MOHAN LAL SHARMA Vs. UNION OF INDIA

JUDGEMENT

(1.) By filing this public interest litigation under Art. 226 of the Constitution, the petitioner has prayed to set aside the Memorandum of Understanding (MoU, for short) dated July 4, 2005 executed between the Government of Rajasthan and M/s. Mahindra and Mahindra Limited, a Company incorporated under the provisions of the Companies Act, 1956, for setting up Special Economic Zone (SEZ, for short) on a land admeasuring 3000 acres situated near Mahapura, Ajmer Road, Jaipur. The petitioner has further prayed to set aside the decision dated September 5, 2005 of the Government of Rajasthan by which the Jaipur Development Authority (JDA, for short) has granted approval to transfer the land admeasuring 161.23 hectares to the Rajasthan State Industrial Development and Investment Corporation Limited (RIICO, for short) for the purpose of setting up SEZ. The petitioner has also prayed to set aside Lease Deed dated September 26, 2006 executed by JDA in favour of RIICO for the purpose of establishment of SEZ. The petitioner has further prayed to set aside the notification dated December 20, 2005 issued under Section 4(1) of the Land Acquisition Act, 1894 (Act of 1894, for short) declaring that the lands mentioned therein are likely to be needed for the public purpose of setting up of SEZ. Yet another prayer claimed by the petitioner is that the State of Rajasthan, RIICO as well as JDA be restrained from transferring any further land to Mahindra World City (Jaipur) Limited directly or through RIICO. It is also prayed by the petitioner that a High Level Enquiry Committee be constituted to probe large scale scam to the tune of Rs. 5,000 crores in the State of Rajasthan relating to setting up of SEZ at Jaipur.

(2.) The petitioner is a retired municipal employee and claims that he had espoused public causes by filing public interest litigation relating to grabbing of valuable Government land. According to the petitioner, to accelerate industrial development, the Rajasthan Special Economic Zones Development Act, 2003 (State Act of 2003, for short) was enacted which came into force with effect from September 8, 2003. It is stated by the petitioner that under S. 6(1) of the State Act of 2003, the State of Rajasthan has to identify and notify the area to be developed as a special economic zone whereas under Section 6(2) of the said Act, the State Government has been entrusted with the duty to select a developer for the purpose of development of the zone, and under Section 6(3) of the said Act, the State Government is required to prescribe the procedure for the selection of the developer. According to the petitioner, to derive undue advantages, the State Government entered into MoU dated July 4, 2005 for establishing SEZ near Mahapura, Ajmer Road, Jaipur with Mahindra and Mahindra Limited, which is illegal. The petitioner has produced a copy of MoU dated July 4, 2005 at Annexure-2 to the petition. What is averred by the petitioner is that the Deputy Commissioner Zone-II, JDA prepared a proposal for acquisition of 13,000 bighas of land at Ajmer Road situated at various villages and forwarded the said proposal to the Secretary, JDA who after approving the proposal, forwarded the same to the Commissioner, JDA which was approved on June 16, 2005 without mentioning public purpose which mistake was subsquently rectified by mentioning that the public purpose for which the lands were sought to be acquired was establishment of Information Technology City, Bio-Tech City and Knowledge City at Jaipur. According to the petitioner, after identifying and notifying the area to be developed as a Special Economic Zone, it was the duty of the State Government to follow the procedure prescribed by the Rules for the selection of the developer and as the Rules have not been framed under the State Act, the decision to set up SEZ could not have been taken and as the State Government has selected the developer contrary to the provisions of Section 6 of the Act, the MoU dated July 4, 2005 entered into between the State of Rajasthan and Mahindra and Mahindra Limited is liable to be set aside. What is claimed by the petitioner is that the decision of selecting the developer has been taken with mala fide intention to favour Mahindra and Mahindra Limited as priceless land has been transferred to the said Company without charging single naya paisa in a clandestine manner and, therefore, the MoU should be set aside by the Court. It is explained by the petitioner that the SEZ was required to be set up on a land admeasuring 3000 acres out of which 1000 acres of Government land available in the name of JDA was leased out to RIICO at Agricultural Reserve Price by Lease Deed dated September 6, 2005 which is illegal and, therefore, the lease deed is also liable to be set aside. The petitioner has asserted that RIICO, in turn, has handed over the land leased to it, to M/s. Mahindra World City (Jaipur) Limited which is contrary to the provisions of the State Act of 2003. According to the petitioner, the proposed requirement for setting up SEZ was 3000 acres of land and, therefore, the JDA took steps for acquisition of land admeasuring about 3495 acres of land by issuing notification dated December 20, 2005 under Section 4(1) of the Act of 1894 which was published in

(3.) On service of notice, respondents Nos. 2 and 3 i.e. the State of Rajasthan and RIICO have filed reply controverting the averments made in the petition. In the reply, it is stated that the petitioner has filed the instant portion to grab public glare with political overtones and, therefore, the petition should be dismissed by the Court. It is mentioned in the reply that the process for establishing SEZ started in February 2005 and apart from allotment of land to RIICO for the purpose of development of two IT majors i.e. Infosys and Wipro have already proposed for allotment of land in the SEZ, Jaipur by the Company and, therefore, the petition which is against public interest should not be entretained by the Court. In the reply it is mentioned that Mahindra and Mahindra Company i.e. respondent No. 6 addressed a letter dated February 21, 2005 to the Government of Rajasthan declaring its intention to set up SEZ in the State of Rajasthan, after which meetings were held on April 23, 2005, May 11, 2005, June 1, 2005 and June 9, 2005 to discuss the proposal. What is stated in the reply is that the Government of Rajasthan Administrative Reforms Department (Group-3) by its order dated June 16, 2005 constituted an Inter Departmental Steering Committee for setting up multipurpose SEZs in the State of Rajasthan and after holding discussions, Inter-Departmental Steering Committee considered the MoU entered into between the Government of Rajasthan and respondent No. 6-Company and approved its draft with certain amendments which was sent to Bureau of Investment Promotion for further action. It is stated in the reply that in its 19th meeting, the Board of Infrastructure Development and Investment (BIDI, for short) discussed the draft MoU and directed the Industries Department to examine the same. It is informed in the reply that on July 4, 2005, the Secretary, Industries, Government of Rajasthan forwarded the draft MoU approved by the State Government to RIICO mentioning that RIICO, as an agency of the State Government was authorized to sign MoU for development of integrated SEZ, and as per the directions, RIICO as an agency of the State Government had signed MoU with Mahindra and Mahindra for establishing integrated SEZ at Jaipur. A copy of the letter dated July 4, 2005 is produced by the deponent of the affidavit-in-reply at Annexure-R/2/2. It is further stated in the reply that BIDI, in its 20th meeting held on August 25, 2005, granted ex-post facto approval to the MoU for establishment of SEZ whereas the Cabinet took decision on November 17, 2005 to establish SEZ near Jaipur-Ajmer National Highway and directed that the land meant for SEZ shall be utilized in accordance with the guidelines issued by the Government of India. What is stated in the reply is that in terms of MoU dated July 4, 2005, the Project Company which was conceived as Special Purpose Vehicle was incorporated in the name and style of Mahindra World City (Jaipur) Limited on August 26, 2005 and upon the application of Mahindra World City (Jaipur) Limited, the State Government made recommendations to the Government of India, Ministry of Commerce on November 23, 2005 for grant of approval. It is mentioned in the reply that Mahindra World City (Jaipur) Limited submitted a proposal to the Board of Approval, Ministry of Commerce and Industry, Government of India for setting up a sector specific SEZ for IT/ITES Sector and Multiproduct SEZ at Jaipur which is estimated to generate foreign exchange as well as employment, which is in public interest. It is stated in the reply that the Government of India, Ministry of Commerce and Industry by communication dated April 7, 2006 granted formal approval to the proposal for development operation and maintenance of sector specific SEZ and also granted in-principle approval for expansion of the same into a multiproduct SEZ at Jaipur in Rajasthan. What is highlighted in the reply is that Shareholders' Agreement was executed on 25th June, 2006 between RIICO and Mahindra Gesco Developers Limited. It is stated in the reply that RIICO is holding equity shares in the Mahindra World City (Jaipur) Limited to the extent of 26% whereas Mahindra Gesco Developer's equity in the said Company is 74% and the Board of Directors comprises 10 Directors, out of which 4 Directors have to be nominated by RIICO and, therefore, it is wrong to say that private Companies have been favoured in the matter of allotment of land. After pointing out to the Court that the State Government had committed for allotment of 1000 acres of Government land for the purpose of establishment of SEZ, it is submitted that JDA has allotted Government land vested in it by virtue of Section 54 of the Jaipur Development Authority Act, 1982 (JDA Act, for short) for a consideration of Rs. 61,17,40,727/- to RIICO which cannot be considered to be illegal at all. It is mentioned in the reply that vide Notification No. 382 dated April 10, 2007, the Central Government, has, in exercise of the powers conferred by sub-section (1) of Section 4 of the Special Economic Zones Act, 2005 (the Central Act of 2005, for short) and in pursuance of Rule 8 of the Special Economic Zones Rules, 2006, notified 76.10 hectares in revenue village Kalawara, Tehsil Sanganer, District Jaipur and Nevta as a Special Economic Zone. Thus by filing reply what is pointed out by respondent Nos. 2 and 3 is that the matter regarding establishment of Special Economic Zone at Jaipur by Mahindra and Mahindra was considered by BIDI as well as Inter-Departmental Steering Committee after which a decision was taken by the State Government to allow development of SEZ through Special Purpose Vehicle, a Company incorporated in the name and style of Mahindra World City (Jaipur) Limited which cannot be regarded as illegal and as there is no large scale scam as alleged by the petitioner, the petition should be dismissed.