# ESSAR STEEL LTD v. UNION OF INDIA & ORS - **Citation:** [2016] 4 S.C.R. 326 - **Court:** Supreme Court of India - **Decided:** 2016 - **Case number:** Civil Appeal No. 4610 of2009 - **Bench:** V. Gopala Gowda, Uday Umesh Lalit - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/essar-steel-ltd-v-union-of-india-ors-31296 - **Pages:** 36 ## Headnote Constitution of India - Arts. 14, 7 3 and Schedule Vil, List I, Entry 53 - Contract for purchase of Regasified Liquified Natural Gas (RLNG) at fixed price - Thereafter, policy decision of the Central Government to pool RLNG prices - Co111munication by the sellers of RLNG to the purchaser (appellant) infor111ing that pursuant to the Govern111ent policy, price of the gas under the contract would be revised - The policy decision found consequent action of unilaterally increasing the price of RLNG - High Court upheld the validity of the policy decision - On appeal, held: Though price fixing is a legislative fzmction, it can be delegated and can be fixed by executive orders as well - RLNG is an essential commodity and parliament having enacted Essential Commodities Act, has left it to the decision of the executive to take steps for fixing the prices of essential commodities - The Union, by virtue of Art. 73 r/w Entry 53 of List I of Seventh Schedule of the Constitution is competent to legislate and take policy decision in relation to the matters relating lo mineral oil resotJ,rces and injlam111able substances, which includes RLNG - The policy decision was taken after due deliberation, in the interest of the public at large - The objective of the policy was to unifY the price of RLNG on a non-discriminatory basis - Moreover, the consumers of RLNG through long term contracts are a class by the111selves for the purpose of Art. 14 of the Constitution - The i111pug11ed decision was to apply to all the players wjthin this class uniformly - Thus the policy decision cannot be said to be discriminatory, arbitrary, illegal, unreasonable or otherwise violative of Ari. 14 of the Constitution - Therefore, the inte1ference with the impugned policy decision is not called for. Judicial Review - Of policy decision regarding com111ercial matters - Permissibility - Held: Court should exercise great caution and restraint when confronted with matters related to the policy 326 ESSAR STEEL LTD. v. UNION OF INDIA & ORS. 327 regarding commercial matters of country - Executive policies are A enacted after much deliberation - Therefore, the courts to interfere with, only when the policy is enacted in arbitrary unreasonable or malafide manner or if it offends the provisions of the Constitution. Constitution of India - Art. 136 - Jurisdiction under - Scope of - Held: Supreme Court, in exercise of its jurisdiction u/Art. 136, B does not have competence to judge the viability of policy decision of the Government. Dismissing the appeals, the Court HELD: 1.1 This Court should exercise great caution and restraint when confronted with matters related to the policy regarding commercial matters of the country. Executive policies are usually enacted after much deliberation by the Government. Therefore, it would not be appropriate for this Court to question the wisdom of the same, unless it is demonstrated by the aggrieved persons that the said policy has been enacted in an arbitrary, unreasonable or nut/a.fide manner, or that it offends the provisions of the Constitution of India. [Para 31) (353-C-D) Peerless General Finance & Investment Co. Ltd. v. Reserve Bank of India 1992 (1) SCR 406 : 1992 (2) sec 343 - followed. Arun Kumar Agrawal v. Union of India 2013 (3) SCR 508 : 2013 (7) SCC 1; Villianur Iyarkkai Padukappu Maiyam v. Union of India 2009 (9) SCR 225: 2009 (7) SCC 561; Narmada Bachao Ando/an v. Union of India 2000 (4) Suppl. SCR 94: 2000 (10) sec 664 - relied on. 1.2 Supreme Court neither has the jurisdiction nor the competence to judge the viability of such policy decisions of the Government in exercise of its appellate jurisdiction under Article 136 of the Constitution of India. fPara 31] 1351-Dl 2.1 By virtue of Article 73 of the Constitution read with Entry 53 of List I of Seventh Schedule to the Constitution, the Union has the power to legislate and take policy decisions in relation to the matters pertaining to mineral oil reso~rces and inflammable substa ## Text _Characters 0–39,599 of 82,795. This is a partial read: ask again with offset=39599 for what follows._ A B c D E F G H [2016] 4 S.C.R. 326 ESSAR STEEL LTD. v. UNION OF INDIA & ORS. (Civil Appeal No. 4610 of2009) APRIL 19,2016 [V. GOPALA GOWDA AND UDAY UMESH LALIT, JJ.) Constitution of India - Arts. 14, 7 3 and Schedule Vil, List I, Entry 53 - Contract for purchase of Regasified Liquified Natural Gas (RLNG) at fixed price - Thereafter, policy decision of the Central Government to pool RLNG prices - Co111munication by the sellers of RLNG to the purchaser (appellant) infor111ing that pursuant to the Govern111ent policy, price of the gas under the contract would be revised - The policy decision found consequent action of unilaterally increasing the price of RLNG - High Court upheld the validity of the policy decision - On appeal, held: Though price fixing is a legislative fzmction, it can be delegated and can be fixed by executive orders as well - RLNG is an essential commodity and parliament having enacted Essential Commodities Act, has left it to the decision of the executive to take steps for fixing the prices of essential commodities - The Union, by virtue of Art. 73 r/w Entry 53 of List I of Seventh Schedule of the Constitution is competent to legislate and take policy decision in relation to the matters relating lo mineral oil resotJ,rces and injlam111able substances, which includes RLNG - The policy decision was taken after due deliberation, in the interest of the public at large - The objective of the policy was to unifY the price of RLNG on a non-discriminatory basis - Moreover, the consumers of RLNG through long term contracts are a class by the111selves for the purpose of Art. 14 of the Constitution - The i111pug11ed decision was to apply to all the players wjthin this class uniformly - Thus the policy decision cannot be said to be discriminatory, arbitrary, illegal, unreasonable or otherwise violative of Ari. 14 of the Constitution - Therefore, the inte1ference with the impugned policy decision is not called for. Judicial Review - Of policy decision regarding com111ercial matters - Permissibility - Held: Court should exercise great caution and restraint when confronted with matters related to the policy 326 ESSAR STEEL LTD. v. UNION OF INDIA & ORS. 327 regarding commercial matters of country - Executive policies are A enacted after much deliberation - Therefore, the courts to interfere with, only when the policy is enacted in arbitrary unreasonable or malafide manner or if it offends the provisions of the Constitution. Constitution of India - Art. 136 - Jurisdiction under - Scope of - Held: Supreme Court, in exercise of its jurisdiction u/Art. 136, B does not have competence to judge the viability of policy decision of the Government. Dismissing the appeals, the Court HELD: 1.1 This Court should exercise great caution and restraint when confronted with matters related to the policy regarding commercial matters of the country. Executive policies are usually enacted after much deliberation by the Government. Therefore, it would not be appropriate for this Court to question the wisdom of the same, unless it is demonstrated by the aggrieved persons that the said policy has been enacted in an arbitrary, unreasonable or nut/a.fide manner, or that it offends the provisions of the Constitution of India. [Para 31) (353-C-D) Peerless General Finance & Investment Co. Ltd. v. Reserve Bank of India 1992 (1) SCR 406 : 1992 (2) sec 343 - followed. Arun Kumar Agrawal v. Union of India 2013 (3) SCR 508 : 2013 (7) SCC 1; Villianur Iyarkkai Padukappu Maiyam v. Union of India 2009 (9) SCR 225: 2009 (7) SCC 561; Narmada Bachao Ando/an v. Union of India 2000 (4) Suppl. SCR 94: 2000 (10) sec 664 - relied on. 1.2 Supreme Court neither has the jurisdiction nor the competence to judge the viability of such policy decisions of the Government in exercise of its appellate jurisdiction under Article 136 of the Constitution of India. fPara 31] 1351-Dl 2.1 By virtue of Article 73 of the Constitution read with Entry 53 of List I of Seventh Schedule to the Constitution, the Union has the power to legislate and take policy decisions in relation to the matters pertaining to mineral oil reso~rces and inflammable substances, which includes RLNG. There is no c D E F G H 328 A B c D E F SUPREME COURT REPORTS [2016] 4 S.C.R. existing legislative provision as far as fixing of the price of RLNG is concerned. Thus, the executive of the Union of India is well within its right to exercise its powers under the Constitution to take such decisions by way of policy decisions. [Para 32) [354F-G] Association of Natural Gas v. Union of India 2004 (3) SCR 534 = 2004 (4) SCC 489 - referred to. 2.2 The objective of the impugned policy decision dated 06.03.2007 is to unify the prices ofRLNG on a non-discriminatory basis so that there is no distinction between old customers and new customers, as far as prices of RLNG in the long term contracts is concerned. Thus, the impugned policy decision was passed in the larger public interest, keeping in view the need to provide RLNG at viable prices to the existing and new customers alike. It is further clear that it is nearly impossible to predict or' even control LNG prices, as the same are controlled by global market forces. The only way to have any semblance of control over the prices ofRLNG was to pool the prices ofRLNG procured by the off-takers under long term contracts. [Para 33) [354-H; 355-A; 356-A-B] 2.3 It becomes clear from a perusal of the documents produced on record that the executive policy decision dated 06.03.2007 to pool the price of RLNG was arrived at after elaborative discussions between representatives of Qatar, India, IOC, BPCL, GAIL, ONGC and other experts in the field. It was an informed decision taken in the interest of the public at large. The impugned policy decision dated 06.03.2007 has also been duly authenticated by the Under Secretary to the Government of India, which is well within the powers conferred on the Under Secretary under the Business Transaction Rules, 1961. [Paras 34, 37] [357-B; 359-F-G] 2.4 Even though price fixing is a legislative function; the G ~. same can be delegated and can be fixed by way of executive orders ·as well. RLNG, being a petroleum product, is an essential < ' commodity for the. purpose of the Essential Commodities Act, 1955. While Parliament has enacted the Essential Commodities Act, it has left it to the discretion of the Executive to take concrete steps for fixing the prices of essential commodities as H 'and when necessity arises. [Para 37] 357-E-H] ESSAR STEEL LTD. v. UNION OF INDIA & ORS. 329 Mis Sitaran1 Sugar Co. Ltd. v. Union qf India 1990 (1) A SCR 909 : 1990 (3) SCC 223 - followed. 2.5 The plea of the appellants that the said policy takes away their vested right, cannot be accepted in light of Clause 11.4 of the Supply Agreement, which clearly provides for a situation of change in price ofRLNG under the contract as a result B of change in the policy of the Government. [Para 381 1359-G-HJ Delhi Development Authority v. Joint Action Committee, Allottee of SFS Flats 2007 (13) SCR 811 : 2008 (2) sec 672 - relied on. 2.6 Except a plea that the policy is for the benefit of one entity (RGPPL), the appellants have not presented any evidence to show that they have been discriminated against, as the policy has been applied for all players across the board, as far as long term contracts are concerned. Nothing has been brought on record to show that the said decision is arbitrary, ma/a fide, unreasonable or taken after non application of mind. On the contrary, the documents produced on record by the respondents, which is the back and forth of communication and minutes of meetings between Ministers in Qatar and India, as well Secretaries of the Government and the representatives of IOCL, BPCL, GAIL, ONGC and Petronet, would clearly show that the impugned decision dated 06.03.2007 was taken after due deliberation and exploring all other possible alternatives to reduce the price of RLNG, so as to make it viable for the new entrants in the market to buy it and run their projects in a feasible manner in the larger public interest. [Para 39] (360-C-E] 2.7 The consumers of RLNG through long term contracts are a class by themselves, for the purpose of Article 14 of the Constitution of India. The impugned policy decision dated 06.03.2007 was to apply to all the players within this class uniformly and across the board. Thus, the plea that the appellants have been discriminated against, or that the impugned policy decision was taken in an arbitrary manner, cannot be accepted, as the said plea is wholly untenable in law. [Para 39] (360-F] 2.8 There being no evidence to suggest that the impugned policy direction is illegal, arbitrary, unreasonable or otherwise c D E F G H 330 SUPREME COURT REPORTS [20 I 6] 4 S.C.R. A violative of Article 14 of the Constitution, there is no reason to B c D E F G H interfere with the same. [Para 40) (360-H; 361-A] Delhi Development Authority v. Joint Action Committee, Allottee of SFS Flats 2007 (13) SCR 811 : 2008 (2) SCC 672; State of Madhya Pradesh v. Thakur Bharat Singh 1967 AIR 1170 : 1967 SCR 454; Bishan Das v. State of Punjab 1961 AIR 1570 : 1962 SCR 69; Satwant Singh Sawhney v. D. Ramarathnam, Asstt. Passport Officer 1967 AIR 1836 : 1967 SCR 525; Ram Prasad Narayan Sahi v. The State of Bihar 1953 AIR 215: 1953 SCR 1129; Prag Ice & Oil Mills v. Union of India 1978 (3) SCR 293 : 1978 (3) SCC 459; Union of India v. Cynamide India Ltd.1981 (2) SCR 841 : 1987 (2) SCC 720; Maganbhai lshwarbhai Patel v. Union of India 1969 (3) SCR 254 : 1970 (3) SCC 400; Jaipur Development Authority v. Vi;ay Kumar Data & Anr: 2011 (7) SCR 242 : 2011 (12) SCC 94; G.J. Fernandes v. State of Mysore 1967 AIR 1753 : 1967 SCR 636; Lala Ram v. Jaipur Development Authority 2015 (13) SCALE 559; Central Dairy Farm v. GI India Ltd. & Ors. 2003 (4) Suppl. SCR 710 : 2004 (1) SCC 55; Shimnit Utsch India Pvt. Ltd. & Anr v. West Bengal Transport Infrastructure Development Corporation Ltd. & Ors. 2010 (6) SCRlllO : 2010 (6) SCC 303; Union of India & Am: v. International Trading Co. & Anr. 2003 (1) Suppl. SCR 55: 2003 (5) SCC 437; Sahakari Khand Udyog Manda! Ltd. v. CCE & Customs 2005 (2) SCR 606 : 2005 (3) SCC 738; Mafatlal Industries Ltd. 1,: Union of India 1996 (10) Suppl. SCR 585 : 1997 (5) SCC 536 - referred to. Case loaw Reference 2007 (13) SCR 811 relied on Para 10 1967 SCR 454 referred to Para 11 1962 SCR 69 referred to Para 11 1967 SCR 525 referred to Para 12 ESSAR STEEL LTD. v. UNION OF INDIA & ORS. 331 1953 SCR 1129 referred to Para 13 1978 (3) SCR 293 referred to Para 15 1987 (2) SCR 841 referred to Para 15 1969 (3) SCR 254 referred to Para 17 2011 (7) SCR 242 referred to Para 18 1967 SCR 636 referred to Para 18 2015 (13) SCALE 559 referred to Para 18 2003 (4) Suppl. SCR 710 referred to Para 20 2010 (6) SCR 1110 referred to Para 22 . 2003 (1) Suppl. SCR 55 referred to Para 22 2005 (2) SCR 606 referred to Para 24 1996 (10) Suppl. SCR 585 referred to Para 25 2013 (3) SCR 508 referred to Para 31 2009 (9) SCR 225 relied on Para 31 2000 (4) Suppl.SCR 94 relied on Para 31 1992 (1) SCR 406 followed Para 31 2004 (3) SCR 534 referred to Para 32 1990 (1) SCR 909 followed Para 37 CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4610 of2009. From the Judgment and Order dated 16.05.2008 of the High Court of Gujarat atAhmedabad in Special Civil Application No. 4468 of2008 WITH C. A. Nos. 4609 and 4657 of2009. Ranjit Kumar, SG, Tushar Mehta, ASG, Dr. A.M. Singhvi, Ravindra Srivastava, Ashok Parija, Nagendra Rai, Gaurav Banerji, Sr. Advs., Pulkit Tare, MaheshAgarwal, Karan Lahiri, Ms. Neeha Nagpal, Ms. Shashank Manish, Gopalrao Srikar, Siddharth Srivastava, Raghav Dwivedi, Nitesh Gupta, (For E. C. Agrawala), Aspi Kapadia, Sum it Goel, (For Mis. Parekh & Co.), S.A. Haseeb, Kaushal Yadav, B. Krishna Prasad, Ritesh Kumar, K. Parameshwar, Vivek Sharma, N.K. Sharma, Ms. Priyanka Dixit, N. L. Ganapathi, Jafar Alam, Aditay Mathur, Phaguni N. Lal, Ravi Prakash, Aditya Dewan, Samir Malik, Lakshmi Raman Singh, Ms. K. V. Bharathi Upadhyaya, M/s. Parekh & Co., Ms. Bindu Saxena, K.K. Patra, Ms. A B c D E F G H 332 A B c D E F G H SUPREME COURT REPORTS [2016) 4 S.C.R. Aparajita Swarup, Shailendra Swarup, Vyom Shah, Ms. Manisha Singh, P.Y. Yogeshwaran, Avtar Singh Chauhan, Purnima Bhat, Advs. for the appearing parties. The Judgment of the Court was delivered by V. GOPALA GOWDA, J. I. The present appeals arise out of the impugned common final judgment and order dated 16.05.2008 passed in Special Civil Application No. 4468 of2008 etc. by the High Court of Gujarat at Ahmedabad, wherein by a majority of 2: 1, a Three Judge bench upheld the validity of the impugned policy decision dated 06.03.2007 on the ground that the Union of India is competent to take the policy decision and further it has held that it is either arbitrary, unjust or violative of the fundamental rights of the appellants herein. 2. Since the facts in all these appeals raise the same issue for our consideration, for the sake of brevity, we refer to the facts of Civil Appeal No.4610 of 2009. The necessary relevant facts required to appreciate the rival legal contentions advanced on behalf of the parties are stated in brief hereunder: India purchases natural gas from Gulf countries. Since gas in large quantities cannot be feasibly transported by pipelines across countries, before such gas is transported, it is liquefied and thereafter shipped to. India. This liquefied gas is known as Liquefied Natural Gas (hereinafter referred to as "LNG"). Once this I iquefied gas reaches India, it is converted into gas again. This is known as Regasified Liquefied Natural Gas (hereinafter referred to as "RLNG"). In the instant case, Ras Laffin Natural Gas Company Limited, Qatar (hereinafter referred to as "RasGas") sold LNG to Petronet LNG Limited (hereinafter referred to as "Petronet"), an Indian company, which was set up as a Joint venture between the Government oflndia and the key players in the LNG market like Oil and Natural Gas Corporation (hereinafte~ referred to as "ONGC"), Indian Oil Corporation Limited (hereinafter referred to as "IOCL") and Bharat Petroleum Corporation Limited (hereinafter referred to as "BPCL"). This was done under a Sale Purchase Agreement entered in July, 1999 for a period of25 years. 3. Petronet sold the resultant LNG to companies like BPCL, IOCL and GAIL. They in turn, sold it to customers like Essar Steel, which is the appellant in Civil Appeal No. 4610 of2009. ESSAR STEEL LTD. v. UNION OF INDIA & ORS. [V. GOPALA GOWDA, J.] 4. In the immediate context of the present appeals, Essar Steel signed contracts with IOCL, BPCL and GSPCL for purchase ofRLNG at a fixed price. The price was fixed upto the date 3 I .12.2008. The Gas Supply Agreements were for the supply of 5 million metric tonnes per annum (MMTPA) at a fixed price of US $ 2.9412 per million metric british thermal unit (MMBTU). 5. On 06.03.2007, the Central Government issued the impugned policy directive to Petronet in the following terms: "I. The question of prices to be charged for RLNG from different customers has been under consideration of the Government. After considering existing practices and to avoid loading high cost of additional RLNG being made available to the prospective customers, it has been decided, after examination of all aspects, in public interest, that the gas prices being charged on supply of RLNG procured under long term contracts should be on a non discriminatory basis and uniform pooled prices should be charged for all the existing and new customers. 2. You are advised accordingly and requested to give effect to the same immediately." The letter was authenticated by the Under Secretary to the Government of India. 6. In pursuant to the above communication dated 06.03.2007, letters dated 19.03.2007 and 12.04.2007 were sent from IOCL, BPCL and GAIL to Essar Steel, informing it that in view of the policy decision of the Government to pool RLNG prices, the price of gas under the contract would be revised and increased from Rs. 135 per MMBTU to Rs. 207.02 MMBTU. ·- - 7. Aggrieved, the appellant filed Writ Petition No. 5098 of2007 before the High Court of Delhi, challenging the impugned policy decision and the consequent action of IOCL, BPCL, GAIL and GSPCL in unilaterally increasing the price of RLNG w.e.f. 01.08.2007, is in contravention of the gas supply contracts which clearly stipulate the fixed price of US$ 2.93 per MMBTU ofRLNG. Certain other appellants had also filed Writ Petitions before the High Court of Gujarat urging various legal grounds questioning the legality of the impugned policy decisions and the communications received by them. In pursuant to which, the High Court passed an interim order granting stay of the operation of 333 A B c D E F G H 334 A B c D E F G H SUPREME COURT REPORTS [2016] 4 S.C.R. the impugned policy decision. A Transfer Petition No. 513 of2007 was filed before this Court seeking for transfer of Writ Petition No. 5098 of 2007 from the High Court of Delhi to the Gujarat High Court. Vide order dated 22.08.2007, this Court vacated the stay operating on the impugned policy decision and transferred the Writ Petition No. 5098 of2007 from Delhi High Court to Gujarat High Court and directed the Division Bench of the Gujarat High Court to hear the batch of Writ Petitions. The judges of the Division Bench could not concur on the opinion and vide order dated 28.09.2007, referred the matter to a third judge. Vi de order dated 12.10.2007, the single judge opined not to grant any interim relief in favour of the appellants in their writ petitions. The Chief Justice of the Gujarat High Court rejected the prayer of the appellants for stay of the operation of the impugned policy vide order dated 17.10.2007. The appellants challenged the correctness of the said order before this Court by way of filing SLP (C) Nos. 21397-99 of 2007. This Court vide its order dated 26.02.2008 directed the High Court of Gujarat to list the Writ Petitions for final hearing before a Three Judge bench. Vide impugned judgment and order dated 16.05.2008, by a majority of2: 1, the High Collli upheld the impugned policy decision dated 06.03 .2007 and dismissed the Writ Petition filed by the appellant. The majority judgment opined as under: " ...... Union of India, by Empowered Group of Ministers with advise of expe1is and Secretaries of various depaiiments of Union of India, has taken the decision of pooling of price of Regasified Liquefied Natural Gas, on non-discriminatory basis and thereby has put under one denomination, consumers of long term contracts and future consumers. Parties to the contract cannot bind Union of India (third party) by terms of contract ... Policy of Union of India is not bound by contractual terms of two private parties, on the contrary, contractual terms will be subject to policy decision by Union oflndia ..... . As a cumulative effect of the aforesaid facts, reasons and judicial pronouncement, the impugned decision taken by the Union oflndia dated 06.03.2007, is a policy decision for pooling price of Regasified Liquefied Natural Gas. Union oflndia is competent to take this policy decision and the same is neither arbitrary, nor it is unjust, nor violative of fundamental rights, nor violative of constitutional rights nor the same is violative of statutory rights of the petitioners and the petitioners have failed to establish that they ESSAR STEEL LTD. v. UNION OF INDIA & ORS. [V. GOPALA GOWDA, J.] have borne the burden of increase in price ofRegasified Liquefied Natural Gas without passing the same to their further consumers, hence, are not entitle to refund. For getting refund, the aforesaid aspect ought to be established by the petitioners, on the basis of evidence on record, either in the suit or in the arbitration. There is no substance in these petitions, and, therefore, all these petitions are hereby dismissed." Hence, the present appeals. 8. Mr. Abhishek Manu Singhvi, learned senior counsel appearing on behalf of the appellant Essar Steel in Civil Appeal No. 4610 of2009 has questioned the correctness of the impugned judgment and order passed by the High Court. It is contended by him that the contracts between the appellants and off takers (IOCL, GPSCL) had three elements, viz., fixed price, for a fixed term, in respect of a fixed basic quantity. The appellant is aggrieved by the fact that even with this limited five year period and after having faithfully observed these frozen and unchangeable contractual parameters of fixed term, fixed price and fixed quantity for almost four out of five years, the respondents reneged and violated these fixed parameters in the last fourteen months of the contract, all for the benefit of a single entity, that is the Ratnagiri Gas and Power Private Limited (hereinafter referred to as the "Ratnagiri Power Project"). 9. The learned senior counsel further contends that executive actions of the Union of India which operates to the prejudice of any person must necessarily have legislative backing. It is contended that in the present case, no entity except the Ratnagiri Power Project was benefited as a result of the change of policy by the Central Government. 10. The learned senior counsel in support of his legal submission places reliance on the decision of this Court in the case of Del/ti Development Authority 1( Joint Action Committee, Allottee of SFS Flats1, wherein it has held as under: ' 335 A B c D E F "62 ....... I tis well known principle oflaw that a person would be G bound by the terms of the contract subject of course to its validity. A contract in certain situations may also be avoided. With a view to make novation of a contract binding and in particular some of the terms and conditions thereof, the offeree must be made.known '(2008) 2 sec 672 H 336 A B c D E F G SUPREME COURT REPORTS [2016] 4 S.C.R. thereabout. A party to the contract cannot at a later stage, while the contract was being performed, impose terms and conditions which were not pa1i of the offer and which were based upon unilateral issuance of office orders, but not communicated to the other party to the contract and which were not even the subject matter of a public notice. 67. The stand taken by DOA itself is thatthe relationship between the parties arises out of the contract. The terms and conditions therefore were, therefore, required to be complied with by both the parties. Terms and conditions of the contract can indisputably be altered or modified. They cannot, however, be done unilaterally unless there exists any provision either in contract itself or in law. Novation of contract in terms of Section 60 of the Contract Act must precede the contract making process. The parties thereto must be ad idem so far as the terms and conditions are concerned. If ODA, a contracting party, intended to alter or modify the terms of contract, it was obligatory on its part to bring the same to the notice of the allocate. Having not done so, it, relying on or on the basis of the purported office orders which is not backed by any statute, new terms of contract could thrust upon the other party to the contract. The said purported policy is, therefore, not beyond the pale of judicial review. In fact, being in the realm of contract, it cannot be stated to be a policy decision as such." I I. The learned senior counsel fmiher contends that executive action of the Union of India, when it seeks to prejudice the rights of a person, must have the backing ofa statute. The learned senior counsel in support of the above contention places reliance on the decision ofa Constitution Bench of this Cou1i in the case of Stme o_(Madhya Pradesh v. Thakur Bharat Singlz1, wherein it was held as under: "We have adopted under our Constitution notthe continental system but the British system under which the rule oflaw prevails. Every Act done by the Government or by its officers must, if it is to operate to the prejudice of any person, be supported by some legislative authority." Another Constitution Bench of this Court, in the case of Bis/um Das v. State of Punjab3, held as under: 2 AIR 1967 SC 1170 H 3 AIR 1961SC1570 ESSAR STEEL LTD. v. UNION OF INDIA & ORS. [V. GOPALA GOWDA, J.] "As pointed out by this Court in Wazir Chand v. The State of Himachal Pradesh 1954 Cri LJ 1029, the State or its executive officers cannot interfere with the rights of others unless they can point to some specific rule of law which authorises their acts. In Ram Prasad Narayan Sahi v. The State of Bihar [I 953]4 SCR 1129 this Court said that nothing is more likely to drain the vitality from the rule of law than legislation which singles out a particular individual from his fellow subjects and visits him with a disability which is not imposed upon the others." 12. The learned senior counsel further places reliance on yet another constitution bench decision of this Court in the case of Satwm1t Singh Sawlmey 1~ D. Ranuirat/11um1,Asstt. Passport Officer, wherein it was held as under: "Article 14 says thatthe State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India. This doctrine of equality before the low is a necessary corollary to the high concept of the rule oflaw accepted by our Constitution. One of the aspects of rule of law is that every executive action, if it is to operate to the prejudice of any person, must be supported by some legislative authority." Placing strong reliance on the cases cited above, the learned senior counsel contends that the impugned policy decision of the Union oflndia has no statutory flavour, as price pooling has been implemented neither through statute nor delegated legislation. 13. The learned senior counsel further contends that the impugned policy decision is an executive action benefitting a single person, namely Ratnagiri Power Project. Thus, this is on a worse footing than single person legislation, as it is a single person executive action. The learned senior counsel places reliance on the decision of a Constitution Bench of this Court in support of the above legal plea urged by him in the case of Ram Prasad Narayan Sa/ti v. Tlte State of Bilwr', wherein it was held as under: "There have been a number of decisions by this court where the question regarding the nature and scope of the guarantee implied in the equal protection clause of the Constitution came up for consideration and the general principles can be taken to be fairly 'AIR 1967 SC 1836 'AIR 1953 SC 215 337 . A B c D E F G H 338 A B c D E F G H SUPREME COURT REPORTS [2016) 4 S.C.R. well settled. What this clause aims at is to strike down hostile discrimination or oppression or inequality. As the guarantee applies to all persons similarly situated, it is certainly open to the legislature to classify persons and things to achieve particular legislative objects; but such selection or differentiation must not be arbitrary and should rest upon a rational basis, having regard to the object which the legislature has in view. It cannot be disputed that the legislation in the present case has singled out two individuals and one solitary transaction entered into between them and another private party, namely, the Bettiah Wards Estate and has declared the transaction to be a nullity on the ground that it is contrary to the provisions oflaw, although there has been no adjudication on this point by any judicial tribunal. It is not necessaryforour present purpose to embark upon a discussion as to how far the doctrine of 'separation of powers has been recognised in our Constitution and whether the legislature can arrogate to itself the powers of the judiciary and proceed to decide disputes between private parties by making a declaration of the rights of one against the other. It is also unnecessary to attempt to specify the limits within which any legislation, dealing with private rights, is possible within the purview of our Constitution. On one point our Constitution is clear and expli_sit, namely, that no law is valid which takes away or abridges the fundamental rights guaranteed under Part III of the Constitution. There can be no question, therefore, that it the legislation in the present case comes within the mischief of article 14 of the Constitution, it has got to be declared invalid." 14. _The learned senior counsel contends that Government action, more so executive action, which is not subjected to democratic debate in the Parliament, benefitting or burdening a single person or entity ought to be viewed as especially pernicious and discriminatory, and ought to be treated as such, especially while scrutinizing such action under the lens of Article 14 of the Constitution. It is submitted that in the instant case, it is not a legislative action which has marked out the Ratnagiri Power Project for a special benefit; this is a single person executive action, which is on an even weaker footing. 15. The learned senior counsel further contends that price fixation is a legislative function and in support of this contention he places reliance on the Seven Judge Bench decision of this Court in the case of Prag Ice ESSAR STEEL LTD. v. UNION OF INDIA & ORS. 339 [V. GOPALA GOWDA, J.] & Oil Mills v. Union of Indi