# // • [2010J '5 S.C.R. 1081 M/S M.R.F. LTD: ETC v. MANOHAR PARRIKAR AND ORS

- **Citation:** [2010] 5 S.C.R. 1081
- **Court:** Supreme Court of India
- **Decided:** 2010-05-03
- **Case number:** Civil Appeal No. 4220 of 2002
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/2010j-5-s-c-r-1081-m-s-m-r-f-ltd-etc-v-manohar-parrikar-and-ors-27000
- **Pages:** 72

## Headnote

1
--//
• [2010J '5 S.C.R. 1081
M/S M.R.F. LTD: ETC.
v.
MANOHAR PARRIKAR AND ORS.
(Civi!Appeal No. 4220 of 2002 etc.)
MAY 3, 2010
[R.V. RAVEENDRAN AND H.L. DATTU, JJ.] ·
Rules of Business of the Government of Goa:
A
B
rr. 3, 6, 7 and 9 - Decision taken by Minister of Power c
allowing rebate in electricity tariff- Matter notreferred to Chief
Minister or the· Council of Ministers - Nor wa_s_ the concurrence
of Finance Department taken - HELD: Such a decision
cannot be said. to be the deCision 'of the Government -
Notifications giving effect to such· decisions without complying D
with the Rules of Business framed under Article 166(3) of the
Constitution,· are non-est and void ab initio .:.. High Court has
rightly held the Rules of Business as mandatory - In the
instant case, there is sufficient doubt with regard to the conduct
of the Minister of Power in issuing the_ notifications -
E
therefore, suspicion of irregularity renders- the doctrine of
indoor management inapplicable - Constitution of India, 1950
- Articles 154 and 166 - Doctrine of indoor Management -
Public Interest Litigation.
Code of Civil Procedure, 1908: ·
F
s.11, 0.2, r.2 - Res judicata - Withdrawal of electri_city
tariff rebate granted as per Notifications challenged in writ·
petitions - Upheld by High Court - But writ petitioners held
entitled to the rebate for the periods indicated in the judgment G
- SLPs dismissed- Subsequent writ petition irrpublic interest
filed challenging validity and legality of the Notifications -
HELD: In the earlier litigation, issue of validity or legality of
the Notifications was never raised, nor the writ petitioner in the
1081
H
1082
SUPREME COURT REPORTS
[2010] 5 S.C.R.
A subsequent writ petition was a party thereto - Merely because
the State Government did not agitate legality or validity of the
notifications in earlier round of litigation, it cannot be deemed
to have accepted legality for the .Notifications, or waived its
objection thereto - Therefore, the principles of res judicata
B and the doctrine of estoppel have no application - Since the
issue that was decided by High· Court in earlier round of
litigation and the issue raised and considered in subsequent
public interest 1Yrit petition are entirely different, doctrine of
merger has also no bearing _.: Estoppe/ - Rules of Business ·
c of Government ot Goa 7 Doctrine of merger. .
(
. ·.·
··.· ..
··
.
..
• .. ·
.
. ...
The Government of Goa issued notification dated
30.9.1991 granting: rebate· of 25% iri •electricity· tariff in
respect of power. supply to the low tensiOn and high
tension industrial ·consurners. The said notification was
D late'r rescinded ·by another Notification. dated• 31.3.1995.
l
Howey~r, on 15.5.19~6. an~t.her notification was issued
amending .the not1f1cat1on dated 30.9.1991 and
substituting the words• "high tension or low tensfori
power supply", by words' "high tension/extra high tension
E or low tensiOn p·ower supply". A further notification dated
'.j1.8.1996 was issued ·rest§ring the facility of 25% .reb.ate
w.e.f.1.8.1996. By an order dated 31.3.1998 issued by the
Chief Electrical Engineer,' the benefits of rebate granted
under Notification dated 1r8.1996 were withdrawn, This
F led to a spate of litigation by the industrial units before
the High Court. During the pendency of the writ petitions,
the State Cabinet passed a resolution and,' accordingly,
by issuing the notificatiori"dated 24;7.1998 the State
· Government Withdrew the benefit of 25% rebate. The High
G · Coui1,1tiy·its'order dated 21.1.1999, disposed of the writ
petitions holding the circular/order dated 31.3.1998 as
invalid and the notification dated 24.7.1998 as legal, valid
·~md operative. However, the High Court held that all the
petitioners were entitled to 25% rebate in power tariff for
H the periods as indicated in the judgment. The appeals
M.R.F. LTD. ETC. v. MANOHAR PARRIKAR AND
1083
ORS.
challenging the judgment of the High Court were
A
dismissed by the Supreme Court by its orde

## Text

_Characters 0–39,960 of 144,891. This is a partial read: ask again with offset=39960 for what follows._

1
--//
• [2010J '5 S.C.R. 1081
M/S M.R.F. LTD: ETC.
v.
MANOHAR PARRIKAR AND ORS.
(Civi!Appeal No. 4220 of 2002 etc.)
MAY 3, 2010
[R.V. RAVEENDRAN AND H.L. DATTU, JJ.] ·
Rules of Business of the Government of Goa:
A
B
rr. 3, 6, 7 and 9 - Decision taken by Minister of Power c
allowing rebate in electricity tariff- Matter notreferred to Chief
Minister or the· Council of Ministers - Nor wa_s_ the concurrence
of Finance Department taken - HELD: Such a decision
cannot be said. to be the deCision 'of the Government -
Notifications giving effect to such· decisions without complying D
with the Rules of Business framed under Article 166(3) of the
Constitution,· are non-est and void ab initio .:.. High Court has
rightly held the Rules of Business as mandatory - In the
instant case, there is sufficient doubt with regard to the conduct
of the Minister of Power in issuing the_ notifications -
E
therefore, suspicion of irregularity renders- the doctrine of
indoor management inapplicable - Constitution of India, 1950
- Articles 154 and 166 - Doctrine of indoor Management -
Public Interest Litigation.
Code of Civil Procedure, 1908: ·
F
s.11, 0.2, r.2 - Res judicata - Withdrawal of electri_city
tariff rebate granted as per Notifications challenged in writ·
petitions - Upheld by High Court - But writ petitioners held
entitled to the rebate for the periods indicated in the judgment G
- SLPs dismissed- Subsequent writ petition irrpublic interest
filed challenging validity and legality of the Notifications -
HELD: In the earlier litigation, issue of validity or legality of
the Notifications was never raised, nor the writ petitioner in the
1081
H
1082
SUPREME COURT REPORTS
[2010] 5 S.C.R.
A subsequent writ petition was a party thereto - Merely because
the State Government did not agitate legality or validity of the
notifications in earlier round of litigation, it cannot be deemed
to have accepted legality for the .Notifications, or waived its
objection thereto - Therefore, the principles of res judicata
B and the doctrine of estoppel have no application - Since the
issue that was decided by High· Court in earlier round of
litigation and the issue raised and considered in subsequent
public interest 1Yrit petition are entirely different, doctrine of
merger has also no bearing _.: Estoppe/ - Rules of Business ·
c of Government ot Goa 7 Doctrine of merger. .
(
. ·.·
··.· ..
··
.
..
• .. ·
.
. ...
The Government of Goa issued notification dated
30.9.1991 granting: rebate· of 25% iri •electricity· tariff in
respect of power. supply to the low tensiOn and high
tension industrial ·consurners. The said notification was
D late'r rescinded ·by another Notification. dated• 31.3.1995.
l
Howey~r, on 15.5.19~6. an~t.her notification was issued
amending .the not1f1cat1on dated 30.9.1991 and
substituting the words• "high tension or low tensfori
power supply", by words' "high tension/extra high tension
E or low tensiOn p·ower supply". A further notification dated
'.j1.8.1996 was issued ·rest§ring the facility of 25% .reb.ate
w.e.f.1.8.1996. By an order dated 31.3.1998 issued by the
Chief Electrical Engineer,' the benefits of rebate granted
under Notification dated 1r8.1996 were withdrawn, This
F led to a spate of litigation by the industrial units before
the High Court. During the pendency of the writ petitions,
the State Cabinet passed a resolution and,' accordingly,
by issuing the notificatiori"dated 24;7.1998 the State
· Government Withdrew the benefit of 25% rebate. The High
G · Coui1,1tiy·its'order dated 21.1.1999, disposed of the writ
petitions holding the circular/order dated 31.3.1998 as
invalid and the notification dated 24.7.1998 as legal, valid
·~md operative. However, the High Court held that all the
petitioners were entitled to 25% rebate in power tariff for
H the periods as indicated in the judgment. The appeals
M.R.F. LTD. ETC. v. MANOHAR PARRIKAR AND
1083
ORS.
challenging the judgment of the High Court were
A
dismissed by the Supreme Court by its order dated
13.2.2001. Respondent No. 1 (in CA No. 4220 of 2002)
challenged the correctness of the notifications dated
15.5.1996 and 1.8.1996 by filing a writ petition under
public interest and sought to declare the two notifications
B
as null and void. It was stated that as the said
notifications were issued only at the instance of the
Minister of Power, the same could not be terme·d as
decisions of the State Government; and if the said illegal
notifications were allowed to stand, they will cause a loss c
of Rs.50 crores to the States Exchequer. The writ petition
was contested on the ground that the High Court in its
judgment dated 21.1.1999 having upheld the validity of
the notifications dated 15.5.1996 and 1.8.1996 and the
said judgment having been upheld by the Supreme Court D
by its order dated 13.2.2001, the writ petition was barred
by the principle of res judicata and the doctrine of merger.
The High Court by its judgment dated 19/24.4.2001 held
that the notifications dated 15.5.1996 and 1.8.1996 having
been issued without complying with the Rules of
Business of the Government of Goa framed under Article
E
166(3) of the Constitution, were non-est and void ab-initio.
Aggrieved, the various industrial units filed the appeals.
Dismissing the appeals, the Court
HELD: 1.1. The High Court rightly held that the Rules
of Business of the Government of Goa framed under
Article 166(3) of the.Constitution of India, including Rules
F
3, 6, 7 and 9 thereof, are mandatory and not directory, and
any decision taken by any individual Minister in violation
G
thereof cannot be termed as the decision of the State
Government. The said Rules must be strictly adhered to.
Any decision by the Government in breach of these Rules
will be a nullity in the eyes of law. The decisions of the
State Government have to be in conformity with the
H
1084
SUPREME COURT REPORTS
[2010] 5 S.C.R.
A mandate of Articles 154 and 166 ofthe Constitution as
also the Rules framed thereunder, otherwise they 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
s of the business of the Government, which has to be
carried out in a just and fit manner in keeping with the
Business Rules and as per the requirement of Articles 154
and 166 of the Constitution. [Para 54, 62-63] (1133-G-H;
1134-A; 1139-E-H; 1140-H; 1141-A]
c
State of Kerala vs. A. Lakshmikutty (1987) 1 SCR 136 =
(1986) 4 SCC 632; CBI vs. Ravi Shankar Srivastava, (2006)
4 Suppl. SCR 450 = (2006) 7 SCC 188; Punjab State
Industrial Development Corpn. Ltd. vs. PNFC Karamchari
Sangh 2006 (3 ) SCR 751 = (2006) 4 SCC 367; State of
D Bihar vs. Kripalu Shankar, (1987) 3 SCR 1 = (1987) 3 SCC
34; Haridwar Singh vs. Bagun Sumbrui, (1973) 3 SCC 889;
Gulabrao Keshavrao Patil vs. State of Gujarat, (1995) 6
Suppl. SCR 97 = (1996) 2 SCC 26; K.K. Bhalla vs. State
of M.P. 2006 (3) SCC 581 and State of UP. vs. Neeraj
E Avasthi (2005) 5 Suppl. SCR 906 = 2006 (1) SCC 667,
relied on.
F
G
R. Chitralekha vs. State of Mysore (1964) 6 SCR 368,
held inapplicable.
Dattatraya Moreshwar vs. State of Bombay (1952) SCR
612; Bachhittar Singh vs. State of Punjab (1962) Supp 3
SCR 713 and State of Sikkim vs. Dorjee Tshering Bhutia
(1991) 3 SCR 633 = (1991) 4 sec 243, referred to.
Bannari Amman Sugars Ltd. vs. Commercial Tax Office
(2004) 6 Suppl. SCR 264 = (2005) 1 sec 625; and State
of UP. vs. Om Prakash Gupta (1969) 3 SCC 775, cited.
Montreal Street Rely Co. vs. Normandin-1917 A.C. 170;
H R v Immigration Appeal Tribunal Ex parte Jeyeanthan 1999
M.R.F. LTD. ETC. v. MANOHAR PARRIKAR AND
1085
ORS.
(3) AER 231; Attorney General's Reference (No 3 of 1999),
A
2001 (1) AER 577 and R v Sekhon and others, 2003(3) AER
508, referred to.
Halsbury's Laws of England, 4th Edition Re issue Vol.
44(1 ), referred to.
B
1.2. Clause (1) of Article 166 of the Constitution says
that whenever an 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
C
and instruments made and executed in the name of the
Governor shall be authenticated in the manner specified
in the rules. All matters, excepting those in which the
Governor is required to act in his discretion, have to be
allocated to one or the other of the Ministers on the
D
advice of the Chief Minister. [para 52] [1131-C-E]
1.3. Any decision taken by the State Government
reflects the collective responsibility of the Council of
Ministers and their participation in such decision making
process. The Chief Minister as the Head of the Council
of Ministers is answerable not only to the Legislature but
also to the Governor of the State, who, as the Head of the
State, acts with the aid and advice of the Council of
Ministers headed by the Chief Minister. The Rules framed
under Article 166 (3) of the Constitution are in aid to fulfill
the constitutional mandate embodied in Chapter II of Pait
E
F
VI of the Constitution. The decision of the State
Government must meet the requirement of these Rules
also. Therefore, if the Council of Ministers or Chief
Minister has not been a party to a decision taken by an
G
individual Minister, that decision cannot be the decision
of the State Government and it would be non-est and void
ab initio. [para 61 and 62] [1139-A-C, G-H; 1140-A]
1.4. A decision to be the decision of the Government
H
1086
SUPREME COURT REPORTS
· [2010] 5 S.C.R.
A must satisfy the requirements of the Business Rules
framed by the State Government under the provisions of
Article 166(3) of the Constitution. In the case on hand, the
decisions leading to the notifications dated 15.5.1996 and
1.8.1996 do not comply with the requirements of
B Business Rules framed by the Government under the
provisions of Article 166(3) of the Constitution, and the
Notifications are the result. of the decision taken by the
Power Minister at his level. The decision of the individual
Minister cannot be treated as the decision of the State
c Government and the Notifications issued as a result of
such a decision, are in violation of the Business Rules
and void ab initio; and all actions consequent thereto are
null and void. The fact Lhat the decisions taken by the
Minister alone were acted upon . by issuance of
0 Notifications dated 15.5.1996 and 1.8.1996 will not render
them decisions of the State Government even if it chose
to remain silent for a sufficient period of time or the
Secretary concerned did not take any action under Rule
46 of the Business Rules. [para 53 and 68) [1133-D-E;
E 1147-A-D]
1.5. Rule 7 (2) of the Business Rules states that a
proposal which re_guires previous concurrence of
Finance Department under the said Rule, but in which
Finance Department has not concurred, may not be
F proceeded with, unless the Council of Ministers has
taken a decision to that effect. From a combined reading
of the provisions of Rules 7, 3 and 6 of the Business
Rules, the conclusion would be irresistible that any
proposal which is likely to be converted into a decision
G 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
H concurrence of the Finance Department and capnot be
M.R.F. LTD. ETC. v. MANOHAR PARRIKAR AND - 1087
ORS.
finalized merely at the level of the Minister in charge. The
A
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, it will result in the decision of the State
B
Government. [para 53] [1131-G-H; 1132-A, F-H; 1133-A-B]
1.6. In the instant case, the decisions impugned
involve and concern not only the Department of Power
but also the Departments of Industries and Finance and
in view of the provisions of Rule 20, the decisions by C
Minister of Power to finalize the Notificatio11s at his level
without placing the proposal before the Chief Minister or
the Council of Ministers fell out side the purview of the
Power Minister. When the rescinding Notification dated
31.03. 1995 was issued, the· rebate of 25% was available
D
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
E
on the State's finances, more so, by creation of a new
category, namely, Extra High Tension Consumers
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
F
of the Finance and Industries Departments. [para 59-60]
[1136-H; 1137-A-B, G-H; 1138-A-B]
1. 7. The Notification dated 15.5.1996, which was
claimed by the appellants to be only clarificatory,
G
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
H
1088
SUPREME COURT REPORTS
[2010] 5 S.C.R.
A.
been placed before the Council of Ministers or the Chief
Minister and since the same has not been done it is in
violation of the Business Rules and hence the decision
is non-est. Even assuming that the Notification dated
15.5.1996 was clarificatory in nature, th" same violates
B Rule 19 of the Business Rules and there is nothing on
record to show that the department concerned attempted
to seek ratification of the decision taken by the Power
Minister before the Notification dated 15.5.1996 was
issued. The Notification dated 1.8.1996 also cannot be
c treated as mere clarificatory. It is a notification issued
purportedly in terms of a Government decision. It was a
decision finalized at the level of the Minister of Power
alone and was taken in violation of the Rules of Business
framed under Article 166(3) of the Constitution. The
0 decision cannot be called a government decision as
understood under Article 154 of the Constitution. Having
regard to the figures placed on record, which the High
Court has noticed in its judgment, showing the liability
likely to be brought on the State by Notification dated
1.8.1996, it cannot be said that the said Notification did
E not create any additional financial liability on the State
Government warranting approval by the Cabinet or the
compliance of the Business Rules before it was brought
into effect. Therefore, the Notifications dated 15.5.1996
and 1.8.1996 are unsustainable and the High Court has
F rightly held the same as non-est and void ab initio. [para
60, 64, 69 and 75) [1138-B-E; 1142-B-C; 1147-E-G; 1152D-E]
Royal British Bank v. Turquand, [1856) 6 E. & B. 327,
G referred to.
·
2. Suspicion of irregularity has been widely
recognized as an exception to the doctrine of indoor
management. The protection of the doctrine is not
available where the circumstances surrounding the
H contract are suspicious and, therefore, invite inquiry.
M.R.F. LTD. ETC. v. MANOHAR PARRIKAR AND
1089
ORS.
Applying the exception' to the instant matter, there is
A
sufficient doubt with regard to the conduct of the Minister
of Power in issuing the Notifications dated 15.5.1996 and
01.08.1996. Therefore, there is definite suspicion of
irregularity which renders the do,ctrine of indoor
management inapplicable to the instant case. [para 71 and
B
73) [1149-C-D; 1150-E-F]
B. Anand Behari Lal v. Dinshaw and Co. (Bankers) Ltd,
AIR 1942 Oudh 417; Abdul Rehman Khan & Anr. v. Muffasal
Bank Ltd. and Ors, AIR 1926 All 497; Shrisht Dhwan(Smt.)
C
vs. Shaw Bros. (1992) 1 SCC 534; and State of Kamataka
vs. All India Manufacturer Organization and Others, (2006) 1
sec 32, referred to.
R. Chitralekha and Others vs. State of Mysore 1964 (6)
SCR 368, held inapplicable.
D
J. C Houghton& Co. v. Noth a rd, Lowe & Wills Ltd, [1927)
1 KB 246 (CA) - referred to.
3.1.The subject matter of earlier writ petitions was
completely different and distinct from the public interest
E
litigation filed by respondent no.1. In the earlier litigation,
there was no challenge whatsoever to the Notifications
dated 15.5.1996 and 1.8.1996 and the declaration sought
in writ petition No. 316 of 1998 was not in issue in the
earlier batch of petitions. Therefore, it cannot be said that
F
the controversy in the earlier batch of writ petitions and
the instant writ petition is the same. 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, which never had an
G
opportunity or occasion to look into, consider and
pronounce upon the validity of the same with reference
to the Business Rules framed under Article 166 (3) of the
Constitution. The principles of res judicata, Doctrine of
Estoppel and the principles embodied in Order II Rule 2
H
1090
SUPREME COURT REPORTS
(2010] 5 S.C.R.
A of the Code of Civil Procedure pressed into service by
the appellants cannot operate against the State.
Government merely because the State did not agitate
either before the High Court or this Court the legality or
validity of these notification in the earlier round of
B litigation when it had an occasion to do so. The State
Government cannot be deemed to have accepted the
legality of the Notifications and waived its objection or
challenge thereto. The doctrine of estoppel, therefore, has
no application at all, more so, in view of the illegality the
c notifications dated 15.05.1996 and 01.08.1996 suffer from
in view of the non-compliance with the provisions of the
Business Rules. The fact that the State Government did
not raise these objections in the earlier batch of writ
petitions does not disentitle it to such a stand or prevent
0 it from raising its objections based on legal provisions.
Respondent No. 1 was not a party to the earlier batch of
writ petitions before the High Court or this Court.
Therefore, the principles of res judicata or for that matter
even the doctrine of estoppel will not apply to or operate
E against him. [para 24, 28, 29 and 75) (1109-G-H; 1110-AB; 1113-A; 1114-A-C; 1151-F-H; 1152-A-D]
F
Madhvi Amma Bhawani Amma and Ors. vs. Kunjikutty
Pillai Meenakshi Pillai and Ors.· (2000) 3 SCR 752 = (2000)
6 sec 301, referred to.
3.2. As regards the objections raised on the basis of
concept of merger, tl:!e High Court has held that though
the appeals ch;.~llenging the judgment of the High Court
dated 21.1.1999 have been dismissed by this Court, and
the findings of the High Court on the relevant issues have
G been impliedly confirmed, the concept of merger will not
come in its way in deciding the issues involved in the
instant petition for the reason that the said issues were
not raised and, therefore, not required to be decided by
the High Court in its earlier judgment dated 21.01.1999
H
M.R.F. LTD. ETC. v. MANOHAR PARRIKAR AND
1091
ORS.
inasmuch as legality of Notifications dated 15.5.1996 and
A
1.8.1996 was not examined therein. The principle of
merger has no bearing, since, the issue that was decided
by the High Court in the earlier batch of writ petitions and
the issue that was raised and considered in the
subsequent public interest litigation (W.P. No. 316 of
B
1998) are entirely different. [para 25, 27-28] [1110-C-F;
1112-F-H; 1113-A]
Shankar Ramachandra Abhyankar vs. Krishnaji
Dattatreya Bapat (1970) 1 SCR 322 = (AIR 1970 SC 1 ),
referred to.
C
4. The appellants have not been able to show any
infirmity or illegality in the order of the High Court
warranting interference. [para 77] [1152-G-H]
Case Law Reference:
1970) 1 SCR 322
referred to
Para 27
(2000) 3 SCR 752
referred to
para 28
(1952) SCR 612
..referred to
para 30
1995 ( 6 ) Suppl. SCR 97 relied on
para 31
1964 (6) SCR 368
held inapplicable
para 32
(1973) 3 sec 889
relied on
para 33
1917 A.C. 170
referred to
Para 34
1999 (3) AER 231
referred to
Para 35
2001 (1) AER 577
referred to
Para 36
2003(3) AER 508
referred to
Para 37
(1987) 1 SCR 136
relied on
para 40
(2006) 4 Suppl. SCR 450 relied on
para 41
2006 (3) SCR 751
relied on
para 42
1987 ( 3 ) SCR 1
relied on
para 43
D
E
F
G
H
1092
SUPREME COURT REPORTS
(2010) 5 S.C.R.
A
(1973) 3 s cc 889
relied on
para 44
1952 SCR 612
cited
para 45
(1962) Supp 3 SCR 713
referred to
para 46
1991) 3 SCR 633
referred to
para 47
B 1995 (6) Suppl. SCR 97
relied on
para 48
2004 (6 ) Suppl. SCR 264 cited
para 49
(1969) 3 sec 115
cited
para 49
c 2006 (3) sec 581
relied on
para 55
2005 (5 ) Suppl. SCR 906 relied on
para 56
(1992) 1 sec 534
referred to
para 70
AIR 1942 Oudh 417
referred to
para 73
D AIR 1926 All 497
referred to
para 73
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
4220 of 2002.
From the Judgment & Order dated 19/23.04.2001 &
E 24.04.2001 of the High Court of Bombay at Goa in Writ Petition
No. 316 of 1998.
F
WITH
C.A. Nos. 4219, 4213, 4214, 4217 & 4218 of 2002.
F.S. Nariman, L.N. Rao, K.N. Bhat, Dr. Rajeev Dhawan,
Shyam Diwan, Deeptakirth Verma, S. Karpe, Subash Sharma,
Binu Tamta, Prashant Kumar, Triveni Poteker, I. Bimola Devi,
Punit Jain, Chander Shekhar Ashri, Anu Mohla, A Subhashini,
Mohit Abraham, Dhruv Mehta, T.S. Sabasish (for K.L. Mehta
G & Co.), Santosh Paul, M.J. Paul, K.K. Bhat, Arvind Gupta,
Sriharsh N. Hundela, Kavin Gulati, Rohina Nath, Rohan
Dhiman, Rashmi Singh, Sharuk Narang, Ashu Kansai, Umesh
Kumar Khaitan for the appearing parties.
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The Judgment of the Court was delivered by
M.R.F. LTD. ETC. v. MANOHAR PARRIKAR AND
1093
ORS.
H.L. DATTU, J. 1. In Civil Appeal Nos. 4220 of 2002, 4213
A
of 2002 and 4218 of 2002, the appellants have called in
question the correctness of the judgment and order in Writ
Petition No. 316 of 1998 dated 19/24.4.2001, passed by the
High Court of Bombay Panajj Bench, at Goa in a Writ Petition
brought in public interest by one Manohar Parrikar, a Member
B
of Legislative Assembly, Goa (who later on became the Chief
Minister of the State of Goa) questioning the legality, validity
and propriety of two notifications issued by Government of Goa
dated 15.5.1996 and 01.8.1996 in respect of grant of 25%
rebate to Low Tension, High Tension and Extra High Tension c
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
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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
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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
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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 called in question
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the correctness of the judgment and order passed by the High
Court of Bombay Panaji Bench, at Goa in Writ Petition No. 316
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[2010] 5 S.C.R.
A of 1998 dated 19/24.4.2001
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The material facts as pleaded by the Appellants in Civil
Appeal Nos. 4220 of 2002, 4213 of 2002 and 4218 of 2002
are as under:
1. The Government of Goa, in purported exercise powers
conferred upon them by Section 23 of the Indian Electricity Act,
1910 ('Electricity Act' for short) issued a Notification on
30.09.1991, granting rebate of 25% in Tariff in respect of the
power supply to the Low Tension and High Tension Industrial
C Consumers/appellants who apply for availing High Tension or
Low Tension Power Supply on or after the 1st of October, 1991
for bona fide industrial activities and certified by the Industries
Department. Government of Goa as eligible for concessional
tariffs for a period of five years from the date on which electricity
D supply is made available to such units.
2. This Notification was issued by the State Government
in the name of the Governor of the State as per,the Rules of·
Authentication framed under Article 166(2) of the Constitution
E of India by following the procedure prescribed by the Business
Rules framed under the Provisions of Article 166(3) of the ·
Constitution of India after the State Cabinet had .approved it.
Though the said Notification was in subsistence, except one
Industrial Unit, none applied to the State Government for the
F grant of benefit of the Notification for a long period or at least
till 31.03.1995. On 31.03.1995, the said Notification was
rescinded by the State Government in purported exercise of
power conferred on it under Section 21 of the General Clauses
Act read with Sections 23 & 51-A of the Electricity Act with
effect from 01.04.1995, by issuing a Notification dated
G 31.03.1995 strictly in accordance with the Business Rules and
Rules of Authentication pursuant to the decision taken by the
State Cabinet.
3. Though the Goverriment rescinded the Notification dated
H 30.09.1991, number of industrial units approached the State
M.R.F. LTD. ETC. v. MANOHAR PARRIKAR AND
1095
ORS. [H.L. DATTU, J.]
Government and claimed benefit of 25% rebate in terms of A
Notification dated 30.09.1991 for the period between the date
of supply of electricity and 31.03.1995. Some applications were
rejected by the Chief Electrical Engineer of State of Goa, on
the ground, that, they being in the category of Extra High Tension
did not fall within the category of consumers covered by the
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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 c
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
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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
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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 31.03.1995, issued certain clarifications. On
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15.05.1996, however, the State Government issued another
Notification in purported exercise of power conferred on it under
Sections 23 & 51-A of the Electricity Act read with Section 21
of the General Clauses Act, to amend the Notification dated
30.09.1991 which had been rescinded as per Notification
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dated 31.03.1995. By the said Notification the Government
substituted the words "High Tension or Low Tension power
supply" by the words "High Tension/Extra High Tension or Low
Tension power supply". The State Government further issued
another Notification dated 01.08.1996 restoring the facility of
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SUPREME COURT REPORTS
(201 O] 5 S.C.R.
A giving 25% rebate to these three categories of Industrial
consumers and made the said rebate available from
01.08.1996 to those who had either applied or availed the
power supply as on that date.
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5. By an order dated 31.03.1998, issued by the Chief
Elec.trical Engineer of State of Goa, the benefits of rebate
granted by the State Government were withdrawn, as it appears
that the State Government did a re-thinking over its power to
grant such rebate on the Tariff. This action of the State
Government led to a spate of litigations by the Industrial Units
C in the High Court of Bombay Panaji Bench, at Goa, wherein
they contended that the benefits granted by the State
Government as a policy decision could not be withdrawn by the
order dated 31.03.1998, which was merely an administrative
order and that they were entitled to the benefits granted by the
D Notification dated 01.03.1996, as long as the said Notification
was not withdrawn by due process of law.
6. During the pendency of these writ proceedings before
the High Court, the State Cabinet after addressing itself to the
E issues raised by the industrial units in the writ proceedings,
passed a resolution to withdraw the benefit of 25% rebate and
accordingly issued a Notification dated 24.07 .1998 and
withdrew the rebate of 25% with effect from 01.08.1998. By an
order dated 21.01.1999, the High Court disposed of the batch
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of writ petitions, inter alia holding that the Circular dated
31.03.1998 mentioned supra as invalid and inoperative and the
Notification dated 24.07 .1998 as legal, valid and operative, and
that all petitioners therein were entitled to 25% rebate in power
tariff for the periods as indicated in paragraph 56 of the said
G judgment etc.
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7. The judgment of the High Court was taken up in appeal
by both parties to this Court and this Court by an order dated
13.02.2001 declined to interfere with the said order of the High
Court and rejected both sets of appeals.
M.R.F. LTD. ETC. v. MANOHAR PARRIKAR AND
1097
ORS. [H.L. DATTU, J.]
8. Mr. Manohar Parrikar, the 1st respondent herein, in the
A
meantime, had moved the High Court with a Misc. Civil
Application No.637 of 1999, seeking withdrawal of his writ
petition with 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
B
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 with earlier set
of writ petitions disposed of by the High Court on 21.01.1999.
Subsequently, the said prayer was also withdrawn.
c
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
D
circular was illegal and to quash it to the extent it goes beyond
the scope of Notification of 1991. He also prayed for certain
other reliefs, including initiation of recovery of rebates paid by
the State Government to the beneficiaries.
10. Though the petitioner had sought many reliefs in his
writ petition, the High Court confined itself to the challenge made
to the legality of the notificafions dated 15.05.1996 and
01.08.1996. Before the High Court the 1st respondent herein
contended as under:
That the two notifications were not issued in
compliance with the requirements of Article 154
read with Article 166 of the Constitution of India and
the Business Rules of the Government of Goa
fram~d by the Governor there11nder.
'
.
That retrospective benefit of rebate in tariff given by
these two notifications was not bona fide and is
illegal.
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SUPREME COURT REPORTS
[2010) 5 S.C.R.
That there was no Budgetary Provisions made for
these benefits to be extended during the relevant
financial years.
That the Notifications in question were not issued
as is contemplated by and under Articles 154 and
166 of the Constitution of India and that they were
issued only at the instance of the Minister of Power
at the relevant point of time and, hence,
Notifications could not be termed as the decisions
of the State Government.
That the amendment brought by the Notification
dated 01.08.1996 has overridden the very scope
of the Notification dated 30.09.1991 which is
impermissible in law.
That the Notification dated 15.05.1996 could not
have beer_i issued when the Notification dated
30.09.1991 was already rescinded by Notification
dated 31.03.1995 and no life could have been
infused into the said notification when it did not
exist.
Addition to the said notification of Extra High
Tension consumers with retrospective effect from
01.10.1991 was beyond the scope of the
Notification dated 30.09.1991.
11. The said writ petition was contested by the 2nd
respondent, who was the power Minister at the relevant point
of time. He mainly contended that there was no illegality in the
G said Notifications which have been issued by following the
prescribed procedure in the normal course of business of the
Government with a view to prqmote industrial growth of the
State so as to generate more employment opportunities and,
therefore, there was nothing improper or illegal about it. It was
H also contended by the 2nd respondent therein that even if the
M.R.F. LTD. ETC. v. MANOHAR PARRIKAR AND
1099
ORS. [H.L. DATTU, J.]
said notifications were held to be contrary to the provisions of
A
Article 166 of the Constitution, the said Rules are only directory
and failure to comply with 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
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that the State Government was satisfied with the legality of the
Notifications. The respondent also raised a preliminary
objection regarding the maintainability of the Writ Proceedings c
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 the State Government by filing two affidavits of the Chief
Electrical Engineer itself showed that the State Government
walked into the shoes of the 1st respondent herein and that the
Government cannot support the challenge to the Notifications
issued by it and even if the petition was pro bono when filed, it
ceased to be so after the respondent No.1 herein took over as
the Chief Minister of the State of Goa. The further contention
advanced was that the High Court, having conclusively upheld
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the validity of these two notifications in its judgment dated
21.01.1999, cannot re-examine the same, more so, in view of
confirmation of the said judgment by this Court in its Order
dated 13.01.2001. The 2nd respondent therefore sought
dismissal of the Writ Petition. A number of judgments were cited
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and relied upon by the 2nd respondent in support of his case
before the High Court. The other parties including the
interveners also supported the 2nd respondent therein, on the
issue of maintainability and further addressed arguments based
on the principles of res judicata and the concept of merger of
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SUPREME COURT REPORTS
(2010] 5 S.C.R.
A the judgment of the High Court dated 21.01.1999 with the
judgment of this Court dated 13.01.2001. On these premise the
respondents sought dismissal of the Writ Petition. It appears
from the pleadings before us, that, the High Court had permitted
certain Companies including the M.R.F Ltd, to come on record
B as interveners and oppose the reliefs sought in the Writ
Petition.
·
'
.
12. The High Court by its judgment dated 19/24.04.2001
impugned herein allowed the writ petition in part by holding that
the Notifications dated 15.05.1996 & 01.08.1996 could not be
C termed as Notifications issued by the State Government on
account of Non Compliance of the Rules of Business· framed
under Article 166 (3) of the Constitution of India and therefore
non-est and void-ab-initio and that the consequential actions
based on these two notifications are null and void.
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13. Aggrieved by the said judgment of the High Court, the
Appellant [M.R.F. Ltd.] and others are before us in Civil Appeal
Nos. 4220 of 2002, 4213 of 2002 and 4218 of 2002.
14. In Civil Appeal.Nos. 4219 of 2002, 4214 of 2002 and
E 4217 of 2002, the appellants- M/s M.R.F. Limited, Goa Glass
Fibre Limited and Alcon Cement Company Limited are
questioning the correctness of judgment of the High Court in
partly allowing the Writ Petition Nos. 364 of 1999 and 277 of
1999 and dismissing the Writ Petition No. 254 of 1999
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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,
G 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
H it was further stated that the amount of arrears be credited in
M.R.F. LTD. ETC. v. MANOHAR PARRIKAR AND
1101
ORS. [H.L. DATTU, J.]
60 installments w.e.f. September, 1996 and each installment
A
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 deni~d to the appellant for the
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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 c
approached the High Court for directions to seek
implementation of the said judgment.
16. The present appeal is filed against the High Court's
order dated 24.04.2001 and the letter issued on 25.05.2001
by the Department of Power to the appellant herein asking for
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refund of the rebate of Rs. 1, 11,35,738 in one installment on
or before 15.6.2001 pursuant to the order dated 24.4.2001.
17. The facts in Civil Appeal No.4214 of 2002 are:- The
appellant - Goa Glass Fibre Ltd. - has set up a manufacturing
plant at Colvale, Bardez Goa and it had applied for electric
power connection on 18. 7 .1994. Pursuant to the agreement
signed on 7 .12.1995 between the appellant and the respondent
no. 2, the appellant's factory was given power supply for the
first time on 16.3.1996. The appellant made a representation
to respondent no. 2 on or about 3.7.1996 for the benefit of 25%
rebate in tariff and another reminder was sent in that regard
on 27 .11.1996. The claim for rebate was made on the basis
of the government notification dated 30.09.1991, 15.05.1996
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and 01.08.1996. Pursuant to the Notification dated 01.08.1996,
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25% rebate to this industry was granted w.e.f. February, 1997
along with the arrears of installment @ Rs. 1,24,520. Such
rebate was adjusted in the monthly bill.