Gujarat High Court
Kesar Terminals & Infrastructure ... vs Kandla Port Trust & 2 on 31 August, 2017
Author: N.V.Anjaria
Bench: N.V.Anjaria
C/CA/11998/2015 CAV ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
CIVIL APPLICATION (FOR DIRECTION) NO. 11998 of 2015
In SPECIAL CIVIL APPLICATION NO. 11751 of 2014
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KESAR TERMINALS & INFRASTRUCTURE LIMITED....Applicant(s) Versus KANDLA PORT TRUST & 2....Respondent(s) ========================================================== Appearance:
MR MIHIR THAKORE, SR. ADVOCATE WITH MR PREMAL S RACHH, ADVOCATE for the Applicant(s) No. 1 MR MIHIR JOSHI, SR. ADVOCATE WITH MR DHAVAL D VYAS, ADVOCATE for the Respondent(s) No. 1 , 3 ========================================================== CORAM: HONOURABLE MR.JUSTICE N.V.ANJARIA Date : 31/08/2017 CAV ORDER Pending main Special Civil Application No.11751 of 2014, the applicant-original petitioner Kesar Terminal Infrastructure Limited, has filed this Civil Application, to pray as under.
(i) to accept the amount of lease rent from the Petitioner Company and issue receipts in the name of the Petitioner Company and further be pleased to direct the Respondent Authority to accept TDS certificate issued by the Petitioner Company as also to permit proposed construction of new Tank and other structures as there is urgency to upgrade the terminal facility support infrastructure and to carry out repair work as requested in the letters seeking approval;
(ii) to stay the execution, implementation and operation of notice dated 9.10.2015 and further be pleased to direct the respondent Authority not to take any coercive steps against the applicant company Page 1 of 26 HC-NIC Page 1 of 26 Created On Sun Sep 03 13:42:48 IST 2017 C/CA/11998/2015 CAV ORDER
2. In the main petition the petitioner seeks the prayers to set aside the demand of transfer fee raised by the Kandla Port Trust, and also to quash the claim of the Kandla Port Trust (KPT) for outstanding dues of differential lease rent in respect of the period from year 1994 to 2012. The parcels of land were leased by the Kandla Port Trust to the said Kesar Enterprises Limited as per the details given hereinbelow. A direction is also prayed for against the KPT to recognise the petitioner as a transferee company came into existence in place of the erstwhile original lessee-Kesar Enterprises Limited. A Scheme of Arrangement was sanctioned by order dated 12th March, 2010 by the High Court of Bombay whereby the present petitioner - Kesar Terminals and Infrastructure Limited purchased the properties and lease premises from the original lessee. The petitioner now claims to have entered the shoe of the original lessee. According to the stand of the KPT, the petitioner has no locus to prosecute for the prayers made in the petitions and that applicant-petitioner is required to pay the transfer fee as contemplated.
2.1 Another Special Civil Application No.16908 of 2014 is also filed by the same petitioner wherein the petitioner has prayed to set aside the demand notices issued by the KPT in respect of outstanding dues of differential lease rent for the said period from 1994 to 2012. It was a subsequently filed petition making the comprehensive prayers to improvise the previous petition. In the said petition, the Page 2 of 26 HC-NIC Page 2 of 26 Created On Sun Sep 03 13:42:48 IST 2017 C/CA/11998/2015 CAV ORDER prayer is made also to set aside the Tariff Order of the Tariff Authority for Major Ports (TAMP) dated 25th March, 2011 as well as the Notification dated 11th May, 2011 which came to be issued pursuant to the said order of TAMP.
2.2 In Special Civil Application No.11751 of 2014 as well as in Special Civil Application No.16908 of 2014, Rule is issued. No interim order was passed by the Court.
3. The present Civil Application came to be filed now on the ground that the KPT has been denying the permission to construct and upgrade the terminal facilities by refusing to recognise the petitioner as a transferee. A further grievance is raised in the Civil Application that the KPT has issued notice dated 09th October, 2015 whereby the KPT wants to recover the outstanding amount of lease rent. The demand of outstanding lease is based on the TAMP order and the notification aforementioned. The applicant-petitioner therefore wants interim relief to recognise the status of transferee for itself, and further prays that the KPT may be directed to desist from making any recovery of the lease rentals demanded.
3.1 The demand notice dated 09th October, 2015 issued by the KPT against the implementation of which, the stay is prayed for, requires the petitioner to clear the following outstanding dues.
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Land Outstanding dues Breaches
Sq.Mtrs.
Rs.1,09,58,265/- Non payment of Outstanding dues of 6878 Compensation bill period from 03/10/2013 to 30/06/2015 Rs.54,47,583/- Non payment of Differential bill of revised rate for the period from 03-07-1994 to 02-07-2008.
31741 Rs.1,56,55,996/- Non payment of Differential bill of revised rate for the period from 01-06-1994 to 31-05-2012.
15347 Rs.1,60,88,787/- Non payment of Differential bill of revised rate for the period from 01-07-1994 to 30-07-2012.
31741 Rs.12,07,34,887/- transfer fees/Upfront Rent 15347 Rs.8,76,19,408/- transfer fee/Upfront Rent Rs.25,65,04,923/- Total outstanding 3.2 Thus the plea and the prayers in the present Civil Application has two folds aspects, which are also the limbs of controversy involved. First is the questioning of legality and validity of the demand of the KPT in respect of lease rentals for the aforesaid period. The second is that, according to the applicant-petitioner, it is not liable to pay the transfer fee as claimed by the KPT, but is entitled to be recognised as transferee-lessee.
3.3 It was under three different agreements that the different parcels of land came to be leased by the Kandla Port Trust to the said lessee-Kesar Enterprises Limited. The relevant terms of those leases regarding lease rent, period increase in the lease rent and providing permissible increase, deserves to be noted.
3.4 The first agreement was dated 03rd June, 1986 whereby land admeasuring 31,741 sq. mtrs. came to be Page 4 of 26 HC-NIC Page 4 of 26 Created On Sun Sep 03 13:42:48 IST 2017 C/CA/11998/2015 CAV ORDER leased to the said lessee for the period of 01st June, 1987 to 31st May, 2017. The rent provided for was Rs.03.60 per sq. mtr., which could be increased upto Rs.07.20 after 10th year and Rs.10.80 after 20th year.
3.4.1 The second agreement was dated 28th June, 1986 in respect of 6,878 sq. mtrs. of land. The lease period was from 03rd July, 1978 to 02nd July, 2008. The lease rent was fixed at Rs.02.88 per sq. mtr.
3.4.2 The third agreement was dated 26th February, 1997 which leased 15,347 sq. mtrs. of land for a contemplated period from 01st July, 1992 to 30th June, 2022.
3.5 It is relevant to notice that in respect of the first lease mentioned hereinabove, it stands created only by virtue of a provisional allotment letter. The lease deed was required to be executed but was not executed and the terms of lease was never engrafted in form of formal lease deed even until the contemplated period of lease expired. Like in the first lease agreement, in respect of the third agreement also, what is executed is only allotment order and the lease deed is not executed so far even as the lease made to start since February, 1997. It is in respect of second lease agreement that the lease deed was executed. Furthermore, it is also an aspect to be noted that in respect of leases for 31,741 sq. mtrs. of land as well as in respect of 6,878 sq. mtrs. of land, the period of lease has already expired. The petitioner has been retaining the possession.
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3.6 The objection of the applicant against the
demand of the outstanding rent for the past period is based on one of the grounds that in the first two agreements, the terms of the lease do not permit the enhancement of lease rent during the subsistence of the lease period. In the third mentioned agreement, there is a provision for variation to entitle the KPT to demand the enhance rent by virtue of the contractual terms. On the other hand, the Kandla Port Trust has raised demand for lease rentals at the rates on the basis of the order of the Tariff Authority for Major Ports and the consequential Notification issued under the provisions of the Major Port Trusts Act, 1963.
3.7 As far as the claim for transfer fee is concerned, the applicant-petitioner has been objecting thereto vehemently that it was not a transfer but a demerger, hence the transfer fee was not payable, and that in any view, as per alternative submission, the transfer fee could not have been levied at the rate and the criteria sought to be levied by the KPT.
4. Heard in extenso learned senior counsel Mr.Mihir Thakore with learned advocate Mr.Premal Rachh for the applicant and learned senior counsel Mr.Mihir Joshi with learned advocate Mr.Dhaval Vyas for the Kandla Port Trust. Also heard learned senior advocate Mr.D.D. Vyas for Tariff Authority for Major Ports.
Learned advocates developed with deft their
submissions on the various aspects arising in the
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case.
4.1 The case of the KPT as contended in its
reply, stating the gist thereof, is that the
petitioner is required to seek approval for transfer which was effected under the Scheme of Arrangement and in absence of necessary approval to the transfer by the KPT, the petitioner remains an unauthorised occupant of the leased land and the demised premises. About the demand of lease rentals for the past period, the KPT's case is that the same has become due and payable by virtue of Tariff Order and the Notification of the TAMP which has a statutory application and that the same is based on the Land Policy binding and implemented. It is the case that the applicant- petitioner would not be granted the permissions as prayed for as it has not paid the transfer fee nor the lease rentals due are paid.
4.2 As against the aforesaid stand of the KPT, the case of the applicant-petitioner is that as the terms of the first two lease agreements did not envisage variation in the lease rent, it was not open to enhance the lease rates and to raise demand for the past period retrospectively and that even Tariff Authority for Major Ports could not have modified the terms of the existing leases. It was but accepted that this would not apply in case of third lease which contains a clause for enhancement, still however it is the case that such enhanced demand of rent could be raised only with effect from the order of the TAMP, that is from 11th May, 2011 and not for past period, Page 7 of 26 HC-NIC Page 7 of 26 Created On Sun Sep 03 13:42:48 IST 2017 C/CA/11998/2015 CAV ORDER which would amount to retrospective levy. The second limb of submission is that either Tariff Authority or KPT could not determine and levy the lease rental retrospectively and neither the Land Policy would entitle the Tariff Authority or the KPT to modify the terms regarding rentals of the existing lease.
4.3 It was submitted that TAMP Order could not operate, in any view, retrospectively. In order to support this proposition, principles in paragraph 7of the Apex Court's decision in Suna Ullah Bhatt v. State of Jammu and Kashmir [AIR 1972 SC 2431] was relied on. It was next contended that the Tariff Order and the Notification of TAMP under the Major Port Act is in the nature of subordinate legislation which cannot vary the terms of contract. It was therefore contended that when the lease itself contained the condition about the rent payable, about its enhancement and periodicity, the same was binding to the KPT, and could not be varied during the subsistence of the contractual period on the ground of TAMP Notification or Land Policy applied by Government of India.
4.4 On behalf of the Tariff Authority for Major Ports learned senior counsel produced copies of Notifications dated 31st March, 2005 and 04th December, 2013. He submitted that while fixing the scale of rates, the authority had undertaken the inquiry and had further undertaken the consultative process by affording hearing to the parties. He submitted that the guidelines of the Land Policy was followed and the Page 8 of 26 HC-NIC Page 8 of 26 Created On Sun Sep 03 13:42:48 IST 2017 C/CA/11998/2015 CAV ORDER Notifications were issued which, according to submission of learned senior counsel, are required to be carried out by the Board.
4.5 The issues in the controversy arise in three-folds. First is whether it was permissible in law for the Kandla Port Trust to enhance the lease rentals in variation of the existing terms and whether it could exercise such powers on the basis of the TAMP order and the Notification for which there was a prima facie justification in law; whether the levy could be characterised as retrospective in nature so as not to become permissible. Third is the claim of the transfer fee and the liability of the applicant to pay the same and whether without the payment as demanded, it could insist to be in the place and locus of the original lessee.
5. Before proceeding to examine as to in favour of which side a prima facie case exists, the statutory provisions of the Major Port Trusts Act, 1963 on the basis of the rival contentions are rested, may be usefully referred to.
5.1 The Kandla Port Trust is constituted under the Major Port Trusts Act, 1963. The provisions of the said statute govern the management, administration and functional affairs of the KPT. Prior to coming into force of the Act, the properties and assets of the Port were vested in the Central Government. Section 29 of the Act relates to transfer of assets and liabilities of the Central Government, and provides Page 9 of 26 HC-NIC Page 9 of 26 Created On Sun Sep 03 13:42:48 IST 2017 C/CA/11998/2015 CAV ORDER inter alia in sub-clause (a) of sub-section (1) that all property, assets and funds and all rights to levy rates vested in the Central Government or any other authority, as the case may be, for the purpose of Port immediately before the appointed date shall vest in the Board. Thus, now, the properties and assets of the Port as well as rights to levy rates stand vested in the KPT. Sub-clause (a) of sub-section (1) of Section 29 came into force with effect from 01st February, 1975.
5.2 Section 47A in Chapter VA titled as 'Tariff Authority for Major Ports' provides for constitution of and incorporation of Tariff Authority for Major Ports. The word 'Authority' is defined in Section 2(aa) to mean Tariff Authority for Major Ports constituted under the said Section 47A. This Tariff Authority for Major Ports is empowered to issue Notification to frame the scale of rates and for providing for conditions of service for use of the property.
5.3 Sections 48 and 49 concerning imposition and recovery of rates at Ports in Chapter VI are relevant to be reproduced as under.
"48. Scales of rates for services performed by Board or other person. - (1) The Authority shall from time to time, by notification in the Official Gazette, frame a scale of rates at which, and a statement of conditions under which, any of the services specified hereunder shall be performed by a Board or any other person authorised under section 42 at or in relation to the port or port approaches-
(a) transhipping of passengers or goods between vessels in the port or port approaches;Page 10 of 26
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(b) landing and shipping of passengers or goods from or to such vessels to or from any wharf, quay, jetty, pier, dock, berth, mooring, stage or erection, land or building in the possession or occupation of the Board or at any place within the limits of the port or port approaches;
(c) carnage or porterage of goods on any such place;
(d) wharfage, storage or demurrage of goods on any such place;
(e) any other service in respect of vessels, passengers or goods, (2) Different scales and conditions may be framed for different classes of goods and vessels."
"49. Scale of rates and statement of conditions for use of property belonging to Board - (1) The Authority shall from time to time, by notification in the Official Gazette, also frame a scale of rates on payment of which, and a statement of conditions under which, any property belonging to, or in the possession or occupation of, the board, or any place within the limits of the port or the port approaches may be used for the purposes specified hereunder-
(a) approaching or lying at or alongside any buoy, mooring, wharf, quay, pier, dock, land, building or place as aforesaid by vessels;
(b) entering upon or plying for hire at or on any wharf, quay, pier, dock, land, building, road, bridge or place as aforesaid by animals or vehicles carrying passengers or goods;
(c) leasing of land or sheds by owners of goods imported or intended for export or by steamer agents;
(d) any other use of any land, building, works, vessels or appliances belonging to or provided by the Board.
(2) Different scales and conditions may be framed for different classes of goods and vessels.
(3) Notwithstanding anything contained in sub-section (1), the Board may, by auction or by inviting tenders, lease any land or shed belonging to it or in its possession or occupation at a rate higher than that provided under sub-section (1)."Page 11 of 26
HC-NIC Page 11 of 26 Created On Sun Sep 03 13:42:48 IST 2017 C/CA/11998/2015 CAV ORDER 5.4 It is significant to notice the definition of 'rate' in Section 2(v) which says that 'rate' includes any toll, duty, rent, rate, fee or charge leviable under this Act. In other words, the rent is a specie of rate and is included in the rate.
5.5 Section 52 of the Act provides for prior sanction of the Central Government to the rates and conditions approved by the Board, however by virtue of Ports Land (Amendment) Act, 1997 with effect from 09th January, 1997, the said provision and the requirement of prior sanction appears to have been repealed.
5.6 By Amending Act of 1997, provisions of Sections 29, 48 and 49 came to be effected with effect from 09th January, 1997. The powers of fixing the scale of rates came to be divested from the Board and were vested with the Tariff Authority for Major Ports. The Board is empowered to enter into contracts and prescribe the mode of execution as per Sections 33 and 34 of the Act. The Board is, therefore, statutorily vested for entering into contracts.
5.7 Section 111 of the Act is a power of the Central Government to issue direction to the Board. The provision reads as under.
"111. Power of Central Government to issue directions to Board - (1) Without prejudice to the foregoing provisions of this Chapter, the Authority and every Board shall, in the discharge of its functions under this Act, be bound by such directions on questions of policy as the Central Government may give in writing to it from time to time:Provided that the Authority or the Board, as the case may be, shall be given opportunity to express its views before any direction is given under this sub-section.(2) The decision of the Central Page 12 of 26 HC-NIC Page 12 of 26 Created On Sun Sep 03 13:42:48 IST 2017 C/CA/11998/2015 CAV ORDER Government whether a question is one of policy or not shall be final."
5.8 In respect of nature of powers flowing from Section 111 of the Act, the attendant provisions of the Land Policy for Major Ports, the following observations of the Supreme Court in Yazdani International Private Limited v. Auroglobal Comtrade Private Limited [(2014) 2 SCC 657] observed and stated, "It is necessary to notice here that sub-section (3) of Section 49 was inserted by Act 17 of 1982 with effect from 31.5.1982. For the present, it is sufficient to note that Section 49 also authorises the authority constituted under Section 47-A to frame a "scale of rates" for using any property either belonging to or in the possession or occupation of the Board. The distinction between Sections 48 and 49 is that while Section 48 deals with the scale of rates for the services to be rendered by the Board, Section 49 deals with the scale of rates for the utilisation of the property (both movable and immovable) of the Board. However, sub-section (3) authorises the Board to collect amounts higher than those prescribed under the scale of rates contemplated under sub-section (1) either by resorting to a process of auction or inviting tenders in the context of the use of the property belonging to the Board. The relevance of the said sub-section will be discussed later." (Para 5) "Chapter IX of the Act contains provisions which authorise the Government of India to exercise supervisory control as specified in the various provisions of the said Chapter over the activities of the Boards constituted under the Act. Relevant in the context of the present litigation is Section 111 of the Act which declares that both, the authority constituted under Section 47-A and the Boards constituted under the Act are bound "by such directions on questions of policy" as the Central Government may give in writing from time to time." (Para 6) "In exercise of the authority under Section 111, it appears that the Central Government issued certain directions to all the major ports except Kolkata and Mumbai styled as Land Policy for Major Ports initially in the year 2004 which was modified in the year 2011."
(Para 7)
6. From the provisions of the Major Port Trust Page 13 of 26 HC-NIC Page 13 of 26 Created On Sun Sep 03 13:42:48 IST 2017 C/CA/11998/2015 CAV ORDER Act, 1963 referred to hereinabove, it cannot be gainsaid that the Tariff Authority created under the Act is a competent authority which is empowered to decide the scale of rates. Such scale of rates may be framed and governed in the Notification for the service performed by the Board. The scale of rates and statement of conditions for use of property belonging to the Ports are also to be framed by the Authority- the TAMP. The rate includes rent. The TAMP Notification has the basis of Land Policy announced by the Central Government which contain guidelines and comes out process of determination of scale of rates and market value to be implemented by the Board.
6.1 When any property of the Board is leased, TAMP is the competent authority to frame the scale of rates for its use. The purpose is specified under Section 49 of the Act, for which the scale of rates and statement of conditions for use of property may be framed by the TAMP includes, as per sub-clause (c), leasing of land or sheds by owner of goods imported or intended for export, and as per clause (d) any other use of any land, building, works, vessels or appliances belonging to the Board. This fixation of rates or providence of conditions would apply in respect of the contracts which may be entered into by the Board in respect of use of property of the Board in the form of or manner envisaged.
6.2 Furthermore, the Central Government pronounces the Land Policy on the basis of the guidelines in which the TAMP would proceed to frame Page 14 of 26 HC-NIC Page 14 of 26 Created On Sun Sep 03 13:42:48 IST 2017 C/CA/11998/2015 CAV ORDER the scale of rates, conditions and other charges. Section 111 empowers the Central Government to issue direction to the Board and the Board is bound by such directions on the question of Land Policy, in the discharge of its function under the Act. Land Policy was brought into in the year 2004 and thereafter in the year 2011.
6.3 It was rightly contended that a lease granted by the Port Trust regarding the use of the land is by virtue of and under the statutory powers conferred under the Act which involves parting with land within or adjacent to the Port, and which is a natural resources. There was a substance in the submission that determination of scale of rates cannot be treated same as an agreed rate that may have culminated upon private negotiation in an ordinary contract.
6.4 The combined operation of the above statutory provisions in the Act create a mandate in respect of observance and compliance of order and notification issued by the TAMP in the matter of fixation of scale of rates. The scale of rates initially fixed by the Board or fixed by the TAMP subsequent to its constitution, are the exercise of independent statutory power not limited to any individual contract or specific case but they have a common effect. The contract of lease executed by the Board can indeed be viewed as a contract having statutory flavour, not to be equated and not to be placed on the same footing with an ordinary contract.
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6.5 It is an undeniable proposition of law that
terms of the contract can be varied by statutory power or they may stand varied or they may stand altered because of operation of the statute. Law would operate to override the terms of contract, to vary them. This proposition was furthered and fortified by pressing into service the following observations from the decision of the Supreme Court in case of National Sample Survey Organisation v. Champa Properties Limited [(2009) 14 SCC 451. It was observed in paragraph 31, "where a statute governing tenancies and/or rents provides for fixation of rent or increases in rent, and such statute is applicable to the tenancy in question, then the rent will have to be determined in accordance with the statutory provisions. Subject to the above, any increase can be only by the consent of the parties".
6.6 The Supreme Court in case of State of Rajasthan v J.K. Synthetics Limited [(2011) 12 SCC 518] had observed thus which support the view that the statutory operation will prevail over the terms of lease agreement.
"The contesting respondent in the last case (Shree Cement) raised an additional contention. It was submitted that Clause VI(iii) of the lease deed in its case provided that any royalty which was not paid within the prescribed time shall be paid with simple interest at the rate of 10% per annum. It is therefore contended that the interest on any arrears cannot be more than 10% per annum in its case. The lease is governed by the Mineral Concession Rules, 1960 and execution of the lease deed is itself in compliance with one of the requirement of the Rules, namely, Rule
31. Once Rule 64-A was amended by Notification dated 20-2-1991 increasing the rate of interest to 24% per Page 16 of 26 HC-NIC Page 16 of 26 Created On Sun Sep 03 13:42:48 IST 2017 C/CA/11998/2015 CAV ORDER annum, any term in the lease deed prescribing a lesser rate of interest, shall have to yield to Rule 64-A from that date as the Rule will prevail over the terms of the lease. This position is evident from the decision in South Eastern Coalfields v. State of M.P. [(2003) 8 SCC 468] also." (Para 42) 6.7 The position emanating from the working of the provisions of the Major Port Trusts Act and principles of law, the applicant may not be able to readily contend that such fixation cannot have overriding effect on the terms of the existing leases in respect of charging of rentals. The TAMP Order/Notification fixing the scale of rates which would include the rent is a statutory function discharged under the Act and such Order or Notification would be a kind of statutory instrument.
6.8 Thus, the operation of law in form of the TAMP Order/Notification fixing scale of rates in respect of lease agreements between KPT and the applicant could hardly be brushed aside. The working of the provisions of the Act coupled with the statutory nature and effect of Order/ Notification by the TAMP would have by necessary implication, a definite effect, would have interaction and interjection with the lease agreements and affect existing leases and their term, in particular the charging of lease rentals thereunder.
6.9 In the present cases, the agreement dated 03rd June, 1986 in respect of 31,741 sq. mtrs. of land was even not a full-fledged agreement but was a provisional allotment order which never culminated into a formal lease deed. The period of this agreement Page 17 of 26 HC-NIC Page 17 of 26 Created On Sun Sep 03 13:42:48 IST 2017 C/CA/11998/2015 CAV ORDER and the second agreement dated 26th August, 1986 for the parcel of land of 6,878 sq. mtrs. had already expired. The petitioner-lessee continued to be in possession even after the completion of the lease period. This is yet another bearing aspect. As far as the third agreement dated 26th February, 1997 is concerned, it is an admitted position that the order of renewal specifically contemplated for payment of lease rent at a higher rate whenever the scheduled rates are revised by the competent authority. Therefore, the petitioner is obliged to pay the revised lease rent as fixed by the TAMP for the period of its operation.
6.10 The grievance of the applicant-petitioner against the demand of the revised rates is even otherwise not justified. It could not be disputed that the applicant had paid a revised rate as fixed by the Central Government in the year 1994 in respect of the first lease and thus it was with clear indication about the understanding that the rates will be subject to revision by the Authority irrespective of the term of the agreement. The applicant was aware about the period for the prescribed rates under the Government Notification of 1994 which was for five years and that it was required to pay the revised rates from the year 1999. The Land Policy came to be announced by the Central Government in the year 2004 and thereafter in the year 2011. The Policy Guidelines were binding on the KPT and TAMP as discussed above. Clause 5.3 in the agreement regarding schedule of rates for use of land was to be arrived at after taking 6% of the market Page 18 of 26 HC-NIC Page 18 of 26 Created On Sun Sep 03 13:42:48 IST 2017 C/CA/11998/2015 CAV ORDER value of the land and the scheduled rates were to be revised every five years. The applicant paid the rent as revised by the competent authority in the year 1994. Thereafter in view of the TAMP Notification issued in light of the Land Policy revising the rates, the applicant was required to pay the lease rentals accordingly. It was rightly contended that use of land for over a period of long 30 years cannot be equated with the providence to other services which are essentially one time service or of short duration. The continued use of land for tank terminals stand on a different footing from levy of charges, for instance, for landing and shipping of wharfage etc. The revision of rates for lease rentals creating liability for the lease to pay the same would arise because of statutory instrument in the nature of TAMP Order which had an effect of varying the terms of the existing lease.
7. In this strong prima facie view, at the stage of interim examination of the issues, the contention of the applicant could not be accepted that merely because the existing lease contains the condition regarding lease rentals and its periodicity, they cannot be varied during the currency of the lease. The TAMP Order which is a statutory instrument and a product of operation of law and the contemplations thereof including fixation of scale of rates which would include the rent, are binding to the Board and the terms of the lease would stand in derogation of the TAMP Order to be implemented for its scale of rates with its binding nature. Noticeably, the nature of the order of the TAMP was explained by Page 19 of 26 HC-NIC Page 19 of 26 Created On Sun Sep 03 13:42:48 IST 2017 C/CA/11998/2015 CAV ORDER the Division Bench of this Court in judgment in case of Kandla Port Trust v. Shri Kandla Salt Leaseholder Welfare Association being Letters Patent Appeal No.870 of 2013 decided as per the judgment dated 11th October, 2014, the Division Bench stated that it was of the prima facie opinion that the function of the TAMP while determining the tariff can be said to be a legislative function. It was held that the TAMP Order is binding on existing lessee.
8. The contention that the demand of lease rentals has an element of retrospectivity is prima facie not well maintained. The issue is, in a way, out of context also. The rates under the allotment orders were provisional in nature because the lease deed was never executed. Furthermore, the Land Policy is framed and on the basis of which the TAMP Order and the Notification framing the scale of rates came to be issued. The very process consumes time. The Policy Guidelines stand translated into TAMP Notification which is thereafter implemented by the Board as binding requirements. The final determination and implementation of the revised scale of rates would operate from such date. After the Land Policy is announced, the TAMP would consider the proposals and follow the prescribed procedure including inviting suggestions and comments from the stake holders. The determination of scale of rates would take place thereafter. Because of the very nature of this exercise, when the actual demand would be raised, it would relate to past period. It is the retroactiveness and not retrospectiveness. A retroactive operation of Page 20 of 26 HC-NIC Page 20 of 26 Created On Sun Sep 03 13:42:48 IST 2017 C/CA/11998/2015 CAV ORDER demand would not make it unsustainable in the given set of facts. The ground that the demand is retrospective is, therefore, prima facie not tenable.
8.1 It was submitted, in which submission there was a prima facie merit that in levying the increased rentals, there was no retrospectivity at all. The scale of rates are not as such imposed by the Order but they have been determined by the Government under the Land Policy. It is at the rate of 6% of the market value to be revised every five years. The Land Policy and the Guidelines contained therein takes the nature of directions of the Central Government which are binding to the TAMP as well as Kandla Port Trust. This proposition of binding nature do prima facie stem from operation of Section 111 of the Act and other attendant provisions considered hereinabove.
8.2 Merely because the demand operates in respect of the past period when it is actually made, it is not rendered unreasonable or arbitrary by itself. This is also because the revision of rates is based on the market value. From 1999 itself the applicant was put to notice that rates would be revised. Having regard to all these aspects and dimensions, the contention of the applicant that the demand being retrospective and harsh, and that the same is impermissible under Section 49 of the Act, could not be accepted for its prima facie merits. This issue may require a detailed examination, however the same cannot be a ground for granting any injunction against recovery in favour of the applicant.
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9. Therefore on the score of retrospectivity, the applicant's case must fail to be accepted at this interim stage.
10. Adverting to the issue of payability of the transfer fee, the submission of the applicant is that the transfer fee is not payable in the facts of the case because it was a demerger of a company into two companies distinct from amalgamation. Alternatively, it was submitted that even if the transfer fee is payable, it is in terms of the condition based on the existing rent in the lease agreement and not as demanded by the Kandla Port Trust. The distinction drawn between the amalgamation of two companies and demerger of a company, to disclaim the liability to pay the transfer fee does not hold good. It would not be disputed that the petitioner is a resulting transferee company and with its coming into existence as per the Scheme of Arrangement, the previous company has lost its existence. The petitioner is the new independent identity with all leasehold properties and assets of the original company transferred in its favour.
10.1 The stand on part of the applicant not to pay the transfer fee as demanded by the KPT could not be countenanced either on facts or in law. The petitioner as a transferee company has been in occupation of the subject matter lands which is an unauthorised occupation in asmuch as the transfer has not been approved by the KPT. Unless it is approved, Page 22 of 26 HC-NIC Page 22 of 26 Created On Sun Sep 03 13:42:48 IST 2017 C/CA/11998/2015 CAV ORDER the petitioner-the transfer company may not be able to seek status so as to enter the shoe of the original lessee. The Scheme of Arrangement was sanctioned by the Bombay High Court on 12th March, 2010. The petition was filed in the year 2014. In terms of Land Policy of 2010, which is placed on record at Page No.281 of the compilation of the petition, the lease has been rendered liable to be fortified and the compensation would be payable at three times the lease rent. The transfer pursuant to the Scheme of Arrangement was under the provisions of the Companies Act, 1956 amounted to transfer of lease. The consequences including that of eviction would follow. The contention could not be accepted that the case is different since it was a demerger. Such a contention is misconceived because under the Scheme of Arrangement, the lease is already transferred to the resulting company and the new companies have been brought into existence. The leasehold rights cannot be said to be lasting with or cannot be said to be continuing with the trasnferor company.
10.2 The contention was that the first lease contemplates a stipulation of payment of three times the rent as transfer or assignment fees at the time of transfer. It is the case of the applicant that the KPT is entitled to levy the transfer fee only to the said extent but not on the basis of the rentals revised pursuant to TAMP Order.
10.3 It may be stated that the terms contemplate
prior approval of the KPT before transfer can be
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C/CA/11998/2015 CAV ORDER
effected. Therefore the actual transfer has to be
post-approval only. In the present case, the
petitioner did not even apply for prior approval.
Therefore, it cannot insist that KPT should accept the date of transfer as 12th March, 2010.
10.4 The demand of the KPT for transfer fee as per notice dated 09th October, 2015 taking the rent as revised under the TAMP Order/Notification is prima facie quite justified and the applicant-petitioner cannot claim that determination of transfer fee should be on the basis of the rent stipulated in the original allotment order. As far as the second lease in respect of land admeasuring 6,878 sq. mtrs. Is concerned, the lease period expired before the transfer. Therefore, the issue of levy of transfer fee has not arisen in respect of the said lease. The KPT is entitled, however to lease rent for the period of occupation and to claim the amount three times the lease rent as per the Land Policy for unauthorised occupation. The petitioner being a transferee company and independent entity resulting out of the Scheme of Arrangement was bound in law to seek approval of the KPT for its status and was further obliged to pay the transfer fee as claimed by the KPT.
11. Therefore above is the inescapable strong prima facie conclusion in respect of payability of the transfer fee having regard to the operation of the facts of the case.
12. For all the above adverted aspects, Page 24 of 26 HC-NIC Page 24 of 26 Created On Sun Sep 03 13:42:48 IST 2017 C/CA/11998/2015 CAV ORDER considerations and reasons, the case of the applicant on all the three contentions fails in terms of prima facie legal merits. The amounts demanded by the KPT in notice dated 09th October, 2015 could hardly be questioned more particularly when the claim of the KPT has strong prima facie statutory basis. It stems from the authority of law flowing from the prima facie consideration of the above referred provisions of the Major Port Trusts Act, 1963 and the principles of law operating in that regard, the same being based on the TAMP's Order and Notification which has statutory operation to override the terms of the existing lease. The contention that the levy is retrospective could also not hold the field on prima facie consideration as discussed above. The applicant-petitioner also fails to establish its prima facie case for resisting and refusing to pay the transfer fee for the strong facts operating against it.
13. As on the neither score, the applicant has got any prima facie case, the relief prayed for in the present Civil Application cannot be granted. The notice dated 09th October, 2015 cannot be stayed and shall have to be operated for its consequences. The applicant-petitioner's case wanting in prima facie legal and factual merits, the applicant will have to pay the amounts demanded. What may be observed is only that the payment of amount demanded in the notice will be subject to final orders which may be passed in the writ petitions. Notice dated 09th October, 2015 required the petitioner to clear the demanded dues within 15 days, in which regard, since the case was Page 25 of 26 HC-NIC Page 25 of 26 Created On Sun Sep 03 13:42:48 IST 2017 C/CA/11998/2015 CAV ORDER agitated and now has culminated into present order, it is provided that the period of 15 days mentioned in the said notice dated 09th October, 2015 shall be reckoned to run from the date of receipt of this order.
14. Civil Application stands dismissed.
(N.V.ANJARIA, J.) Anup Page 26 of 26 HC-NIC Page 26 of 26 Created On Sun Sep 03 13:42:48 IST 2017