Gmr Chhattisgarh Energy Limited vs Union Of India & Ors.
2015 Latest Caselaw 1105 Del

*   IN THE HIGH COURT OF DELHI AT NEW DELHI

+                      WP(C) No.3047/2014


                                        Decided on : 6th February, 2015

    GMR CHHATTISGARH ENERGY LIMITED                         ..... Appellant
                 Through:       Mr. Gopal Jain, Senior Advocate with
                                Ms. Padma Priya, Advocate.

                       versus

    UNION OF INDIA & ORS.                                   ..... Respondent

Through: Mr. Sanjay Jain, ASG with Mr. Malaya Kumar Chand and Ms.Rajul Jain, Advs.

for R-1/UOI.

Mr.Anil Soni, CGSC and Mr.Naginder Benipal, Adv. for R-2/Central Electricity Authority.

CORAM:

HON'BLE MR. JUSTICE V.K. SHALI

1. This is a writ petition filed by the petitioner against the

respondents for quashing the communication dated 19.06.2013 issued

by the Ministry of Railways to Central Electricity Authority ('CEA'

for short) as being totally arbitrary and violative of Article 14 of the

Constitution of India. It has been further prayed that directions be issued to the Railway Board for permitting the movement of imported

coal from Vizag port to the petitioner's plant via Tilda Station of SEC

Railway.

2. Briefly stated the fact of the case leading to the filing of the

present writ petition are that the petitioner had proposed to set up coal

based thermal power plant of 1370 MW (2 x 685 MW) at Village

Raikheda, Tilda Block, Raipur, Chattisgarh. The feasibility report was

submitted to the South Eastern Central Railway (hereinafter referred

to in short as 'SECR') which was approved in principle. However,

the plant could not be made operational on account of the fact that the

domestic coal linkage was not provided. Since there was a prolonged

delay in obtaining the immediate domestic long term coal linkage, the

petitioner proposed to use the imported coal from South Africa till the

time of obtaining the domestic coal linkage. The petitioner

accordingly signed a Memorandum of Understanding with South

African coal mines for supplying the requisite coal to the plant site till

the domestic coal linkage was obtained. The imported coal was

proposed to be moved from Vizag port via Titlagarh-Raipur railway

station to the plant site which was at a distance of 13 km from the Tilda station for the purpose of running thermal power plant.

Necessary approval was sought from the Chief Operations Manager,

SECR vide letter dated 29.03.2011. On 04.07.2011 the Railway

Transport Clearance (hereinafter referred to in short as 'RTC') was

issued to the petitioner by the Ministry of Railways for movement of

imported coal from Vizag to the plant siding at Tilda wherefrom it

was perhaps to be carried by road to the plant. In the said

communication, it was specifically assured to the petitioner that the

aforesaid RTC was valid for the full life of the project if

commissioned or for five years in case project is not commissioned.

On 13.10.2011, SEC Railway approved the detailed project report of

the petitioner categorically mentioning that the imported coal can be

moved via Tilda Station. The only requirement was that only 4.2 MT

of coal volume was to be imported and it was to come via Vizag port.

Based on the aforesaid assurance and the RTC, the petitioner

approached the Railway Board for issuance of instructions to the

concerned railways authorities on 25.01.2013 for undertaking the

movement of imported coal from Vizag port to the plant site.

3. On 28.02.2013, the Ministry of Railways replied to the petitioner that the imported coal to power houses in the country, as

per the logistics plan issued by the Railway Board, the power plants

in Chattisgarh State have been linked to Western Ports and the power

houses wanting to move imported coal from the port outside the

logistics plan, the approval of the CEA was required.

4. It may be pertinent to mention here that this was for the first

time after the grant of RTC by the respondent No.1 that said

respondent made a reference to the logistics plan of Railways for the

movement of coal to the power plants in Chattisgarh.

5. On 14.03.2013, the petitioner without prejudice to its rights

approached to Central Electricity Authority for its recommendation to

permit the movement of imported coal from Vishakhapatnam port to

the plant site. It was mentioned in the said representation dated

14.03.2013 by the petitioner to the Central Electricity Authority that

the implications of changing the import of coal from Viszag port to

any of the western ports, like Mundra Port, Dahej and Dharamtar

would not only result in increase of cost of production of electricity

which was assessed at between 380-600 crores, but it will bring an

additional burden of increased ocean freight of approximately INR 46 crores apart from the increase of distance from the port of import to

plant.

6. The CEA examined the request of the petitioner and

recommended to the Railway Board on 27.05.2013 permitting the

petitioner to move the imported coal from Vizag port to their power

plant from Tilda station. Thus, this approval by the CEA to the

proposal of the petitioner, which was not in line with the so called

logistics plan of the respondent No.1/Ministry of Railways,

tantamounted to approval of their plea that the change of port for

importing the coal from east to west would result in substantial

increase in the electricity tariff. Despite the aforesaid approval

having been granted by the CEA as well as the RTC having been

granted for the full life time of the project, the respondent No.1 vide

communication dated 19.06.2013 rejected the request of the petitioner

to carry the coal from Vizag port to Tilda.

7. The petitioner made representations on 14.11.2013 and

23.12.2013. However, nothing was heard from the respondents. On

21.03.2014, the petitioner went to the extent of making a request to

the respondent No.1 seeking permission to allow at least one rake per day for the purpose of commissioning of the plant so that it does not

suffer any financial loss on account of the delayed commissioning of

project. Since nothing was heard or done by the respondent No.1

favourable to the petitioner, they were constrained to file the present

writ petition challenging the communication of the respondent dated

19.06.2013.

8. The respondent/Ministry of Railways filed their reply affidavit

wherein it was stated by them that the permission of RTC was granted

to the petitioner subject to the logistics plan although the factum of

the logistics plan was not mentioned in the approval in principle

granted by the respondent No.1. It was the case of the respondent

No.1 that the RTC was granted in anticipation of doubling of TIG-

RSD section and since this could not be done, therefore, the petitioner

could not be permitted to carry the coal from vizag port. It was also

averred that the port location had to be changed due to the logistics

plan and all other thermal power plants in and around the area where

the petitioner's plant was set up were also being similarly treated for

the purpose of import of coal from the western ports and no special

treatment could be accorded to the petitioner.

9. It has been stated that all these factors clearly show that the

RTC was issued only as first stage clearance and could not be treated

as clearance having been granted by the respondent No.1 after due

deliberation once and for all, so as to enable it to force the petitioner

to import the coal only from eastern port.

10. Similarly, the respondent No.1 took the plea that the petitioner

is yet to complete the project of its siding at Tilda. Annual reports

had not been submitted which was a precondition to grant of RTC. It

was also averred that the decision to shift the port of import from east

to west was in public interest as all other power plants in Chattisgarh

area have been permitted to import the coal form western ports. Thus,

the petitioner did not deserve to be accorded any special treatment.

11. The petitioner in its rejoinder refuted the averments made by

the respondents in the counter affidavit contending that the RTC was

only a first time clearance in principle and that was subject to the

logistics plan. As a matter of fact, it was stated by the petitioner that

the clearance which was granted was without any reservation and was

valid for the entire life of the project and it was on the basis of these

assurances having been granted by the respondents that the petitioner invested huge amount of money for setting up not only the thermal

plant, but in erecting the siding at Tilda also.

12. It was averred by the petitioner that the petitioner's case could

not be equated with that of the cases of the other power plants on

account of the fact that in the case of the petitioner, a definite promise

was made on the basis of which it had altered its position and

therefore its case was distinguishable as compared to the cases where

the RTC was yet to be issued. So far as the applicability of the

logistics plan is concerned, it has been averred that the logistics plan

is referred to for the first time only after the permission in principle

had been granted and, therefore, after having granted the RTC without

any reservation, it was not open to the respondents to retrace their

steps so as to deny the benefit of the same to the petitioner.

13. It was also averred by the petitioner that the shifting of port of

import of coal from east to west is not subserving any public interest

inasmuch as not only the cost of power generation gets increased, but

the production of the thermal electricity becomes costelier and it was

no argument on the part of the respondent No.1 that the petitioner

remains unaffected by the said increase inasmuch as it could transfer the said additional burden to the end consumer. On the basis of the

aforesaid facts, the petitioner prayed for quashing of the letter dated

19.06.2013.

14. During the course of arguments, it transpired that the letter

dated 19.06.2013 of which quashing has been sought was actually

addressed to the CEA which in principle had given an approval for

import of the coal from Vizag port despite being at variance with the

logistics plan. Therefore, CEA was also impleaded as party. The

CEA in its reply has supported the case of the petitioner although they

did not file any formal reply, but in principle supported the stand of

the petitioner.

15. It may also be pertinent to mention that during the pendency of

the writ petition, the Ministry of Railways filed an additional affidavit

of one Sh. H.S.Bajwa, Director Traffic Transportation, Railway

Board praying to supplement the stand taken by them on the basis of

the logistics plan.

16. The oral submissions with regard to the RTC being a first time

clearance in principle which was ultimately to be subject to logistics plan of the Railways was sought to be enforced. Further the question

of short of capacity movement on the Vizag-Tilda Line was also

raised to wriggle out from their earlier stand. The aforesaid affidavit

was filed by the respondent No.1 without seeking permission of the

court and, therefore, was objected to by the learned senior counsel for

the petitioner.

17. The learned senior counsel for the petitioner had despite

objection in principle to the admissibility of the said additional

affidavit, had filed reply to the same and contended that the policy

governing the RTC was not new but was formulated on 09.12.2004

and it was contended that by granting permission or rather RTC, the

respondents were now trying to wriggle out of the same by giving

reasons which not only are not germane to the position and are also

extraneous and, therefore, cannot be taken into consideration.

18. On the basis of the aforesaid pleadings, the contention of

Mr.Gopal Jain, the learned senior counsel for the petitioner, has been

two-fold.

a) The first and foremost submission has been that the respondents

having chosen to give RTC to the petitioner on the basis of which the petitioner has invested not only considerable amount of money, but

has also erected railway siding, are now bound by the doctrine of

promissory estoppel and the respondents cannot after having

permitted the petitioner to change his position retrace their steps

unilaterally by deviating from the terms and conditions of the RTC.

In this regard, supplemental argument of the learned senior counsel

for the petitioner has been that the RTC was to remain valid and

subsisting for the entire life of the project and this was specifically

mentioned in the letter dated 04.07.2011 by virtue of which the RTC

was granted. It has been contended by the learned senior counsel that

at the time when the clearance was granted, admittedly, the logistics

plan was in position and therefore the respondents had granted the

RTC to the petitioner with their eyes open and in the teeth of the

existence of the logistics plan which now cannot be altered or

deviated from. It was also contended by him that even at the stage

when the petitioner was required to transport coal from Vizag to the

Tilda, the respondent did not talk about these impediments for the

transportation but rather referred the petitioner to the CEA for the

purpose of approval as a pre-condition for transporting the coal from Vizag to Tilda. It is contended that even this requirement was

complied with by the petitioner inasmuch as not only the approval

was granted by the CEA but they had also taken note of the fact that

the shifting of the port from east to west as envisaged in the logistics

plan would result in considerable enhancement of valuation of the

project. It has been contended by him that the contention of the

learned ASG that the petitioner can offload the extra burden to the

customer is not in public interest and therefore this cannot be

permitted to be done.

b) The learned senior counsel for the petitioner has also placed

reliance on the judgments of the Supreme Court in i) SVA Steel Re-

rolling Mills Ltd. Vs.State of Kerala & Ors. in Civil Appeal

Nos.10103-10106 of 2010 decided on 06.02.2014; ii) State of Bihar

& Ors. v. Kalyanpur Cement Ltd.; (2010 3 SCC 274 and iii)

Mohinder Singh Gill v. Chief Election Commissioner; (1978) 1 SCC

405.

19. So far as the respondents are concerned, the learned ASG has

tried to put stress essentially on the aspect of logistics plan and

contended that at the time of when the RTC was granted, the said clearance was granted only in principle for the purpose of setting up

of siding at Tilda and it had to be read as subject to the logistics plan

and the plan envisaged doubling of the railway track from Vizag to

Tilda which could not be done for various reasons. Therefore the

movement of the goods including import of coal from Vizag port to

the Tilda could not be carried out smoothly and in an orderly manner

and the port of import had to be diverted to west coast. It has also

been contended that the petitioner is not being discriminated on that

score because all other thermal power plants set up in and around the

plant of the petitioner were being permitted to import coal only from

the west coast only and, therefore, the petitioner cannot raise the plea

of arbitrariness and discrimination under Article 14 of the

Constitution of India. It was also contended that so far as the

enhancement of the cost of generation of power is concerned, that was

not an impediment because it is ultimately to be borne by the

customer and therefore, this argument of the petitioner does not have

any merit.

20. It has also been contended that the decisions which have been

taken by the respondents are in the public interest and they have not been taken with a view to penalize the petitioner.

21. I have considered the submissions made by the learned senior

counsel for the petitioner as well as of the learned ASG and have also

gone through the record.

22. Before dealing with the submissions urged by the learned

senior counsel for the petitioner, it may be pertinent to refer to the

doctrine of estoppel.

'Estoppel' is a rule of equity to prevent a person from taking advantage of a condition or situation when, with knowledge of the facts, he has so conducted himself as to lead the other party to believe that he would not do as he did. It is thus an appeal to conscience of court and ordinarily involves some element of wrongdoing on the part of the person sought to be estopped which would render it inequitable to permit him to take advantage of his prior conduct.

The doctrine of promissory or equitable estoppels is well established in Administrative Law and in Constitutional Law. It represents a principle evolved by equity to avoid injustice. Explaining the principle, Wade (Administrative Law {9th Edition}) states: "The basic principle of estoppels is that a person who by some statement or representation of fact causes another to act to his detriment in reliance on the truth of it is not allowed to deny it later, even though it is wrong. Justice here prevails over truth."

"Estoppel is a rule of equity flowing out of fairness striking on behavious deficient in good faith. It operates as a check on spurious conduct by preventing the inducer from taking advantage and assailing forfeiture already accomplished. It is invoked and applied to aid the law in administration of justice. But for it great many injustices may have been perpetrated. (Indira Bai v. Nand Kishore;

(1990) 4 SCC 668, 670"

23. A perusal of the aforesaid doctrine would show that the

doctrine of promissory estoppel is a doctrine which has been invoked

by the Courts in a number of cases where a party on the basis of a

representation of the other side has changed his position and incurred

liabilities. The said doctrine is invariably permitted to be invoked

when a party in case is not protected by the said doctrine would

seriously be prejudiced and subjected to great injustice.

24. In the present case also, there is dispute about the fact that the

petitioner had got approved his proposal for setting up of a thermal

plant of 1370 MW (2 x 685 MW) at Village Raikheda, District

Raipur, Chhattisgarh near Tilda Station. According to the petitioner,

it had invested almost Rs.8,000 crores in not only setting up the plant,

but also a siding at Tilda-Bilaspur Section for the purpose of

offloading the imported coal for which it had entered into a Memorandum of Settlement for supply of coal for running the power

plant successfully and generating electricity. This coal was sought to

be imported by the petitioner from Vizag port which was the nearest

port to the project site. The necessity for importing the coal arose on

account of the fact there was a shortage of domestic coal linkage for

running the thermal plant. Accordingly, keeping all these parameters

in view, the petitioner had applied with the respondent No.1/Ministry

of Railways seeking RTC for carrying the coal from Vizag port to the

Tilda i.e. up to their siding and thereafter to be transported by road at

a distance of 12-13 kms at which the project site was situated. This

permission was granted by the respondent No.1 vide letter dated

04.07.2011 subject only to the condition that the project ought to have

been commissioned or if it was not commissioned, then it had to be

done necessarily within a period of five years from the date of grant

of permission.

25. It is not the case of the petitioner or that of even the

respondents that at the time when the permission was granted the

plant was functioning. The plant was yet to be commissioned,

therefore, it had a period of five years within which the plant had to be commissioned. It may also be pertinent here to mention that the

aforesaid permission which was granted by the respondent No.1 was

without any reservation or reference to the fact that it was subject to

the logistics plan or any other condition which will empower it to

review the decision.

26. On the contrary, the respondents had specifically assured the

petitioner that the aforesaid RTC was granted to them for the life of

the project itself. That being the position, the respondent No.1 could

not be permitted to contend now that this permission which was

granted to the petitioner on 04.07.2011 was subject to the condition of

logistics plan and the logistics plan envisaged two things : i) the

permission which was granted to the petitioner was only to be treated

as a permission in principle and was subject to the condition that the

respondent No.1 was anticipating to double the railway line from

Vizag to Tilda which would have resulted in increased movement of

the goods from point of start to the point of termination. Such a

condition does not find mention in the letter of approval granted by

the respondent No.1 in favour of the petitioner.

27. Similarly, at the time when the permission was granted by the respondent No.1 to the petitioner, the logistics plan was already in

existence but there was not even an iota of mention with respect to the

same the letter dated 04.07.2011 granting RTC to the petitioner that

the said RTC is to be treated as subject to the logistics plan.

Therefore, the respondents cannot plead now that the logistics plan

being a part of the RTC to wriggle out of their commitment of

permitting the petitioner to transport the imported coal from Vizag

port (rail head) to Tilda (their siding) and from Tilda Station to the

project site. If this stand of the respondent No.1 is upheld then not

only it will be against the doctrine of promissory estoppel but it will

not attach any seriousness or finality to the decision of the

respondents. Such a casual approach of the respondents will have

disastrous effect on the project and its founder.

28. It is no argument on the part of the respondent No.1 that they

had convened a meeting of all the stake holders namely the CEA or

NTPC or the concerned railway authorities and arrived at a

conclusion that all the imported coal which is to be utilized by the

existing or prospective thermal plants set up in the Chattisgarh region

should be supplied through western port.

29. The contention of the learned ASG was that there was no

discrimination between the petitioner and the other plant holders is

totally bereft of any logic. The reason for this is that so far as the

petitioner is concerned, its case is based on the doctrine of promissory

estoppel. In the case of the petitioner, RTC has already been issued

while as in the case of others, there is no RTC having been issued by

the respondent No.1. Therefore, the petitioner's case cannot be

equated with that of other plant holders who are yet to be granted

RTC on the same lines on which the RTC has been granted to the

petitioner. Therefore, the plea of non-discrimination does not hold

any water. On the contrary, the actions of the respondents clearly

show an arbitrariness in changing their decision.

30. On the contrary, the respondent No.1 when approached by the

petitioner seeking permission to transport the imported coal from

Vizag port to their siding at Tilda, they were asked to obtain the

approval of the CEA. The CEA is a specialized body which is having

expertise of going into the question of resources and the raw material

and advise the Ministry of Railways after examining the proposal of

the parties as to whether the proposal given by a particular plant holder is feasible or not. Even at this stage, when respondent No.1

was approached by the petitioner for the purpose of grant of

permission to carry their imported coal from Vizag to Tilda, the

respondent No.1 did not find it fit to raise the question of logistics

plan.

31. The petitioner approached the CEA, gave the requisite

information and also brought to the notice of the CEA that in case

their port of import is shifted from east to west then, not only the

distance between Vizag port and the ports to which they are likely to

be shifted on the west coast of the country would be almost doubled,

but it would also entail additional expenditure to the tune of Rs.380-

600 crores apart from the increase in the freight charges to the tune of

Rs.86 crores. The CEA after receipt of the proposal had also

approved the transportation of the imported coal from Vizag port to

the Tilda and accordingly granted the necessary approval.

32. Once the CEA had recommended the case of the petitioner for

import of coal form Vizag port to Tilda that should have been the end

of the matter and the respondents ought not to have raised any query

or rejected the proposal. But the respondents still took the stand that they are to go according to the logistics plan.

33. Thus action of the respondent No.1 is arbitrary, bereft of any

logic or reasoning and seems to be actuated by ulterior motives that

despite the petitioner having been referred to CEA for the purpose of

obtaining the approval and the letter in this regard having been

obtained, yet the respondent No.1 was trying to wriggle out of the

same by taking flimsy pretexts. One of the flimsy pretexts which was

taken for the purpose of wriggling out of the assurance given by them

was that the additional burden which the petitioner bears will

eventually have to be borne by the consumer and therefore, no serious

prejudice would be caused to the petitioner even if the imported coal

is permitted to be routed through the western port.

34. This argument of the respondent No.1 that the ultimate burden

is to be borne by the customer is not only highly unreasonable but

also illogical. This is on account of the fact that any action of a

Government body must be initiated keeping in mind the larger public

interest. The respondent No.1 has taken the plea that their action of

shifting the port of import from east to west was actuated by

subserving the public interest. But I find that instead of serving the public interest, the very action of the respondent No.1 is anti public

inasmuch as it will result not only in enhancement of cost of

production of electricity, but will also result in causing great deal of

inconvenience and loss of resources to the petitioner. This cannot be

permitted to be done at the whims and fancies of the respondent No1.

35. One of the arguments which has been raised by the respondent

No.1 is that the permission which was granted to the petitioner and

which was valid for a period of five years was subject to the condition

that they were to submit the annual reports. It has been alleged by

them that the petitioner did not submit its annual reports. This aspect

has been contested by the petitioner by contending that this is

factually incorrect. They had submitted the reports on 01.07.2012,

25.06.2013 & 24.07.2014. The details in this regard have not only

been averred in the rejoinder affidavit but also copies of the same

have been placed on record as Annexure P-1 to P-6. This contention

of the respondent No.1 that the non submission of annual report also

was a ground to be taken into consideration for non granting them the

benefit of the letter dated 04.07.2011 is untenable in law.

36. Last but not the least, the respondent No.1 has taken a plea that they have taken a plea that they have filed an additional affidavit and

in the additional affidavit they have tried to supplement the denial of

import of coal from Vizag port by giving additional reasons which

have been amplified in the said additional affidavit. The additional

reasons given by the respondent No.1 in the additional affidavit

cannot be taken cognizance of on account of two reasons.

37. Firstly, this additional affidavit has been filed by the petitioner

without obtaining the permission of the court or without any direction

from the court. The pleadings in a writ petition essentially consist of

averments made in the petition by way of an affidavit, the counter

affidavit/reply affidavit filed by the respondent and the rejoinder

thereto filed by the petitioner. In the instant case, all these processes

were completed yet the respondent No.1 of their own without any

rhyme or reason and without obtaining any permission of the court,

chose to file the additional affidavit. In the additional affidavit, they

have tried to give the reasons as to why the port of import has been

shifted from east to west and as to how it does not impact the

decisions taken by them which was communicated to the petitioner

vide letter dated 04.07.2011. The court does not find it necessary to go into the finer details of the averments made in the additional

affidavit for the simple reason that this was not done on the direction

of the court. Even if it is taken into consideration, what is essentially

to be seen is the decision taken by the respondent No.1 vide letter

dated 19.06.2013 sent by them to the CEA which does not give the

reasons as to why they have shifted the port of import of coal from

east to west. The reasons for the same cannot be supplied by way of

an affidavit. It ought to be evident in the letter itself.

38. The learned senior counsel for the petitioner has relied upon the

judgment of Mohinder Singh Gill V. Chief Election Commissiner;

(1978) 1 SCC 405 and has contended that the action of a party has to

be adjudged on the basis of the reasons provided in the order itself

and not by the supplementary reasons in the shape of an affidavit.

This judgment squarely fits in with the facts of the present case. In the

instant case, the impugned order dated 19.06.2013 by virtue of which

the port of import has been shifted from east to west and

communicated to the CEA, does not have any basis whatsoever as it

does not give any reasons why this has been done. Therefore, in my

view, the judgment in Mohinder Singh Gill's case, the letter dated 19.06.2013 cannot be relied upon as a reasoned order passed by the

respondent No.1.

39. In totality of circumstances, I feel that the action of the

respondent No.1 in issuing the letter dated 19.06.2013 to the CEA

shifting the port of import from Vizag to western port is totally

arbitrary, discriminatory, illegal and without any basis whatsoever

and accordingly the said letter is quashed and a writ of mandamus is

issued to the respondent No.1 to permit the petitioner to import coal

from Vizag port up to Tilda station as envisaged in the letter dated

04.07.2011. Further, the respondents are bound by the doctrine of

promissory estoppel. Accordingly, the writ is allowed in terms of the

prayer.

V.K. SHALI, J FEBRUARY 06, 2015/dm