SC Overturns Guj HC, Stops Adani To Takeover Warehouse

| Updated: October 14, 2022 11:46 am

The Supreme Court on Thursday, October 13, 2022, thwarted Adani Ports SEZ Ltd’s attempt to take over a fully operational warehouse of Central Warehousing Corporation, a PSU, on 34 acres at New Mundra Ports. SC chastised the Gujarat High Court for “adopting dual parameters” in its judgment in favour of the business group.

The apex court overturned the order and directed that the original dispute be decided by a single-judge bench of the High Court, uninfluenced by the decisions of the HC and the SC.

A Supreme Court panel of Justices B R Gavai and C T Ravikumar supported senior attorney Maninder Singh’s arguments on behalf of the Central Warehousing Corporation (CWC) and stated, “We are of the view that the approach adopted by the division bench (of the Gujarat High Court) was pushing appellant CWC, which is a statutory body, to accept the settlement.”

Gavai wrote the verdict and stated, “The HC effectively coerces the MD of CWC, a statutory body, into accepting the first two criteria and leaving the third condition up to the parties to settle through mediation. On March 9, 2019, the offer made by Adani (APSEZ) and the acceptance made by CWC were both composite offers. The HC should have required APSEZ to accept the third condition if it was so concerned about the dispute’s settlement that it also pushed the CWC to accept the first two.”

In response to the “unwarranted,” criticism of CWC by the HC Justices Gavai and Ravikumar stated that “The HC ought to have considered that CVC has already made observations as early as 2010 that the swapping of the warehousing facility from the current site to a changed site would cause serious financial implications and that there could be various vested interests involved.” The CVC had stated that moving warehouse facilities could cause CWC to lose business.

The bench declared, “The HC should have considered that the interests of CWC could not have been secured unless all three elements were met. If a settlement had to be reached, it could not have been forced upon a statutory corporation to its harm and in favour of a private entity unless the same was determined to be in the interests of both parties.”

The SC also objected to the conflicting stances on this matter taken by the ministries of commerce and industry, food and public distribution, and consumer affairs. “Speaking in two contradicting voices does not bode well for the Union of India. It is not permissible for the two departments of the Union of India to adopt positions that are perpendicular to one another. We thus urge the Union of India to develop a process that will ensure that whenever these conflicting positions are taken by various departments, they will be settled at the governmental level itself,” stated the bench.

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