M-S M.R.F. LTD. ETC. v. MANOHAR PARRIKAR AND ORS

Citation: [2010] 5 S.C.R. 1081

Court: Supreme Court of India

Bench: R.V. RAVEENDRAN, H.L. DATTU

Case summary

M-S M.R.F. LTD. ETC. v. MANOHAR PARRIKAR AND ORS.pdf

Judgment text

--// • [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: rr. 3, 6, 7 and 9 - Decision taken by Minister of Power 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 with the Rules of Business framed underArticle 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 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: · 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 - 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 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 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 · 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 late'r rescinded ·by another Notification. dated• 31. 3. 1995. Howey~r, on 15. 5. 19~6. an~t. her notification was issued l 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 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 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 1 · Coui1, tiy·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 the periods as indicated in the judgment. The appeals ORS. challenging the judgment of the High Court were 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 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 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 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 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 3, 6, 7 and 9 thereof, are mandatory and not directory, and any decision taken by any individual Minister in violation 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 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] 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 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 Avasthi (2005) 5 Suppl. SCR 906 = 2006 (1) SCC 667, relied on. 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; R v Immigration Appeal Tribunal Ex parte Jeyeanthan 1999 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 E 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 F under Article 166 (3) of the Constitution are in aid to fulfill the constitutional mandate embodied in Chapter II of Pait 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 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 Notifications dated 15. 5. 1996 and 1. 8.

1996 will not render 0 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 ORS. finalized merely at the level of the Minister in charge. The procedure or process does not stop at this. After the concurrence of the Finance Department the proposal has to be placed before the Council of Ministers and/or the Chief Minister and only after a decision is taken in this regard, it will result in the decision of the State 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 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 only to Low Tension and High Tension consumers, and the Extra High Tension Consumers got deleted pursuant to the Notification dated 6. 12. 1993.

A decision, therefore, to include a new category of consumers for grant of rebate which necessarily involved extra financial burden on the State's finances, more so, by creation of a new category, 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 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, 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 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 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 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 decision cannot be called a government decision as 0 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 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 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; 1152- D-E] Royal British Bank v. Turquand, [1856) 6 E. & B. 327, 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 contract are suspicious and, therefore, invite inquiry. ORS.

Applying the exception' to the instant matter, there is 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 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. Nothard, 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 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 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 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 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 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 it from raising its objections based on legal provisions. 0 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 against him. [para 24, 28, 29 and 75) (1109-G-H; 1110-A- B; 1113-A; 1114-A-C; 1151-F-H; 1152-A-D] 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 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 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: D 1970) 1 SCR 322 referred to Para 27 (2000) 3 SCR 752 referred to para 28 (1952) SCR 612 .. referred to para 30 E 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 F 1999 (3) AER 231 referred to Para 35 2001 (1) AER 577 referred to Para 36 2003(3) AER 508 referred to Para 37 G (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 H (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 1995 (6) Suppl. SCR 97 relied on para 48 2004 (6 ) Suppl. SCR 264 cited para 49 (1969) 3 sec 115 cited para 49 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 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 & 24. 04. 2001 of the High Court of Bombay at Goa in Writ Petition No. 316 of 1998. 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 & 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. The Judgment of the Court was delivered by 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 D 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 E 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 F 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 F allowing the writ petition. In Civil Appeal No. 4218 of 2008 (Mauvin Godinho Vs. Manohar Parrikar & Ors. ), 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. 316 H of 1998 dated 19/24. 4. 2001 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 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 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 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 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 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 30. 09. 1991, number of industrial units approached the State Government and claimed benefit of 25% rebate in terms of 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 Notification dated 30. 09. 1991. On 29. 06. 1995, a Calling Attention Notice in Legislative Assembly was also brought in by Mr. Manohar Parrikar, seeking clarification from the State Government as to whether these industrial units were entitled for the benefits flowing from the Notification dated 30. 09. 1991 upto 31. 03. 1995. The Power Minister gave a reply to the said Notice which is reproduced in the judgment under appeal.

In sum and substance the Minister stated, that, the Government was committed to honour the concession granted by the Notification dated 30. 09. 1991 to the eligible industrial units who apply for High Tension and low tension power on or after 01. 10. 1991 till the date of withdrawal, i. e. 01. 04. 1995. 4. The Under Secretary to Government of Goa, Department of Power issued a clarification dated 01. 11. 1995 to the Chief Electrical Engineer on the lines of the reply given by the Power Minister to the Calling Attention Motion and reiterated the same by a communication dated 12. 12. 1995. Later, as the Government being satisfied that there were certain difficulties in the matter of clearing cases of claim of rebate for the period upto 31. 03. 1995, issued certain clarifications. On 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 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 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. 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 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 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 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 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 judgment etc. 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. 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. E 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: F 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 G 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. H A 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 B 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. c 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. D 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 E exist. Addition to the said notification of Extra High Tension consumers with retrospective effect from 01. 10. 1991 was beyond the scope of the F 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 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 B withdrawing them and the fact that no such action was taken by the State Government for almost two years itself indicated that the State Government was satisfied 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 D 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 E 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 F advanced was that the High Court, having conclusively upheld 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 G 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 H 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. D 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 F 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 60 installments w. e. f. September, 1996 and each installment was of Rs. 1,74,513. The respondent had adjusted an amount of Rs. 53,78,594 as against the bills from September, 1996 to August, 1997 and further adjustment of Rs. 31,41,234 was also done subsequently thus leaving a balance of Rs. 73,29,528. The benefit of rebate was deni~d to the appellant for the remaining period on the basis! of the notification dated 31. 3.

1998, whereby the extension of rebate in tariff was suspended. Pursuant to the judgment dated 21. 1. 1999, the appellant raised a fresh demand for rebate before the respondent no. 2 and as they failed to succeed, they approached the High Court 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 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 and 01. 08. 1996. Pursuant to the Notification dated 01. 08. 1996, 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. This rebate was withdrawn by issuing a circular dated 31. 3. 1998. This circular was challenged in the High Court. The High Court in its judgment dated 21. 01. 1999, held the circular dated 31. 3. 1998 as invalid and inoperative. The appellant filed a Writ Petition No. 254 of 1999 in the High Court praying for the restoration of the 25% rebate .. 18. The facts in Civil Appeal No. 4217 of 2002 are:- The Alcon Cement Company Limited applied for power supply on 17. 9.

1992 and entered into an agreement with the respondent no. 2 for supply of power on 29:9. 1993. The appellant's factory at Surla in the State of Goa was given electricity supply for the first time on 1. 3. 1994. Sometime in October 1996, the Executive Engineer acknowledged the entitlement of 25% rebate and . rebate in energy consumption was granted. The appellant was given adjustment of 13 installments quantified in sum of Rs. 2,90,342/- leaving a balance of 47 installments. In addition, the balance of subsidy for the months of March 1998 to July 1998 was worked out at the rate of Rs. 4,24,671 thus making a total sum of Rs. 14,74,755. The benefit of rebate was denied to the appellant for the remaining period on the basis of the notification dated 31. 3. 1998, whereby the extension of rebate in tariff was suspended. Pursuant to the judgment dated 21. 1. 1999, the appellant raised a fresh demand for rebate before the respondent no.

2 and as they failed to succeed, they approached the High Court seeking directions to implement the said judgment. 19. Before us the appellants urged various contentions and supported them with various grounds and the case laws. The questions of law according to the appellants are as under: Whether there is any breach of judicial discipline by the High Court in not following it's own Judgment rendered by a Full Bench in the Case of Kharkanis wherein the Business Rules framed· under Article 166 (3) were held to be directory in nature, but in holding that the Rules of Business are mandatory? Whether the High Court by the judgment impugned herein has set at naught the judgment dated 21. 01. 1999 rendered by the other Division Bench with reference to the same notifications impugned in Writ Petition No. 316 of 1999, the former of which has been affirmed by this Court by its order dated 13. 02. 2001 in Civil Appeal No. 3206-07 of 1999 arid others?

Whether the appellants as consumers of power seeking rebate in terms of the Notifications issued in the name of the Governor which have been duly gazetted, can be estopped from seeking relief of rebate under them on the ground that the said Notifications were void ab initio as they were not issued in complianc! 'J of Business Rules? Whether the High Court, in the writ petition filed by Manohar Parrikar, on the basis of the files produced before it by the State Government with Manohar Parrikar as the Chief Minister of the State at the time of such production, erred in concluding that the impugned notifications are non-est on the basis of such files which had also been examined by the earlier Division bench of the High Court?

Whether the High Court by ~uing directions to effeCt recovery of rebate granted on the basis of Natifications in issue has over ruled the decision of the earlier Division Bench which had held that relief under the notifications would be granted up to the date of rescission of the Notification by the Gazette dated 27. 07. 1998? V. Vhe". ther the h1gh,,Court erred in allowing the Writ Petitibn of Manohar Parrikar based on the changed stance of the State Government contained in its affidavit dated 12. 04. 2001 which was different from that which was "taken by the State in the Court before the 1st respondent herein became the Chief Minister of the State of Goa?

Whether the High Court was justified in allowing the Writ Petition of Manohar Parrikar on the ground of Notifications being null and void for want of compliance with the Business Ruleswhile its stand before the High Court in the present writ petition and earlier batch of writ petitions was that the notifications impugned had been rescinded due to financial crunch and in public interest which was upheld by the High Court and by this Court? Whether the judgment impugned has been rendered in a case where the petitioner on his becoming Chief Minister of the State drew support of the State Government through his own Advocate General to settle scores with his political rival the 3rd respondent herein? Is there any judicial indiscipline in the High Court in not following the judgment of this Court dated 13. 02. 2001 confirming the High Court judgment dated 21. 01.

1999, more so in view of the consistent stand taken by the State Government in Parrikar's case that the judgment of the High Court, dated 21. 01. 1999 covered the issues therein and that the High Court should await the order of this Court in Appeals pending and which was eventually disposed by order dated 13. 02. 2001? Did the High Court erred in not permitting Manohar Parrikar [1 s,t respondent herein] to withdraw his writ petition, when he himself had submitted that the issues in his writ petition were covered by the judgment of the High Court dated 21. 01. 1999 and that the appeals there against were pending in this Court? M. R. F. LTD. ETC. v. MANOHAR PARRIKAR ANG· 1105 20. These civil appeals are opposed by the State A Government by filing a detailed Counter Affidavit.

The contentions of the State Government in support of the impugned judgment can be summarized as under: That the State has a vital interest in the outcome of B the proceedings before this Court which have a bearing on the State's Finances as an order of this Court setting aside the judgment impugned will result in a loss of Rs. 50 Crores to the State's Exchequer. c That the State has already paid an amount of about 16 crores as rebate and it cannot afford to pay any more on account of financial crunch faced by it and also on account of the Notifications not being Government decision in the eyes .

of law, in as much D as the matter was neither placed before the State Cabinet in terms of the Business Rules nor was the mandatory concurrence of the Finance Department under the Business Rules obtained and the High Court has rightly held that the Notifications cannot E be termed as State Government's decisions for want of non-compliance of mandatory Business Rules and the decision and actions based on the notification are therefore non-esl F That there is no truth in the contention that the State Government has taken stand which is inconsistent with and contradict9ry to the one taken In the earlier affidavits filed in the proceedings. That the earlier affidavits for and on behalf of the G State were filed by Chief Electrical Engineer Nagarajan in virtual support of the Notifications impugned. However, the said Nagarajan himself was party to the entire. matter including moving of the file, initiating the process and that his H -. ,.

,----- -· I\ A appointment was on ad-hoc basis overlooking the just and reasonable claims of various other senior, eligible and qualified candidates and that he had given benefit of rebate to an applicant whose application had been rejected by his predecessor. B That investigation on a police complaint lodged by the petitioner in W. P 316 of 1999 disclosed that there was a conspiracy hatched between the said Nagarajan and the then Power Minister at whose instance the Notifications impugned were issued c and that a charge sheet was·laid before the Special Court set up under the Prevention of Corruption Ac;:t for offences under Section 1208 of the Indian Penal Code and other provisions of the Prevention of Corruption Act and the said Nagarajan who filed D the earlier affidavits was an accused in the said proceedings. That when it comes to the involvement of public revenue and the effect on the State's Exchequer to . the tune of Rs. 50 Crores, one has to be bold E enough to.

place the correct facts' and law before the Court and the earlier affidavits filed on behalf of the State Government did not place before the Court correct facts of the matter and that the affidavit of Nagarajan which did not reflect correct position of F law and did not place correct facts before the Court should be discarded and the one filed subsequently should not . be considered as contradictory or inconsistent as correct facts borne out from the Government files were placed before the Court by G the said affidavits. The said affidavits also reflected the fact that there was neither financial sanction nor was there a budgetary provision nor was there a Cabinet approval as mandatorily required under the provisions of Article 166 (3) of the Constitution and H the said Notifications therefore could not be said to be the decision of the State Government in the eye of law. The affidavit dated 12. 04.

2001 was filed before the High Court after the State re-examined the entire matter at the highest level and after examining the legal aspects and as it was found that certain matters which go to the root of the matter and as the earlier affidavits filed before the High Court did not place all the facts emanating from Government files and records. The said affidavit was filed explaining the severe financial implications which the said Notifications incurred on the State in the form of rebate which could not be borne by the State's interest and which was detrimental to the St~te's Interest, more so in view of lack or absence of legal sanctity for the said notification. The affidavit was filed further to disclose that there was breach of mandatory Business Rules and to show that neither cabinet approval for the decision as required under law was obtained nor any budgetary allocation made for the rebate.

The affidavit was filed to explain that the State Government could not bear liability of such magnitude. 21. The counter-affidavit of the respondent - State herein further reiterates the position of law flowing from various provisions of the Constitution and the Business Rules made there under and states that the impugned notifications did not comply with the requirements of the Business Rule 7 and were therefore totally vitiated and did not have any binding effect on the State Government. The decision contained in the said Notifications could not be the decision of the State Government in the strict and true sense of law. With these contentions the State Government seeks to support and sustain the judgment of the High Court against which appeal is filed in this Court. 22. A rejoinder is filed by the appellant - M. R. F Ltd. to counter various statements made by the State Government' in its Counter Affidavit filed in the appeal. 23. We have heard Shri F. S. Nariman, Dr.

Rajeev Dhavan, Shri L. Nageshwar Rao, Shri K. N. Bhatt and Shri Shyam Divan, the learned senior counsel for the parties who have advanced elaborate arguments in support of the issues respectively raised by them in the pleadings. 24. The High Court by its judgment impugned herein has elaborately dealt with each of the cori•entions of the parties before it. Before the High Court the Writ Petition filed in public interest was opposed on various grounds. It was preliminarily objected to and opposed on the ground of maintainability which was dealt with by the High Court holding as under:- " We have no hesitation to hold that the Petition is not required to be dismissed on the ground of merger of the earlier decision dated 21st January, 1999 with the order of the Apex court or on the ground of res judicata.

There is no dispute that the illegality of these Notifications were not challenged in the Petitions which came to be decided on 21st January, 1999 and, in fact, the said challenge could not have been raised for the simple reason that the Petitioners' claim was entirely based on the existence of these t'\'P Notifications. When the Petitioner moved Miscellar\leous Civil Application No. 637 of 1999 with the prayer to allow him to withdraw the Petition for the reasons I stated therein: this court while rejecting the said application by order dated 27th January, 2000, gave the following reasoning:- . "It appears that at one stage the applicant had prayed for f,taking up the Writ Petition No. 3. 16/98 along with the other batch of Writ Petitions, but the said prayer was withdrawn. In the said batch of Writ Petitions, challenge had been I thrown to the aecision of government of Goa ORS. [H. L. DATIU, J.

] communicated· by the Chief Electrical Engineer vide A Circular dated 31st March, 1998 to suspend the release of 25% rebate of power tariff to the industrial consumers. There was no challenge whatsoever to Notification dated 15th May, 1996, or Notification dated 1st August, 1996, or that the said Notifications were null and void and to 8 nullify any effect given to them in the earlier batch of Writ J:_etitions which declaration is now sought by the Writ Petition No. 316/98. There was also no challenge to the guidelines framed by letter dated 12th December, 1995, which is sought to be challenged in the Writ Petition No. c 316/98 on the ground that it is illegal to the extent it goes beyond the scope of 1991 Notification.

No direction had been sought in the earlier batch of Writ Petitions for investigation into the grant of rebate, or for initiation of recovery proceedings against those units to whom 25% D rebate had actually been paid, or adjusted, or to fix accountability of the concerned public servant, or authorities for causing loss to the State exchequer. After taking us through the Judgment, learned advocate for the applicant himself. admitted that none of the declarations or E directions claimed in Writ Petition No. 316/98 had been sought in the earlier batch of Writ Petitions. Therefore, it cannot prima facie be said thal the controversy in the earlier batch of Writ Petitions and the Writ Petition in question is the same. F In the circumstances, in our opinion, there is no case made out for permitting the applicant to withdraw the Writ Petition No. 316/98. Accordingly, the application is hereby dismissed.

" G There was no challenge whatsoever to the Notifications dated 15th May, 1996 and 1st August, 1996 and the declamtion now sought in the instant Writ Petition was not in issue in the earlier batch of Petitions. After taking us through the judgment, the learned senior counsel admitted that none of the H A declarations or directions in Writ Petition No. 316/98 had been sought in the earlier batch of Writ Petitions. Therefore, it cannot be said that the controversy in the earlier batch of Writ Petitions and the present Writ Petition in question are the same. This Order dated 17th January, 2000 has now become final, though B it was an interlocutory order rejecting Miscellaneous Civil Application No. 637 of 1999. This Court was more than convinced that the challenge raised in Writ Petition No.

316 of 1998 was not an issue for consideration before it while handing down the judgment dated 21st January, 1999, It is for these c reasons, the principle of res judicata will not be applicable in the instaflt case. 25. As regards the objections raised by the respondents on the basis of concept of merger, the High Court has held that though the appeals challenging the judgment of the High Court D dated 21. 01. 1999 have been dismissed by this Court, and the findings of the High Court on the relevant issues have been impliedly confirmed and though the principle laid down by this Court in the case of Kunhayammed Vs. State of Kera/a, [(2000) 6 sec 359], is squarely applicable on the issue of E merger and the judgment dated 21. 01. 1999 of the High Court merged with the order of this Court dated 13. 02.

2001, the concept of merger will not come in its way in deciding the ' issues involved in this petition for the reasons, that, these issues were not raised and therefore not required to be decided by F the High Court in its earlier judgment dated 21. 01. 1999 as was clear from the order passed by it on 27. 01. 2000 in Misc. Civil Application No. 637 of 1999. The High Court held, that, it had no occasion to address itself on the cballenge raised to the notification impugned in the Writ Petition of Manohar Parrikar G and the earlier batch of Writ Petitions proceeded solely against the order dated 31. 03. 1998, and subsequent Notification issued by the State Government on 24. 07 . 1998. It is observed by the High Court, that, the. State Government opposed those Writ Petitions without examining the legality of the Notifications H dated 15. 05. 1996 and 01. 08.

1996 and it had contended that the benefi~ of rebate was withdrawn as the State Government A was facing financial crunch and that the said benefit had been introduced as a policy of the State Government and when it was realized by the State that it was facing financial difficulties in extending the benefit of rebate it decided to withdraw the same which has been upheld by the High Court in the earlier batch B of writ proceedings. The High Court therefore has concluded that it cannot now be said that State Government cannot take a stand that the Notifications impugned were issued without following the mandatory provisions of Rules of Business or that they were not Notifications issued by the State Government in c the eyes of law. The High Court has also observed, that if the State had no occasion to address itself on the legality of these Notifications, it is not estopped either from raisin~ a challenge or supporting the challenge at an appropriate time.

It is also held by the High Court that as the 1st respondent herein was D not a party to the earlier batch of Writ Petitions before the High Court and as his application for hearing his petition with that batch of petitions was withdrawn, he is not estopped from continuing with his challenge against the Notifications dated 15. 05. 1996 and 01. 08. 1996. E 26. Arguments were also advanced to the effect that the State Government should not be allowed to take contradictory stand as the stand taken by the State Government in its two affidavits filed through the Chief Electrical Engineer in the earlier batch of writ petitions was conflicting with each other. F The said contention was sought to be raised by the respondents in view of the change of the Government during the intervening period and the 1st respondent herein was the Chief Minister at the relevant point of time.

The High Court has repelled these contentions by stating that the challenge to the notifications G impugned before by the 1st respondent herein in his petition cannot be decided on the touch stone of affidavits filed even if they are contradictory in nature and the challenge had to be decided on its own merits, on the basis of records and the Constitutional Mandate. The High Court has observed that in H A a democratic set up the decisions of the Governments decide the destiny of the people and therefore the validity of such decisions should be decided not on the basis of affidavits filed by the Officers of the Governments or on incomplete or inadequate information rrtade available by them, but on the B basis of Constitutional pro~~sions and Business Rul~s framed thereunder.

The High Court further felt that it was duty bound to examine the records to reassure itself that the decisions purported to have been taken by the Government are, in fact and in law, the decision of the Government and they are in C conformity with the mandate of the Constitution. Thus the High Court has rejected the preliminary objection as to the maintainability of the Writ Petition and proceeded to decide the challenge made to the above mentioned two notifications on its merits. D 27. In our view, the principle of merger essentially refers to the merging of the orders passed by the superior courts with that of the orders passed by a subordinate court. This Court in the case of Shankar Ramachandra Abhyankar Vs. Krishnaji Dattatreya Bapat (AIR 1970 SC 1) has laid down the condition E as to when there can be a merger of the orders of the superior court with that of the orders _passed by the lower court.

This Court stated, that, if any judgment pronounced by the superior court in the exercise of its appellate or revisional jurisdiction after issue of a nbtice and a full hearing in the presence of both F the parties, then it would replace the judgment of the lower court. Thus, constituting the judgment of the superior court the only final judgment to be executed in accordance with law by the Court below. The merger is essentially of the operative part of the order and the principle of merger of the order of the G subordinate Court with the order of the superior Court cannot be applied when there is no order made by the superior Court on merits and the controversy between the parties has not been looked into by the superior Court. 28.

The issue of merger has no bearing in the facts and H circumstances of the present petitions, 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 is entirely different. Secondly, in our view, the principles of res judicata is also not attracted since the issue raised and considered in the subsequent public, . B interest litigation had not been raised and considered in the earlier round of litigation. It would be worthwhile to recaiJ the observations made by this Court in the case of Madhvi Amma Bhawani Amma and Ors. Vs. Kunjikutty Pillai Meenakshi Pillai and Ors.

(2000) 6 SCC 301, wherein the Court has observed that in order to apply general principle of res judicata, Court must find, whether an issue in a subsequent suit, was directly and substantially in issue in the earlier suit or proceedings, was it between the same parties, and was it decided by such Court. Thus, there should be an issue raised and decided, not merely a finding on any incidental question for reaching such a decision. So, if such issue is not raised and if on any other issue, if, incidentally any finding is recorded, it would not come within the periphery of principle of resjudicata. However, Shri K. N. Bhatt, learned Senior Counsel appearing for the former Power Minister, would submit that the principles of res judicata and constructive res judicata bars the exercise of jurisdiction by the High Court as there is a bar not only on issues directly raised in a previous lis but the issue that ought to have been raised.

It is further submitted that the record of decision culminating in notification dated 24. 03. 1998 was available and produced before the High Court in previous writ petitions and the same Finance Secretary who had opined in his cabinet note that Rules of Business stood violated due to non-consultation with Finance department had filed affidavit in previous Writ Petitions on the decision to issue notification dated 24. 07. 1998. Therefore, the learned senior counsel would contend that the High Court has erred in deciding this issue against this respondent. In aid of this submission, the learned senior counsel has pressed into service the observations made by this Court in the case of State of Karnataka vs. All India Manufacturer Organization and Others, [(2006) 1 SCC 32]. 29. We are not impressed by the submission of the learned senior counsel Shri K. N. Bhatt.

In our view, the subject matter of earlier Writ Petitions was completely different and distinct from the public interest litigation filed by Mr. Manohar Parrikar. In the earlier Writ Petitions, the challenge was against notification and the circulars issued by the State Government and in the present Writ Petitions the High Court was primarily · concerned with validity or otherwise of the notifications dated 15. 5. 1996 and 01. 08. 1996. Therefore, we are of the view that the reasonil')g and conclusions reached by the High Cou1rt, on the aforesaid issue is in accordance with law and in accordance with the principles laid_ down by this Court. Therefore, we agree with the conclusion reached by the High Court. 30. The appellants herein have raised an issue with regard to the nature of Business Rules framed by the Government of Goa i. e. whether thes~ Rules are directory or mandatory. Indeed it is their principal contention.

Before the High Court also, their contention was that the Rules of Business of the State of Goa were directory and not mandatory and failure to comply with such Rules will not nullify the decision taken by the State Government. Shri F. S_ Nariman, learned senior counsel submitted that it is now settled law, that, violation of conduct of Business Rules does not vitiate the decision or order, since the Rules of Business are only directory and not mandatory. The learned senior counsel has invited our attention to the decision of this court in the case of Dattatreya Moreshwar Pangarkar vs. State of Bombay- [(1952) SCR 612]. In the said decision, the court has observed : "It is well settled that generally speaking the provisions of a statute creating public duties are directory and those conferring private rights are imperative. When the provisions of a statute relate to the performance of a public duty and ! h~ case is such that to hold null and void acts M. RF. LTD. ETC. v.

MANOHAR PARRIKAR AND 1115 c;ione in neglect of this duty would work serious general A inconvenience or injustice to persons who have no control over those entrusted with the duty and at the same time would not promote the main object of the legislature, it has been the practice of the courts to hold such provisions to be directory only, the neglect of them not affecting the B validity of the acts done. The considerations which weighed with Their Lordships of the Federal Court in the case referred to above in the matter of interpretation of Section 40(1)of the 9th Schedule to the Government of India Act, 1935, appear to me to apply with equal cogency to Article c 166 of the Constitution. The fact that the old provisions have been split up into two clauses in Article 166 does not appear to me to make any difference in the meaning of the article.

Strict compliance with the requirements of Article 166 gives an immunity to the order in that it cannot D be challenged on the ground that it is not an order made by the Governor. If, therefore, the requirements of that article are not complied with, the resulting immunity cannot be claimed by the State. This, however, does not vitiate the order itself. The position, therefore, is that while the E Preventive Detention Act requires an executive decision, call it an order or an executive action, for the confirmation of an order of detention under Section 11 (1) that Act does not itself prescribe any particular form of expression of that executive decision. Article 166 directs all executive action F to be expressed and authenticated in the manner therein laid down but an omission to comply with those provisions does not render the executive action a nullity. 31. Reference is also made to the decision of this Court in Gulabrao Keshavrao Patil and Ors. Vs.

State of Gujarat G (1996) 2 sec 26. It was noted as follows: "Article 166(1) and (2) expressly envisage authentication of all the executive action and shall be expressed to be taken in the name of the Governor and shall be H authenticated in such manner specified in the rules made by the Governor. Under Article 166(3), the Governor is authorised to make the rules for the more co,nvenient transaction of the business of the Government of the State, and for the allocation among Ministers of the said business insofar as it is not a business with respect to which the Governor is by or under the Constitution required to act in his discretion. In other words, except in cases when the Governor in his individual discretion exercises his constitutional functions, the other business of the Government is required to be conveniently transacted as per the Business Rules made by Article 166(3) of the Constitution.

If the action of the Government and the order is duly authenticated as per Article 166(2) and the Business Rule 12, it is conclusive and irrebuttable presumption arises that decision was duly taken according to Rules. " 32. Mr. F. S. Nariman next relied upon the decision of this Court in R. Chitralekha and Others vs. State of Mysore, [1964 (6) SCR 368], wherein this Court has stated that it is "settled law" that provisions of Article 166 of the Constitution are only directory and not mandatory in character. And if they are not complied with it can be established as a question of fact that the impugned order was in fact issued by the Governor. " 33. In Haridwar Singh Vs. Bagun Sumburui, [(1973) 3 sec 889], it was noted as follows. "Several tests have been propounded in decided cases for determining the question whether a provision in a statute, or a rule is mandatory or directory. No universal rule can be laid down on this matter.

In each case one must look to the subject-matter and consider the importance of the provision disregarded and the relation of that provision to the general object intended to be secured. Prohibitive or negative words can rarely be directory and are indicative of the intent that the provision is to be mandatory. Where a prescription relates to performance of a public duty and to invalidate acts done in neglect of them would work serious general inconvenience or injustice to persons who have to control over those entrusted with the duty, such prescription is generally understood as mere instruction for the guidance of those upon whom the duty is imposed. " 34. In Montreal Street Rely Co. vs. Normandin - 1917 A. C. 170, it is held: 'The statutes contain no enactment as to what is to be the consequence of nonobservance of these provisions. It is contended for the appellants that the consequence is that the trial was coram non judice and must be treated as a nullity.

It is necessary to consider the principles which have been adopted in construing statutes of this character, and the authorities so far as there are any on the particular question arising here. The question whether provisions in a statute are directory or imperative has very frequently arisen in this country, but it has been said that no general rule can be laid down, and that in every case the object of the statute must be looked at. The cases on the subject will be found collected in Maxwell on Statutes, 5th ed. P. 596 and following pages.

When the provisions of a statute relate to the performance of a public duty and the case is such that to hold null and void acts done in neglect of this duty would work serious general inconvenience, or injustice to persons who have no control over those entrusted with the duty, and at the same time would not promote the main object of the Legislature, it has been the practice to hold such provisions to be directory only, the neglect ·of them, though punishable not effecting the validity of the acts done. " (emphasis supplied) A 35. In R v Immigration Appeal Tribunal Ex parte Jeyeanthan 1999 (3) AER 231, it is observed : "The issue is of general importance and has implications for the failure to observe procedural requirements outside the field of immigration.

The conventional approach when B there has been non-compliance with a procedural requirement laid down by a statute or regulation is to conc;ider whether the requirement which was not complied with should be categorised as directory or mandatory. If it is categorised as directory it is usually assumed it can be c safely ignored. If it is categorised as mandatory then it is usually assumed the defect cannot be remedied and has the effect of rendering subsequent events dependent on the requiremeni a nullity or void or as being made without jurisdiction and of no effect. The position is more complex D than this and this approach distracts attention from the important question of what the legislator should be judged to have intended should be the consequence of the noncompliance. This has to be assessed on a consideration of the language of the legislation aga_inst the factual E circumstances of the non-compliance.

In the majority of cases it provides limited, if any, assistance to inquire whether the requirement is mandatory or directory. The requirement is never intended to be optional if a word such as 'shall' or 'must' is used. F A requirement to use a form is more likely to be treated as a mandatory requirement where the form contains a ' notice designed to ensure that a meinber of the public is informed of his or her rights, such as a notice of a right to appeal. In the case of a right to appeal, if, notwithstanding G the absence of the notice, the member of the public exercises his or her right of appeal, the failure to use the form usually ceases to be of any significance irrespective of the outcome of the appeal. This can confidently be said to accord with the intention of the author of the requirement.

H There are cases where it has been held that even if there A· has been no prejudice to the recipient because, for example, the recipient was aware of the right of appeal but did not do so, the non-compliance is stiH fatal. The explanation for these decisions is that the draconian consequence is imposed as a deterrent against not observing the requirement. However even where this is the situation the consequences may differ if this would not be in the interests of the person who was to be informed of his rights. Because of what can be the very undesirable consequences of a procedural requirement which is made so fundamental that any departure from the requirement makes everything that happens thereafter irreversibly a nullity it is to be hoped that provisions intended to have this effect will be few and far between.

In the majority of cases, whether the requirement is categorised as directory or mandatory, the tribunal before whom the defect is properly raised has the task of determining what are to be the consequences of failing to comply with the requirement in the context of all the facts and circumstances of the case in which the issue arises. In S! JCh a situation that tribunal's task will be to seek to do what is just in all the circumstances (see Brayhead (Ascot) Ltd. v Berkshire CC (1964] 1 All ER 149, [1964] 2 QB 303 applied by the House of Lords in London and a Clydesidc Estates Ltd. v. Aberdeen DC [1979] 3 All ER 876, [1980] IWLR 182). By contrast, a requirement may be clearly directory because it lays down a time limit but a tribunal is given an express power to extend the time for compliance. If the tribunal grants or refuses an extension of time the position is clear. If the time limit is extended the requirement is of no Significance.

If an extension is refused the requirement becomes critical. It may, for example, deprive a member of the public of a right to appeal which if exercised in time would have been ·bound to succeed. In the latter situation a directory requirement has consequences which are as significant as any mandatory requirement. A far from straightforward situation is where there is a need for permission to appeal to a tribunal but this is not appreciated at the time. The requirement is mandatory in the sense that the tribunal or the party against whom the appeal was being brought would have been entitled to object to the appeal proceeding without the permission and if they had done so the appeal would not have been accepted. However, what is the position if because they were unaware of the existence of the requirement no objection is made and the appeal is heard and allowed? Is the appellant, when the mistake is learnt of, to be deprived of the benefits of the appeal?

If the answer is Yes the result could be very unjust. This would be especially so, if in fact the tribunal in error had told the appellant that permission is not needed and he would have been in time to make the application if he had not been misinform'ed-. Could it have been the intention of the author of the requirement that the requirement should have the effect of depriving the appellant of the benefit of his appeal? Clearly not. In such a situation the non-compliance would almost inevitably be regarded as being without significance. It must be remembered that procedural requirements are designed to further the interests of justice and any consequence which would achieve a result contrary to those interests should be treated with considerable reservation. " 36.

In Attorney General's Reference (No 3 of 1999), 2001(1) AER 577, it is held: "My Lords, I acknowledge at once that reasonable minds may differ as to the correct interpretation of a subsection which has no parallel in the 1984 Act or any other statute. Nevertheless, there do seem to be secure footholds which may l'ead to a tolerably clear answer. It is not along the route A adopted by the prosecution of asking whether the relevant pr'ovision is mandatory or. directory. In London and Clydeside Estates Ltd. vs. Aberdeen DC [1979] 3 All ER 876 at 882-884, {1980} 1 WLR 182 at 188-190, Lord Hailsham of St Marylebone L. C. considered this dichotomy B and warned against the approach 'of fitting a particular case into one or other of mutually exclusive and starkly contrasted compartments'.

In R v Immigration Appeal Tribunal, exp Jeycanthan [1999J 3 All ER 231 at 237, [2000] 1 WLR 354 at 360, Lord Woolf MR, now Lord c Chief Justice, echoed this warning and held that it is 'Much more important ... to focus on the consequences of noncompliance'. This is h~ I will approach the matter. " 37. In R v Sekhon and others, 2003(3) AER 508, it is observed : D "25. There is no doubt that difficulties for courts exist in applying the distinction between mandatory requirements on the one hand, and directory requirements on the other. Even if the terms 'directory' and ·mandatory' are not used E the problem remains of answering the question : what is the effect of non-compliance with procedural requirements? What is necessary as indicated by Lord Campbell LC in Liverpool Borough Bank v. Turner (1861) 30 LJ Ch 379 at 381, 45 ER 715 at 718, is 'to try to get at the real F intention of the legislature, by carefully attending to the whole scope of the statute to be construed. " 38.

Reference can be made to certain passages from HALSBURY'S Laws of England, 4th Edition Re issue Vol. 44(1) at para 1237 and 1238: · · G 1237. Substantive and procedural enactments. A distinction is drawn between enactments that have substantive effect and those that are merely procedural. Here 'substantive' means having to do with the substance H of the law, in particular the nature and existence of legal rights, powers or duties, whereas procedure is concerned with formalities and technicalities, rather than substance. A procedural change is expected to improve matters for everyone concerned (or at least to improve matters for some, without inflicting detriment on anyone else who uses ordinary care, vigilance and promptness). The distinction governs such questions as whether a statutory requirement is mandatory or merely directory", whether the effect of an enactment is retrospective' and when a limitation period begins tb run.

The question may be whether, on the facts of the instant case, the enactment is substantive or merely procedural, bearing in mind that an enactment may be substantive in the light of some facts but merely procedural on others. Another use of the term 'substantive' is to indicate a 'permanent' provision of an Act, in contrast to merely temporary or transitional provisions. l 1238. Mandatory and directory enactments. The distinction between mandatory and directory enactments concerns statutory requirements and may have to be drawn where the consequence off ailing to implement the requirement is not spelt out in the legislation. The requirement may arise in one of two ways. A duty to implement it may be imposed directly on a person; or legislation may govern the doing of an act or the carrying on of an activity, and compel the person doing the act or carryin9' on the ~ctivity to implement the requirement as part o( a specified {)rocedure.

The requirement may be impbsed merely by implication. To remedy the deficiency of the legislature in failing to specify the intended legal consequence of non-compliance with such a requirement, it has been necessary for the courts to devise rules. These lay down that it must be decided from the wording of the relevant enactment whether the requirement is intended to be mandatory or merely directory. The same requirement may be mandatory as to some aspects and directory as to the rest. The court will be more willing to hold that a statutory requirement is merely directory if any breach of the requirement is necessarily followed by an opportunity to exercise some judicial or official discretion in a way which can adequately compensate for that breach. Provisions relating to the steps to be taken by the parties to legal proceedings (using the term in the widest sense) are often construed as mandatory.

Where, however, a requirement, even if in mandatory terms, is purely procedural and is imposed for the benefit of one party alone, that party can waive the requirement.