M/S South East U.P.Power ... vs U.P.Power Transmission ...
2019 Latest Caselaw 3879 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH
 
 

						                                       Reserved
 

 
                Case :- MISC. BENCH No. - 9530 of 2019
 

 
Petitioner :- M/S South East U.P.Power Transmission Company Ltd. Lucknow
 
Respondent :- U.P.Power Transmission Corporation Ltd Throu.Chairman & Ors.
 
Counsel for Petitioner :- Kartikey Dubey,Mahima Pahwa
 
Counsel for Respondent :- C.S.C.,D.K.Pathak,Mohd.Altaf Mansoor,Puneet Chandra
 

 
Hon'ble Dr. Devendra Kumar Arora,J.

Hon'ble Manish Mathur,J.

(Delivered by Hon'ble Manish Mathur, J.)

1. Heard Sri Prashant Chandra learned Senior Advocate assisted by Ms. Mahima Pahwa for the petitioner; Sri Raghvendra Singh learned Advocate General assisted by Sri Altaf Mansoor learned counsel appearing for the opposite party no.1; learned Additional Chief standing Counsel for the opposite party No.2 and Sri D.K. Pathak learned counsel for the opposite party no.5. In view of the fact that the primary parties to the dispute are represented, notices to opposite parties 3,4,6 and 7 are dispensed with.

2. By means of the present writ petition, the petitioner has sought a direction to the opposite party No.1, the U.P Power Transmission Corporation Ltd to take over the project of the petitioner after paying the agreed amount along with interest at the rate of 21% with effect from 24th June, 2018 with additional expenditures incurred by the petitioner during the pendency of the proceedings.

3. The petitioner is a transmission licensee and has been granted an intra-state transmission licence by the Uttar Pradesh Electricity Regulatory Commission to establish transmission system for the Mainpuri -Bara Line on build, operate, maintain and transfer basis project. The opposite party no.1 is a Government of U.P. Undertaking and the designated State Transmission Utility against whom the reliefs have been sought. The opposite parties no. 3 to 5 are the lenders of the petitioner and the opposite party No.6 is the subsidiary company of M/s Isolux Corsan Concesiones S.A. (in short Isolux) which is the majority shareholder of the petitioner and had acquired the petitioner-company through the opposite party No.6 whereas the opposite party No.7 is a shareholder of the petitioner.

4. In furtherance of a tender floated by the opposite party No.1, inviting applications for setting up of aforesaid project, the majority shareholder of the petitioner i.e. Isolux had applied and was selected for the award of contract. A letter of intent dated 5th July, 2011 was issued in furtherance of which Isolux acquired 100 % equity share holding of the petitioner and subsequently, the transmission service agreement was signed. It is a relevant factor that the transmission service agreement dated 20th January, 2012, was signed between Pachimanchal Vidyut Vitran Nigam Limited, Dakshinanchal Vidyut Vitran Nigam Limited, Purvanchal Vidyut Vitran Nigam Limited, Madhyanchal Vidyut Vitran Nigam Limited on one part and the petitioner on the other part. The opposite party No.1 was not a party to the said agreement and was only the nominee of the aforesaid corporations on the first part which were referred to as the Long Term Transmission Customers (hereinafter referred to as LTTCs) for the purposes indicated in Article 19 read with Schedule 8 to the said agreement. Subsequently the project could not be completed in time resulting in discussions between the parties under the aegis of the State Government.

5. As per the averments made in the writ petition, during the course of such consultations, a meeting was held on 28th November, 2017 in which a promise was held out to the petitioner that the project would be taken over by the opposite party No.1 and after valuation of the project, the amount so valued would be paid to the petitioner. It has been averred that in pursuance thereof, the petitioner altered its position but due to the subsequent resiling from the said promise by the opposite party no.1, the petitioner has been compelled to file the present writ petition seeking to enforce the promise so made under the doctrine of Promissory Estoppel.

6. At the very outset the learned Advocate General has raised a preliminary objection with regard to maintainability of the writ petition on the ground of availability of alternative redressal forum under Article 17 of the agreement dated 20th January, 2012 (hereinafter referred to as 'agreement') which provides for amicable settlement and dispute resolution by an Arbitral Tribunal in view of the Arbitration and Conciliation Act, 1996. The learned Advocate General relying upon Article 17.2.1 of the said agreement has submitted that on account of an alternative redressal system provided for in the Agreement, the present writ petition would not be maintainable.

7. Sri Prashant Chandra the learned Senior Counsel rebutting the arguments of the learned Advocate General has submitted that a comparison of Article 17 with the reliefs sought in the present writ petition makes it clear that the reliefs sought is beyond scope of the agreement and as such the alternative redressal mode provided for under Article 17 of the agreement would not be applicable in the present case. He has further submitted that the relief sought in the present writ petition does not arise out of or in connection with the agreement and as such the provisions of Article 17 of the agreement would not be a bar in the maintainability of the writ petition.

8. We have considered the submissions of the learned counsel for the parties.

9. Article 17.2.1 of the agreement provides as follows:-

17.2.1 Either Party is entitled to raise any claim, dispute or difference of whatever nature arising under, out of or in connection with this Agreement, including its existence or validity or termination or whether during the execution of the Project or after its completion and whether prior to or after the abandonment of the Project or termination or breach of the Agreement by giving a written notice to the other Party, which shall contain:

(i) a description of the Dispute;

(ii) the grounds for such Dispute; and

(iii) all written material in support of its claim.

17.2.2 The other Party shall, within thirty (30) days of issue of notice issued under Article 17.2.1, furnish:

(i) counter-claim and defences, if any, regarding the Dispute; and

(ii) all written material in support of its defences and counter-claim.

10. A perusal of the aforesaid article clearly provides that either party can raise any claim, dispute or difference of whatever nature arising under, out of or in connection with the agreement. It is to be seen that the agreement specifically falls for the purposes of execution of the project which did not involve any condition of the project being taken over by the opposite party No.1 nor does it contemplate the payment of the amount of project derived at by the valuers. As such, it can not be said that the claims sought in the present writ petition arise under, out of or in connection with the agreement. Furthermore, it is to be seen that the relief has been sought against the opposite party No.1 which is not a party to the said agreement and has been named only as a nominee of the LTTCs. As such, it can not be said that the terms and conditions of the agreement are binding upon the opposite party No.1. In terms of the above, the writ petition is held to be maintainable.

11. So far as the merits of the case are concerned, the learned Senior Counsel appearing for the petitioner has submitted that the opposite party No.1 is bound by the doctrine of promissory estoppel in view of specific promise held out to the petitioner with regard to taking over of the project and payment of valuation thereof. He has further submitted that in terms of the said promise, the petitioner had altered its stand thereby attracting the principle of promissory estoppel from which the opposite party No.1 can resile only in public interest, which not being present, the writ petition is, thus, liable to be allowed in terms of the reliefs sought. Sri Prashant Chandra learned Senior Counsel has also submitted that the delay occasioned in the execution of the project was primarily on account of the necessary clearances not being executed in time by the State agencies. He has further submitted that there is a considerable public interest involved in the continuance of the project which is one of its kind in the country and would entail relief to lacs of households in the State of U.P. and as such every effort should be made to save the project. He has submitted that on the contrary, there is no public interest involved in the opposite party No.1 resiling from the project.

12. The learned Advocate General rebutting the submissions of the learned counsel for the petitioner has submitted that the principle of promissory estoppel would be applicable only in case some promise, expressed or implied was ever made to the petitioner by the opposite party No.1. He has submitted that the opposite party No.1 neither being a signatory to the agreement nor even being a party to the project, as such can not be compelled to take over the project on a misapplication of the principle of promissory estoppel. He has further submitted that, even otherwise, the aforesaid doctrine would be inapplicable since the petitioner has not indicated as to how it has altered its position on account of any promise made by the opposite party No.1. Elaborating his arguments, the learned Advocate General has further submitted that the opposite party No.1 has entered the picture primarily as an agent of LTTCs only for the limited purpose indicated in Article 19 read with Schedule 8 of the agreement which do not entail any duty upon the opposite party No.1 to take over the project or to compensate the petitioner as demanded in the writ petition and, as such, no relief as sought can be granted against the opposite party No.1. He has further submitted that the actual relief required by the petitioner of shifting of tariff can not be granted since the same is barred by Section 63 of the Electricity Act, 2003 and also since it would be unfair to other companies who lost the bid since they could not match the tariff which was the basis of granting bid to the petitioner. Learned counsel for both the parties have relied upon the same set of judgments in order to buttress their submissions regarding applicability of the doctrine of the promissory estoppel.

13. In view of the dispute raised by learned counsel for the parties, the following questions arise for the proper adjudication of the writ petition:-

(A) Whether any promise expressed or implied has been extended by the opposite party No.1 to the petitioner?

(B) Whether the doctrine of promissory estoppel would bound the opposite party No.1 regarding the reliefs sought in the writ petition?

(C) Whether the petitioner acting upon the expressed or implied promise by the opposite party No. 1 has varied its position?

(D) Whether the writ petition is liable to be dismissed on account of nonjoinder of necessary parties such as the LTTCs.

14. Since Questions No. (A) and (B) pertain to the applicability of the doctrine of promissory estoppel, as such, are being decided together.

15. Question No. A & B: With regard to applicability of the principle of promissory estoppel, the leading authority on the same in India is the case of M/s Moti Lal Padampat Sugar Mills Company Limited versus State of Uttar Pradesh and others reported in (1979) 2 SCC 409 in which the Hon'ble Supreme Court applied the aforesaid principle enunciated in the judgment of Central London Property Trust Limited versus High Trees House Limited with approval as made applicable by the judgment of the Hon'ble Supreme Court itself in Union of India versus Anglo Afgan Agencies reported in AIR 1968 SC 718. In the case of Moti Lal Padampat (supra), Hon'ble the Supreme Court has held that the true principle of promissory estoppel seems to be that where one party has by his words or conduct made to the other a clear and unequivocal promise which is intended to create legal relations or affect a legal relationship to arise in the future, knowing or intending that it would be acted upon by the other party to whom the promise is made and it is in fact so acted upon by the other party, the promise would be binding on the party making it and he would not be entitled to go back upon it, if it would be inequitable to allow him to do so.

16. The Hon'ble Supreme Court in the case of Sharma Transport versus Government of A.P. and others reported in (2002) 2 SCC 188 has held that the principle has been evolved by equity to avoid injustice. It is neither in the realm of contract nor in the realm of estoppel and its object is to interpose equity shorn of its form to mitigate the rigor of strict laws. The aforesaid principle has subsequently been followed in the cases of Kasinka Trading v. Union of India reported in (1995) 1 SCC 274, Manuel Sons Hotel Private Limited v. State of Kerala and others reported in (2016) 6 SCC 766, State of Bihar and others v. Kalyanpur Cement Limited reported in (2010) 3 SCC 274 and various other cases.

17. In the decision in Kalyanpur Cement Limited (supra), Hon'ble the Supreme Court has explained the doctrine to the effect that for applicability of the doctrine of promissory estoppel, it must be established - (a) that a party must make an unequivocal promise or representation by word or conduct to the other party;(b) the representation was intended to create legal relations or affect the legal relationship to arise in the future;(c) it has to be shown that the party invoking the doctrine has altered his position relying on the promise and that (d) the Court will not apply the doctrine in abstract.

It has been further held that the only condition under which an authority or Government can resile from the doctrine is if such a promise is against the law or if any larger public interest is involved.

18. Applying the aforesaid doctrine in the present case, it can be seen that assertion of the petitioner is that a promise in terms of the relief sought in the petition was explicitly made in the meeting held on 28th November, 2017 under the aegis of the State Government. Earlier, we had summoned the records pertaining to the said meeting which were produced by the learned Advocate General. A perusal of the Minutes of meeting dated 28th November, 2017 does not indicate any such promise explicitly or impliedly made by the opposite party no.1. The minutes of the meeting does not even indicate that any promise with regard to the opposite party no.1 taking over the project was final in nature. On the contrary, the minutes of the said meeting indicate that a final decision may be taken subsequent to the valuation of the project for which valuers were required to be appointed. A perusal of the aforesaid document clearly indicates the fact that deliberations were ongoing without any final outcome with regard to the same which was subject to the valuation report. However, after the submission of the valuation report, the opposite party no.1 did not deem it fit to continue with the deliberations since it did not agree with the valuations so made. A tentative understanding arrived at during the course of deliberations, without any finality attached to it, can not be said to be a promise either expressed or implied of the nature so as to attract the principle of 'promissory estoppel'.

19. In view of the above, it cannot be said that any final promise of the nature sought in the writ petition was ever made to the petitioner by the opposite party no.1. In the event of such a promise not having been made, it cannot be said that the principle of promissory estoppel would apply in the present case.

20. It is also a relevant factor that the opposite party no.1 was not a party to the agreement and in fact had only entered the picture as a nominee of the LTTCs. in terms of the Article 19.1.1 of the agreement which reads as follows:-

19.1.1 The Long Term Transmission Customers hereby appoint and authorize Uttar Pradesh Power Transmission Corporation Ltd. (hereinafer referred to as the nominee of Long Term Transmission customer) to represent all the Long Term Transmission Customers for discharging the rights and obligations of the Long Term Transmission Customers which are required to be undertaken by all the Long Term Transmission Customers. All the Long Term Transmission Customers shall follow and be bound by the decisions of the nominee of Long Term Transmission Customer on all matters specified in the Schedule 8 of this Agreement. Accordingly each Long Term Transmission Customer agrees that any decision, communication, notice, action or inaction of the nominee of Long Term Transmission Customer on such matters shall be deemed to have been on its/his behalf and shall be binding on each of the Long Term Transmission Customer. The TSP shall be entitled to rely upon any such action, decision or communication or notice from the nominee of Long Term Transmission Customer. It is clarified that provisions under this Article 19.1 are not intended to and shall not render the nominee of Long Term Transmission Customer liable to discharge Transmission Charges payments due to TSP from the Long Term Transmission Customers.

21. A perusal of the Article 19.1.1 of the agreement clearly indicates that the role of the opposite party no.1 was for a limited purpose only and had nothing to do with the execution of the project. The role assigned to the opposite party no.1 was also to be only in terms of the matters specified in Schedule 8 of the agreement which is as follows:-

"Schedule : 8

List of Articles :

List of Articles under which rights and obligations of the Long Term Transmission Customers (including all matters incidental thereto and related follow-up), which are required to be undertaken by the nominee of Long Term Transmission Customers, or by Majority Long Term Transmission Customers or by the Long Term Transmission Customers jointly, respectively:

 

 
A) Rights and Obligations of the  the Long Term Transmission Customers required to be undertaken by the  the Long Term Transmission Customers/nominee of  the Long Term Transmission Customers
 

 
	i.	Article 3.3.5 (approach the Appropriate Commission on 		termination of the Agreement on TSP's not able to meet 			conditions subsequent)
 
	ii.	Article 5.5 (inspection of the Project during the construction 		phase)
 
	iii. 	Article 6.1.1.  and 6.1.2 (extension of Scheduled COD);
 
	iv. 	Article 6.4.1 (communication with the TSP on imposition of 		liquidated damages)
 
	v. 	Article 7.3.2 (notice for maintenance of Inter Interconnection 		Facilities under the purview of the Long Term Transmission 		Customers);
 
	vi. 	Article 11.7(d) (inspection of Project during operation of 		Force Majeure);
 
	vii. 	Article 13.1.(a) (notice to TSP on abandonment of Project);
 
	viii. 	Article 13.3. (d) (to approach the Appropriate Commission 		for revocation of Transmission Licensee on account of TSP's 		Event of Default);
 
	ix.	Articles 14.2.1(b), 14.2.2(b), and 14.2.2(c) (notice for patent 		indemnity);
 
	10. 	Article 14.2.1.(d) (provide assistance to the TSP during the 		proceedings of patent indemnity);
 
	11. 	Article 19.2.3 (written permission to TSP for divestment of 		equity holding and subsequent verification of equity 			structure, post-divestment); and
 
	12. 	Schedule 7 (computation of alternative escalation index in 		the event of CERC discontinuing publishing of the inflation 		rate mentioned in this schedule).
 

 
B) Rights and Obligations of  the Long Term Transmission Customers required to be undertaken by the Majority Long Term Transmission Customers
 

 
	1. 	Article 2.3.1 (decision to continue the Project beyond the 		Expiry Date);
 
	2. 	Article 3.1.3 (waiver of the TSP's obligations due to reasons 		attributable to the  the Long Term Transmission 				Customers(s));
 
	3. 	Articles 3.3.2 and 3.3.4 (right to terminate the Agreement 		on non-fulfillment of conditions subsequent);
 
	4. 	Articles 13.1 (k) and 13.1 (l) (invocation  of termination of 		the Agreement due to the TSP's Event of Default;
 
	5. 	Article 13.3 (notice to TSP for termination of Agreement on 		TSP's Event of Default;
 
	6. 	Article 19.1.4 (in case of any difference of opinion on any 		decision among the  the Long Term Transmission Customers, 		decision in such cases to be taken by the Majority  the Long 		Term Transmission Customers); and
 
	7. 	Article 19.1.5 (Right to replace the nominee of  the Long 		Term Transmission Customers)
 

 
and any other Articles of this Agreement not specifically mentioned herein, which provide for a joint action by all  the Long Term Transmission Customers."
 

 

22. A perusal of the Article 19.1.1 read with schedule 8 of the agreement makes it clear that the opposite party no.1 had a very limited role to play which did not extend to execution of the project and as such the relief claimed against the opposite party no.1 being beyond the terms of its scope, cannot be granted. It is also to be seen that the relief claimed in the writ petition is in the nature of Mandamus which can be granted only for enforcing any statutory provision or any other ground having the force of law. Purely private contractual obligations without the applicability of the doctrine of promissory estoppel cannot be enforced through writ jurisdiction as has been held by the Hon'ble Supreme Court in the case of Joshi Technologies International INC v. Union of India and others reported in (2015) 7 SCC 728.

23. Another factor whereby the relief sought in the present writ petition is not maintainable against the opposite party no.1 is the applicability of Chapter X of the Indian Contract Act, 1872 (hereinafter referred to as the Act of 1872), particularly Section 230 thereof, which specifically provides that in the absence of any contract to that effect, an agent can neither personally enforce contracts entered into by him on behalf of his principal nor is he personally bound by them. Since the agreement clearly indicates the standing of the opposite party no.1 as a nominee of the LTTCs, it would clearly have a role of an agent as defined under Section 182 of the Act of 1872 and therefore the provisions of Section 230 of the said Act would clearly be applicable in the present case.

24. In view of the above, it is held that the doctrine of promissory estoppel would not be binding upon the opposite party no.1 in the present case. Questions No.A and B are answered accordingly.

25. Question No.C: Although as per the answer recorded to Questions no. A and B, the first component of the doctrine of promissory estoppel i.e. an expressed or implied promise on behalf of the opposite party no.1, has not been made out, it still remains to be seen as to whether the petitioner had acted upon any promise which it thought had been extended to it. A perusal of the pleadings do not indicate as to how the petitioner has varied its position acting upon the promise presumed to have been extended to it. The pleadings of the writ petition merely indicate the difficulties being faced by the petitioner due to non-execution of the project within the stipulated time and that certain other companies interested in the project subsequently backed out but the same still does not indicate any variation in the position of the petitioner solely on account of presumed promise. Therefore it cannot be said that the petitioner, at any time, acted upon the said presumed promise or that it has altered its position on account of it. Question No.C is answered accordingly.

26. Question No. D So far as the question with regard to the maintainability of the writ petition for nonjoinder of necessary parties is concerned, a perusal of the agreement makes it clear that it has been executed between Pachimanchal Vidyut Vitran Nigam Limited, Dakshinanchal Vidyut Vitran Nigam Limited, Purvanchal Vidyut Vitran Nigam Limited, Madhyanchal Vidyut Vitran Nigam Limited and the petitioner in which the opposite party no.1 was only having the role of a nominee in terms of the expressed provisions of Article 19 read with Schedule 8 to the agreement, the LTTCs were, therefore, the main signatories to the agreement and were the actual customers of the petitioners. As such the relief, as claimed by the petitioner, could have been made only against the aforesaid LTTCs which were the necessary parties to the writ petition. The Hon'ble Supreme Court defining the term 'necessary parties' in the case of Mumbai International Airport (P) Ltd vs Regency Convention Centre & Hotels (P) Ltd., reported in (2010) 7SCC 417, clearly laid down that a necessary party is one without whom effective relief cannot be granted. In the present case, we are of the opinion that the relief as sought by the petitioner required the LTTCs to be a party to the petition which, therefore, clearly was a necessary party. Although it is settled law that the Code of Civil Procedure, 1908 is inapplicable in writ jurisdiction in terms of Section 141 of the said Code of 1908, but it is also settled law that general provisions pertaining to the same would be applicable in writ proceedings and, therefore, although the writ petition may not be dismissed on account of non-joinder of necessary parties but, at the same time, no effective relief can be granted in the absence of the same which, therefore, requires the dismissal of the writ petition on the said ground. Question no.D is answered accordingly.

27. In view of the above, the writ petition, being devoid of merits, is dismissed. Parties to bear their own costs.

Order Date : 01.05.2019

prabhat/kvg