High Court Division
(Special Original Jurisdiction)
Naima Haider J
Farid Ahmed J
Judgment March 14th, 2012.
HKD International (CEPZ) Ltd and another………..
………………… Petitioners
vs
Bangladesh Export Processing Zones Authority (BEPZA) and others ……….
…………….. Respondents*
Constitution of Bangladesh, 1972 Article 102(2)(a)(i) and (ii)
Promissory Estoppel-The principles of approbate and reprobate envisage that once a party takes a stand which ends in some kind of compromise and also acts on the compromise, such a party cannot be allowed to take a contrary stand unless the earlier stand is against all known principles of law. . ….. (16)
Raisuddin Ahmad with Md Aktaruzzaman, Advocates-For the Petitioners.
Ahmed Sohel. Advocate-For the Respondents No.1 & 2.
Judgment
Naima Haider J : In this application under Article 102(2)(a)(i) and (ii) of the Constitution of the People’s Republic of Bangladesh, a Rule Nisi was issued calling upon the respondents to show cause as to why the Memo under reference No.00.314.014.01.00.057.1991-1187 (1) dated September 27, 2011 (Annexure-J to the writ petition) refusing to withdraw the cancellation of No Objection Certificate and cancellation of No Objection Certificate vide Memo No. IP: O-57/660 dated May 3, 2009 (Annexure-H to the petition) to transfer assets etc. of the company named HKD (BD) Ltd to petitioner No.1 company as was granted earlier under Memo No. IP: 0-57/1643 dated August 26, 2008 (Annexure-C to the petition) as already been acted upon shall not be declared as have been issued and made without any lawful authority and of no legal effect and/or such other or further orders passed as to this Court may seen fit and proper.
2. The brief facts necessary for the disposal of the writ petition are that petitioner No.1 is a private limited Test Manufacturing and Exporter Company named HKD International (CEPZ) Ltd. and the petitioner No.2 is the Managing Director. A Company named HKD International (Bangladesh) Ltd set up an expert oriented industry in Chittagong Export Processing Zone, an Export Processing Zone (EPZ) under respondent No. 1. The said Company decided to voluntarily wind up their company, and sell all its assets and liabilities to the petitioners Company. Accordingly, petitioners and HKD International (Bangladesh) Ltd. signed a Deed of Agreement on 14-7-2008 to sell and purchase machinery etc. of HKD International (Bangladesh) Ltd. by the petitioners.
3. While HKD International (Bangladesh) Ltd. have been carrying out its business within Chittagong EPZ area, they applied to respondents by their letter dated 14-7-2008 to wind up their company voluntarily and also to sell all their assets and liabilities to petitioners. They have also prayed to respondent No 4 for issuance of No Objection Certificate’ (NOC) in this regard. The respondent No.3 by its Memo No. IP: 0-57/1643 dated August 26, 2008 conveyed to Managing Director, HKD International (Bangladesh) Ltd. that the authority of respondent No.1 BEPZA was pleased to issue NOC in favour of them subject to fulfilment of ten conditions thereby consenting to selling of assets and liabilities covering building machinery, equipments and materials of KHD International (Bangladesh) Ltd. to petitioners HKD International (CEPZ) Ltd.
4. Accordingly, the company HKD International (Bangladesh) Ltd. was wound up in accordance with the provisions of Companies Act, 1994 and such winding up was duly published in the Bangladesh Gazette on 23-9-2008 and Certificate of filing No. 516 dated 24-3-2009 was issued from the Office of Assistant Registrar of the Joint Stock Companies and Firms consequently the company HKD International Bangladesh) Ltd. stood dissolved in the eye of law.
5. All on a sudden BEPZA by their letter date May 03, 2009 cancelled its NOC dated August 26, 2008 issued by General Manager (investment Promotion) BEPZA which was earlier granted in favour of HKD International {BD) Ltd, primarily alleging that HKD International BD Ltd. transferred its assets, liabilities etc. to HKD International (CEPZ) Ltd “for availing the tax holiday facility”. Though the cancellation letter was issued in May 03,2009 but BEPZA has been asking the petitioners, to run business in the name of HKD International (BD) Ltd, whereas said company was wound up with the permission of Registrar of Joint Stock Companies, who had already issued certificate of winding up on March 24, 2009. In the eye of law HKD International (BD) Ltd ceased to exist with effect from March 24, 2009 so there is no scope to restart any business under that name. Further, according to BEPZA web page under the heading “EPZ Benefits and Incentives,” 10 years tax holidays is one of the inbuilt incentives granted to any investor for investing in EPZs and availing of tax holiday facilities are itself inbuilt in the process of process of investments in EPZs which cannot be termed as an offence and that cannot be a ground for cancellation of NOC. Further, no basis of BEPZA’s coming to a decision “that it seems to the Authority” has been explained in their cancellation of NOC letter dated May 03, 2009. It is further stated that no authority has been conferred upon the Bangladesh Export Processing Zones Authority Act, 1980 to cancel a NOC granted in favour of any entity and which has already been acted upon on grounds of “it seems to the Authority” as no reference of taking any of such decision by competent authority of BEPZA as to its seeming has been cited and no decision of Authority to support cancelling the NOC for alleged “availing the tax holiday facility” which is inbuilt incentive for investment in EPZs, has been cited in the letter of cancellation of NOC, which is nothing but colourable exercise of power not vested in the BEPZA. It is further stated that the respondents have retracted from their own promises made to petitioners and actions against which promise have already been taken by petitioners as well as respondents and even Custom Authorities on the basis of BEPZA issued NOC, that is, in the light of their promise made, well before illegal cancellation of NOC. The petitioners company having facing serious difficulties in running their business, under anomalous situation created by respondents in course of business, made series of representations to respondents to withdraw their cancellation of NOC letter dated May 03, 2009 and made last representation to that effect on August 27, 2011. But the respondent No.3 by his letter dated September 27, 2011 finally refused to reconsider their decision and conveyed their unwillingness to withdraw cancellation of NOC dated August 26, 2008.
6. Being aggrieved by and dissatisfied with the cancellation of NOC dated May 3, 2009 the petitioners moved this Court and obtained the Rule Nisi.
7. The case of the respondent Nos. 1 & 2 is that the HKD International (BD) Ltd. had started commercial operation on 1-1-1991 and HKD International (CEPZ) Ltd started operation on 01-01-2005. HKD International (BD) Ltd enjoyed 10 years of tax holiday. But the company tried to enjoy the same facility again by selling all assets and liabilities to newly formed sister concern HKD International (CEPZ) Ltd, upto 1-1-2014. So, as and when the authority identified their intention of selling all its assets and liabilities in order to evade tax, the authority cancelled the NOC for protecting financial loss of the Government before final permission. The further case of the respondents is that as per clause No.(g) of NOC the company did not propose for cancellation of plots from the account of HKO International (BD) Ltd. and allot the same plot in favour of HKD International (CEPZ) Ltd. The cancellation of plots from transferee and among the same plots to transferor is the 3rd phase activity and it will be completed as and when the transferee gets final permission from the authority.
8. Mr Rais Uddin Ahmad, learned Advocate for the petitioner submits that HKD International (BD) Ltd. ceased to exist with effect from March 24, 2009 in the eye of law after having been wound up and there is no scope to restart any business under that name. He next submits that according to Board of Investment web page under the heading “EPZ” Benefits and Incentives”, 10 years tax holidays is one of the inbuilt incentives granted to any investor for investing in EPZs and hence as availing of tax holiday facilities is itself inbuilt in the process of investments in the EPZs which cannot be termed as an offence. Mr Rais Uddin Ahmad next submits that the cancellation of NOC is ex facie, illegal and void ab initio as BEPZA’s coming to a decision “that it seems to the Authority” has not been explained in their cancellation of NOC letter dated May 03, 2009. Further, Foreign Private Investment (Promotion and Protection) Act, 1980 also provides for granting tax holiday subject to NBR approval. So, availing of tax holiday by any investor in EPZ cannot be termed to be a wrong doing warranting cancellation of NOC on that ground. He further submits that two plots of wound up Company HKD International (BD) Ltd. has already been transferred in the name of petitioner HKD International (CEPZ) Ltd. by respondent No.4 by its letter dated 26-1-2009.
9. Mr Ahmed Sohel, learned Advocate on behalf of the respondent Nos. 1 & 2, submits that the respondents did not violate any provision of BEPZA Act, 1980 or Foreign Private Investment (Promotion and Protection) Act, 1980. They acted in accordance with law for greater public interest. Mr Sohel further contends that the company failed to submit necessary documents for final permission in favour of sale/transfer as per the clauses of NOC, so the company has the existence in the eye of law and as per the terms of the land lease agreement they were requested to commence commercial operation.
10. We have considered the submissions of the learned Advocates of respective parties and perused the application, affidavit-in-opposition and annexure appended thereto.
11. The question which arises for our consideration is whether the memo under Challenge cancelling the NOC dated August 26, 2008 issued by the respondent can be sustained.
12. It transpires from record that HKD International (BD) Ltd. by its letter dated July 14, 2008 requested the Chittagong Export Processing Zone Limited to issue them No Objection Certificate (NOC) to wind up their company. Accordingly, DEPZA Dhaka Office by its letter dated August 26, 2008 granted permission to sell assets etc. of HKD International (BD) Ltd. to HKD International (CEPZ) Ltd. The NOC was granted subject to the fulfillment of some conditions. The conditions were met and in the process BEPZA by its letter dated November 18, 2008 granted permission to transfer some vehicles of HKD International (BD) Ltd. to HKD International (CEPZ) Ltd. Thereafter, BEPZA on January 25, 2009 allowed insertion of name of HKD International (CEPZA) Ltd. against Plot Nos 10-12, Sector-4 of CEPZ in place of HKD International (BD) Ltd.
13. For facility of reference the letter dated January 26, 2009 as it appears from Annexure-G is reproduced below:
BEPZA/CEPZ/SEE/91 26/01/2009
M/s HKD International (CEPZ) Ltd. Plot 10-12, Sector-4
Chittagong EPZ
Chittagong
Subject : Regarding name of M/s HKD International (CEPZ) M/s HKD International (BD) Ltd.
Ref: (1) Our letter reference No. IP:O- 51/1643 dated 26-8-2008.
(2) Your letter reference No. nil dated 4-12-2008.
Please refer to above
This is to inform you that the Authority has accorded your factory name M/ s HKD International (CEPZ) Ltd. instead of M/s HKD International (BD) Ltd. at Plot No. 10-12, Sector-4, of CEPZ according to your prayer. All utilities bills like Electricity, Water and Land rent shall be issued with effect from 04-1-2009 in the name of M/s HKD International (CEPZ) Ltd.
Thanking and assuring you of our best co-operation at all time.
Bd/-
27-1-2009
(Abdul Alim) Supcrintending Engineer
Chittagong EPZ Phone: 741441
14. This Court notes that when the said NOC was already acted upon, BEPZA by their subsequent letter dated May 3, 2009 cancelled its NOC granted earlier on August 26, 2008 alleging that HKD International (BD) Ltd. Transferred its assets and liabilities etc. to HKD International (CEPZ) Ltd, “for availing the tax holiday facility:”
15. It appears that HKD International (BD) Ltd was wound up and the Registrar of Join Stock Companies issued Certificate of Winding up on March 24, 2009. The said company ceased to exist in the eye of law and it was not possible to restart any business in the name of a wound up company. Further, the impugned memo cancelling the NOC does not narrate as to why it has taken such a step when BEPZA itself had given the NOC. BEPZA’s coming to a decision “that seems to the authority” is very vague and does not reflect any ground for cancelling the NOC.
16. By issuing the NOC in favour of HKD International (CEPZ) Ltd. the respondents are now estopped from coming with the different plea that the company earlier in the name of HKD International (BD) Ltd. has not been. wound up. BEPZA in view of the earlier stand cannot resile from the same and, thus, its action would be barred by the principle of promissory estoppel. There is another aspect of the matter. Should the Court allow the parties to take a stand and then resile on the stand taken? The principles of approbate and reprobate envisage that once a party takes a stand which ends in some kind of compromise and also acts on the compromise, such a party cannot be allowed to take a contrary stand unless the earlier stand is against all known principles of law. Reverting back to the case in hand, we find that the respondents earlier have treated the petitioner’s company to be wound up and now they cannot take a different stand and are stopped to resile from their earlier stand on their own action.
17. In view of the discussions made hereinabove, we are of the view that the Rule deserves to succeed.
18. Accordingly, the Rule is made absolute. The impugned cancellation of No Objection Certificate vide Memo No, IP 0-57/660 dated May 3, 2009 (Annexure-11 to the petition) is hereby set-aside and declared to have been made without lawful authority and of no legal effect.
No order as to costs.
