TaxTMI 
TaxTMI 
2010 (5) TMI 900
X X X X Extracts X X X X
X X X X Extracts X X X X
....to Low Tension, High Tension and Extra High Tension Industrial consumers of electricity as a policy of the State Government. In Civil Appeal No. 4219 of 2002 (M/s M.R.F. Ltd. & Anr. Vs. State of Goa & Anr.), the appellant has called in question the judgment and order passed by the High Court of Bombay Panaji Bench, at Goa in Writ Petition No. 364 of 1999 dated 24.4.2001, partly allowing the writ petition filed by the appellant. In Civil Appeal No. 4214 of 2002 (Goa Glass Fibre Ltd. & Anr. Vs. The State of Goa & Anr.), the appellant has called in question the correctness or otherwise of the judgment and order passed by the High Court of Bombay Panaji Bench, at Goa in Writ Petition No. 254 of 1999 dated 25.4.2001 dismissing the writ petition filed by the appellant. In Civil Appeal No. 4217 of 2002 (Alcon Cement Company Limited & Anr. Vs. The State of Goa & Anr.), the appellant has called in question the correctness of the judgment and order passed by the High Court of Bombay Panaji Bench, at Goa in Writ Petition No. 277 of 1999 dated 24.4.2001 partly allowing the writ petition. In Civil Appeal No. 4218 of 2008 (Mauvin Godinho Vs. Manohar Parrikar & Ors.), the appellant has c....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... category of consumers covered by the Notification dated 30.09.1991. On 29.06.1995, a Calling Attention Notice in Legislative Assembly was also brought in by Mr. Manohar Parrikar, seeking clarification from the State Government as to whether these industrial units were entitled for the benefits flowing from the Notification dated 30.09.1991 upto 31.03.1995. The Power Minister gave a reply to the said Notice which is reproduced in the judgment under appeal. In sum and substance the Minister stated, that, the Government was committed to honour the concession granted by the Notification dated 30.09.1991 to the eligible industrial units who apply for High Tension and low tension power on or after 01.10.1991 till the date of withdrawal, i.e. 01.04.1995. 4) The Under Secretary to Government of Goa, Department of Power issued a clarification dated 01.11.1995 to the Chief Electrical Engineer on the lines of the reply given by the Power Minister to the Calling Attention Motion and reiterated the same by a communication dated 12.12.1995. Later, as the Government being satisfied that there were certain difficulties in the matter of clearing cases of claim of rebate for the period upto 31.0....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ken up in appeal by both parties to this Court and this Court by an order dated 13.02.2001 declined to interfere, the said order of the High Court and rejected both sets of appeals. 8) Mr. Manohar Parrikar, the 1st respondent herein, in the meantime, had moved the High Court, a Misc. Civil Application No.637 of 1999, seeking withdrawal of his writ petition, liberty to challenge the legality or otherwise of the Notification after this Court decided the above mentioned civil appeals filed before it against the order of the High Court dated 21.01.1999. The High Court by its order dated 27.01.2000 rejected the said application. Mr. Manohar Parrikar had also moved the High Court to hear his petition along, earlier set of writ petitions disposed of by the High Court on 21.01.1999. Subsequently, the said prayer was also withdrawn. 9) Before the High Court, the 1st respondent herein challenged the correctness of the Notifications dated 15.05.1996 and 01.08.1996, and sought to declare the same as null and void. He also challenged the guidelines framed in the letter dated 12.12.1995 and sought to declare the said circular was illegal and to quash it to the extent it goes beyond the sco....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n if the said notifications were held to be contrary to the provisions of Article 166 of the Constitution, the said Rules are only directory and failure to comply, them did not vitiate the Notifications and in any event, if it was realized by the State Government that these Notifications were issued contrary to the Provisions of Article 166 nothing prevented the State Government from withdrawing them and the fact that no such action was taken by the State Government for almost two years itself indicated that the State Government was satisfied, the legality of the Notifications. The respondent also raised a preliminary objection regarding the maintainability of the Writ Proceedings on the ground, that, once the Notifications impugned have been authenticated as per the Business Rules, they are immune from any challenge and there cannot be a situation where respondent No.1, who at the relevant point of time, was the Chief Minister of Goa, would be contesting against the action of the State Government. It was also contended that the petition lacked bona fides and was moved only to settle political scores and to gain political mileage. The fact that contradictory stands were taken by th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of 1999 and 277 of 1999 and dismissing the Writ Petition No. 254 of 1999 respectively. 15) The facts in Civil Appeal No. 4219 of 2002 are :- Appellant applied for power supply connection for setting up a factory in the State of Goa on 03.10.1991. On 02.09.1992, appellant was supplied electricity for the first time. Sometime in October 1996, the Executive Engineer had acknowledged that the appellant is entitled for 25% rebate as provided in the notification. The amount of rebate was computed at Rs. 1,04,70,762 for the period from 02.09.1992 to 01.09.1996 and it was further stated that the amount of arrears be credited in 60 installments w.e.f. September, 1996 and each installment was of Rs. 1,74,513. The respondent had adjusted an amount of Rs. 53,78,594 as against the bills from September, 1996 to August, 1997 and further adjustment of Rs. 31,41,234 was also done subsequently thus leaving a balance of Rs. 73,29,528. The benefit of rebate was denied to the appellant for the remaining period on the basis of the notification dated 31.3.1998, whereby the extension of rebate in tariff was suspended. Pursuant to the judgment dated 21.1.1999, the appellant raised a fresh demand for re....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... 4,24,671 thus making a total sum of Rs. 14,74,755. The benefit of rebate was denied to the appellant for the remaining period on the basis of the notification dated 31.3.1998, whereby the extension of rebate in tariff was suspended. Pursuant to the judgment dated 21.1.1999, the appellant raised a fresh demand for rebate before the respondent no. 2 and as they failed to succeed, they approached the High Court seeking directions to implement the said judgment. 19) Before us the appellants urged various contentions and supported them, various grounds and the case laws. The questions of law according to the appellants are as under: • Whether there is any breach of judicial discipline by the High Court in not following it's own Judgment rendered by a Full Bench in the Case of Kharkanis wherein the Business Rules framed under Article 166 (3) were held to be directory in nature, but in holding that the Rules of Business are mandatory? • Whether the High Court by the judgment impugned herein has set at naught the judgment dated 21.01.1999 rendered by the other Division Bench, reference to the same notifications impugned in Writ Petition No. 316 of 1999, t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....01 confirming the High Court judgment dated 21.01.1999, more so in view of the consistent stand taken by the State Government in Parrikar's case that the judgment of the High Court, dated 21.01.1999 covered the issues therein and that the High Court should await the order of this Court in Appeals pending and which was eventually disposed by order dated 13.02.2001? • Did the High Court erred in not permitting Manohar Parrikar [1st respondent herein] to withdraw his writ petition, when he himself had submitted that the issues in his writ petition were covered by the judgment of the High Court dated 21.01.1999 and that the appeals there against were pending in this Court? 20) These civil appeals are opposed by the State Government by filing a detailed Counter Affidavit. The contentions of the State Government in support of the impugned judgment can be summarized as under: • That the State has a vital interest in the outcome of the proceedings before this Court which have a bearing on the State's Finances as an order of this Court setting aside the judgment impugned will result in a loss of Rs. 50 Crores to the State's Exchequer. • ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hich did not reflect correct position of law and did not place correct facts before the Court should be discarded and the one filed subsequently should not be considered as contradictory or inconsistent as correct facts borne out from the Government files were placed before the Court by the said affidavits. The said affidavits also reflected the fact that there was neither financial sanction nor was there a budgetary provision nor was there a Cabinet approval as mandatorily required under the provisions of Article 166 (3) of the Constitution and the said Notifications therefore could not be said to be the decision of the State Government in the eye of law. The affidavit dated 12.04.2001 was filed before the High Court after the State re-examined the entire matter at the highest level and after examining the legal aspects and as it was found that certain matters which go to the root of the matter and as the earlier affidavits filed before the High Court did not place all the facts emanating from Government files and records. The said affidavit was filed explaining the severe financial implications which the said Notifications incurred on the State in the form of rebate which could n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....have been raised for the simple reason that the Petitioners' claim was entirely based on the existence of these two Notifications. When the Petitioner moved Miscellaneous Civil Application No.637 of 1999, the prayer to allow him to withdraw the Petition for the reasons stated therein, this court while rejecting the said application by order dated 27th January, 2000, gave the following reasoning:- "It appears that at one stage the applicant had prayed for taking up the Writ Petition No. 316/98 along, the other batch of Writ Petitions, but the said prayer was withdrawn. In the said batch of Writ Petitions, challenge had been thrown to the decision of government of Goa communicated by the Chief Electrical Engineer vide Circular dated 31st March, 1998 to suspend the release of 25% rebate of power tariff to the industrial consumers. There was no challenge whatsoever to Notification dated 15th May, 1996, or Notification dated 1st August, 1996, or that the said Notifications were null and void and to nullify any effect given to them in the earlier batch of Writ Petitions which declaration is now sought by the Writ Petition No. 316/98. There was also no challenge to the guidel....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t on the relevant issues have been impliedly confirmed and though the principle laid down by this Court in the case of Kunhayammed Vs. State of Kerala, [(2000) 6 SCC 359], is squarely applicable on the issue of merger and the judgment dated 21.01.1999 of the High Court merged, the order of this Court dated 13.02.2001, the concept of merger will not come in its way in deciding the issues involved in this petition for the reasons, that, these issues were not raised and therefore not required to be decided by the High Court in its earlier judgment dated 21.01.1999 as was clear from the order passed by it on 27.01.2000 in Misc. Civil Application No. 637 of 1999. The High Court held, that, it had no occasion to address itself on the challenge raised to the notification impugned in the Writ Petition of Manohar Parrikar and the earlier batch of Writ Petitions proceeded solely against the order dated 31.03.1998, and subsequent Notification issued by the State Government on 24.07.1998. It is observed by the High Court, that, the State Government opposed those Writ Petitions without examining the legality of the Notifications dated 15.05.1996 and 01.08.1996 and it had contended that the bene....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ernments or on incomplete or inadequate information made available by them, but on the basis of Constitutional provisions and Business Rules framed thereunder. The High Court further felt that it was duty bound to examine the records to reassure itself that the decisions purported to have been taken by the Government are, in fact and in law, the decision of the Government and they are in conformity, the mandate of the Constitution. Thus the High Court has rejected the preliminary objection as to the maintainability of the Writ Petition and proceeded to decide the challenge made to the above mentioned two notifications on its merits. 27) In our view, the principle of merger essentially refers to the merging of the orders passed by the superior courts, that of the orders passed by a subordinate court. This Court in the case of Shankar Ramachandra Abhyankar Vs. Krishnaji Dattatreya Bapat (AIR 1970 SC 1) has laid down the condition as to when there can be a merger of the orders of the superior court, that of the orders passed by the lower court. This Court stated, that, if any judgment pronounced by the superior court in the exercise of its appellate or revisional jurisdiction after....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ns and the same Finance Secretary who had opined in his cabinet note that Rules of Business stood violated due to non-consultation, Finance department had filed affidavit in previous Writ Petitions on the decision to issue notification dated 24.07.1998. Therefore, the learned senior counsel would contend that the High Court has erred in deciding this issue against this respondent. In aid of this submission, the learned senior counsel has pressed into service the observations made by this Court in the case of State of Karnataka vs. All India Manufacturer Organization and Others, [(2006) 1 SCC 32]. 29) We are not impressed by the submission of the learned senior counsel Shri K.N. Bhatt. In our view, the subject matter of earlier Writ Petitions was completely different and distinct from the public interest litigation filed by Mr. Manohar Parrikar. In the earlier Writ Petitions, the challenge was against notification and the circulars issued by the State Government and in the present Writ Petitions the High Court was primarily concerned, validity or otherwise of the notifications dated 15.5.1996 and 01.08.1996. Therefore, we are of the view that the reasoning and conclusions reached....
X X X X Extracts X X X X
X X X X Extracts X X X X
....icle are not complied with, the resulting immunity cannot be claimed by the State. This, however, does not vitiate the order itself. The position, therefore, is that while the Preventive Detention Act requires an executive decision, call it an order or an executive action, for the confirmation of an order of detention under Section 11(1) that Act does not itself prescribe any particular form of expression of that executive decision. Article 166 directs all executive action to be expressed and authenticated in the manner therein laid down but an omission to comply, those provisions does not render the executive action a nullity. 31) Reference is also made to the decision of this Court in Gulabrao Keshavrao Patil and Ors. Vs. State of Gujarat (1996) 2 SCC 26. It was noted as follows: "Article 166(1) and (2) expressly envisage authentication of all the executive action and shall be expressed to be taken in the name of the Governor and shall be authenticated in such manner specified in the rules made by the Governor. Under Article 166(3), the Governor is authorised to make the rules for the more convenient transaction of the business of the Government of the State, and for ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... It is necessary to consider the principles which have been adopted in construing statutes of this character, and the authorities so far as there are any on the particular question arising here. The question whether provisions in a statute are directory or imperative has very frequently arisen in this country, but it has been said that no general rule can be laid down, and that in every case the object of the statute must be looked at. The cases on the subject will be found collected in Maxwell on Statutes, 5th ed. P. 596 and following pages. When the provisions of a statute relate to the performance of a public duty and the case is such that to hold null and void acts done in neglect of this duty would work serious general inconvenience, or injustice to persons who have no control over those entrusted, the duty, and at the same time would not promote the main object of the Legislature, it has been the practice to hold such provisions to be directory only, the neglect of them, though punishable not effecting the validity of the acts done." (emphasis supplied) 35) In R v Immigration Appeal Tribunal Ex parte Jeyeanthan 1999 (3) AER 231, it is observed : ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....his rights. Because of what can be the very undesirable consequences of a procedural requirement which is made so fundamental that any departure from the requirement makes everything that happens thereafter irreversibly a nullity it is to be hoped that provisions intended to have this effect will be few and far between. In the majority of cases, whether the requirement is categorised as directory or mandatory, the tribunal before whom the defect is properly raised has the task of determining what are to be the consequences of failing to comply, the requirement in the context of all the facts and circumstances of the case in which the issue arises. In such a situation that tribunal's task will be to seek to do what is just in all the circumstances (see Brayhead (Ascot) Ltd v Berkshire CC [1964] 1 All ER 149, [1964] 2 QB 303 applied by the House of Lords in London and a Clydesidc Estates Ltd v Aberdeen DC [1979] 3 All ER 876, [1980] lWLR 182). By contrast, a requirement may be clearly directory because it lays down a time limit but a tribunal is given an express power to extend the time for compliance. If the tribunal grants or refuses an extension of time the p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at 882- 884, [1980] 1 WLR 182 at 188-190, Lord Hailsham of St Marylebone L.C. considered this dichotomy and warned against the approach 'of fitting a particular case into one or other of mutually exclusive and starkly contrasted compartments'. In R v Immigration Appeal Tribunal, ex p Jeycanthan [1999J 3 All ER 231 at 237, [2000] 1 WLR 354 at 360, Lord Woolf MR, now Lord Chief Justice, echoed this warning and held that it is 'Much more important ... to focus on the consequences of non- compliance'. This is how I will approach the matter." 37) In R v Sekhon and others, 2003(3) AER 508, it is observed : "25. There is no doubt that difficulties for courts exist in applying the distinction between mandatory requirements on the one hand, and directory requirements on the other. Even if the terms `directory' and `mandatory' are not used the problem remains of answering the question : what is the effect of non-compliance, procedural requirements? What is necessary as indicated by Lord Campbell LC in Liverpool Borough Bank v. Turner (1861) 30 LJ Ch 379 at 381, 45 ER 715 at 718, is `to try to get at the real intention of the legislature, by carefully atten....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ely directory. The same requirement may be mandatory as to some aspects and directory as to the rest. The court will be more willing to hold that a statutory requirement is merely directory if any breach of the requirement is necessarily followed by an opportunity to exercise some judicial or official discretion in a way which can adequately compensate for that breach. Provisions relating to the steps to be taken by the parties to legal proceedings (using the term in the widest sense) are often construed as mandatory. Where, however, a requirement, even if in mandatory terms, is purely procedural and is imposed for the benefit of one party alone, that party can waive the requirement. Provisions requiring a public authority to comply, formalities in order to render a private individual liable to a levy have generally been held to be mandatory. Requirements are construed as directory if they relate to the performance of a public duty, and the case is such that to hold void acts done in neglect of them would work serious general inconvenience or injustice to persons who have no control over those entrusted, the duty, without at the same time promoting the ma....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l of Ministers. It is further submitted that the decision on which reliance is placed by learned senior counsel Shri F.S. Nariman does not specifically answer the issue whether the Rules of Business framed under Article 166(3) of the Constitution is mandatory or directory and in fact all those decisions are rendered in the context of Article 166(1) and (2) of the Constitution and the Courts have held that, the form of expression and authentication are only directory, and not mandatory. In aid of their submission, the learned senior counsel relies on the observations made in the following decisions : - 40) In State of Kerala vs. A. Lakshmikutty, [(1986) 4 SCC 632], it is held : "It must therefore follow that unless and until the decision taken by the Council of Ministers on January 30, 1985 was translated into action by the issue of a notification expressed in the name of the Governor as required by Article 166(1), it could not be said to be an order of the State Government. Until then, the earlier decision of the Council of Ministers was only a tentative one and it was therefore fully competent for the High Court (sic State Government) to reconsider the matter ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cated and clause (3) relates to the making of the rules by the Governor for the more convenient transaction of the business of the Government. A study of this article, therefore, makes it clear that the notings in a file get culminated into an order affecting right of parties only when it reaches the head of the department and is expressed in the name of the Governor, authenticated in the manner provided in Article 166(2)." (pr. 15, pp. 43) 44) In Haridwar Singh vs. Bagun Sumbrui, [(1973) 3 SCC 889], Rule 10 had been formulated under Article 166(3), it is observed : "16. In this case, we think that a power has been given to the Minister in charge of the Forest Department to do an act which concerns the revenue of the State and also the rights of individuals. The negative or prohibitive language of rule 10(1) is a strong indication of the intent to make the Rule mandatory. Further, rule 10(2) makes it clear that where prior consultation, the Finance Department is required for a proposal, and the department on consultation, does not agree to the proposal, the department originating the proposal can take no further action on the proposal. The cabinet alone would be compete....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uired Revenue Minister to make the order against the petitioner, but the same was done by the Chief Minister. The said order of the CM was rescued by another rule of business which allowed him to call any fine before him. No mention of Article 166(3) being directory or mandatory." 47) In State of Sikkim vs. Dorjee Tshering Bhutia, [(1991) 4 SCC 243], it is observed : "14.....The government business is conducted under Article 166(3) of the Constitution in accordance, the Rules of Business made by the Governor. Under the said Rules the government business is divided amongst the ministers and specific functions are allocated to different ministries. Each ministry can, therefore, issue orders or notifications in respect of the functions which have been allocated to it under the Rules of Business." 48) In Gulabrao Keshavrao Patil vs. State of Gujarat, [(1996) 2 SCC 26], it is held : "14....It would, therefore, be clear that the decision of a Minister under the Business Rules is not final or conclusive until the requirements in terms of clauses (1) and (2) of Article 166 are complied with. Before the action or the decision is expressed in the name of the Governor ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the name of the Governor shall be authenticated in such manner as may be specified in rules to be made by the Governor, and the validity of an order or instrument which is so authenticated shall not be called in question on the ground that it is not an order or instrument made on executed by the Governor. (3) The Governor shall make rules for the more convenient transaction of the business of the Government of the State, and for the allocation among Ministers of the said business insofar as it is not business, respect to which the Governor is by or under this Constitution to act in his discretion." 52) Clause (1) of Article 166 of the Constitution says, that, whenever executive action is to be taken by way of an order or instrument, it shall be expressed to be taken in the name of the Governor in whom the executive power of the State is vested. Under Clause (2), the orders and instruments made and executed in the name of the Governor shall be authenticated in the manner specified in the rules. Under Clause (3) of Article 166 of the Constitution, the Governor is authorized to make rules for the more convenient transaction of business of the Government of the State and f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ny grant of land or assignment of revenue or concession, grant, lease or licence in respect of minerals or forest rights or rights to water, power or any easement or privilege or otherwise have a financial implications whether involving expenditure or not. From a combined reading of the provisions of Rules 7, 3 and 6 of the Business Rules of the Government of Goa the conclusion would be irresistible that any proposal which is likely to be converted into a decision of the State Government involving expenditure or abandonment of revenue for which there is no provision made in the Appropriation Act or an issue which involves concession or otherwise has a financial implication on the State is required to be processed only after the concurrence of the Finance Department and cannot be finalized merely at the level of the Minister in charge. The procedure or process does not stop at this. After the concurrence of the Finance Department the proposal has to be placed before the Council of Ministers and/or the Chief Minister and only after a decision is taken in this regard that it will result in the Decision of the State Government. Therefore the High Court has rightly rejected the argument....
X X X X Extracts X X X X
X X X X Extracts X X X X
....inistry. If a direction was to be issued by the State to the JDA, it was necessary to be done on proper application of mind by the cabinet, the concerned Minister or by an authority who is empowered in that behalf in terms of the Rules of the Executive Business framed under Article 166 of the Constitution of India. Such a direction could not have been issued at the instance of the Chief Minister or at the instance of any other officer alone unless it is shown that they had such authority in terms of the Rules of the Executive Business of the State. We have not been shown that the Chief Minister was the appropriate authority to take a decision in this behalf." (emphasis supplied) 56) In State of U.P. vs. Neeraj Avasthi, [2006 (1) SCC 667], this Court held that the power of the State Government was confined to issuing directions to State Agricultural Produce Market Board on the question of policy and observed : "Such a decision on the part of the State Government must be taken in terms of the Constitutional scheme, i.e., upon compliance of the requirement of Article 162 read, Article 166 of the Constitution of India. In the instant case, the directions were purpo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r, prepare a memorandum indicating precisely the salient facts of the case and points for decision and copies thereof circulated to the Council by the Secretary. Rule 14 requires in a case which involves or concerns more than one Department, the Minister by previous discussion to arrive at an agreement and if such agreement is reached the memorandum referred to in Rule 13 supra should contain the joint recommendations of the Ministers and if no agreement is reached the points of differences and views of each of the Minister should be stated in the memorandum. Items No.5,9 & 30 in the Schedule to the Rules relate to proposal which have a bearing on the Finances of the State and which do not have the concurrence or consent of the Finance Minister's proposal involving important change in the policy and practice; proposals to vary or reverse a decision previously taken by the Council. Under Rule 16 the decisions of the Council in each case should be recorded and placed, the records of the case after their approval by the Chief Minister. Extracts of the decision should be sent to the Secretary of the Department who should take necessary action thereon. Rule 17 enables a Minister in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e exchequer, the Government was required to process them in keeping, the requirements of the Business Rules. When the Rescinding Notification dated 31.03.1995 was issued the rebate of 25% was available only to Low Tension and High Tension consumers and the Extra High Tension Consumers got deleted pursuant to the Notification dated 6.12.1993. A decision, therefore, to include a new category of consumers for grant of rebate which necessarily involved extra financial burden on the State's finances more so by creation of a new category retrospectively was required to be finalized only after it was placed before the Council of Ministers or the Chief Minister in addition to obtaining the previous concurrence of the Finance and Industries Departments. The Notification dated 15.5.1996 which was argued by the appellants herein to be only clarificatory had imposed an additional burden on the State's Exchequer by introducing a new class of consumers for grant of rebate retrospectively and it was finalized by the Power Minister at his level. In law the proposal for the decision leading to the Notification dated 15.5.1996 should have been placed before the Council of Ministers or the Ch....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re to comply, them does not vitiate the decision taken by the State Government. The High Court after considering the various judgments cited before it has repelled the said contention to hold that the said Rules are mandatory and non- compliance thereof would be disastrous. The reasoning adopted by the High Court to arrive at such a conclusion is sound and in accordance, the constitutional mandate. The decisions of the State Government have to be in conformity, the mandate of Article 154 an 166 of the Constitution as also the Rules framed thereunder as otherwise such decision would not have the form of a Government decision and will be a nullity. The Rules of Business framed under Article 166(3) of the Constitution are for convenient transaction of the business of the Government and the said business has to be transacted in a just and fit manner in keeping, the said Business Rules and as per the requirement of Article 154 of the Constitution. Therefore, if the Council of Ministers or Chief Minister has not been a party to a decision taken by an Individual Minister, that decision cannot be the decision of the State Government and it would be non-est and void ab initio. This conclusi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on 21.07.1994 and a Notification dated 31.03.1995 was issued therefor. The 1st respondent's motion in the State Assembly for a Calling Attention Notice evidently moved the State Government to evolve a Scheme for grant of rebate of 25% for the period between 1.10.1991 to 31.03.1995. The Power Minister therefore, on 08.07.1995 called upon the Chief Electrical Engineer to formulate such a scheme who prepared accordingly a note regarding the proposed scheme. Since the earlier Notification was rescinded by the Notification dated 31.03.1995, a clarification was sought from the Law Department on the extension of the period of rebate of 25%. On 25.08.1995, a note was put up by the Law Department indicating that the 25% rebate would be available only for the period between 01.10.1991 to 31.03.1995 and industrial units supplied, power on/or after 31.03.1995 would not be entitled for the same. On 14.02.1996, the Chief Electrical Engineer submitted a note containing a proposal to amend the rebate notification requesting to extend the benefit of the rebate of 25% to Extra High Tension consumers and sought approval thereof. The said draft when referred to the Law Department for its opinion, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....oposal being placed before it or the Chief Minister or without the consultation, the Finance Department, though the draft of the notification was referred to the Law Department before its issuance. 66) It is also to be noted that by the Notification dated 01.08.1996 the State Government intended to re-introduce the benefit of 25% rebate in power tariff. If the State Government as a policy decision desired to re- introduce the said rebate, it was imperative that the said decision complied, the requirement of a Government decision and that it did not remain a Departmental Order or Instruction. The High Court has recorded after verifying the notes on record that the re-introduction of rebate was initiated at the instance of Industries Department and that the proposal for re-introduction attracted the provisions of Rules 9 & 10 of the Business Rules and it did not seek the concurrence of the Finance Department. From the file produced before it the High Court has found that the decision was finalized by the Power Minister at his level without any reference to the Council of Ministers or the Chief Minister. The High Court has also referred to the Statement in writing given by the Chie....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s suggested by him on 30.7.1996 which in our opinion are in violation of the Business Rules. 67) The High Court has perused the files relating to the issue and from them it has noticed that the file was forwarded to the Development Commissioner on or about 17.03.1998 as they were required for preparation of reply to a question in the Assembly and the Commissioner on 25.03.1998 submitted a note referring to the complaint filed by 1st respondent herein alleging illegalities and corruption in the matter of grant of rebate. The complaint of the 1st respondent was about the amendment of the Notification dated 31.09.1991 which had been rescinded by the Notification dated 31.3.1995 and he had alleged that the amendment was made, a mala fide intention of including a specific category of consumer and the amending notification had led to manipulation of records to the extent that some people had attempted to become beneficiaries of the Scheme within the notified period of 01.10.1991 and 31.03.1995. The note of the Commissioner raised certain issues relating to grant of rebate to industrial units after 31.03.1995. As per the objections raised in the note the cases of units which had applie....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....1996 and the same could have been done but for the legal hurdle and the State Government realized the legal hurdles in continuing, the rebate scheme on the basis of the Notification dated 01.08.1996. We fail to understand as to why the State Government did not bring these facts before this Court or the High Court in the earlier round of litigation where its power to withdraw the subsidy in exercise of its power under Section 21 of the General Clauses Act was upheld. Instead it chose to plead financial crunch faced by the State Government as the reason for withdrawal of rebate. It is further to be noted, regard to the Notification dated 01.08.1996, that it re-introduced the benefit of rebate on tariff and made it available to units on the prevailing tariff in force from time to time at which the units were billed for a period of five years from the date of supply of power was made available to them and who had applied or availed power supply on or after 01.10.1991. The notification dated 30.09.1991 on the other hand made available the rebate on the basis of tariff set out in the Notification dated 27.06.19888 and to Low and High Tension Power consumers who had applied for supply of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ents of authentication. Nevertheless mere authentication as required under Article 166(2) of the Constitution did not make it a government decision in law nor would it validate a decision which is void ab initio. The validity of the notification will have to be tested, reference to the constitutional provisions and Business rules and not by their form or substance. Therefore, this contention of the appellants is liable to be rejected. 70) The learned senior counsel Shri F.S. Nariman submitted that the doctrine of indoor management drawn from private law would apply analogously in the facts and circumstances of this case. In response to this submission, the learned senior counsel Dr. Rajeev Dhavan would submit that the concept of private law is not readily applicable in public law. It is further submitted that often private law and public law concepts are similar in name and text but needs to be differentiated. Reference is made to the observations of this Court in Shrisht Dhawan (Smt.) Vs. Shaw Bros. (1992) 1 SCC 534, wherein it is observed: "20.....But fraud in public law is not the same as fraud in private law. Nor can the ingredients which establish fraud in commerci....
X X X X Extracts X X X X
X X X X Extracts X X X X
....saction was found to have been such as to put the plaintiffs on inquiry. To this effect Lord Justice Sargant held:- "Cases where the question has been as to the exact formalities observed when the seal of a company has been affixed, such as Royal British Bank v. Turquand, 6 E. & B. 327, or the County of Gloucester Blank v. Rudry Merthyr, &c., Co., [1895] 1 Ch 629, are quite distinguishable from the present case. In re Fireproof Doors, Ltd., sup., tends rather against than in favour of the plaintiffs, since if a single director has as towards third parties the authority now contended for, the whole of the elaborate investigation of the facts in that case was entirely unnecessary. Perhaps the nearest approach to the present case is to be found in Biggerstaff v. Rowlatt's Wharf, [1896] 2 Ch. 93. But there the agent whose authority was relied on had been acting to the knowledge of the company as a managing director, and the act done was one within the ordinary ambit of the powers of a managing director in the transaction of the company's affairs. It is, I think, clear that the transaction there would not have been supported had it not been in this ordinary cou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....fications dated 15.5.1996 and 1.8.1996 and the State at no point of time before any Court having raised the issue of these two Notifications being void ab initio for want of compliance, the provisions of the Business Rules framed under Article 166(3) of the Constitution of India, the High Court ought to have rejected the plea of the State Government that the Notifications were illegal or were in violation of the Rules of Business and dismissed the Writ Petition on the principles of res judicata, Doctrine of Estoppel and the principles embodied in Order II Rule 2 of the Code of Civil Procedure. It was urged that the State not having raised this at any point of time before any court should not be allowed to do so. We do not find any merit in these contentions. As noticed by us earlier in the judgment, the issue regarding the validity or legality of the Notifications dated 15.5.1996 and 1.8.1996 was never raised in the earlier batch of writ petitions before the High Court and the High Court never had an opportunity or occasion to look into, consider and pronounce upon the validity of the same, reference to the Business Rules framed under Article 166 (3) of the Constitution. These prin....