‘REPORTABLE’ IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 5609 OF 2019 (Arising out of SLP (C) No. 27765 of 2018)

M/s. R. K. INDUSTRIES (UNIT-II) LLP          Appellant(s)

VERSUS

S.C/S.T SHIPBREAKERS ASSOCIATION & ORS.      Respondent(s)

J U D G M E N T R. F. NARIMAN, J.

Leave granted.

The challenge in the instant appeal is by a person who

was not a party before the High Court.  The reason why we

have  heard  Mr.  Shekhar  Naphade,  learned  senior  counsel

appearing on behalf of the appellant, and why we have given

his  client  leave  to  appeal,  is  only  to  set  right  the

interpretation to The Gujarat Maritime Board (Conditions &

Procedures  for  granting  permission  for  Utilizing  Ship

Recycling  Plots)  Ship  Recycling  Regulations,  2015

(hereinafter referred to as ‘2015 Regulations’ for brevity).

The skeletal facts necessary to decide this case are

as follows:  

In February, 2017, the Gujarat Maritime Board issued a

tender for  auction of  eight vacant  plots  at  Alang-Sosiya

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CIVIL APPEAL NO. 5609 OF 2019 (Arising out of SLP (C) No. 27765 of 2018)

Ship  Recycling  Yard,  District  Bhavnagar,  for  the  reasons

best known to it, as it chose to do so despite the fact that

on this date, 20 vacant plots were available for auction.

Considering the 2015 Regulations supra, the Gujarat Maritime

Board  decided  that  out  of  these  plots,  four  should  be

reserved for ST category, two for SC category and two would

go to the General category.  Respondent Nos. 1, 2 and 3

before  us,  viz.  the  S.C./S.T.  Shipbreakers  Association,

filed Special Civil Application No. 5509 of 2017 before the

High Court of Gujarat at Ahmedabad on 14.03.2017 in which it

challenged the allocation of plots to SC and ST candidates

stating  that  the  Regulations,  if  properly  read,  would

necessarily mean that the reservation of 14 per cent and 7

per  cent  for  ST  category  and  SC  category  respectively,

should be of the total number of plots that are available

and not merely those that are sought to be auctioned.  If

this were to be so, then all the eight plots would have to

be reserved for SC and ST candidates inasmuch as the total

reservation quota as a percentage of the total number of

plots  had  not  been  reached.   On  22.04.2017,  the  tender

notice issued by the Gujarat Maritime Board was stayed by

the  High  Court,  and  by  the  impugned  judgment  dated

16.04.2018, the High Court held that not only would all the

eight plots that were subject matter of the auction notice

be reserved for the ST and SC candidates but that, even for

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CIVIL APPEAL NO. 5609 OF 2019 (Arising out of SLP (C) No. 27765 of 2018)

the remaining number, i.e., if 20 plots were to be taken as

a block,  all 20 would have to be reserved for ST and SC

candidates inasmuch as the quota for these candidates, going

by the percentage of total plots, had not been reached.   In

this view of the matter, the High Court quashed the tender

notice and directed the Gujarat Maritime Board as follows:  

“12. In view of the above and for the reasons stated above, Special Civil Application No. 5509 of 2017 is allowed.  It is held and directed that respondent GMB shall make reservation of 7% plots belonging to SC  Category  and  14%  of  plots  to  ST  Category  out of /considering the Total Plots and not Vacant Plots as on today (as contended on behalf of the GMB). The  respondent  GMB  is  also  directed  to simultaneously hold the auction of all the vacant plots and apply the reservation as directed herein above i.e., including all the vacant plots bigger size  plots  and  /  or  smaller  size  plots. Consequently,  the  impugned  tender  at  Annexure  F (collectively)  issued  by  the  respondent  no.  2  in February  2018  for  8  plots  at  Alang-Sosiya  Ship Recycling Yards is hereby quashed and set aside and the  respondent  GMB  is  directed  to  invite  fresh tenders/bids in light of the present judgment and order.  The said exercise shall be completed at the earliest but not later than six months from today. Rule is made absolute to the aforesaid extent.  No costs.”

Shri Shekhar Naphade, learned senior counsel appearing

on behalf of the appellant herein, has attempted to argue

his peculiar facts before us in which he sought to challenge

the fact that the plot licensed to him has itself been set

up for auction, together with the fact that since he wishes

to amalgamate with the neighbouring plot, this amalgamation

would  become  impossible  if  all  vacant  plots  were  to  be

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CIVIL APPEAL NO. 5609 OF 2019 (Arising out of SLP (C) No. 27765 of 2018)

reserved for ST and SC categories, as was required by the

impugned judgment.  We may state that we are not going into

the  individual  facts  of  Shri  Naphade’s  client’s  case.

Suffice it is to state that we are granting his client a

limited permission to file a special leave petition against

the impugned judgment challenging its correctness.  It will

be  open  for  him,  in  separate  proceedings,  to  challenge

action taken against his client by the Gujarat Maritime Bard

up to date, including action taken by the Maritime Board

pursuant to our judgment.  All contentions in this behalf

are left open both to his client as well as to the Gujarat

Maritime Board.

Shri  Naphade  has  assailed  the  High  Court’s

interpretation  of  the  2015  Regulations  by  painstakingly

taking  us  though  the  history  of  various  regulations,

pointing out the difference between the earlier regulations

and the present Regulation, and ultimately pointing out that

clause  5.4  of  the  2015  Regulations  must  be  read  as  an

adjunct to clauses 5.1 and 5.2.  As a result of this, clause

5.4  cannot  be  read  torn  out  of  context  along  with  the

definition of “plot” contained in the Regulations so as to

arrive at the result arrived at by the High Court.  In his

submission,  therefore, having regard to the fact that the

earlier Regulation of 2006 specifically spoke of reservation

“out  of  total  plots”  which  language  is  missing  from  the

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CIVIL APPEAL NO. 5609 OF 2019 (Arising out of SLP (C) No. 27765 of 2018)

current  Regulation,  it  is  clear  that  the  context  of  the

current Regulation requires reservation only of the plots

that are sought to be auctioned.   

To  this,  Shri  Gursharan  Virk,  learned  counsel

appearing for the Gujarat Maritime Board, argued that the

issue today is really academic inasmuch as Shri Naphade’s

client should not be allowed permission to file the special

leave petition at all.  The Board has since taken a decision

to follow the Gujarat High Court’s judgment.  He also argued

before us that if the Gujarat High Court’s judgment were not

followed, incongruous results might follow.  He gave us an

example,  by  which,  assuming  that  only  three  plots  were

vacant and were auctioned, it would be impossible to work

out a reservation of 14 per cent and 7 per cent of these

three plots.  So, obviously, what is meant by reservation is

reservation only out of the total plots.  Even otherwise,

according to him, the appellant ought not to be granted any

relief given the fact that he has woken only at this late

stage.   

We  have  also  heard  Mr.  Rajendra  Singhvi,  learned

counsel appearing for respondent Nos. 1-3, who has argued

that the tender notice of February, 2017, could be said to

fall  between  two  stools.   It  could  only  be  upheld  if,

according  to  him,  the  High  Court’s  judgment  were  right,

because it is only if reservation is taken of total plots –

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CIVIL APPEAL NO. 5609 OF 2019 (Arising out of SLP (C) No. 27765 of 2018)

six out of eight plots would be reserved.  If the contrary

construction  is  adopted,  it  is  obvious  that,  at  best,

perhaps, one plot could be reserved.  The Gujarat Maritime

Board,  therefore,  though  it  ought  to  have  reserved  all

eight, has really followed the principle of reservation from

out of total number of plots, which is the correct principle

to be followed in the facts of this case.

Having heard learned counsel for all the parties, we

may first go to The Gujarat Maritime Board (Conditions and

Procedure for granting permission for Utilising Shipbreaking

Plots) Regulations, 1994 (hereinafter referred to as 1994

Regulations’ for brevity).  In these Regulations, paragraph

9 laid down reservation for ST and SC candidates as follows:

“9.  Out of plots which were vacant as on 3rd August, 1992 or fell vacant thereafter, or any new plot which is  developed  thereafter  7  per  cent  of  these  plots shall  be  reserved  for  granting  permission  to  Co- operative Societies all of whose members belong to Scheduled Castes, and 14% plots shall be reserved for Co-operative Societies all of whose members belong to Scheduled  Tribes.   All  the  terms  and  conditions specified  in  the  Government  of  Gujarat,  Roads  & Buildings Department Vernaculars Resolution No. 2 LPW- 1290-25435-GH dated 3rd August, 1992 shall be treated as forming part of these Regulations --------------- Scheduled Caste/ Scheduled Tribe applicants included in the list from category ---- in Regulation 4, shall be permitted to utilize plots on reservation basis on fulfillment of ------- terms and conditions specified in those Regulations and in the Schedule hereto and thereafter,  --------  other  applicants  of  SC/ST categories, permission for utilizing the plots shall be granted on tender-cum-auction basis.”

A  perusal  of  paragraph  9  of  the  1994  Regulations

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CIVIL APPEAL NO. 5609 OF 2019 (Arising out of SLP (C) No. 27765 of 2018)

would show that reservations were to be based only on three

categories  of  plots  viz.,  those  that  were  vacant  on

03.08.1992; or those that fell vacant thereafter; or any new

plot  which  is  developed  thereafter.   A  reading  of  these

Regulations would show, therefore, that reservation at this

juncture, was not from out of the total number of plots but

only of the three categories mentioned hereinabove.   

The 1994 Regulations were supplanted by the Gujarat

Maritime  Board  (Conditions  and  Procedures  for  granting

permission  for  Utilising  Shipbreaking  Plots)  Regulations,

2006  (hereinafter  referred  to  as  ‘2006  Regulations’  for

brevity) by clause 9 by which reservations for plots were

made as follows:  

“9. Out of total plots 7 per cent of these plots shall  be  reserved  for  granting  permission  to  Co- operative Societies of all of whose members belong to Scheduled Castes, and 14% plots shall be reserved for Co-operative Societies of all of whose members belong to Scheduled Tribes.  All the terms and conditions specified  in  the  Government  of  Gujarat,  Roads  & Buildings Department Vernacular Resolution No. LPW- 1290-25435-GH dated 3rd August, 1992 and Government of Gujarat, Port & Fisheries Department Resolution No. WKS-1099-CM, MLA 82 (17) GH dated 4/1/2000 shall be treated as forming part of these Regulations.

Explanation  for  the  purpose  of  these  Regulations before calculating 7% for the Co-operative Societies belonging to the members of Scheduled Caste and 14% for  the  Cooperative  Societies  belonging  to  the members  of  Scheduled  Tribe  categories,  the  Chief Executive Officer & Vice Chairman shall reserve 10 plots  for  granting  permission  for  ship  recycling activities  on  ship  to  ship  basis  as  provided  in Regulation herein above.”  

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CIVIL APPEAL NO. 5609 OF 2019 (Arising out of SLP (C) No. 27765 of 2018)

The  scheme  of  these  Regulations  would  clearly  show

that there has been a vital change in the reservation policy

insofar as vacant plots to be auctioned are concerned.  The

vital change is contained in the opening words of clause 9

which states “’Out of total plots’………………………………….”

This  situation  obtained  until  the  present  2015

Regulations were enacted, substituting the 2006 Regulations.

By these Regulations, a new Chapter 5 was inserted.  What is

relevant for our purpose are paragraphs 5.1 to 5.4 which

read as under:  

“5.1 The Chief Executive Officer may grant permission to use plots for ship recycling in respect of- a. a plot which is newly developed b. a plot which his vacant c. a plot which has fallen vacant on account of

cancellation/termination of the permission.

5.2 Procedure : All such plots, shall be offered for use  for  ship  recycling  after  following  the procedure of Tender-cum-Auction.

5.3 Tender-cum-Auction: The upset price for tender cum auction will be Rs.540/-  per  sqm  per  year.   The  terms  and conditions of the tender document shall be fixed by the Board.

5.4 Allocation for the Reserved Categories:  7% and 14% of the plots shall be reserved for Scheduled Castes and Scheduled Tribes respectively for granting permission for utilization of ship recycling plots.”

The bone of contention between the parties is, what is

the  meaning  of  the  expression  “the  plots”  contained  in

paragraph 5.4.  The High Court has held that “the plots”

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CIVIL APPEAL NO. 5609 OF 2019 (Arising out of SLP (C) No. 27765 of 2018)

must be read with the definition of “plot” contained in the

Regulations, which is contained in paragraph 15 as follows:  

15.“Plot” means piece of land adjacent to waterfront or  otherwise  earmarked  by  the  Board  for  the purpose  of  ship  recycling  having  dimensions specified in the permission letter.  This shall include  existing  plot  or  plots  that  may  be developed in future within the ship recycling yard under the Gujarat Maritime Board.”

If  this  interpretation  is  to  be  accorded,  then  the

High  Court  is  right  in  stating  that  the  expression  “the

plots” would include total plots and not merely plots to be

auctioned.   

It  is  important  to  first  notice  the  context  of

paragraph 5.4 of the 2015 Regulations.  The marginal note of

clause 5.4 indicates the drift of the provision as follows:  

“Allocation for the reserved categories”.

If one would ask oneself the question as to what is to

be allocated, the answer is to be found in clause 5.1 and

5.2.  What is to be allocated, therefore, is only plots

which are newly developed; plots which are already vacant;

and  plots  which  have  fallen  vacant  on  account  of

cancellation/termination of the permission.  Clause 5.2 is

even more explicit in its language.  In that it states “All

such plots”  are  to  be  auctioned.   Once  clause  5.4  is

interpreted keeping in view the context of clauses 5.1 and

5.2, it is obvious that the expression “the plots” contained

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CIVIL APPEAL NO. 5609 OF 2019 (Arising out of SLP (C) No. 27765 of 2018)

in clause 5.4 has reference only to plots that are to be

auctioned, which are mentioned in clauses 5.1 and 5.2.  Once

this is so, the expression “plots” must take colour from the

context  in  which  it  is  placed.   Indeed,  the  definition

clause  is  itself  expressly subject  to  context  to  the

contrary.   

This being the case, it is a little difficult to agree

with the High Court that reservation is to take place only

out of the total plots and not the plots to be auctioned.

In  point  of  fact,  the  2015  Regulations  are  an  express

departure from the earlier Regulations of 2006, which, in

turn, were a departure from the earlier Regulations of 1994.

The argument of Mr. Virk that if only three vacant plots

were  to  be  auctioned,  reservation  of  21%  of  this  figure

would be impossible is an argument which flies in the face

of the  express language  of the  2015 Regulations,  coupled

with the fact that the preceding 2006 Regulations, which had

the words “Out of the total plots…….” is missing in the 2015

Regulations.  In the case of reservation of vacant plots of

a smaller number that are put to auction, it is for the

Board to work the reservation policy contained in the 2015

Regulations  in  a  non-arbitrary  fashion,  giving  effect  to

reservation as authored by us hereinabove.  This being so,

we set aside the judgment of the High Court.  However, it is

made  clear  that  there  being  no  challenge  by  any  General

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candidate to the reservation made out of the eight plots of

six  plots  in  favour  of  SC  and  ST  candidates,  this

reservation  will  continue  only  for  the  purpose  of  the

auction of eight plots.  All future tenders/auctions will

abide  by  the  interpretation  given  by  us  in  our  judgment

today.   

With these observations the appeal is allowed.

The protection granted by our order dated 29.03.2019

will continue for a period of four weeks.  The appellant, as

has  been  stated  hereinabove,  is  free  to  adopt  whatever

proceedings is available to him in law.  Any challenge made

by the appellant in proceedings hereafter would be heard on

its own merits.  All the contentions therein are open to the

appellant as well as the Gujarat Maritime Board.   

………………………………………………………………………., J. [ R. F. NARIMAN ]

………………………………………………………………………., J. [ SANJIV KHANNA ]

………………………………………………………………………., J. [ SURYA KANT ]

New Delhi; July 16, 2019.

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