140 hectares out of 195 hectares that is reclaimed by the
Appellants is allocated to the Appellants for their own purpose s, 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 alo ne 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 State Government, in
which it examined the representation made by the Appellants dated 7 th
April, 2015 and rejected the same. This letter expressly st ates 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:
ESSAR BULK TERMINAL LIMITED & ANR. v. STATE OF
GUJARAT & ORS. [R. F. NARIMAN, J.]
No
.
Representation of Essar
Ports Ltd. to Hon’ble CM
Comments
1. EBTL through an
investment of more than
Rs. 2000 Cr. has been
operating deep draft 550m
jetty since 2010 and caters
to the Essar’s Steel plant
cargo requirement. The
steel plant is expected to
ramp up its production in
line with its 10 MMTPA
capacity and would require
augmented marine facility
and back up area for
handling its increased cargo
requirements.
The Proposed port limit
excludes the area of 550m
jetty and back-up area
behind the jetty. Hence, it
has no effect. The present
capacity of the steel plant is
10 MMTPA whereas the
actual steel production at
the plant in the year 2014-
15 is only 3.15 MMTPA.
No firm/definite plans for
augmentation in steel
production are submitted.
2. GMB had given NOC for
reclamation of 319 ha. in
June 2007, pursuant to
which Essar started the
process for development of
back up land for its
expansion. The allotment
of the reclaimed land to
Essar was also decided in
the meeting held under the
chairmanship of the then
Chief Secretary in
November 2009. EBTL
has developed a channel of
more than 7 km length
with capacity to handle up
to 11m draft vessel and has
plans to take it up to 14m
draft and have waterfront
of more than 5 km.
GMB had granted NOC to
dump dredged material for
310 Ha. of land in the
mudflat area shown in the
map attached as Annexure
3. However, as per the
DILR report, the actual
reclaimed area is only
approx. 195 Ha. Out of this
area approx. 98 hectares of
reclaimed land is excluded
from the proposed
expansion of port limit.
Further, a specific condition
was mentioned in the NOC
of GMB that the ownership
of the reclaimed land shall
vest with GMB/GOG.
Further it is also be noted
that NOC granted to EBTL
for reclamation is also
355
The Proposed port limit
excludes the area of 550m
up area
the jetty. Hence, it
has no effect. The present
capacity of the steel plant is
10 MMTPA whereas the
actual steel production at
the plant in the year 2014 -
15 is only 3.15 MMTPA.
No firm/definite plans for
augmentation in steel
production are submitted.
GMB had granted NOC to
mp dredged material for
310 Ha. of land in the
mudflat area shown in the
map attached as Annexure
3. However, as per the
DILR report, the actual
reclaimed area is only
approx. 195 Ha. Out of this
area approx. 98 hectares of
reclaimed land is excluded
m the proposed
expansion of port limit.
Further, a specific condition
was mentioned in the NOC
of GMB that the ownership
of the reclaimed land shall
Further it is also be noted
that NOC granted to EBTL
also
beneficial 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
the dredged material in the
mid sea (very far) which
would have been expensive.
3
.
In order to develop
commercial port facilities,
EBTL submitted a proposal to
GMB in 2008 and signed
MOU with GMB for
expansion by 3.7 km.
waterfront along with the
associated back up land during
vibrant Gujarat 2013 in the
presence of Shri. Narendra
Modi- Hon’ble Prime Minister
of India. Pursuant to this Essar
has invested substantial
amount in terms of time and
money for development of the
same. After the necessary
recommendation from the
Government of Gujarat EBTL
has received the environment
clearance of 6 th 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
their planned expansion while
their application remains
pending.
The proposal for development
of commercial ports facilities
was received. But, the
permission granted to Essar is
only for captive purpose and
thus, without performing
bidding process, there is no
policy of GOG to convert
captive port facilities into a
commercial port terminal.
Further HPPL has already
rights under concession
agreement to develop
common commercial port
facilities cannot be accepted.
GMC or GOG has never
granted such permission for
commercial port facilities
development by Essar.
ESSAR BULK TERMINAL LIMITED & ANR. v. STATE OF
GUJARAT & ORS. [R. F. NARIMAN, J.]
6 The proposed expansion of
port limits not only
constrains the existing steel
plant operations but, also
infringe on EBTL
expansion as explained
above, thereby jeopardizing
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.
The future plans of EBTL
are for commercial port
operation. There is no
policy to convert captive
port facilities into
commercial port facilities
as there is no bidding
process involved. Hence,
the same may not be
acceptable.
8. Essar plant at Hazira is the
largest integrated steel plant
facility in India at a single
location and any impact on
the operation of the same
would be lead to substantial
loss to the exchequer. Essar
group has invested more
than INR 44500 Cr. in the
Hazira complex in its steel,
power and ports business
group infrastructure.
Essar has following captive
port facilities operational.
No. Jetty Capacity
(MMTPA)
1. 456 m
Lighterage
Main
jetty
5
2. 592 m
Lighterage
(1 st
expansion)
5
3. 550 m
deep
water
berth
(2 nd
expansi
on)
15
Total 1598 m 25
Further, GOG has approved
further 1100m waterfront
for deep water jetty
(3 rd expansion) for which
357
In furtherance to the above, the following points may please be
seen:
(1)- (3) xxx xxx xxx
(4) ESSAR has submitted details vide letter dated 7 th April, 2015
of various proposals to GMB for development of waterfront and
back-up area from time to time. GMB as a regulatory a uthority
scrutinizes every proposal and submits to Govt. for necess ary
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
construction permission is yet
to be accorded by GMB.
Adding this 1100m waterfront,
total jetty/wharf of 2698m will
be utilized by EBTL.
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.
ESSAR BULK TERMINAL LIMITED & ANR. v. STATE OF
GUJARAT & ORS. [R. F. NARIMAN, J.]
ownership of reclaimed land shall vest with GMB/GOG (Condition
No.7) and ESSAR shall not claim reimbursement for a ny
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 def inite 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 wil l be of the
ownership of either the Government or the GMB, and, that it is beneficial
to the company, as otherwise the dredged material would have to be
dumped in the sea which would have been very expensive. Howev er,
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 imp ortance, in
that the GMB was alive to the fact that Essar is reall y 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 Governm ent has
approved for a capacity of 25 MMTPA, against which Essar has 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
359
were to be accepted, the 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 M inistry of
Environment and Forests dated 6 th 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 l and and
that much less land than 1011 hectares has been allocated for the use of
a commercial port, has to be accepted.
24. The further plea, that the forest land to the north consisting of
300 hectares, having now been acquired in October, 2016, would enure
to the benefit of HPPL, would also not take the Appellants’ ca se any
further, as even these 300 hectares would be subsumed wi thin 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 Co urt, 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 anchorage of such vessels, but
also for reasons of customs formalities, port conversion, general security
etc. We are not, therefore, satisfied that the notificati on 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 constr ucted 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 Ap pellants to
private property.
ESSAR BULK TERMINAL LIMITED & ANR. v. STATE OF
GUJARAT & ORS. [R. F. NARIMAN, J.]
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.
Kalpana K. Tripathy Appeal dismissed.