With the Centre advising the Puducherry government to cancel its agreement with private partners to develop a Special Economic Zone (SEZ) in the Union Territory, the Madras High Court has now directed Puducherry Chief Secretary to produce material to show whether the administration has decided to cancel the pact or not.

Justice K.K. Sasidharan passed the order on two writ petitions seeking a direction to the Union Government to issue the notification for proceeding with the project.

Following the Centre’s announcement of the SEZ in 2000, the Puducherry government wanted to set up the project under public-private participation (PPP). In a petition, SPML Infra Ltd, New Delhi, a joint venture partner of the Pondicherry Special Economic Zone Company Ltd (PSEZC), said the Commerce Ministry had granted in-principle approval in December 2004 to the territorial government for setting up a multi-product SEZ in Puducherry.

After the incorporation of the PSEZC in 2006, the real process of setting up the zone was set in motion. More than 300 hectares of land were acquired at Sedarapet-Karasur. All steps necessary for issuing a formal notification to proceed with the SEZ had been fully completed.

This was clear from the approval granted by the Board of Approvals of the Commerce Ministry in August 11, 2009.

Despite repeated correspondence and requests, the Centre had not issued the notification for implementing the project.

A petition with a similar prayer has been filed by Om Metal Infra Projects Ltd, Jaipur, another joint venture partner.

In an order a few days ago, Mr. Justice Sasidharan said the Union Territory’s decision to develop an SEZ was not approved by the Centre. In a communication to the Chief Secretary of August 6, 2009, the Union Home Ministry had said there were several infirmities in the process of selection of the strategic partner. The territorial government did not follow a transparent bidding process.

The Ministry had advised the government to cancel the entire agreement with the strategic partner and not to part with the land in favour of Puducherry Industrial Promotion, Development and Investment Corporation Ltd (PIPDIC) or the SPV (Special Purpose Vehicle). In case any part of the land had already been transferred to PIPDIC or the SPV, it should be resumed immediately, the communication stated.

The Judge said the counter did not indicate the action taken by the Puducherry government pursuant to the Centre’s 2009 communication. He directed the government to submit its response in writing.