Dismissed

Lulu Cyber Park (P) Ltd. v. the Union of India

Kerala HC11 Oct 2021WP(C)/6570/2021

Case brief

AI extract

What is this about?

The petitioner (SEZ developer) challenged exit orders passed by the Development Commissioner granting exit to a tenant unit. The court held that under Rule 74 of SEZ Rules 2006, the co-developer has no role in the exit process, and the Administrative Authority acts independently.

What did the court decide?

The writ petition filed by the co-developer was dismissed with no interference in the exit orders.

Lulu Cyber Park (P) Ltd. Vs the Union of India — Company and Corporate | Kerala HC (2021)

¶1

IN THE HIGH COURT OF KERALA AT ERNAKULAM

¶2

PRESENT

¶3

THE HONOURABLE MR. JUSTICE P.V.KUNHIKRISHNAN

¶4

MONDAY, THE 11^TH DAY OF OCTOBER 2021 / 19TH ASWINA, 1943

¶5

WP(C) NO. 6570 OF 2021

¶6

PETITIONER/S:

¶7

LULU CYBER PARK (P) LTD. INFOPARK SEZ, KOCHI-682 042, REPRESENTED BY ITS AUTHORIZED SIGNATORY A. JANARDHANA PAI, AGED 75 YEARS, S/O. ACHUTHA PAI, DIRECTOR, LULU CYBER PARK (P) LIMITED INFOR PARK, SEZ, KOCHI-682 042, RESIDING AT 40/6535, AYERS APARTMENT, C-3, T.D. ROAD, ERNAKULAM-682 035

¶8

BY ADV G.SREEKUMAR (CHELUR)

¶9

RESPONDENT/S:

¶10

1 THE UNION OF INDIA REPRESENTED BY THE SECRETARY TO THE GOVERNMENT, MINISTRY OF COMMERCE AND INDUSTRY, DEPARTMENT OF COMMERCE, UDYOG BHAVAN, NEW DELHI-110 107

¶11

2 COCHIN SPECIAL ECONOMIC ZONE AUTHORITY (CSEZA), ADMINISTRATIVE BUILDING, COCHIN SPECIAL ECONOMIC ZONE, KAKKANAD, COCHI-682 037, REPRESENTED BY ITS CHAIRMAN.

¶12

3 THE DEVELOPMENT COMMISSIONER, COCHIN SPECIAL ECONOMIC ZONE (CSEZ), MINISTRY OF COMMERCE AND INDUSTRY, GOVERNMENT OF INDIA, KOCHI-682 037

¶13

4 M/S. ZERONE CONSULTING PRIVATE LIMITED, 106M 1ST FLOOR, LULU CYBER TOWER 1, LULU CYBER PARK PRIVATE LIMITED (LCPPL), INFOPARK SPECIAL ECONOMIC ZONE, KAKKANAD, COCHIN-682 042, REPRESENTED BY ITS AUTHORIZED SIGNATORY.

¶14

BY ADVS.SRI.JAISHANKAR V.NAIR, CGC SRI.S.ANANTHAKRISHNAN

¶15

THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 11.10.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

¶16

W.P.(C). No. 6570 of 2021

¶17

-2-

¶18

P.V.KUNHIKRISHNAN, J.

¶19

W.P.(C) No. 6570 of 2021 -W

¶20

Dated this the 11th day of October, 2021

¶21

JUDGMENT

¶22

The above writ petition is filed challenging Exts.P10 and

¶23

P11 orders passed by the 3^rd respondent. I will narrate the

¶24

short facts which leads to Exts.P10 and P11. The petitioner is the co-developer in the Infopark Special Economic Zone (SEZ) under the Ministry of Commerce and Industry, Government of India. The 4^th respondent is a tenant of the petitioner. The 4^th respondent entered into a lease agreement with the petitioner for an area approximately 8,289 square feet for running their

¶25

SEZ Unit. They were engaged in information technology services and the Letter of Approval (LOA) was given by the authority concerned in 2008. Ext.P1 is the lease agreement. There was some dispute between the petitioner and the 4^th respondent in connection with the lease, which leads to the

¶26

-3-

¶27

W.P.(C). No. 6570 of 2021

¶28

rent control proceedings, which ultimately culminated in fixing rent as sought by the petitioner, that is evident from Ext.P2 judgment of the Rent Control Appellate Authority. Though rent control revisions were preferred by the 4^th respondent against Ext.P2, those were subsequently withdrawn. Hence, Ext.P2 order of the appellate authority became final. It is the case of the petitioner that an amount of Rs.2.33 crores is due from the 4^th respondent to the petitioner as on 31.12.2020. For realisation of the same, Arbitration Proceedings are being initiated as contemplated under the lease deed and an Arbitration Request is pending before this Court. Meanwhile, the 4^th respondent approaches the authorities for an exit order in terms of Rule 74 of the Special Economic Zone Rules, 2006 (SEZ Rules 2006). Ext.P5 is the submission of the 4^th respondent dated 21.07.2021 to the 3^rd respondent during the hearing of that application. The petitioner also submitted an objection before the 3^rd

¶29

-4-

¶30

W.P.(C). No. 6570 of 2021

¶31

respondent as evident by Ext.P6. It is the case of the petitioner that the 3^rd respondent passed Exts.P10 and P11 orders allowing exit to the 4^th respondent without considering the contentions in Ext.P6. Aggrieved by the same, this writ petition is filed with following prayers:

¶32

“i) Call for the records leading to Ext P10 and P11 order and may be pleased to issue a writ of certiorari to quash the same.

¶33

ii) Issue a writ of mandamus or any other appropriate writ order or direction commanding the respondents, in the event of this Hon'ble court finding that it is a case of exit order then to debar the fourth respondent from further carrying out their activities inside any Special Economic Zone since it is a case of exit which means that there is complete divesting of activity from any Special Economic Zone in the interest of justice.”

¶34

Heard the learned counsel for the petitioner and the

¶35

learned counsel for the 4^th respondent. I also heard the

¶36

learned Central Government Counsel appearing for

¶37

W.P.(C). No. 6570 of 2021

¶38

-5-

¶39

respondents 1 to 3.

¶40

The learned counsel for the petitioner reiterated his contentions in the writ petition. The learned counsel submitted that the prayer of the 4^th respondent is not for an exit order and they are trying to shift their unit to another place. The leaned counsel takes me through Rule 74 of the SEZ Rules, 2006, which deals about exit of units. According to the counsel, on a perusal of Exts.P5 and P8 it is clear that the prayer of the 4^th respondent is to shift the unit and not for an exit order. The learned counsel specifically takes me through paragraph 3 of Ext.P5 letter of the 4^th respondent. Then the counsel takes me through Ext.P7, the exit policy of the SEZ Units. The learned counsel then takes me through the heading in Ext.P8, which says that “Bill of Entry for Home Consumption [Zone to Zone Transfer]”. Thereafter, the learned counsel relied on Ext.P9 which is a letter issued by the Under Secretary to the Government of India to all Development Commissioners,

¶41

W.P.(C). No. 6570 of 2021

¶42

-6-

¶43

Special Economic Zones. The learned counsel specifically relied on the 1^st and 2^nd paragraphs of the communication in Ext.P9 to strengthen his arguments that the proposal of shifting/relocation/transfer of SEZ Units from one SEZ to another SEZ within the same zone, the “No Due Certificate” from the existing developer/co-developer is necessary. The sum and substance of the arguments of the petitioner is that the action of the 4^th respondent is a shifting/relocation/transfer of SEZ unit from one SEZ to another SEZ within the same zone and therefore, the “No Due Certificate” from the existing developer/co-developer is necessary.

¶44

The learned counsel for the 4^th respondent

¶45

submitted that there is nothing to interfere with Exts.P10 and P11. The learned counsel submitted that the request of the 4^th respondent is only for an exit order from the SEZ scheme under Rule 74 of SEZ Rules, 2006. He also submitted that, as per the Special Economic Zone Act, 2005 (SEZ Act, 2005) and

¶46

W.P.(C). No. 6570 of 2021

¶47

-7-

¶48

Rules, 2006, if an application is filed for exit order as per Rule 74 of the SEZ Rules, 2006 the developer/co-developer has no role in it. The learned counsel submitted that this is clear from various provisions under the SEZ Act, 2005 and SEZ Rules, 2006. The learned counsel takes me through Ext.P10 order and submitted that there is nothing to interfere with the order passed by the 3^rd respondent. The learned counsel submitted that the 4^th respondent started the SEZ Unit at Infopark Special Economic Zone in 2008 and the LOA is Ext.R4(a). The learned counsel also takes me through Ext.R4(b), which is LOA for setting up the Unit at the Cochin Special Economic Zone and that was in the year 2016. The learned counsel submitted that the 4^th respondent has got two separate SEZ units at Infopark SEZ and at Cochin SEZ. The 4^th respondent wants to windup his Unit at Infopark Special Economic Zone. Therefore, the 4^th respondent submitted application for the exit order. The learned counsel submitted that when an

¶49

-8-

¶50

W.P.(C). No. 6570 of 2021

¶51

application for exit order is submitted by a Unit, the authority need to consider whether the conditions under Rule 74 of the SEZ Rules, 2006 are complied with or not. The 3^rd respondent, after considering the same, passed the exit order and there is nothing to interfere with the same. The learned counsel submitted that a detailed counter affidavit is filed to substantiate the case of the 4^th respondent.

¶52

The learned CGC submitted that a statement is filed on behalf of respondents 1 to 3. The learned CGC takes me through the counter affidavit especially paragraph 12 of the same and submitted that a person can have any number of Units holding separate LOAs for different authorized operations, in one or more SEZs in India subject to the condition that each Unit is treated as a separate SEZ Entity/Unit. The learned CGC submitted that the authority concerned passed the order strictly in accordance to Rule 74 of the SEZ Rules, 2006 and there is nothing to interfere with the

¶53

W.P.(C). No. 6570 of 2021

¶54

-9-

¶55

same.

¶56

I considered the contentions of the petitioners and

¶57

the respondents. I also perused the pleadings and documents in the writ petition along with the counter affidavit/statement.

¶58

The 4^th respondent - M/s.Zerone Consulting Private Limited, is a Unit inside the Infopark SEZ, Kakkanad engaged in IT services with LOA given in 2008. Ext.R4(a) is the LOA. The 4^th respondent approached the office of the Development Commissioner with an application for exit order from the SEZ scheme under Rule 74 of the SEZ Rules, 2006. The same was considered by the 3^rd respondent and passed Exts.P10 and P11 orders. Exts.P10 and P11 orders are passed in an application filed under Rule 74 of the SEZ Rules, 2006. It will be better to extract Rule 74 of SEZ Rules, 2006.

¶59

“RULE 74. Exit of Units.-(1) The Unit may opt out of Special Economic Zone with the approval of the Development Commissioner and such exit

¶60

-10-

¶61

W.P.(C). No. 6570 of 2021

¶62

shall be subject to payment of applicable duties on the imported or indigenous capital goods, raw materials, components, consumables, spares and finished goods in stock.

¶63

Provided that if the unit has not achieved positive Net Foreign Exchange, the exit shall be subject to penalty that may be imposed under the Foreign Trade (Development and Regulation), Act, 1992.

¶64

(2) The following conditions shall apply on the exit of the Unit, namely. -

¶65

(i) Penalty imposed by the competent authority would be paid and in case an appeal against an order-imposing penalty is pending, exit shall be considered if the unit has obtained a stay order from competent authority and has furnished a Bank Guarantee for the penalty adjudicated by the appropriate authority unless the appellate authority makes a specific order exempting the Unit from this requirement;

¶66

(ii) In case the Unit has failed to fulfill the terms and conditions of the Letter of Approval and penal proceedings are to be taken up or are in process, a legal undertaking for payment of

¶67

-11-

¶68

W.P.(C). No. 6570 of 2021

¶69

penalties, that may be imposed, shall be executed with the Development Commissioner;

¶70

(iii) The Unit shall continue to be treated a unit till the date of final exit.

¶71

(3) In the event of a gems and jewellery unit ceasing its operation, gold and other precious metals, alloys, gem and other materials available for manufacture of jewellery shall be handed over to an agency nominated by the Central Government at a price to be determined by that agency.

¶72

(4) Development Commissioner may permit a Unit, as one time option, to exit from Special Economic Zone on payment of duty on capital goods under the prevailing Export Promotion Capital Goods Scheme under the Foreign Trade Policy subject to the Unit satisfying the eligibility criteria under that Scheme.

¶73

(5) Depreciation norms for capital goods shall be as given in sub-rule (1) of rule 49.”

¶74

A reading of the above provision will show that a

¶75

Unit may opt out of Special Economic Zone with the approval

¶76

-12-

¶77

W.P.(C). No. 6570 of 2021

¶78

of the Development Commissioner and such exit shall be subject to payment of applicable duties on the imported or indigenous capital goods, raw materials, components, consumables, spares and finished goods in stock. It is also stated in Rule 74 that if the unit has not achieved positive Net Foreign Exchange, the exit shall be subject to penalty that may be imposed under the Foreign Trade (Development and Regulation), Act, 1992. Rule 74(2) says about three conditions that is applicable on the exit of a unit. Similarly, other formalities are also mentioned in Rule 74 (3), (4) and (5). There is nothing in Rule 74 or in the Act 2005, which will give an opportunity of hearing to a co-developer while considering an application for exit order. The short point raised by the petitioner is that the prayer of the 4^th respondent is not for getting an exit order. The 4^th respondent is actually shifting the unit from one zone to another zone. What is the evidence available for the same? The learned counsel for the petitioner

¶79

W.P.(C). No. 6570 of 2021

¶80

-13-

¶81

submitted that, in Ext.P8, it is mentioned that, it is a zone to zone transfer. But I perused Ext.P8. Ext.P8 is not a document that can be relied to conclude that the application of the 4^th respondent is not a request for an exit order under Rule 74 of the SEZ Rules. It is only a bill of entry for home consumption. The same relates to the transfer of articles and materials from one zone to another zone. Admittedly, the 4^th respondent is having two SEZ units as evident by Exts.R4(a) and R4(b) LOAs. The 4^th respondent wants an exit order as far as the SEZ Unit at Infopark, which relates to Ext.R4(a) LOA. The application of the 4^th respondent was considered by the 3^rd respondent in detail and found that the contentions of the 4^th respondent is genuine and exit order is passed as evident by Exts.P10 and P11.

¶82

The learned counsel for the petitioner relied on Ext.P9 communication from the Under Secretary to Government of India to all Development Commissioners, in

¶83

W.P.(C). No. 6570 of 2021

¶84

-14-

¶85

which it is stated that if the proposal is for shifting/relocation/ transfer of SEZ units from one SEZ to another SEZ, “No Due Certificate” from the existing developer/co-developer is necessary and also the consent letter/offer of space from the developer/co-developer where unit wants to shift is also necessary. According to me, Ext.P9 is not at all applicable in the facts and circumstances of this case. The 4^th respondent is having two SEZ units as evident by Exts.R4(a) and R4(b). He wants to windup his unit at Infopark SEZ, for which Ext.R4(a) LOA was issued. The 3^rd respondent considered that request in detail and allowed the request and issued exit order. I perused Ext.P10 order in detail, especially the concluding portion. The point raised by the petitioner is considered by the 3^rd respondent in detail and rejected the same. According to me, there is nothing to interfere with the above order invoking the powers under Article 226 of the Constitution of India.

¶86

If there is any grievance to the petitioner regarding

¶87

W.P.(C). No. 6570 of 2021

¶88

-15-

¶89

the arrears of rent, the petitioner is free to agitate the same in accordance to law, before the appropriate authority. But the petitioner cannot challenge Exts.P10 and P11 order, which according to me, is only an exit order and the co-developer of the 4^th respondent has no role in it. Therefore, according to me

¶90

there is nothing to be interfered with Exts.P10 and P11.

¶91

Therefore, the writ petition fails and accordingly it is

¶92

dismissed. Sd/-

¶93

P.V.KUNHIKRISHNAN JUDGE

¶94

das

¶95

-16-

¶96

W.P.(C). No. 6570 of 2021

¶97

APPENDIX OF WP(C) 6570/2021

¶98

PETITIONER EXHIBITS

¶99

EXHIBIT P1	A TRUE COPY OF THE AGREEMENT OF LEASEWITH EFFECTIVE DATE OF 01.04.2008 EXECUTED BETWEEN THE FOURTH RESPONDENT AND THE PETITIONER.
EXHIBIT P2	A TRUE COPY OF THE COMMON JUDGMENT DELIVERED IN RCA NOS. 16 OF 2014, 28 OF 2014 AND 29 OF 2014 BY THE RENT CONTROL APPELLATE AUTHORITY, ERNAKULAM DATED 5.10.2016.
EXHIBIT P3	A TRUE COPY OF THE JUDGMENT DELIVERED IN RENT CONTROL REVISION PETITION OS. 25 OF 2017, 26 OF 2017, 29 OF 2017 BY THIS HON'BLE COURT DATED 11.11.2020.
EXHIBIT P4	A TRUE COPY OF THE SEZ RULES 74.
EXHIBIT P5	A TRUE COPY OFTHE LETTER OF FOURTH RESPONDENT DATED 27.01.2021.
EXHIBIT P6	A TRUE COPY OF OBJECTION RAISED BY THE PETITIONER DATED 03.02.2021.
EXHIBIT P7	A TRUE COPY OF THE EXIT POLICY AS ENVISAGED IN THE SPECIAL ECONOMIC ZONE ACT ISSUED DATED NIL.
EXHIBIT P8	TRUE COPIES OF PERMISSIONS NOS. 3010453 DT.17.08.2020, 3015557 DT. 16/11/2020 AND 3016657 DT. 02.12.2020 ISSUED BY THE AUTHORISED OFFICER, INFOPARK SPECIAL ECONOMIC ZONE FOR THE ZONE TO ZONE TRANSFER OF MATERIALS BELONGING TO THE FOURTH RESPONDENT.
EXHIBIT P9	A TRUE COPY OF THE OFFICE MEMORANDUM DATED 14.07.2016, OF THE GOVT. OF INDIA MINISTRY OF COMMERCE AND INDUSTRY AS INSTRUCTION NO. 101 DATED 01.11.2019.
EXHIBIT P10	A TRUE COPY OF THE ORDER PASSED BY THE DEVELOPMENT COMMISSIONER DATED

¶100

-17-

¶101

W.P.(C). No. 6570 of 2021

¶102

26.02.2021.

¶103

EXHIBIT P11 A TRUE COPY OF THE EXIT ORDER ISSUED DATED 26.2.2021.

Lulu Cyber Park (P) Ltd. v. the Union of India

Case brief

What is this about?

What did the court decide?

Lulu Cyber Park (P) Ltd. v. the Union of India

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

V.J.Joy Vs State of Kerala

Rukiya Beevi Saidali Vs State of Kerala

Gopika G. Vs Canara Bank

P.A.Q. Meeran Vs the Union of India

The Federal Bank Ltd, Kalpetta Branch, Wayanad Vs Kerala State Financial Enterprses Ltd, Kalpetta, Wayanad District

M/S. Spices Producer Company Limited, Vs State of Kerala