Gujarat High Court
Messrs Anita Exports vs Union Of India on 18 April, 2019
Author: Harsha Devani
Bench: Harsha Devani, Bhargav D. Karia
C/SCA/17013/2018 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 17013 of 2018
FOR APPROVAL AND SIGNATURE:
HONOURABLE MS.JUSTICE HARSHA DEVANI
and
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
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1 Whether Reporters of Local Papers may be allowed to
see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the
judgment ?
4 Whether this case involves a substantial question of law
as to the interpretation of the Constitution of India or any
order made thereunder ?
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MESSRS ANITA EXPORTS & 1 other(s)
Versus
UNION OF INDIA & 2 other(s)
================================================================
Appearance:
MR PARESH M DAVE, ADVOCATE with MR AMAL PARESH DAVE,
ADVOCATE for the Petitioners
MR. PARTH H BHATT(6381) for the Respondents
================================================================
CORAM: HONOURABLE MS.JUSTICE HARSHA DEVANI
and
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
Date : 18/04/2019
ORAL JUDGMENT
(PER : HONOURABLE MS.JUSTICE HARSHA DEVANI) Page 1 of 22 Downloaded on : Sat Oct 12 04:46:15 IST 2019 C/SCA/17013/2018 JUDGMENT
1. By this petition under article 226 of the Constitution of India, the petitioners have challenged the decision of the second respondent - Board of Approval, New Delhi taken in its 84th meeting held on 5.10.2018 (Annexure "O" to the petition), whereby it has rejected the proposal for extension/renewal, and prays for all consequential benefits and reliefs including renewal and extension of the petitioners' Letter of Approval.
2. The facts of the case stated briefly are that the petitioner firm was granted Letter of Approval (LoA) dated 15.5.1996 by the respondent authorities permitting the petitioner to function within the Special Economic Zone (SEZ) for manufacture of plastic bags etc. out of plastic waste/scrap. The Letter of Approval was amended from time to time permitting the petitioner firm to manufacture reprocessed plastic agglomerates out of the waste and scrap, and also permitting the petitioners recycling/re-conditioning of old and used clothing.
2.1 Till 2005-2006, the petitioner firm was extensively involved in both the businesses of re-cycling of plastic waste/scrap as well as in the production of textile products from used clothing. However, thereafter, the Ministry was conducting a detailed examination of continuation and functioning of plastic re-cycling units and therefore, the Letter of Approval was extended only for a short period of time awaiting the outcome of the said examination by the Ministry. During such period, extension was granted only for a period of six months. Accordingly, the Letter of Approval granted to the petitioner in the meantime was extended from time to time for Page 2 of 22 Downloaded on : Sat Oct 12 04:46:15 IST 2019 C/SCA/17013/2018 JUDGMENT short periods. Since the Letter of Approval for recycling and reprocessing plastic out of waste and scrap was not being extended in a routine manner, but was temporarily extended intermittently, the petitioners found it difficult to continue their business in the normal fashion. However, their plastic division was never entirely shut down and the petitioners always had the intention to carry on the said business on standardization of the policy by the respondent Ministry. The petitioners, therefore, from time to time, kept renewing the Letter of Approval.
2.2 It appears that a draft policy came to be issued by the respondent Ministry on 4.2.2013 concerning the functions and operations of units engaged in the business of recycling of plastic, which also came to be published on the website of the said authority. As a consequence of the finalization of the policy, the respondent Ministry addressed a letter to all Zonal Development Commissioners, including the third respondent, for listing all the cases relating to extension of letter of permission of units engaged in plastic reprocessing before the second respondent for consideration during its meeting scheduled on 17.10.2013. Pursuant thereto, the petitioner addressed various communications to the third respondent requesting it to place the matter of the petitioner's unit also before the Board of Approval for consideration. However, the petitioner's case was not put up for consideration before the Board of Approval in its meeting held on 8.11.2013, whereas the case of other nineteen units engaged in reprocessing of plastic waste and scrap situated at Kandla SEZ and nine other units situated at other SEZs came to be considered by the Board of Approval and extension to all the units came to be Page 3 of 22 Downloaded on : Sat Oct 12 04:46:15 IST 2019 C/SCA/17013/2018 JUDGMENT granted as a matter of routine.
2.3 Thereafter, the petitioners addressed letters dated 21.11.2013 and 26.12.2013, bringing to the notice of the third respondent that the petitioner's name was missed out and was not forwarded or placed before the Board of Approval for extension of Letter of Approval. Pursuant to the request made by the petitioner, the petitioner's case for renewal of Letter of Approval was put up before the Board of Approval. In its meeting held on 3.4.2014, the Board of Approval noted that the proposal of the petitioner was not recommended by the Development Commissioner and therefore, permitted the Development Commissioner to withdraw the proposal. Being aggrieved by the withdrawal, the petitioner addressed various letters to the second respondent as well as the third respondent bringing to their notice that such withdrawal was incorrect and without any reason.
2.4 Pursuant to the said communications, the third respondent - Development Commissioner once again forwarded the proposal for renewal before the Board of Approval under letter dated 28.12.2014 and recommended that the case of the petitioner was fit for renewal. Thereafter, several meetings were held by the Board of Approval wherein extension and renewal was granted to two units, viz., M/s R. R. Vibrant Polymers Ltd., a unit in Kandla SEZ and M/s Plastic Processors and Exports, a unit in Noida SEZ, which were otherwise lying defunct and dormant for eight to fifteen years.
2.5 As the case of the petitioner was not taken up despite recommendation made by the third respondent, the petitioner Page 4 of 22 Downloaded on : Sat Oct 12 04:46:15 IST 2019 C/SCA/17013/2018 JUDGMENT addressed various letters and emails both to the second as well as third respondents for taking up the case of the petitioner for renewal. Despite specific recommendation made by the third respondent vide letter dated 28.10.2014 and various reminders addressed by the petitioner, its case was not taken up by the Development Commissioner for almost forty five months. Finally, the case was posted before the second respondent for consideration in its meeting held on 3.7.2017. However, despite the recommendation made by the third respondent, the Board of Approval rejected the proposal without assigning any reasons whatsoever, which was communicated to the petitioner by a letter dated 12/14.7.2017.
2.6 Being aggrieved, the petitioners filed a writ petition before this court being Special Civil Application No.19048 of 2017. This court by a judgment and order dated 8.5.2018, recorded the submissions of the petitioners and directed the concerned authority to reconsider the petitioner's case to examine the similarity with other existing units, which, according to the petitioners, were granted renewal despite being non-operational for extended period. Accordingly, the petitioner's case was placed back before the Board of Approval. In its 83rd meeting held on 19.6.2018, the petitioner's case was taken up, but after considering the facts of the case and petitioner's submissions, the Board of Approval directed the Development Commissioner, KASEZ to carry out inspection of the unit and furnish a factual report after checking the records of the unit as well as similar cases pointed out before this court in the judgment dated 8.5.2018.
Page 5 of 22 Downloaded on : Sat Oct 12 04:46:15 IST 2019C/SCA/17013/2018 JUDGMENT 2.7 Pursuant thereto, the office of the Development
Commissioner conducted inspection of the petitioners' unit and checked all the records, including the machinery and equipment in the unit. Thereafter, the Development Commissioner submitted a report to the second respondent - Board of Approval. In the 84th meeting held on 12.9.2018, the petitioners' request/application for extension of Letter of Approval was listed as agenda item No.84.7(vii). The petitioner's case was taken up for consideration and decision by the Board of Approval in its 84th meeting, but it was deferred for further deliberations. Thereafter, the case of the petitioner was taken up on 5.10.2018 in the follow up meeting, when the application/request of the petitioner for renewal and extension of Letter of Approval came to be once again rejected by the Board of Approval. Being aggrieved, the petitioners have preferred the present petition seeking the reliefs noted above.
3. Mr. Paresh Dave, learned advocate for the petitioners, submitted that the decision of the Board of Approval not to accede to the petitioner's request for renewal of Letter of Approval for extension of recycling of plastic waste and scrap is wholly illegal and without jurisdiction and also contrary to the specific directions issued by this court for reconsideration of its case. It was submitted that when the petitioner's case was placed back before the Board of Approval pursuant to the direction issued by this court and the Board of Approval was directed to reconsider the petitioner's case to examine the similarity with other existing units which were granted renewal despite being non-operational for a long period, the Board of Approval was bound to reconsider the petitioner's case from Page 6 of 22 Downloaded on : Sat Oct 12 04:46:15 IST 2019 C/SCA/17013/2018 JUDGMENT that angle; but the Board of Approval has not only acted without jurisdiction but also unreasonably and arbitrarily in not following the direction issued by this court.
3.1 The attention of the court was invited to the report of the Development Commissioner, to submit that after due verification of the facts on a specific direction of the Board of Approval, the Development Commissioner had reported that the case of another units, viz., M/s R.R. Vibrant Polymers Ltd., KASEZ was similar and the report from the Development Commissioner, Noida also confirmed that the unit of M/s Plastic Processors and Exporters Pvt. Ltd. remained closed for a long period of fifteen years before renewal/extension of Letter of Approval was granted in their favour. It was submitted that the similarity between such cases and the case of the petitioners herein stood fully established; and therefore, the Board of Approval was under an obligation to allow extension and renewal of Letter of Approval in favour of the petitioners in compliance with the direction issued by this court. It was submitted that the Board of Approval, however, has bypassed the specific direction of this court and has come up with a totally new ground for rejecting the application of the petitioner on the ground that there was a policy for phasing out the units which were engaged in plastic recycling and reprocessing activities. It was submitted that the petitioner being better situated than the two units, the Board of Approval was not justified in not granting the extension of the Letters of Approval to the petitioner. It was, accordingly, urged that the petition deserves to be allowed by granting the reliefs as prayed for.
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4. Opposing the petition, Mr. Parth Bhatt, learned senior standing counsel for the respondents, submitted that rule 18 of the Special Economic Zone Rules, 2006 (hereinafter referred to as "the SEZ Rules") bars setting up of any new unit for recycling of plastic waste as well as recycling of used clothing under rules 18(4)(a) and 18(4)(c) of the rules. However, the proviso to the said rules empowers the Board of Approval, an inter-ministerial body constituted under section 8 of the SEZ Act, to decide the extension of validity of Letter of Approval granted to such units.
4.1 The attention of the court was invited to the averments made in the affidavit-in-reply filed on behalf of the respondents, to submit that there is a ban on setting up any new units for recycling business of both plastic and used clothing after the SEZ Act and the rules coming into force since 10.2.2006. That the import of plastic scrap was always under restricted category since 1998, having environmental concerns and that vide Notification No.GSR 395(E) dated 4.4.2016, the said plastic import was placed under the prohibited category by MOEF & CC and relaxation was granted to recycling units under the SEZs, which clearly indicates that existing plastic recycling units of SEZs are in a privileged position to import and recycle plastic waste and scrap. It was submitted that the provisions of the SEZ law also show the intention of the legislature not to proliferate the business of plastic scrap import.
4.2 It was submitted that pursuant to the order dated 9.5.2018 passed by this court, the report of the Development Commissioner, KASEZ was called for and on the basis of his Page 8 of 22 Downloaded on : Sat Oct 12 04:46:15 IST 2019 C/SCA/17013/2018 JUDGMENT report, the petitioners' case was considered in the 84th meeting of the Board of Approval held on 12.9.2018, whereafter the matter was deferred for further deliberations. It was submitted that thereafter, the petitioners' case was considered on 5.10.2018 and in view of the policy to phase out units of plastic waste and scrap recycling, the Board of Approval, in the interest of the environment, has not acceded to the request of the petitioners for renewal of Letter of Approval for extension of recycling of plastic waste and scrap. It was submitted that the decision taken by the Board of Approval being a conscious policy decision not to encourage revival of such closed units, the same is just, legal and proper, and does not warrant interference. It was reiterated that the Board of Approval has taken the decision taking into consideration the larger Government policy of phasing out such units and not to encourage revival of such plastic recycling business in SEZ, and that the decision of the Board of Approval is in compliance of the letter and spirit of the direction issued by this court. It was, accordingly, urged that the petition being devoid of merits, deserves to be dismissed.
5. In rejoinder, Mr. Paresh Dave invited the attention of the court to the fact that after rejecting the petitioner's application on 5.10.2018, the Board of Approval, on 22.11.2018, has allowed extension of one year to twenty eight similarly situated plastic scrap reprocessing units. It was argued that this decision of extension of Letter of Approval for twenty eight similar SEZ units shows that: (a) there is no policy by the Government for phasing out plastic processing units; and (b) such so called policy is applied only in the petitioner's case.
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6. The facts are not in dispute. Pursuant to the judgment and order dated 8.5.2018 passed by this court, the Board of Approval called for a report from the Development Commissioner, KASEZ. After receipt of the report, the Board of Approval, in its 84th meeting held on 12.9.2018, deferred the matter for further deliberations. Thereafter, by the impugned decision taken on 5.10.2018, the Board held thus:
"Agenda Item No.84.7(vii) Request of M/s Anita Exports, a unit in Kandla SEZ for renewal of LoA for extension of recycling of plastic waste and scrap.
The Board noted that this case came up for reconsideration consequent upon decision of the Hon'ble Gujarat High Court dated 08.05.2018 in SCA No.19048 of 2017.
The Board noted that number of plastic waste and scrap recycling units were set up in EPZs during 1995-
98. At the time of formulation of SEZ Rules, 2006, it was noticed from the past performance of these units that they did not adhere to environmental norms and had no export potential. The issue of continuation of these units in SEZs was also considered by the Export Promotion Board under the Chairmanship of Cabinet Secretary in 1998 and it was decided that no new units of plastic waste and scrap recycling will be allowed to be set up in EPZs.Page 10 of 22 Downloaded on : Sat Oct 12 04:46:15 IST 2019
C/SCA/17013/2018 JUDGMENT Accordingly, only those plastic scrap recycling units which existed prior to the inception of SEZ Rules, 2006, were allowed to continue and it was decided that no new unit of plastic waste and scrap recycling will be allowed in SEZs. The intention of the policy was to phase out these units of plastic waste and scrap recycling which could have negative impact on the environment. Further, as per Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016, the import of solid plastic waste i.e. the raw material used by the plastic recycling units has been banned in Domestic Tariff Area. These units being in SEZ are exempted. However, the business model of these units have adverse effect on environment.
The Board noted that the past trend of operations of these units indicates that they used the provisions of SEZ Rules, 2006 to clear goods to DTA to a large extent to show positive NFE which is not in consonance with the overall aims of SEZ policy that seeks to boost actual exports. Moreover, certain norms prescribed by the Department of Commerce for exports have prohibited in the DTA, and function in the SEZ, that for without an adequate nexus to exports, which is the paramount rationale of the SEZs.
The Board noted that considering the overall policy of phasing out such units in the interest of environment, there should not be any further repetition of the decisions which have been taken on Page 11 of 22 Downloaded on : Sat Oct 12 04:46:15 IST 2019 C/SCA/17013/2018 JUDGMENT the earlier referred cases, contrary to the above reality and the objectives of the policy.
If the renewal of this case of extension of LoA is considered, this again would become precedent for such cases in future and consequently the larger policy intent of phasing out such units would remain unachievable. In view of the above discussion, the Board was not inclined to consider the proposal for present renewal favourably. The unit has been closed for 7 years, and the balance of convenience lies in maintaining that position.
Accordingly, BoA decided not to accede to the request of M/s Anita Exports, for renewal of LoA for extension of recycling of plastic waste and scrap."
7. On a plain reading of the above decision, it is clear that such decision has been taken in the light of the larger policy intent of phasing out such units in the interest of the environment. However, it appears that the petitioner is singled out for implementation of such policy, whereas in case of similarly situated units, approval is granted by the Board of Approval and the Letter of Approval has been extended for a further period of one year.
8. Insofar as the larger policy intent of phasing out such units is concerned, no such policy has been placed on record nor is the learned counsel for the respondents in a position to produce such policy and as a matter of fact, it appears that the Central Government has not taken any policy decision to Page 12 of 22 Downloaded on : Sat Oct 12 04:46:15 IST 2019 C/SCA/17013/2018 JUDGMENT phase out plastic recycling units.
9. At this juncture, reference may be made to section 9 of the Special Economic Zones Act, 2005, which reads thus:
"9. Duties, powers and functions of Board.- (1) Subject to the provisions of this Act, the Board shall have the duty to promote and ensure orderly development of the Special Economic Zones. (2) Without prejudice to the generality of the provisions contained in sub-section (1), the powers and functions of the Board shall include--
(a) granting of approval or rejecting proposal or modifying such proposals for establishment of the Special Economic Zones;
(b) granting approval of authorised operations to be carried out in the Special Economic Zones by the Developer;
(c) granting of approval to the Developers or Units (other than the Developers or the Units which are exempt from obtaining approval under any law or by the Central Government) for foreign collaborations and foreign direct investments (including investments by a person resident outside India), in the Special Economic Zone for its development, operation and maintenance;
(d) granting of approval or rejecting of proposal for providing infrastructure facilities in a Special Economic Zone or modifying such proposals;
(e) granting, notwithstanding anything contained in the Industries (Development and Regulation) Act, 1951 (65 of 1951), a licence to an industrial undertaking referred to in clause (d) of section 3 of that Act, if such undertaking is established, as a whole or part thereof, or proposed to be established, in a Special Economic Zone;
(f) suspension of the letter of approval granted to a Developer and appointment of an Administrator under sub-section (1) of section 10;
(g) disposing of appeals preferred under sub-section (4) of section 15;
(h) disposing of appeals preferred under sub-section Page 13 of 22 Downloaded on : Sat Oct 12 04:46:15 IST 2019 C/SCA/17013/2018 JUDGMENT (4) of section 16;
(I) performing such other functions as may be assigned to it by the Central Government. (3) The Board may, if so required for the purposes of this Act or any other law for the time being in force relating to Special Economic Zones, by notification, decide as to whether a particular activity constitutes manufacture as defined in clause (r) of section 2 and such decision of the Board shall be binding on all Ministries and Departments of the Central Government.
(4) The Board may delegate such powers and functions as it may deem fit to one or more Development Commissioners for effective and proper discharge of the functions of the Board. (5) Without prejudice to the foregoing provisions of this Act, the Board shall, in exercise of its powers or the performance 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.
(6)The decision of the Central Government whether a question is one of policy or not shall be final."
10. Thus, sub-section (2) of section 9 of the SEZ Act delineates the powers and functions of the Board, which of course is without prejudice to the generality of the provisions contained in sub-section (1), which provides that the Board shall have the duty to promote and ensure orderly development of the Special Economic Zones. Sub-section (2) of section 9 of the SEZ Act postulates nine duties and functions of the Board, out of which clauses (a) to (e) relate to granting approval by the Board; clause (f) relates to suspension of approval, clauses (g) and (h) relate to disposing of appeals, and (i) provides for performing such other functions as may be assigned to it by the Central Government. Sub-section (5) of section 9 of the SEZ Act, which is relevant Page 14 of 22 Downloaded on : Sat Oct 12 04:46:15 IST 2019 C/SCA/17013/2018 JUDGMENT for the present purpose, says that the Board shall in exercise of its powers or the performance of its functions under the Act, be bound by such directions on questions of policy as the Central Government may give in writing to it from time to time. Thus, it is the Central Government which would frame the policy and the Board would be bound by the directions of the Central Government which are to be given in writing. The fact that sub-section (5) of section 9 of the SEZ Act specifically provides for policies to be framed by the Central Government means that the general provisions contained in sub-section (1) of section 9 would not include the power to take policy decisions. Therefore, the Board while discharging its duties and functions, is bound by the policies framed by the Central Government, but has no power to frame policies on its own. The Board, therefore, is not a policy making body but only an implementing one.
11. As a necessary corollary, it follows that for the purpose of phasing out units involved in recycling of scrap and plastic waste, there has to be a policy of the Central Government in this regard. Furthermore, such policy has to be in writing. In the facts of the present case, there is no material on record to show that the Central Government has framed any policy for phasing out units involved in recycling of scrap and plastic waste.
12. On behalf of the respondents, strong reliance has been placed upon sub-rule (4) of rule 18 of the SEZ Rules, it may, therefore, be germane to refer to the said rule, which to the extent the same is relevant for the present purpose, reads thus:
Page 15 of 22 Downloaded on : Sat Oct 12 04:46:15 IST 2019C/SCA/17013/2018 JUDGMENT "18. Consideration of proposals for setting up of Unit in a Special Economic Zone.-
xxxx (4) No proposal shall be considered for: -
(a) Recycling of plastic scrap or waste:
Provided that extension of Letter of Approval for an existing Unit shall be decided by the Board:"
13. It is the case of the respondents that rule 18 of the SEZ Rules bars setting up of any new unit for recycling of plastic waste. However, the proviso thereto empowers the Board of Approval, an inter-ministerial body constituted under section 8 of the SEZ Act to decide the extension of validity of Letter of Approval granted to such units. It is also the case of the respondents that there is a ban on setting up of any new units for recycling of both plastic and used clothing after the coming into force of the SEZ Act and rules since 10.2.2006. The import of plastic scrap was always under the restricted category since 1998 due to environmental concerns. It appears to be the case of the respondent Board that the policy of the Central Government of phasing out plastic unit can be culled out from sub-rule (4) of rule 18 of the SEZ Rules as there is a ban on setting up of new units. In the opinion of this court, no such policy can be gathered from sub-rule (4) of rule 18 of the SEZ Rules. The only policy embedded in the sub-rule is a policy not to permit new units for recycling of scrap being set up and that is how the Board has been reading the sub-rule till date by granting extension of Letter of Approval by exercising the powers vested in it under the proviso. It is only in the case of the petitioners that the Board has read into rule 18(4) a policy Page 16 of 22 Downloaded on : Sat Oct 12 04:46:15 IST 2019 C/SCA/17013/2018 JUDGMENT to phase out recycling of plastic scrap.
14. Having regard to the chequered history of the case and the fact that time and again the petitioner's case has been deferred by the Board on one ground or the other, it seems that the Board for reasons best known to it, it is trying to evade granting extension of the Letter of Approval to the petitioner. Earlier, the petitioner's case was deferred as it was not supported by the report of the Development Commissioner. Even after the Development Commissioner positively recommended the case of the petitioner, the Board turned down the request without assigning any specific reason therefor, on account of which the petitioner was constrained to approach this court, which by a judgment and order dated 8.5.2018 observed thus:
"It appears from the record that in similar case of other units engaged in the same line of business at Kandla SEZ and other SEZs, extension/renewal was granted, which was otherwise lying defunct and dormant, as per the say of the petitioner. This aspect requires closer scrutiny by the respondent-authority. It is undisputed that the case of the petitioners was not taken up despite there being a recommendation by the respondent no. 3, the petitioner from time to time addressed various letters and e-mails to the respondents no. 2 & 3 for taking up petitioner's case for renewal. Despite recommendation by the respondent no. 3 and though according to the petitioner, the case was similar to the case of other SEZ units, its unit was not granted renewal. Surprisingly, the respondent no. 2 during the said meeting held on 3rd July 2017 rejected the proposal of the petitioner without assigning any reasons.
Admittedly, the petitioner was granted Letter of Permission [LoP] under the erstwhile Import-Export Policy dated 15th May 1996 for manufacturing of all Page 17 of 22 Downloaded on : Sat Oct 12 04:46:15 IST 2019 C/SCA/17013/2018 JUDGMENT types of plastic bags-Garbage collection/carry/ shopping bags, etc., and subsequently, on a request having been made by the petitioner-unit, the said LoA was also amended/broad banded to include recycling activity of worn and used clothing on 27th September 2001, after conversion of the said Free Trade Zone [FTZ] into SEZ unit with effect from 1st November 2000 and thereafter, their five-year block period was recasted from 1st November 2000 to 31st October 2005. Rule 18 of the SEZ Rules, 2006 empowers the Board of Approval which is an inter-ministerial body constituted under section 8 of the SEZ Act to decide extension of validity of LoA granted to such units. We noticed that LoA in the case of the petitioner was further renewed on 13th September 2006 for a period of five years on certain conditions; including necessary environment clearances from GPCB. The petitioners obtained requisite Consolidated Consent Order from GPCB for their plastic recycling activities, which was renewed vide office letter dated 21st August 2008 upto 31st October 2010. Thereafter, LoA was renewed on piecemeal basis till 30th September 2012, as the exercise for putting in place a separate policy for regulating the activities of both plastic recycling as well as worn clothing units was under finalization in the year 2013 and therefore, all such units of SEZs were granted extension of their LoA in piecemeal manner till 31st November 2013; except the petitioners' unit for their plastic recycling business. Again a request was made by the petitioners' Unit for renewal of their LoA for plastic recycling business and the same was forwarded to the ministry on 20th February 2017 for consideration in the BoA meeting. Finally, on 3rd July 2017, request for renewal of their LoA was taken into consideration in a meeting and proposal of the petitioner-Unit for renewal of LoA for extension of recycling of plastic waste and scrap was rejected.
Considering the aforesaid facts and circumstances of this case, we are of the view that the petitioner's case requires reconsideration by the authority particularly to examine the similarity with other existing units which according to the petitioners were granted renewal despite being non operational for extended period.Page 18 of 22 Downloaded on : Sat Oct 12 04:46:15 IST 2019
C/SCA/17013/2018 JUDGMENT With these observations, this writ petition is hereby partly allowed. The order passed by the respondent no. 2 rejecting the proposal for extension/renewal [as recorded at Item No. 78.5 (ii) of the minutes of meeting held on 3rd July 2017] and the covering letter dated 14th July 2017 is hereby quashed and set- aside."
15. Thus, in terms of the above directions, the respondent Board was required to examine the similarity of the petitioners' case with other existing units which according to the petitioners were granted renewal despite being non- operational for the extended period. The Board thereafter, in its 83rd meeting held on 19th June, 2018, directed the Development Commissioner, KASEZ to carry out inspection of the unit and furnish a factual report after checking the records of the Unit and similar cases pointed out by this court in its order dated 8.5.2018. In compliance of such direction, the Development Commissioner submitted a report dated 11.7.2018, the relevant part whereof reads thus:
"4. As per directions of the BoA to DC KASEZ to carry out inspection of the Unit and furnish a factual report, the Development Commissioner along with the Joint Development Commissioner and other officials of KASEZ visited the unit on 22.06.2018. During inspection of the unit, some old machinery for recycling of plastic waste and scrap such as Agglomerate Machine, Generator in covered condition etc. were found in their allotted Plot No.419-B, which are lying idle due to non-operation of the plastic business and non-renewal of their LoA.
5. Further, it is noticed from the records available with this office that the said Unit has already ordered additional new machinery like Agglomerate Machine, Blade Sharping Machine, Steel trays for collection, Extra electric motor (Heavy Duty), Electric cable, Page 19 of 22 Downloaded on : Sat Oct 12 04:46:15 IST 2019 C/SCA/17013/2018 JUDGMENT Diesel Generator set (250 KVA) at a cost of Rs.66.80 lakhs for recycling of plastic waste and scrap from M/s Brahmani Engineering Works, Shed No.K-42, Opp. ITI, GIDC, Gandhidham (Kutch) - 370201. Also, they have submitted that they have invested Rs.210 lakhs totally in Plant, Machinery & Building. As regards the consent order from GPCB, the unit will be required to obtain fresh consent order once and if their LoA is renewed by the BoA.
6. With regard to similar situation with that of M/s R. R. Vibrant Polymers Ltd., KASEZ, the said unit was lying idle since the year 2000 due to fire and the third case of M/s Plastic Processors & Exporters Pvt. Ltd. is concerned, the same falls under the jurisdiction of DC, Noida SEZ. The BoA had considered the renewal of dormant units i.e. M/s R.R. Vibrant and M/s Plastic Processors which were similar to the case of M/s Anita Exports.
7. Further, based on the minutes of 83rd BoA meeting held on 19.06.2018, M/s Anita Exports, KASEZ vide its letter dated 27.06.2018 has claimed similarity and enclosed a comparison chart of the 3 cases with their letter which is enclosed herewith."
16. A perusal of the chart reproduced by the Board of Approval in the minutes of its 84th meeting held on 12th September, 2018 shows that the petitioners were better placed than the other two parties, viz., M/s R. R. Vibrant Polymers Ltd., Kandla SEZ and M/s Plastic Processors & Exporters Pvt. Ltd., Noida SEZ. In the said meeting, the request of the petitioners was placed before the Board for its reconsideration. However, in the said meeting, the Board deferred the matter for further deliberations. Thereafter, in the follow up meeting held on 5th October, 2018, the Board once again rejected the case of the petitioners for the reasons as reflected in the extracted portion of the order of the Board reproduced hereinabove.
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17. Thus, now that in the light of the order dated 8th May, 2018 of this court and the report of the Development Commissioner stating that the petitioners are similarly situated to the other two units which were granted extension of Letter of Approval by the Board, the Board had no option but to grant extension of the Letter of Approval to the petitioners, it has now come up with a totally new case by taking shelter behind rule 18(4) of the SEZ Rules, reading into it a policy decision to phase out units which were already established in the SEZ and the petitioners' case is the first case for implementing such so called policy. It appears that the new stand adopted by the Board for not considering the case of the petitioners, is presumably to wriggle out of the above order passed by this court. Considering the manner in which the petitioners' case has been either deferred or rejected on one ground or the other, while similarly situated parties have been granted extension of Letter of Approval, it appears that the Board for reasons best known to it is not inclined to grant approval to the petitioners without any valid reasons for such refusal.
18. In the opinion of this court, the decision of the Board taken in its meeting held on 5th October, 2018 rejecting the request of the petitioners for renewal of Letter of Approval for extension of recycling of plastic waste scrap, suffers from the vice of being discriminatory, arbitrary and capricious and flies in the face of the order dated 8th May, 2018 of this court, and cannot be sustained.
19. For the foregoing reasons, the petition succeeds and is, Page 21 of 22 Downloaded on : Sat Oct 12 04:46:15 IST 2019 C/SCA/17013/2018 JUDGMENT accordingly, allowed. The impugned decision dated 10th October, 2018 of the Board of Approval, to the extent the same relates to the petitioners herein, is hereby quashed and set aside. The request of the petitioners for renewal of Letter of Approval for extension of recycling of plastic waste and scrap is hereby allowed. The petitioners are granted extension of its Letter of Approval for a period of one year as extended by the Board in respect of twenty eight plastic recycling units in its 86th meeting held on 26th December, 2018. It is further clarified that the petitioners shall be treated on a par with such other twenty eight units as and when the question of further extension of the Letter of Approval arises in future.
20. Rule is made absolute accordingly with no order as to costs.
(HARSHA DEVANI, J) (BHARGAV D. KARIA, J) B.U. PARMAR Page 22 of 22 Downloaded on : Sat Oct 12 04:46:15 IST 2019