HC upholds Puducherry govt's cancellation of pacts on SEZ

Madras High Court today upheld Puducherry Government's order cancelling its agreements with private firms for developing a Special Economic Zone (SEZ) in the Union territory following a directive from the Centre, but rapped the manner in which they were selected initially.
The court was dismissing a petition by the SPML Infra Limited and Om Metal Infra Projects Ltd challenging the cancellation of agreements and seeking a direction to the Union Government to notify the establishment of the SEZ.
The matter pertains to allotment of 830 acres of land acquired in Sedarpet and Karasur villages from public to SPML Infra Ltd by the Puducherry Government in 2006 for the SEZ project which was cancelled by it on August 19 last on the advice of Union Government.

The company 'through the backdoor' brought Om Metal Infra Projects Ltd as 'strategic partner'.
The project ran into the rough weather after the Planning Commission and the Department of Economic Affairs questioned the process adopted by the Puducherry government to allow the 'strategic partner'.
The Union Home Ministry considered the issue in detail and advised the state government to cancel the entire deal due to "non-transparent" procedure adopted by the stakeholders.

Dismissing the petition, Justice K K Sasidharan said, "The company failed to challenge the legality of the order of Union Government and the order of Puducherry Government is only a consequential development of the decisions taken by the Central Government."

The Judge referred to specific objections raised by the Union Home, Commerce and Industry Ministries and the department of Economic Affairs and advising the Union Territory to cancel its agreement involving private promoters in the SEZ.
"The Union Territory of Puducherry adopted a procedure unheard of anywhere for selecting private promoter which would appear like a beauty contest," he said.
The Puducherry Government "has now realised fundamental mistakes committed by it earlier and rightly cancelled the agreements," the judge observed.