SEZ case exposes arbitrary functioning of GIDC

SEZ case exposes arbitrary functioning of Goa IDC
Shripad S Merchant, TNN, Nov 28, 2010, 06.16am IST

PANAJI: The legal battle by SEZ developers to hold ground in the state has exposed the functioning of the Goa Industrial Development Corporation (GIDC) as land was allotted by it sans submission of project reports by the companies involved. In two cases, property was transferred even before the formation of companies.

The high court of Bombay at Goa tested the decision of the GIDC to transfer property admeasuring over 30 lakh square meters on the touchstone of reasonableness.

The court found that four SEZ promoters got land from the GIDC in 2006 within a span of a seven days from the date of application. "It is not known in what manner scrutiny of the applications seeking allotment of 16,50,000 sq m of public property was made by a statutory authority like the GIDC," the court remarked. The four applications were made by K. Raheja Corporation Private Limited (KCPL), Paradigm Logistics Distributions Private Limited (PLDPL), Inox Mercantile Co. Pvt. Ltd , and Planet View Mercantile Company Pvt Ltd.

Regarding the allotment of 12 lakh square metres of land at Keri within 21 days from the date of application by Meditab Specialities Pvt Ltd, the court said that the GIDC examined neither the credentials nor financial status and experience of the company.

The court's scrutiny also revealed that the application of Peninsula Research Centre Pvt Ltd (PRCPL)in 2006 did not contain any reference to establishing a SEZ. The application for land admeasuring 2 lakh sqaure metres was made when PRCPL was "under formation" as a company. In another case, land admeasuring over 2 lakh square metres was allotted to Maxgrow Finlease Pvt Ltd on an application made by some other company.

Rejecting the argument of the promoters that the GIDC allotted land to them as there were no other takers for it, the court held that there was no reason to make allotments in a great deal of haste and without any scrutiny of applications.

"Even assuming that the GIDC could have done it without inviting offers from competitors, surely it, without satisfying itself that the allotment was being made to deserving companies having good experience in the field with a view to promote orderly establishment, growth and development of industries in the State of Goa, could not have allotted such vast lands," the court observed

While stating that the allotment of public property need not be made by holding a public auction as a matter of rule, the court noted that the state or public authorities can't act like private persons while disposing of public properties.

The court, however, refraining from going into the controversy about rates at which land was allotted.

Referring to the submissions made by a PIL relying on a CAG report that pointed out irregularities in the allotment of lands in favour of the companies, the court said. The report is recommendatory in nature and had not yet been placed before the legislature.

The court was also posed with the question whether the recommendation made by the industries minister and chief minister earlier for allotting land to the companies can be considered as a direction of the state government .

The court held that there was no state government direction in exercise of powers under Section 16 of the GIDC Act to allot any land for SEZs.