Andhra Pradesh High court on appointment of D C for SEZ

In Ahmed Ehtesham Kawkab, S/O Mr. ... vs The Government Of India, Ministry http://indiankanoon.org/search/?formInput=judgments+on+SEZs
Is the Director, Software Technology Parks of India (STPI), Hyderabad, (a Society registered under the Societies Registration Act, 1860), an officer of the Central Government not below the rank of Deputy Secretary? It is only if he is, would he be eligible, under Section 11(1) of the Special Economic Zones Act, 2005 (S.E.Z. Act), to be appointed as a Development Commissioner of one or more Special Economic Zones. The petitioner herein seeks a writ of quo warranto to quash and set aside the order of the first respondent, as published in the Gazette of India dated 12.11.2007, appointing the 5th respondent as the Development Commissioner of thirty Special Economic Zones in Andhra Pradesh.
Facts, in brief, are that the Government of India, by resolution dated 18.12.1986, announced its policy on software export, software development and training. The resolution provided for an inter-ministerial standing committee to function as an effective instrument for single point clearance and for coordination of all cases of software development and export. Thereafter, on 5.6.1991, STPI was registered as a Society under the Societies Registration Act, 1860. The Inter-Ministerial Standing Committee, constituted by the Department of Industrial Development, Ministry of Industry, Government of India issued notification dated 22.2.1992 delegating specific powers of the Committee to the jurisdictional Directors of STPI. Pursuant to the aforementioned resolution dated 18.12.1986 the Central Government, in exercise of its powers under Section 3(1) of the Foreign Trade (Development and Regulation) Act, 1992, (Act 22 of 1992), notified a Scheme on 22.3.1994 called the "Software Technology Parks (STP) Scheme". This 100% export oriented Scheme, for undertaking software development, was to be administered by the Department of Electronics through the Directors of the respective STPIs. By virtue of the said notification dated 22.3.1994, Directors of STPI were conferred the powers of Development Commissioner in respect of software related imports and exports. The Central Government issued notification dated 10.8.2000 appointing Directors of various STPIs, including the Director, STPI Hyderabad, as Designated officers for implementing the STP schemes. The Central Government issued notification dated 30.1.2006 appointing Designated officers, (including the Directors of STPI), to exercise powers of adjudication under Section 13 read with Section 11 of Act 22 of 1992. Under the impugned notification the Central Government, in purported exercise of its powers under Section 11 (1) of the S.E.Z. Act, appointed the Director, STPI, Hyderabad to be the Development Commissioner of thirty Special Economic Zones…The Court observed ’….The power conferred on the Central Government, under Section 11(1) of the SEZ Act, is to appoint any of its officers, not below the rank of Deputy Secretary to the Government of India, as a Development Commissioner…..’ ‘…….Section 11(1) of the SEZ Act uses the words "Its officers" with reference to the Central Government. The word "Its" means possessive or genitive of "it". The words "Its Officers" in Section 11(1) would, therefore, mean officers of, or belonging to, the Central Government. To be eligible, for appointment as a Development Commissioner of a Special Economic Zone, a person must satisfy the twin conditions stipulated in Section 11(1) of the SEZ Act. He should be (a) an officer of the Central Government; and (b) not below the rank of Deputy Secretary to the Government of India…..’
The 5th respondent was an employee of STPI society before his appointment as Development Commissioner of SEZ. Can such a person be held also to be an officer of the Government of India? Several tests have been laid down to determine when a person can be said to be an officer of the Central Government. There is a relationship of master and servant between the State and a person said to be holding a post under it. The existence of this relationship is indicated by the State's right to select and appoint the holder of the post, its right to suspend and dismiss him, the right to terminate the employment, the right to take other disciplinary action, the right to prescribe the conditions of service and the nature of duties to be performed by the employee, the right to control the manner and method of his doing the work, the right to issue directions, the right to determine the source from which wages or salary are paid and the payment by it of his wages or remuneration. (State of Assam v. Kanak Chandra Dutta5; State of Gujarat v. Raman Lal Keshav Lal Soni6, Mohanlal Kedia Mathuradas v. S.D. Munshaw7; Union Public Service Commission v. Girish Jayanti Lal Vaghela8). The Office or post must not only be under the control of the State, it must also be open to the State to abolish the post and regulate the conditions of service of the officer. (Lachmi v. Military Secretary to the Government of Bihar9). In view of the Constitutional Provisions, such as Articles 309 and 311, the position of a Government servant is different from a private employment. (Girish Jayanti Lal Vaghela8).
Once appointed to his post or office, the Government servant acquires a status and his rights and obligations, including his emoluments, are determined by the Statute or Statutory rules or rules made under Article 309 of the Constitution, which may be made and altered unilaterally by the Government. The legal position of a Government servant, and the legal relationship between the Government and its servant, is more one of status than of contract. The hall- mark of status is the attachment to a legal relationship of rights and duties imposed by the public law and not by mere agreement of the parties. (Roshan Lal Tandon v. Union of India10; Girish Jayanti Lal Vaghela8)
As the 5th respondent is an employee of STPI, (a society registered under the Societies Registration Act), there exists no master and servant relationship between the Central Government and himself. It is not even the case of the 5th respondent that the Central Government has the right to select and appoint the Director of STPI or that it has the right to terminate his services. The right to control the manner and method of work being done by the Director of STPI lies with the Governing Council of S.T.P.I and its Chairman and Vice Chairman. The salary and emoluments of the Director is paid by the Society. The Central Government has no power to take any disciplinary action against the 5th respondent as Director of S.T.P.I since such a power is conferred only on the Society. Similarly the right to prescribe the conditions of service of, and the nature of duties to be performed by, the 5th respondent as a Director lies only with S.T.P.I. The right to issue directions to him etc., are all exercised by the Society and not by the Central Government. Adoption of the C.C.S. (C.C.A) Rules, and other rules applicable to Central Government employees, by the Society makes such rules the rules of the Society. It does not make employees of the Society employees/officers of the Central Government. Nowhere is it suggested by the fifth respondent that the rules governing his service conditions, as a Director of S.T.P.I, Hyderabad, are those made under Article 309 of the Constitution of India. The 5th respondent is also not entitled for protection under Article 311 of the Constitution of India. The legal relationship between the 5th respondent and STPI is purely contractual and is not in the nature of status. There is no master and servant relationship between the Central Government and the 5th respondent.
Further, Section 11 (1) of the Special Economic Zones Act, 2005 stipulates that, in order to be eligible to be appointed to the post of Development Commissioner of a SEZ, the officer of the Central Government should not be below the rank of a Deputy Secretary. Merely because the pay scales of the Director of STPI is higher than that of a Deputy Secretary to the Government of India does not make him an officer of the Central Government higher in the rank than a Deputy Secretary. The word "rank", in its ordinary sense, means grade or status. (N.C. Dalwadi v. State of Gujarat11; P. Ramanatha Aiyer, The Law Lexicon reprint Edition-2002). An employee of a Society cannot be equated either with the grade or the status of an officer of the Central Government. If pay scales were to be the sole criterion for deciding equivalence in rank, nothing prevented Parliament from using the words "drawing a pay scale not lower than that of a Deputy Secretary to the Government of India" instead of the words "not lower in rank than that of a Deputy Secretary to the Government of India."
We are satisfied that a Director of STPI is neither an officer of the Central Government nor is he an officer not below the rank of a Deputy Secretary to the Government of India.


The High Court has examined the scope of the Writ of Quowarranto. It had observed”… A writ of quo warranto is a writ which lies against the person who, according to the relator, is not entitled to hold an office of a public nature and is only a usurper of the office. It is the person, against whom the writ of quo warranto is directed, who is required to show by what authority he is entitled to hold the office. The challenge can be made on various grounds including on grounds that the possessor of the office does not fulfill the required qualifications or suffers from any disqualification, which debars him from holding such office. (B.R. Kapur v. State of Tamilnadu1). Quo warranto proceedings afford a judicial enquiry in which the person, holding an independent substantive public office or franchise, is called upon to show by what right he holds the said office or franchise. If the inquiry leads to the finding that the holder of the office has no valid title to it, issue of a writ of quo waranto ousts him from that office. The procedure of quo warranto confers jurisdiction and authority on the judiciary to control executive action in the matter of making appointment to public offices against the relevant statutory provisions. These proceedings tend to protect the public from usurpers of public office and, if the jurisdiction of the Court to issue a writ of quo warranto is properly invoked, the usurper can be ousted.
Before a citizen can claim a writ of quo warranto he must satisfy the Court, inter alia, that the office in question is a public office and is held by an usurper without legal authority, and that necessarily leads to the enquiry as to whether appointment of the alleged usurper has been made in accordance with law or not. (University of Mysore v. Govinda Rao2). A writ of quo warranto can be issued when the holder of a public office has been appointed in violation of constitutional or statutory provisions. Quo warranto proceedings afford a judicial remedy for removal of the usurper, from the office which he holds without title, by a judicial order. The proceedings give a weapon to control the executive from making appointments to a public office against the law. (N. Kannadasan v S. Ajoy Khose3). If there is any complaint about appointment of an officer, who is not eligible under the statute/statutory rules to be appointed, the proper remedy is to make an application for the issue of a writ of quo warranto. (Mir Ghulam Hussain v. The Union of India4)....”
Grant of relief under Article 226 of the Constitution is based on the existence of a right in favour of the person invoking the jurisdiction of the High Court. The exception to the general rule is only in cases where the writ applied for is a writ of habeas corpus or a quo warranto or a writ filed in public interest, (Vinoy Kumar Vs. State of UP58), where the rule of locus standi is relaxed. (Jasbhai Motibhai Desai Vs. Roshan Kumar, Haji Bashir Ahmed59). In Quo- Warranto proceedings the applicant does not seek to enforce any right of his as such, nor does he complain of any non-performance of duty towards him. What is in question is the right of the non-applicant to hold the office and an order that is passed is an order ousting him from office. The legality of an appointment to high office can be challenged by any citizen. (M.S. Mahadeokar v. Chief Commissioner, Territory, Chandigarh60).
An information would lie even at the instance of a relator who has no personal interest in the matter. Information in the nature of quo warranto can be filed on the relation of private parties. It is open to a private individual to bring it to the notice of the Court that a person who is disqualified to hold an office is still holding it. A person who is not legally entitled to hold an office should not be permitted to hold it. (Venkataraya vs. Sivarama Prasad61). A writ petition, even at the instance of a busy body, for issuance of a writ of quo warranto would be maintainable. (N. Kannadasan3).

The court also examined the status of a society under the Societies Registration Act, 1860. It has held, ’….A society, registered under the Societies Registration Act, 1860, is not a body corporate or a corporation having a distinct legal entity from the members constituting it in the sense of a company incorporated under the Indian Companies Act or a Society registered under the Cooperative Societies Act, yet it has its own identity, personality or entity which, for all purposes, is not identical with that of the members constituting it. A Society, when registered, comes into existence as a registered Society and has properties of its own. Although legal title in the properties may vest in the trustees or the Board of Governors yet the equitable title vests in the Society. (K.C. Thomas v. R.L. Gadeock12). Such a Society is independent of the Central Government even if it has been established by the latter.
On the legal status of statutory corporations, Denning L.J, in Tamlin v. Hannaford13, opined:-
"................In the eye of the law, the corporation is its own master and is answerable as fully as any other person or corporation. It is not the Crown and has none of the immunities or privileges of the Crown. Its servants are not civil servants, and its property is not Crown property. It is as much bound by Acts of Parliament as any other subject of the King. It is, of course, a public authority and its purposes, no doubt, are public purposes, but it is not a government department nor do its powers fall within the province of government.............." (emphasis supplied).
Accepting the submission that S.T.P.I is financially, functionally and administratively dominated by, or is under the pervasive control of, the Central Government, would merely bring it within the ambit of "State" under Article 12 of the Constitution of India. (Pradeep Kumar Biswas v. Indian Institute of Chemical Biology14). It would neither make it a department of the Government of India nor would employees of such a society become officers of the Central Government. Even if STPI is covered by the Central Vigilance Commission, or the Comptroller and Auditor General or even under the Right to Information Act, that would neither make S.T.P.I a department of the Central Government, nor its employees officers of the latter…..’
The court has gone into the rules of interpretation and examined the scope of having more than one constructions for Section 11(1) of the SEZ Act. It had held The primary rule of construction is that the intention of the Legislation must be found in the words used by the Legislature itself. (Unique Butyle Tube Industries Pvt. Ltd., v. Uttar Pradesh Financial Corporation15). Statutory language must always be given presumptively the most natural and ordinary meaning which is appropriate in the circumstances, (Chertsey Urban District Council v Mixnam's Properties Ltd16), and must be construed according to the rules of grammar. When the language is plain and unambiguous, and admits of only one meaning, no question of construction of a statute arises, for the Act speaks for itself. The meaning must be collected from the expressed intention of the legislature. (State of U.P. v. Dr Vijay Anand Maharaj17). If the words used are capable of one construction only, it would not be open to the Courts to adopt any other hypothetical construction on the ground that such hypothetical construction is more consistent with the alleged object and policy of the Act. The words used in the material provisions of the Statute must be interpreted in their plain grammatical meaning, (Kanai Lal Sur v. Paramnidhi Sadhukhan18), andmust be construed it in its ordinary sense as it is well recognised that the language used speaks the mind and reveals the intention of the framers. (C.I.T. v. T.V. Sundaram Iyengar (P) Ltd19). Itwould be impermissible to call in aid any external aid of construction to find out the hidden meaning. A statute should be construed according to the intention expressed in the Statute itself(D.D. Joshi v. Union of India20).

Resort can be had to the legislative intent for the purpose of interpreting a provision of law, when the language employed by the legislature is doubtful or susceptible of meanings more than one. However, when the language is plain and explicit and does not admit of any doubtful interpretation Courts cannot, by reference to an assumed legislative intent, expand the meaning of an expression employed by the legislature and therein include such category of persons as the legislature has not chosen to do.(Ombalika das and another v. Hulisa Shaw21). Unless there is any ambiguity it would not be open to the Court to depart from the normal rule of construction which is that the intention of the Legislature should be primarily gathered from the words which are used. It is only when the words used are ambiguous that they would stand to be examined and construed in the light of surrounding circumstances and constitutional principles and practice. (CIT v. Sodra Devi22). A provision is not ambiguous merely because it contains a word which in different contexts is capable of different meanings. It would be hard to find anywhere a sentence of any length which does not contain such a word. A provision is ambiguous only if it contains a word or phrase which, in that particular context, is capable of having more than one meaning. (Kirkness (Inspector of Taxes) Vs.John Hudson & Co., Ltd.23).
It is only when the material words are capable of two constructions, one of which is likely to defeat or impair the policy of the Act whilst the other construction is likely to assist the achievement of the said policy, would Courts prefer to adopt the latter construction. It is only in such cases that it becomes relevant to consider the mischief and defect which the Act purports to remedy and correct (Kannai Lal Sur18). In the instant case, however, we find no reason to resort to any secondary canon.





Even if the historical background, of appointment of Development Commissioners of S.E.Z, is borne in mind while interpreting Section 11 (1) of the SEZ Act, 2005, it is evident that Parliament, though conscious that Directors of STPI were being appointed from the year 1994 as Development Commissioners under Act 22 of 1992, or the schemes made or policies framed thereunder, has chosen to make a departure and has restricted eligibility under section 11(1) of the SEZ Act, for appointment as Development Commissioners of S.E.Z, only to officers of the Central Government not below the rank of Deputy Secretary to the Government of India.
In A.N. Shashtri56, and B. Srinivasa Reddy57 the Supreme Court held that a writ of quo warranto should be refused where it is the outcome of malice or ill will and that an imposter coming before the Court invoking a public law remedy at the hands of a Constitutional Court suppressing material facts has to be dealt with firmly.
On the other hand, in Dr.Kashinath G. Jalmi v. The Speaker62; and in N. Kannadasan3, the Supreme Court held that, while examining if a person holds a public office under valid authority or not, the Court is not concerned with technical grounds of delay or motive behind the challenge, since it is necessary to prevent continuance of usurpation of office or perpetuation of an illegality. A writ of quo warranto is a writ which merely asks the question as to whether there is a warrant of appointment for holding the office and the question of malafides is completely irrelevant to the matter. (P.L. Lakhanpal v. A.N Ray63; Malik v. P.P. Sharma64).
Be that as it may, if any other member of the public, to whom the oblique motive and conduct alleged against the petitioner in the present case could not be attributed, could file such a writ petition for the same relief, this disability on the ground of oblique motive and conduct would not attach to him. This being so, the relief claimed by the petitioner in the writ petition being in the nature of a class action, without seeking any relief personal to him, ought not to be dismissed merely on this ground, since this is a matter of public concern and relates to the good governance of the State itself. (Dr. Kashinath G. Jalmi62).
In "Mr. Gopal Singh Vs. Sri J. Parthasarthy"65 the Delhi High Court observed that, apart from relying upon the employment notice issued prior to coming into force of the Act, and also annexing a copy of the notification dated 08.08.2008, the petitioner had nowhere averred about the qualifications of the first respondent nor had he attempted to disclose that the said respondent was ineligible for consideration or appointment, that the writ petition merely extracted the provisions of the Act and the petitioner had only urged that the first respondent did not possess the required qualifications. The Delhi High Court dismissed the writ petition as not maintainable as the petitioner had rushed to the Court without verifying any details or particulars. Unlike the writ petition filed before the Delhi High Court, in the present writ petition the petitioner has established that the appointment of the fifth respondent, as Development Commissioner of SEZ, was contrary to Section 11(1) of the SEZ Act and that his continuance in office is illegal.
As we are of the opinion that the fifth respondent does not satisfy the conditions prescribed in Section 11(1) of the SEZ Act to be appointed as Development Commissioner of SEZ, and that he does not have any right to continue to hold the said office, we see no reason to non-suit the petitioner on the ground of locus standi as neither the strict rules of standing, nor the motives of the petitioner, would justify the fifth respondent continuing in office as his appointment falls foul of Section 11(1) of the SEZ Act, 2005.
As a result, the writ petition is allowed and the order of the first respondent, published in Gazette of India dated 12.11.2007, appointing the 5th respondent as Development Commissioner of thirty Special Economic Zones in Andhra Pradesh is, hereby, set aside. The 5th respondent shall henceforth not exercise any of the powers conferred, on the Development Commissioner of a Special Economic Zone, under the SEZ Act, 2005. Necessary action shall be taken by the first respondent to appoint a person, who fulfils the statutory qualifications prescribed under Section 11(1) of the SEZ Act, 2005, as the Development Commissioner for the thirty Special Economic Zones in Andhra Pradesh.

case comment relevant to SEZ

In Reliance Industries Ltd Vs. Designated Authority and Ors. 11 September, 2006 Supreme Court of India www.LegalDuniya.com, imposition of Anti dumping duty was in question. The petitioner has challenged imposition of anti dumping duty on it for importing Pure Terephatalic Acid (for short `PTA'), from Japan, Malaysia, Spain and Taiwan . It is used for the manufacture of polyester yarn (which in turn is used for manufacture of textiles). Apart from the manufacture of PTA, the appellant, inter alia, has a captive power plant from which it draws electricity. The appellant also draws electricity from the Grid for the manufacture of PTA. The cost of electricity forms a significant part of the cost of production. For the electricity drawn from the Grid, the appellant has to pay a tariff rate at the market price of the electricity, while regarding electricity drawn from the captive power plant the appellant transfers electricity at the market rate to its PTA unit.
The court observed: After India became independent in 1947, the Government of Independent India headed by Prime Minister Jawahar Lal Nehru decided to industrialize India as it was realized that the country cannot escape from poverty, unemployment and other social evils unless there is industrialization. It was also known to them that a country cannot be really independent in modern times unless it is industrialized. Hence, the Industrial Policy Resolution was adopted by the Indian government in the early 1950s and encouragement was given to the growth of heavy industry and other industries so that India may become economically independent and a prosperous nation.

The result was that an industrial base was created in India after independence and this has definitely resulted in some progress. The purpose of Section 9A can, therefore, easily be seen. The purpose was that our industries which had been built up after independence with great difficulties must not be allowed to be destroyed by unfair competition of some foreign companies. Dumping is a well-known method of unfair competition which is adopted by the foreign companies. This is done by selling goods at a very low price for some time so that the domestic industries cannot compete and are thereby destroyed, and after such destruction has taken place, prices are again raised.

The purpose of Section 9A is, therefore, to maintain a level-playing field and prevent dumping, while allowing for healthy competition. The purpose is not protectionism in the classical sense (as proposed by the German economist Friedrich List in his famous book `National System of Political Economy' published in 1841) but to prevent unfair trade practices. The 1995 Amendment to Section 9A was apparently made in pursuance to Article VI of the General Agreement on Tariffs and Trade 1994 (GATT 1994) which permitted anti-dumping measures as an instrument of fair competition.

The concept of anti-dumping is founded on the basis that a foreign manufacturer sells below the normal value in order to destabilize domestic manufacturers. Dumping, in the short term, may give some transitory benefits to the local customers on account of lower priced goods, but in the long run destroys the local industries and may have a drastic effect on prices in the long run.
The court has dealt with the relevant provisions under the Customs Act [Section 9A of the Customs Tariff Act, 1975, which was inserted by the Customs Tariff (Second Amendment) Act, 1982. Section 9A was substituted by the Customs Tariff (Amendment) Act, 1995 with effect from 1.1.1995, and now it reads as follows:-

"SECTION 9A - Anti-dumping duty on dumped articles. - (1) Where any article is exported from any country or territory (hereinafter in this section referred to as the exporting country or territory) to India at less than its normal value, then, upon the importation of such article into India, the Central Government may, by notification in the Official Gazette, impose an anti-dumping duty not exceeding the margin of dumping in relation to such article. ]
(2A) Notwithstanding anything contained in sub-section (1) and sub-section (2), a notification issued under sub-section (1) or any anti-dumping duty imposed under sub-section (2), unless specifically made applicable in such notification or such imposition, as the case may be, shall not apply to article imported by a hundred per cent export-oriented undertaking or a unit in a free trade zone or in a special economic zone.

Explanation. - For the purpose of this section, the expressions "hundred per cent export-oriented undertaking", "free trade zone" and "special economic zone" shall have the meaning assigned to them in explanation 2 to sub-section (1) of Section 3 of the Central Excise Act, 1944 (1 of 1944).
The only interesting thing with respect to SEZs is that despite the injury caused due to the dumping of articles to the local industry as was aptly explained by the apex court in the instant case as above, 100% Export Oriented Units, Free Trade Zones and the SEZs are exempted from imposition of even the ‘anti dumping duty’ .
The case has no relevance with the SEZs excepting the incidental perusal of the provisions. In the instant case the petitioner is not an SEZ nor a 100% EOUnit.