Mandatory Business Rules and collective decision-making govern fiscal notifications; unilateral ministerial action cannot validate them.

Challenges to the notifications were not barred by res judicata, merger or estoppel because the earlier proceedings concerned different notifications and did not directly decide the validity of the impugned measures. The Court further held that notifications granting and re-introducing a rebate with fiscal and policy consequences had to comply with the mandatory Business Rules under Article 166(3), including the required governmental concurrence and collective decision-making process. A unilateral decision by the Power Minister alone was insufficient to constitute a decision of the State Government, and authentication in the Governor's name did not cure the defect. The impugned notifications were therefore void in law and the consequential actions invalid.

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Issues: (i) Whether the challenge to the notifications was barred by res judicata, merger, estoppel, or prior proceedings. (ii) Whether the notifications granting and re-introducing the rebate were validly issued as decisions of the State Government despite non-compliance with the Business Rules framed under Article 166(3) of the Constitution of India.

Issue (i): Whether the challenge to the notifications was barred by res judicata, merger, estoppel, or prior proceedings.

Analysis: The earlier round of litigation concerned different notifications and different reliefs. The legality of the impugned notifications was not directly and substantially in issue in those proceedings, and the earlier order refusing withdrawal did not determine that challenge on merits. The prior dismissal of appeals did not bar examination of a distinct issue not then decided. The plea of estoppel also failed because a party is not precluded from raising a legal objection to the validity of a governmental act merely because it was not taken in the earlier proceedings.

Conclusion: The objections based on res judicata, merger, and estoppel were rejected.

Issue (ii): Whether the notifications granting and re-introducing the rebate were validly issued as decisions of the State Government despite non-compliance with the Business Rules framed under Article 166(3) of the Constitution of India.

Analysis: The Business Rules framed under Article 166(3) were held to be mandatory where the decision involved financial implications, abandonment of revenue, or a policy change requiring concurrence of the Finance Department and consideration by the Council of Ministers or the Chief Minister. The impugned notifications were finalized at the level of the Power Minister alone without the required collective governmental decision and without compliance with the prescribed constitutional and administrative process. Mere expression and authentication in the name of the Governor did not cure the defect. The doctrine of indoor management could not protect the notifications in the face of obvious irregularity in the decision-making process.

Conclusion: The notifications were void ab initio and the consequential actions were invalid.

Final Conclusion: The challenge to the impugned notifications failed, and the State's stand that the rebate measures were legally unsustainable was upheld.

Ratio Decidendi: A governmental notification involving fiscal or policy consequences is valid only if the decision is taken in conformity with mandatory Business Rules under Article 166(3); a unilateral decision of an individual minister does not amount to a decision of the State Government and is void in law.

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