TaxTMI 
TaxTMI 
2007 (4) TMI 788
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....s 1 to 3 WP.23422 and Respondents 1 to 4 in WA.Nos.23734 and 24322/06 respectively. : Mr. P.S. Raman Additional Advocate General for Mr. N. Muthusami For Respondent 4 in WP.23422/06, For Respondent 5 in WP.23734/06,24322/06. : Mr. G. Lakshmanan. ORDER The petitioner in the first two writ petitions in W. P. Nos. 23422 and 23734 of 2006 are cement companies and the petitioner in the third writ petition in W.P. No. 24322 of 2006 is a Company engaged in installation and collection of fly ash collection system. In all the three writ petitions, the orders of the first respondent reducing the percentage of collection of fly ash allotted to the respective petitioners by the impugned orders are assailed. Except minor variations in respect of the period for which and the percentage of fly ash they were allowed to collect originally and the reduction in percentage by reason of the impugned orders, all in other respects, the facts are one and the same. As the grounds of attack, the arguments advanced to assail the orders and the defence put forth to sustain the impugned orders are one and the same, all the writ petitions are taken up together for disposal. For the sake of narration....
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.... year and the penalty deemed fit would be imposed for short collection of fly ash due to the fault of the companies after one year of the review period. 11. In case the company is not able to lift fly ash, the company should give 21 days advance notice to enable Chief Engineer/MTPs to allot it to others. Two spells of 15 days each in a year would be permitted on this account. 3. The petitioner, pursuant to the memorandum of understanding, invested huge sum of more than Rs . 4 crores and put up necessary collection system in the allotted units to collect fly ash. From the date of commission of the system, they have been strictly adhering to the terms of the memorandum of understanding and collecting fly ash. The proportionate electricity, water and other charges payable for collection of 80 percent of the fly ash was also being paid promptly. The collection of fly ash from time to time has been recorded and communicated by the respondent to the petitioner on monthly basis from the date of commencement till date. The petitioner has also been supplying a portion of the fly ash collected by it to some other cement companies owned by the Government of Tamil Nadu. 4. While....
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.... the petitioner's average collection was 45 percent and the respondent was constrained to find other takers for collecting the balance 35 percent of the fly ash required to be collected by the petitioner. The petitioner has collected as low as 19 percent of the fly ash in some months. However, the highest average collection of the petitioner was only 53 percent as against the 80 percent provided under the MOU. The petitioner sold a portion of collected fly ash to other companies, which proves that the petitioner's need is for less than the allotted 80 percent. The petitioner having consistently removed less amount of fly ash than contemplated for last few years, the respondent was at liberty to make alternative arrangement for disbursement of fly ash to the needy parties. The petitioner would be reimbursed the expenses of the operation and maintenance cost in proportion to the quantity reduced. The order passed by the respondent on 17.7.2006 in favour of the impleaded respondent for collection of 25 percent of the dry fly ash cannot be considered as malafide on the part of the respondent, as the same was issued by reason of the short collection by the petitioner and honour ....
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....ate General in order to sustain the case of the respondents contends that the writ petition not is maintainable as the memorandum of understanding is not a statutory contract based on any statutory provisions and the remedy of a He He the petitioner is not by way of writ petition. The principles of promissory estoppal and legitimate expectation do not apply to the facts of the present case. The contention of malafide raised by the petitioner is raised without any factual basis. The grant order of 25 percent to similarly situated cement company cannot be regarded as malafide having regard to the peculiar facts an circumstances of the present case. relied on KERALA SEB V. KURIEN E. KALATHIL, (2000) 6 SCC 293 at 298. further contends that when there is a dispute relating to terms of contract, proper course would be reference to arbitration or institution of civil suit and not a writ petition by relying on STATE OF U.P. VS. BRIDGE & ROOF CO. (INDIA) LIMITED reported in (1996) 6 SCC 22 at page NO.29. It is further contended that in respect of issues involving civil rights of parties flowing from a contract, Writ Petition under Article 226 is not maintainable by relying on STATE OF U. P.....
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....rs from the date of publication of the notification, with further increase in utilsiation every year progressively for the next twelve years to enable the utilisation of the entire fly ash generated in the power plant. 11. It is pertinent to state here that the above said notification has been issued to protect the Environment, conserve top soil and prevent the dumping and disposal of fly ash discharged from coal or lignite based Thermal Power Plants on land with the further reasoning to restrict the excavation of top soil for manufacture of brick and promoting utilisation of fly ash in the manufacture of building materials and in construction activities, having regard to the environmental hazard caused by the fly ash produced by thermal power plant. 2. In the above stated circumstances of the case, if we consider the MOU entered into by the petitioner with the respondent Electricity Board which determines the terms and conditions under which the petitioner should clear the fly ash with the penalty clause, it can only be regarded as independent MOU of any statute and as such it cannot be elevated to a position either ofa statute or an enabling provision in a statute, which en....
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....ENT OF A. P. AND OTHERS reported in (2001) 8 SCC 344, the Government of Andhra Pradesh invoking power under the Mines and Minerals (Regulation and Development) Act, 1957 and the Mineral Concession Rules, 1959 \reserved two villages for exclusive exploitation of minerals by public sector unit and by two Government Orders granted different areas in favour of the Andhra Pradesh Mineral Development Corporation. Thereafter, the Government of Andhra Pradesh accorded permission to the Corporation for grant of sub-lease of the areas subject to certain terms and conditions. However, the Government subsequently took a decision to put an end to all the existing sub-leases in order to enable the Corporation to carry on the mining operations directly and withdrew permission granted earlier to the Corporation to grant sub-leases . The validity of the notification withdrawing the permission granted earlier to sub-lease the mining lease in question was challenged. The grant of prospecting mining or direct mining and execution of contract pursuant thereto are governed by the statutory provisions of the MMRD Act, 1957 and the Rules made thereunder i.e., Mineral Concession Rules, 1956. While consider....
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....ly involve an exercise of statutory power. Statutory bodies may enter into contract, which may not raise any issue of public law and hence those matters ought to be adjudicated by a Civil Court or arbitration if provided for in the contract. This case was also pertaining to Electricity Board of Kerala State. This decision is directly on the point and stares at the petitioner's contention to the contra. 17. The decisions of DWARKADAS MARFATIA AND SONS VS. BOARD OF TRUSTEES OF THE PORT OF BOMBAY reported in (1989) 3 SCC 293 and MAHABIR AUTO STORES AND OTHERS (VS. INDIA OIL CORPORATION & OTHERS reported in (1990) 3 SCC 752 have been taken in aid by the petitioner to contend that the State action must be fair and reasonable even though it is contractual in nature. Any breach of contract, which is not fair and reasonable or founded on frivolous reasoning, the judicial review is permissible. In all the above cases, the Court has concentrated to the public law element involved in the contract, has held that judicial review is available if the aggrieved party approaches the Court. It is useful to refer paragraph No.26 of the judgment in KUMARAI SHRILEKHA VIDYARTHI AND OTHERS VS. STA....
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.... equally true of all actions even in the field of contract. Thus, every holder of a public office is a trustee whose highest duty is to the people of the country and, therefore, every act of the holder of a public office, irrespective of the label classifying that act, is in discharge of public duty meant ultimately for public good. With the diversification of State activity in a Welfare State requiring the State to discharge its wide ranging functions even through its several instrumentalities, which requires entering into contracts also, it would be unreal and not pragmatic, apart from being unjustified to exclude contractual matters from the sphere of State actions required to be non-arbitrary and justified on the touchstone of Article 14. " 19. In the above said judgment, the Law Officers appointed to represent the Government were en bloc sent out by a Government Order. In those circumstances of the case, when contended that the appointments are contractual in nature. The Supreme Court held such action could also tested under Article 226. 20. In respect of the the promissory estoppet and legit promissory estoppel and legitimate expectation, it is contended by the learned ....
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....e doctrine. The doctrine must yield when the equity so demands if it can be shown having regard to the facts and circumstances of the case that it would be inequitable to hold the Government the public authority to its promise, assurance or representation. 23. In the case of Ashok Kumar Maheshwari (Dr) v. State of U. P., (1998) 2 SCC 502, it has been held as follows : "8. Doctrine of 'promissory estoppell has been evolved by the courts, on the principles of equity, to avoid injustice. 9. 'Estoppel' in Black's Law Dictionary, is indicated to mean that a party is prevented by his own acts from claiming a right to the detriment of other party who was entitled to rely on such conduct and has acted accordingly. Section 115 of the Indian Evidence Act is also more or less, couched in a language which conveys the same expression. 10. 'Promissory estoppel' is defined Black's as in Law Dictionary as: 'that which arises when there is a promise which promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of promisee, and which does induce such action or forbearance, and ....
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....ference may lie his detriment in the necessity of showing "detriment". Where one party deliberately promises to waive, modify or discharge his strict legal rights, intending the other party to act on the faith of promise, and the other party actually does act on it, then it is contrary, not only to equity but also to good faith, to allow the promisor to go back on his promise. It should not be necessary for the other party to show that he acted to his detriment in reliance on the promise. It should be sufficient that he acted on it." 24. A line of judicial opinion has been rendered by the apex Court for nearly half a century on the rule of promissory estoppel, right from the decision in the case of Thiru John v. Subramanian, AIR 1957 SC 1724; M. P. Sugar Mills Ltd. v. Union of India, AIR 1979 SC 621; Pawan Alloys & Casting Ltd. v. U.P. Seb, (1997) 7 SCC 251; State of Rajasthan v. Mahavir Oil Industries, AIR 1999 SC 2302, and MRF Ltd. v. Asst. Commissioner of Sales Tax, (2006) 8 SCC 702. 25. In all these cases, based on industrial policy concessional notification granting concession payment sales tax or electricity tariff concession or incentive notification, granting waiver o....
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.... Supreme Court held in Pawan Alloys case referred above that even after holding out a promise, the State can withdraw from it even prior to the period specified on the ground of overriding public interest or by giving a reasonable opportunity to the promissee of resuming his earlier position after restoration or status quo ante is possible. The Supreme Court in the case of R.C. TOBACCO PVT. LTD. VS. UNION OF INDIA reported in (2005) 7 SCC 725 = AIR 2005 SCW 4965 upheld the retrospective withdrawal of the exemption notification issued under Section 5 of the Central Excise Act, 1944 on the ground that the exemption notification did not effectuate the intent of the Notification. If the grant of exemption had operated as it was intended to, there would have been no necessity to enact Section 154 of the Finance Act for withdrawal of the exemption granted. 28. In the facts of the present case, the one and only public interest is prevention of environment hazard, which is likely to be caused due to the short collection by the petitioner. It is the specific case of the respondent by giving data that consistently, there is short collection of fly ash by the petitioner, which has been int....
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....ities have to conform to Art.14 of the Constitution of which non-arbitrariness is a significant facet. To satisfy this requirement of non-arbitrariness in a State action, it is, therefore, necessary to consider and give due weight to the reasonable or legitimate expectations of the persons likely to be affected by the decision. Whether the expectation of the claimant is reasonable or legitimate in the context is a question of fact in each case. Whenever the question arises, it is to be determined not according to the claimant's perception but in larger public interest wherein other more important considerations may outweigh what would otherwise have been the legitimate expectation of the claimant. A bona fide decision of the public authority reached in this manner would satisfy the requirement of non-arbitrariness and withstand judicial scrutiny." This has been followed by the apex Court in the case of STATE OF WEST BENGAL AND OTHERS VS. NIRANJAN SINGHA (2001) 2 SCC 326, wherein it has been held that the doctrine of legitimate expectation is only an aspect of Article 14 of the Constitution in dealing with the citizens in a non arbitrary manner and thus, by itself, does not g....
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....g of sale price for fly ash by the petitioner to the third parties, which prima facie made out a case that the petitioner is not requiring the dry fly ash for their cement manufacturing activities and they are selling to third parties for profit. Certain other letters by the petitioner in W. P. No. 23734 of 2006, requesting the petitioner to make available for allocation of morel SCC in Pin 216 quantity. Thus, these are disputed questions of fact, which cannot be resolved by means of an affidavit and counter affidavit and by filing statements on either side. Useful reference can be had to the judgment of the Supreme Court in STATE OF BIHAR VS. JAIN PLASTICS AND CHEMICALS LIMITED reported (2002) 1 and ORISSA AGRO INDUSTRIES CORPORATION LIMITED AND OTHERS VS. BHARATI INDUSTRIES AND OTHERS reported in (2005) 12 SCC 725. 33. So far as the petitioner in the third writ petition is concerned, they are selling to third parties and there is no material produced by them to show that they are using for their own use, except saying that they have invested money for installation of equipments and further the handing over of the unit has not been done by the respondent in a proper manner, whi....