Delhi High Court
Sunflag Iron & Steel Co. Ltd. vs Uoi & Ors. on 8 November, 2024
Author: Sudhir Kumar Jain
Bench: Sudhir Kumar Jain
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision : November 8th, 2024
+ W.P.(C) 4424/2007
SUNFLAG IRON & STEEL CO. LTD.
.....Petitioner
Through: Ms. Malvika Trivedi, Senior
Advocate with Mr. Ankur S.
Kulkarni, Mr. Nirnimesh
Dube, Mr. Varun Kanwal
and Ms. Sujal Gupta,
Advocates
V
UNION OF INDIA & OTHERS
.....Respondents
Through: Mr. Vikrant N. Goyal,
CGSC with Mr. Aditya
Shukla, Advocate for R-1
Mr. Chetan Sharma, ASG
with Mr. Sharat Kapoor,
Mr. Amit Gupta Mr. Shubh
Kapoor, Mr. Anirudh Dusaj,
Ms. Bhavya Garg,
Mr. Saurabh Tripathi,
Mr. Shubham Sharma and
Mr. Vikramaditya Singh,
Advocates for SAIL
Mr. Prashant Singh,
Standing Counsel with
Ms. Prerna Dhall, Mr.
Piyush Yadav and Ms.
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 1
17:11:35
Akanksha Singh, Advocates
for State of Chhattisgarh
CORAM
HON'BLE DR. JUSTICE SUDHIR KUMAR JAIN
J U D G M E N T (oral)
1. The Petitioner has filed the present Writ Petition under Article 226
of the Constitution of India thereby challenging the arbitrary, illegal
and unreasonable actions / decision of the Respondents herein for not
providing assured and uninterrupted regular supply of Iron Ore, for
issuance of certain directions on the Respondents, and for denying
the application of the petitioner for grant of Mining Lease. The
Petitioner has sought the reliefs which are produced verbatim: -
i) issue a Writ of Mandamus or Certiorari or any other writ
/ order / direction directing the Union of India through its
Linkage Committee to provide continuous and
uninterrupted supply of 2,50,000 metric tonnes of Iron Ore
per annum to the Petitioner Company at the rate of 20,000
metric tonnes per month for its Integrated Steel Plant at
Bhandara, Maharashtra through appropriate linkage as
assured;
ii) issue a writ of Mandamus or Certiorari or any other writ
/ order / direction directing the SAIL to make continuous
and uninterrupted supply of the Iron Ore to the Petitioner
with immediate effect as required by the Petitioner till the
appropriate linkage is provided by the Union of India;
iii) issue a Writ of Mandamus or Certiorari or any other
writ / order / direction summoning the records of the
Respondents leading to issuance of the impugned
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 2
Notification dated 20th July, 2006 and set aside / quash the
Notification dated 20th July, 2006;
iv) issue a writ of Mandamus or Certiorari or any other
writ / order / direction declaring that the Rowghat „F‟
deposit situated in District Bastar of Chhattisgarh cannot
be reserved exclusively for any Government Company or
Corporation in all the facts and circumstances of the case
unless and until a confirmed commitment and a contractual
obligation is created in the said Government Company or
Corporation to continuously and uninterruptedly supply
the required Iron Ore to the Petitioner;
v) issue a writ of Mandamus or Certiorari or any other
writ/order/direction directing the Respondents to set aside
the order of Respondent No.1 rejecting the Application of
Petitioner Company for Prospecting Licence and direct the
Respondent No.1 to consider the Petitioner's Application
for Prospecting Licence in respect of Rowghat „F; deposit;
vi) direct the Respondents to maintain status quo in respect
to Rowghat „F‟ Deposit, till the pendency of the present
Petition or till Respondents enter into legally binding
contract for supply of required iron ore to the Petitioner;
and"
vii) Pass such further or other orders as this Hon‟ble Court
may consider fit and proper.
2. The factual matrix of the case as stated by the Petitioner in the writ
petition is as follows: -
a) The Petitioner is a Company duly incorporated under
the provisions of The Companies Act, 1956 and is engaged
in manufacturing of steel and for that purposes has
established a sponge iron and Steel Plant in Bhandara,
Maharashtra for the purpose of manufacturing steel rolled
products and sponge iron.
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 3
b) It is stated by the Petitioner that the Petitioner was
incorporated on 12.09.1984 for setting up an integrated
Steel Plant in Bhandara, a backward region under
Category D of the Maharashtra State for manufacture of
Steel rolled products and sponge iron. It is further
submitted that this project of theirs was promoted by a
Company, namely being, M/s Sunflag Limited (United
Kingdom) with a total investment of over Rs. 270 Crores.
c) It is further contended that for the purpose of
encouraging economic development, the Central
Government offered various incentives including but not
limited to preference in raw material, i.e., Coal and Iron
Ore allocation which would effectively render the project of
the Petitioner and other private entities as economically
viable.
d) In pursuance of the same, it is stated that the Central
Government through its Linkage Committee for Coal and
Iron Ore vide its Meeting held on 14.07.1987 approved Iron
Ore linkage from Dalli-Rajhara lines of SAIL / Respondent
No. 4 in favour of the Petitioner. The same was intimated to
the Petitioner by way of a Letter dated 07.09.1987 issued by
the Department of Steel, Ministry of Steel and Mines,
Government of India.
e) It is stated that based on the approval of the
Respondents, for supply of Iron Ore from Dalli-Rajhara
lines of SAIL/ the respondent No. 4, the Petitioner was first
required to setup its integrated Steel Plant at Bhandara,
Maharashtra which led to a cost of Rs. 300 Crores. The said
plant commenced its operation from 1988-1989 and was set
up purely based on the representations and promises
regarding the supply of iron ore from Dalli Rajhara lines of
SAIL.
f) It is stated that once the Linkage was confirmed by the
Central Government and based upon the assurances of
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 4
uninterrupted Iron Ore supply to the Petitioner, an
Agreement dated 02.05.1988 was entered into between the
Petitioner and SAIL / Respondent No. 4. As per the said
Agreement, 2.5 Lakh Tonnes of Iron Ore was to be
supplied to the Petitioner at the rate of 20,000 Tonnes per
month. It had also been specified in the said Agreement
that the size range of the Iron Ore should be within 10 to 40
mm which is ideal for optimum production of sponge iron.
g) It is stated that despite entering into the said Agreement,
SAIL / Respondent No. 4 was never able to honour their
commitment of supplying 20,000 Tonnes of Iron Ore per
month to the Petitioner.
h) Due to such reason, the Petitioner was compelled to
procure Iron Ore at higher costs from different locations
situated more than 800 KMS from the Steel Plant of the
Petitioner resulting in high transportation charges.
i) Due to the said reason, it became impermissible for the
Petitioner to continue operating its Steel Plant and
accordingly the Petitioner was constrained to issue several
Letters dated 16.09.1992 and 17.02.1993 to the Prime
Minister and Minister for Steel by raising its issue that
SAIL / Respondent No. 4 is not being able to provide even
5,000 Tonnes of Iron Ore per month to the Petitioner.
j) It is stated that the Board of Directors of the Petitioner
Company sometime in March, 1993 resolved that unless
SAIL / Respondent No. 4 supplies adequate Iron Ore to the
Petitioner, the operations of their Steel Plant may seize to
be viable and in pursuance of the same, the Petitioner
issued a Letter dated 17.03.1993 to the Respondent No. 1.
k) Thereafter, the Respondent No. 1 taking cognizance of
the issues being faced by the Petitioner, issued a Letter
dated 10.09.1993 thereby requesting the Chairman of SAIL
/ Respondent No. 4 to place this issue before the Board of
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 5
SAIL / Respondent No. 4 and the Respondent No. 1 was of
the view that SAIL / Respondent No. 4 as per the said
Agreement should provide at least 10,000 Tonnes of Iron
Ore per month to the Petitioner.
l) Acting upon the same, a Meeting was held on 25.01.1994
between the representatives of the Petitioner and Bhilai
Steel Plant of SAIL / Respondent No. 4 wherein SAIL /
Respondent No. 4 stated that Iron Ore more than the size of
10mm cannot be spared as they themselves are facing
shortage of Iron Ore and they would be able to offer less
than 10mm size of Iron Ore to the Petitioner. It is stated
that the Petitioner had no other option but to accept such a
proposal in order to keep their Steel Plant running. The
outcome of this Meeting was duly informed by the
Petitioner to the Respondent No. 1 vide Letter dated
01.02.1994.
m) By way of Letter dated 01.03.1994, SAIL / Respondent
No. 4 accepted the proposal of the Petitioner to conduct
trials of screening 8-10 mm size of Iron Ore from the fines
stockpiles at Dalli-Rajhara Mines.
n) It is stated that the Iron Ore of sizes less than 10 mm
does not yield optimum and / or required production but
the Petitioner in order to meet the required amount of Iron
Ore agreed to additional cost of screening the 8-10 mm of
Iron Ore.
o) Accordingly, two Contracts dated 27.04.1994 and
03.05.1995 were entered into between the Petitioner and
SAIL / Respondent No. 4 for supply of 1.20 Lakh Tons of
Iron Ore of the sizes between 6-10 mm from Dalli-Rajhara
Mines at the rate of 10,000 MT per month. However, the
Petitioner again received Iron Ore from SAIL / Respondent
No. 4 which was lower than the contracted quantity.
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 6
p) That on 05.03.1993, the Government of India announced
the National Mineral Policy, 1993 whereby the Government
decided to do away with the restriction of reservation of
certain minerals for exclusive exploitation by Public Sector
Undertakings and open the same for the Private Sector.
q) By way of a Circular dated 29.10.1993, the Respondent
No. 1 informed all the State Governments and Union
Territories to carry out a review of all the areas reserved
earlier for exploitation of certain mineral for Public Sector
Undertakings.
r) By way of Communication dated 24.01.1994, the
Respondent No. 1 informed the State Governments that the
National Mineral Policy, 1993 aimed at providing a bigger
role to the Private Sector in the field of minerals and hence,
the Public Sector Undertakings are to be treated at par
with the Private Sector. To promote competition between
both the sectors, the State Governments were advised to de-
reserve the areas for certain minerals (including Iron Ore)
so that the willing parties or companies are able to exploit
the same.
s) As aforementioned, since the size of Iron Ore less than 10
mm was not viable for production of sponge iron, and was
neither technically nor economically feasible for them, the
Petitioner stopped lifting such Iron Ore sometime in April,
1996.
t) That since the Central Government provided incentives
to Private Sectors through the National Mineral Policy,
1993 and since SAIL / Respondent No. 4 did not supply the
required amount of Iron Ore to the Petitioner despite its
commitment, the Petitioner made an Application for
Prospecting Licence dated 25.06.2002 under the provisions
of Sections 4, 5 & 6 of the Mines and Minerals
(Development and Regulation) Act, 1957 ["MMDR Act"]
for captive mining of an area of 650 Hectares in Rowghat
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 7
area (Forest Plot No. 87(P) and 89(P) in Malta R.F., Taluk
Narayanpur, District Bastar) which is mentioned as
Rowghat „F‟ Block mines for a period of 3 years.
u) It is stated that as per the Audit Report of Comptroller
and Auditor General of India for the year ending March,
2003, the actual production of Dalli-Rajhara Mines in the
period of 1992-1993 to 2002-2003 exceeded the capacity of
the Mines and huge stock of Iron Ore got accumulated.
This clearly demonstrates that Bhilai Steel Plant was not
able to consume the Iron Ore produced in Dalli-Rajhara
Mines and for some reason SAIL / Respondent No. 4 denied
the supply of Iron Ore to the Petitioner.
v) The Petitioner vide Letter dated 03.11.2003 informed the
Respondent No. 1 that the production in their Steel Plant
had to be stopped for more than a period of 45 days due to
non-availability of Iron Ore. It was also informed that for
the purpose of ensuring continuous supply of Iron Ore, the
Petitioner had applied for a Prospecting Licence.
w) The Respondent No. 3 vide Letter dated 22.11.2003,
informed the Petitioner that a hearing in respect of the
Application for Prospecting Licence of the Petitioner has
been fixed on 02.12.2003. It is however stated that the
Respondent No. 3 did not take any steps in furtherance of
their Letter dated 22.11.2003.
x) After passing of more than 2 years, the Central
Government issued a Notification under Section 17-A of the
MMDR Act bearing no. G.S.R. 438 (E) on 20.07.2016 that
the Rowghat „F‟ Block mines was reserved for SAIL /
Respondent No. 4 and it was declared that no further
Prospecting Licence or Mining Lease would be granted in
such area for a period of 10 years. It is also stated that the
Central Government on 04.01.2007 granted prior approval
under Section 5(1) of the MMDR Act for the Mining Lease
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 8
over Rowghat „F‟ Block mines in favour of SAIL /
Respondent No. 4 for a period of 20 years.
y) The Petitioner states that SAIL / Respondent No. 4
already has copious quantities of reserves at various
locations and it is unfair for other Steel manufacturers to
starve for raw materials while SAIL / Respondent No. 4 is
enjoying its control over various Mines.
z) It is stated that after a period of 6 months after the
issuance of the Notification dated 20.07.2006, the
Respondent No. 3 informed the Petitioner vide Letter dated
06.01.2007 that the hearing for grant of the Prospecting
Licence of the Petitioner would be heard on 12.01.2007 and
vide Letter dated 16.01.2007 it was informed that the
hearing was postponed to 22.01.2007.
aa) The Petitioner informed the Central Government and
the Statement Government of the difficulties being faced by
them due to non-availability of Iron Ore vide Letter dated
13.01.2007.
bb) The Petitioner issued a Letter dated 17.01.2007 to the
Respondent No. 3 requesting to consider the grant of
Mining Lease in order to meet the captive supply of Iron
Ore required by the Petitioner for running their Steel
Plant.
cc) It is stated that the Respondent No. 3 sat over the
Application of the Petitioner for grant of Prospecting
Licence for more than a period of 4 years and the hearing
was finally granted to the Petitioner after 6 months of
issuance of the Notification dated 20.07.2006, hence, it was
clear to the Petitioner that the hearing to be conducted on
22.01.2007 was merely a statutory formality and is clearly a
sham.
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 9
dd) The Application for Prospecting Licence of the
Petitioner was rejected by Respondent No. 3 vide Order
dated 23.02.2007.
ee) The present Writ Petition is therefore filed by the
Petitioner in view of the above-mentioned facts thereof,
praying that an appropriate writ be issued in the nature of
a Mandamus or Certiorari thereby setting aside / quashing
the Notification dated 20.07.2006 issued by the Central
Government, that the Rowghat „F‟ deposit cannot be
reserved exclusively for any Government Company, to set
aside the Order dated 23.02.2007 whereby the Application
for Prospecting Licence of the Petitioner with respect to the
Rowghat „F‟ deposit was rejected, and along with other
consequential reliefs.
3. The respondent no 4/SAIL filed counter affidavit. The respondent
no 4 in counter affidavit submitted that the petitioner is seeking to
vindicate contractual rights in relation to contracts which ceased to be
in operation more than a decade ago. The petitioner was seeking
extra-ordinary constitutional remedy in a contractual field by bye-
passing the agreed dispute resolution mechanism of Arbitration
within jurisdiction of Madhya Pradesh High Court /Chhatisgarh High
Court.
3.1 The petitioner forfeited its right to challenge the 2006 notification
by not challenging the 2002 notification. It is further contended that
SAIL is the largest iron ore and steel producing Company in India
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 10
and is currently engaged in the business of manufacture, processing
and sale of Steel and has 5 main integrated steel plants which have a
combined capacity of 12.03 MT of saleable Steel. Rowghat Iron ore
deposit mines have 6 deposit blocks and the strategic location of F
Block is vital to the respondent No.4 and any deviation therefrom
would make its operations un-viable. The Letter dated 07.09.1987
(which was never communicated to SAIL) could not create a legal
right on the petitioner nor could the Petitioner have any legitimate
expectation than the Respondent No.4 whose application pre-dates
the consent of the Respondent No.1 in its favour. Section 17A of the
MMDR Act is a statutory power and there cannot be any estoppel
against the exercise of a statutory power merely on the basis of a
prior consent conveyed under Section 5(1) of the Act.
4. Ms. Malvika Trivedi, the learned Senior Counsel for the petitioner
advanced oral arguments and Written Submissions were also
submitted on behalf of the petitioner. The Ld. Senior Counsel besides
referring to the factual background of the case submitted that the
Petitioner has filed the present petition being aggrieved by order
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 11
dated 23.02.2007 passed by Government of Chhattisgarh, Mineral
Resources Department rejecting its application to obtain prospecting
license in light of the gazette notification dated 20.07.2006 reserving
the entire area of 2028.797 hectares for SAIL for a period of 10
years. She relied upon the documents viz. petitioner‟s application
dated 25.06.2002 for obtaining prospecting license for about 650.00
hectares of land leased in Khasra No. Forest Plot N. 87 (p) & 89 (p)
Malta R.F., District Bastar, Chhattisgarh State. (Rowghat Iron Ore
Deposit); Notification dated 20.07.2006 issued by Ministry of Mines
in consultation with State Govt. reserved entire area of 2028.797
hectares for SAIL for a period of 10 years and Impugned order
23.02.2007 passed by State Government dismissing all application
due to non-availability of area which stood reserved for SAIL vide
notification dated 16.07.2002.
4.1 Ms. Trivedi submitted that despite promises which led the
petitioner to alter its position, SAIL supplied only 6900 tones against
the promised quantity of 2.5 Lac tones and thereafter stopped all
supplies. She vehemently argued that that the actions of the
respondents are in violation of the Doctrine of Promissory Estoppel
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 12
and she has placed reliance on Motilal Padampat Sugar Mills Co.
Ltd. V State of U.P., (1979) 2 SCC 409 ; State of Punjab V Nestle
India Ltd., (2004) 6 SCC 465 ; Pepsico India Holdings (P) Ltd. V
State of Kerala, (2009) 13 SCC 55; Devi Multiplex V State of
Gujarat, (2015) 9 SCC 132; Garg Acrylics Ltd. V Union of India,
2022 SCC OnLine Del 1890.
4.2 The learned Senior Counsel that on the basis of the assurances of
the Government that Iron Ore Linkage would be provided to the
petitioner from Dalli-Rajhara Lines of SAIL/ the respondent No. 4,
the Petitioner invested more than Rs. 300 Crores in setting up its
Steel Plant on the legitimate expectation that the Respondent will not
act in an arbitrary and illegal manner. She placed reliance on Union
of India V Hindustan Development Corporation, (1993) 3 SCC
499; Bannari Amman Sugars Ltd. V CTO, (2005) 1 SCC 625 and
Sivanandan C.T. V High Court of Kerala, (2004) 3 SCC 799.
4.3 The learned Senior Counsel pointed out certain relevant portions
of the Auditor Report of the CAG for the year ending March, 2003
and submitted that SAIL/the respondent no. 4 arbitrarily denied
supply of Iron Ore to the Petitioner on false and made up pretext
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 13
because as per the said Report of CAG, the actual production of
Dalli-Rajhara Mines during the period of 1992-1993 to 2002-2003
had exceeded its capacity resulting in huge stock of Iron Ore fines
accumulating at the Mines.
4.4 The learned Senior Counsel for the petitioner brought the
attention towards the Notification dated 20.07.2006 issued by the
Central Government and submitted that the said Notification is illegal
as certain parts of the notified areas were already covered by
Prospecting Licenses which were granted in favour of third-parties.
Ms. Trivedi referred Section 17 (1A) of the MMDR Act which
provides that the Central Government may in consultation with the
State Government, reserve any area not already held under any
prospecting licence or mining lease, for undertaking prospecting or
mining operations through a Government company or corporation
owned or controlled by it.
4.5 The Senior Counsel for the petitioner submitted that even though
the Agreements entered into between the Petitioner and SAIL /
Respondent No. 4 included an Arbitration Clause, the same does not
cause any bar to the Petitioner from invoking the extra-ordinary writ
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 14
jurisdiction of this Hon‟ble Court especially when injustice has been
caused to the Petitioner by the Respondents who are functionaries of
the State and relied on Union of India V Tantia Construction
Private Limited, (2011) 5 SCC 697; ABL International Ltd. and
another V Export Credit Guarantee Corporation of India Ltd.
and others, (2004) 3 SCC 553; Kishan Freight Forwarders V
Union of India, 2011 SCC OnLine Del 2560; Human Care
Medical Charitable Trust V Delhi Development Authority, 2012
SCC OnLine Del 69; Union of India V Jai Balaji Industries Ltd.,
2015 SCC OnLine Del 13345; Unitech Limited V Telangana State
Industrial Corporation (TSIIC), (2021) 16 SCC 35; Antares
Systems Ltd. V Delhi Development Authority and another, 2024
SCC OnLine Del 1805. It has been vehemently argued that to
invoke the doctrine of promissory estoppel it is enough to show that
the promisee has, acting in reliance on the promise, altered his
position and it is not necessary for him to further show that he has
acted to his detriment and the refusal of the Government to act fairly
as the Petitioner had altered its position, therefore the respondents
would certainly be bound by the principles of promissory estoppel.
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 15
5. Sh. Chetan Sharma, the learned Additional Solicitor General and
Shri Sharat Kapoor, Advocate advanced oral arguments on behalf of
the respondents. The respondent no.1/Ministry of Mines has
submitted that the issuance of Notification dated 20.7.2006 in
supersession of Notification dated 03.12.2004, reserving an area was
based on the letter dated 27.04.2006 received from the State
Government giving no objection and the Reservation was done over
an area over which Prospecting license or Mining Lease was not held
by any anyone before. The respondent no.1 further submitted that the
commitment if made between two commercial parties if not part of
the mining lease deed is not covered under the MMDR Act. It was
further urged that the commercial agreements lie between two
commercial parties and the same cannot have supervised by the High
Court in exercise of the extra-ordinary writ jurisdiction.
5.1 The respondent No.2/Ministry of Steel submitted that the
proposal of supply of iron ore by the Respondents to the Petitioner
never attained finality as quantity, quality, price and period for which
the iron ore was to be supplied was never determined and supply of
iron ore to the Petitioner would be in contravention of Article 14 and
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 16
19 of the Constitution. The Respondent No.2 further submitted that
due to various factors, it respondent No.4 was not in a feasible
position to supply iron ore to the Petitioner. It was further urged that
there could be no estoppel against the statutory power exercised
under Section 17A (1A) of the MMDR Act more so because it was a
policy decision in the wake of public interest and the same was out of
the purview of the writ jurisdiction of the High Court.
5.2 The respondent No.4/ Steel Authority of India submitted that it
had never given any assurances to supply iron ore to the Petitioner
and as such there was no corresponding obligation of supply the same
more so because the proposals of supply of iron ore never attained
finality. The reliance, if any, on the letter and office memorandum is
mis-placed as the same had not been sent by the Designated
Authority and were of no value. Reliance was placed on Jasbir
Singh Chhabra V State of Punjab, (2010) 4 SCC 192.
5.3 It was further urged that Interdepartmental communications and
file noting in departmental files do not have sanction of law and there
is always an exercise of review until a final decision is taken.
Reliance was placed on the judgements of Union of India V Vartak
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 17
Labour Union, (2011) 4 SCC 200 and State of Uttaranchal V Sunil
Kumar Vaish, (2011) 8 SCC 670. It was also urged that commercial
transactions or policy decisions cannot be gone into in a Writ
Jurisdiction and the Writ Petition will not be maintainable in case of
dispute question of facts. Reliance was placed on Shubhas Jain V
Rajeshwari Shivam & others, (2021) 20 SCC 454. It was further
urged that the petitioner has sought quashing of the notification dated
20.07.2006, without challenging the notification being ultra vires thus
making the writ petition non-maintainable on this count alone. There
is no fundamental right in mining. Promissory Estoppel is not
attracted due to Statutory Prohibition u/s 17A(1A) of the MMDR Act
and there is no Public Interest in favour of the Petitioner for mining
of Iron Ore. The Respondent placed reliance on Monnet Ispat V
Union of India & others, (2012) 11 SCC 1.
6. The learned ASG for the Union of India also submitted that there
is no fundamental right in mining. The Doctrine of Promissory
Estoppel is not attracted due to Statutory Prohibition under Section
17A(1A) of the MMDR Act and there is no Public Interest in favour
of the Petitioner for mining of Iron Ore. He also placed reliance on
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 18
the decision of Monnet Ispat and Energy Limited V Union of
India & others, (2012) 11 SCC 1. It has been further submitted that
the Doctrine of Legitimate Expectation and Promissory Estoppel
cannot be applied in the present case as the same is overridden by
larger public interest. The Petitioners cannot invoke such Doctrine as
the same would block public interest for private benefit.
6.1 The learned ASG brought attention towards the prayers sought by
the petitioner and pointed out that the Writ of Mandamus cannot be
issued where the nature of relief sought is specific performance of a
contract and the issues involved are in relation to disputed questions
of fact. He also placed reliance on Shubhas Jain V Rejeshwari
Shiwam & others, (2021) 20 SCC 454 and Municipal Council
Gondia V Divi Workers & Supplies, 2022 SCC Online SC 247.
6.2 The learned ASG has submitted that SAIL/the respondent no. 4
has invested more than Rs. 2,300 Crores in the Bhilai Steel Plant,
however, due to various concessions and royalties payable by
SAIL/the respondent No. 4, the Bhilai Steel Plant is unable to meet
its own production requirements and raw materials have to be
imported to meet the production requirements and for functioning of
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 19
the Bhilai Steel Plant. The directions, if any, issued by this Court
would not be possible to be implemented.
6.3 The learned ASG submitted that due to the reasons of making
considerable investments, SAIL/the respondent no. 4 has a
preferential right over the Rowghat Mines. It is submitted that the
Petitioner cannot have more legitimate expectation than SAIL/the
respondent No. 4 as the mining application, prior consent,
Prospecting License, etc. all pre-date any of the documents or
applications made by the Petitioner. He placed further reliance on D.
Wren International Ltd. & another V Engineers India Ltd. &
others, AIR 1996 Cal 424 and Excise Commissioner V Issac Peter,
(1994) 4 SCC 104.
6.4 The learned ASG contended grounds for maintainability of the
Writ Petition and submitted that Clause 10.1 of the Agreement dated
02.05.1988 clearly stipulated that the validity of the Agreement was
for 2 years only, Clause 14 of the said Agreement provided the
territorial Jurisdiction is of District Civil Court of Durg, M.P. and
Clause 15 of the said Agreement included an Arbitration Clause
wherein the venue of Arbitration was decided as Ispat Bhawan,
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 20
Bhilai Steel Plant, Bhiali, M.P. Thus, according to him, the Court at
New Delhi that too the High Court has no territorial jurisdiction to
even entertain the Petition especially in light of the judgement of the
Apex Court in ABC Laminart Private Limited as per which, the
jurisdiction of the Courts other than the one mentioned specifically in
the Contract is ousted.
6.5 It was further contented that on the basis of the above-mentioned
Arbitration Clause of the Agreement dated 02.05.1988, the Writ
jurisdiction of this Hon‟ble Court cannot be invoked where there is
an alternative remedy. It was further contended that the Writ
jurisdiction is not exercisable especially if a case is based on disputed
questions of fact and law or an interpretation of a contract. He has
placed reliance on Gail (India) Ltd. V Gujrat State Petroleum
Corporation Ltd., (2014) 1 SCC 329.
6.6 The learned ASG further contends that it is trite law that there can
be no Writ in cases of commercial matters or disputes and relied
upon the Judgement of Kerela State Electricity Board & another V
Kurien E. Kalathil & others., (2000) 6 SCC 293.
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 21
6.7 It has been contended by the learned ASG that the Rowghat „F‟
deposit has been exclusively reserved for SAIL / Respondent No. 4
by way of a Notification issued in 1961 and SAIL / Respondent No. 4
applied for the Prospecting License for Rowghat „F‟ deposit
sometime in August, 1983. It is also contended that the Petitioner has
failed and forfeited their right to challenge the right to exclusivity of
SAIL / Respondent No. 4. The learned ASG has also contended that
the petitioner has approached this Court after a considerable delay of
about 17 years and that this Court should not entertain the present
Writ Petition at such a belated stage and on the basis of this
submission, he relied upon the decision of Chennai Metropolitan
Water Supply & Sewerage Board V T.T. Murali Babu, (2014) 4
SCC 108.
6.8 It was further urged on behalf of the Respondents that the
agreement between the Petitioner and the Respondent No.4 was a
stale agreement as the same was signed on 01.05.1988 for a period of
2 years and the legal maxim Certum est quod certum reddi potest
applied in the case as the time for the contract as per Clause 10.1 of
the Agreement was fixed.
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 22
7. Ms. Malvika Trivedi, the learned Senior Counsel for the petitioner
in rejoinder arguments to the submissions made by the learned ASG
for the respondents argued that the reliance by the respondents on
Monnet Ispat and Energy Limited is misplaced. It is submitted that
the MOU was in respect to the grant of a mining lease which was
promised to the petitioner therein and the MOU was held
unenforceable as the State Government was not aware about the
reservation of the mining area for exploitation in favour of the Public
Sector Undertakings, whereas, in the present case the petitioner was
promised Linkage to the Iron Ore from Dalli-Rajhara lines of SAIL
/the respondent no. 4 on the basis of which the Petitioner invested Rs.
300 Crores to set up a Steel Plant in Bhandara, Maharashtra and the
Impugned Notification of the Central Government dated 16.07.2002
was subsequent to such promises / assurances. Since, there was an
alteration in position based on promises, the Doctrine of Promissory
Estoppel is clearly attracted.
7.1 The learned Senior Counsel submitted that there are no disputed
questions of fact in the present Writ Petition and have not sought any
relief seeking specific performance of any of the Agreement or
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 23
Contract entered into with SAIL /the respondent No. 4. She with
respect to the issue of the Agreement dated 02.05.1988 getting
expired after 2 years, submitted that the Linkages were granted by the
Linkage Committee (constituted by the Cabinet of Ministers) to the
Petitioner which were intended as long term arrangements and were
free of specific expiration dates and the same is evident from various
written communications, Agreements and the Linkage Committee‟s
approval on 14.07.1987. It is also contended by the Ld. Senior
Counsel that post entering into the Agreement dated 02.05.1988,
SAIL / Respondent No. 4 failed to supply adequate quantities of Iron
Ore (20,000 MT) to the Petitioner and even after entering into
subsequent Contracts dated 27.04.1994 and 03.05.1995, SAIL /
Respondent No. 4 again failed to supply Iron Ore to the Petitioner as
per the contracted quantity.
7.2 The learned Senior Counsel with respect to the Respondents
submission of not challenging the Notification dated 20.07.2006 as
ultra vires and not challenging the earlier Notifications vide which
right exclusivity was granted to SAIL / Respondent No. 4 is
concerned, it is submitted that the Notification dated 20.07.2006 is
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 24
not akin to a stature hence there cannot be any requirement to
separately challenge vires of the same and also submitted that the
earlier Notifications dated 16.07.2002 and 03.12.2004 are superseded
by the Notification dated 20.07.2006 hence no requirement to
challenge the same. The learned Senior Counsel with respect to the
submission of the Respondents that SAIL / Respondent No. 4 has
invested more than Rs. 2,300 Crores is concerned, it is contended that
the Petitioner has also invested more than Rs. 300 Crores, spent
additional costs on sourcing Iron Ore from alternative suppliers from
long distances, and have also incurred further expenditure in order to
run and keep their Steel Plant functioning due to failure of SAIL /
Respondent No. 4 to provide adequate quantities of Iron Ore.
7.3 The submissions of the respondents pertaining to the petitioner
having an alternate remedy available by way of invoking Arbitration
have been answered by the Ld. Senior Counsel by submitting that the
present matter is not concerned with specific performance of contract
and instead involved governmental actions affecting public interest in
resource allocation which has directly impacted the Petitioner‟s
business which would not be sufficiently dealt with under
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 25
Arbitration. It is also submitted that there are several legal precedents
which affirm that Arbitration is not the sole recourse wherein there
has been significant injustice and when broader issues are at stake.
The Ld. Senior Counsel has again relied upon the previous
judgements in support of her contentions and further submitted that
the judgement of Gail (India) Ltd. as relied upon by the
Respondents is not applicable to the facts of the present case as the
issues involved therein were very complex and pertained to price
fixation mechanism. The learned Senior Counsel responded to the
contention of the Respondents that "it is trite law that there can be no
writ in purely commercial matters" by submitting that when the
arbitrary actions / decisions of a public authority, violation of
fundamental rights and the public resources are concerned, Writ
Petitions are maintainable. In furtherance of her submissions, the Ld.
Senior Counsel has relied upon the judgements of Andi Mukta
Sadguru Shree Muktajee Vandas Swami Swarna Jayanti
Mahotsav Smarak Trust V V.R. Rudani, (1989) 2 SCC 691 and
Hero Motocorp Ltd. V Union of India, (2023) 1 SCC 386.
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 26
7.4 The learned Senior Counsel has argued that SAIL/ the respondent
No. 4 was granted the Prospecting Licence over the Rowghat mines
as early as 1984 and had decades to explore and develop the mines,
therefore, SAIL / Respondent No. 4 failed to exploit the same and
utilize these resources effectively despite approval granted in 1991. It
is also submitted that the actions and decisions of the Respondents
are in direct contradiction of the National Mineral Policy, 1993 which
encouraged Private Sector participation in mineral resource
allocation. The Ld. Senior Counsel contends that the exclusive
preference of the Rowghat „F‟ deposit and the monopolistic control
over such mines by SAIL / Respondent No. 4 are in violation of
Article 39(b) of the Constitution of India which clearly provides that
the ownership and control over natural resources should be
distributed in a manner which subserves the common good and is
also in violation of Section 4(2)(c) of the Competition Act, 2003
which prohibits dominant market positions. It is further submitted
that the Petitioner applied for the Prospecting Licence in 2002, i.e.,
before the Rowghat „F‟ deposit was reserved for SAIL / Respondent
No. 4 in 2006, therefore, there was a clear lack of transparency in the
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 27
reservation process and the Notification in question was also not
intimated to the Petitioner. Lastly, the learned Senior Counsel
submitted that there is no delay in filing of the present Writ Petition
especially that of 17 years. It is submitted that as per the facts
elucidated in the Writ Petition, there have been multiple cause of
actions leading up to the year of 2007 when only after exhausting its
administrative remedies and the issues faced by it remaining
unresolved, the Petitioner has timely preferred the present Writ
Petition in the year 2007 itself.
8. The learned ASG in response to rejoinder argument has submitted
that the Petitioner‟s own case and the first prayer seeking continuous
and uninterrupted supply of 2.5 Lakhs MT of Iron Ore is a part of the
Agreement dated 02.05.1988, therefore, the Petitioner is clearly
seeking specific performance of the Agreement dated 02.05.1988. He
further submitted that the Agreement dated 02.05.1988 was entered
into based upon the mutual terms and conditions and the period of the
said Agreement clearly stipulated that the term shall be of 2 years
only.
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 28
8.1 The learned ASG contended that under Section 17A(1A) of the
MMDR Act, the Central Government is empowered to reserve
mining areas for Public Sector Undertakings and for such reason and
power, the Notification dated 20.07.2006 cannot be quashed. It is
also contended that the petitioner‟s case does not detail any cause of
action in the period of 1994 and 2002. The Petitioner was sleeping on
its rights until the Notification dated 20.07.2006 was issued and it is
further contended that the Application for the Prospecting Licence
was also delayed by the Petitioner. The learned ASG also submitted
that SAIL/the Respondent No. 4 had prior approval and consent for
Rowghat mines, the Prospecting Licence was granted from
14.09.1988 to 13.09.1990 and was further extended to 13.11.1992.
As per the Mining Lease Application submitted by SAIL/ the
respondent No. 4, it was clearly specified that the Iron Ore shall be
used for captive consumption and the same was granted to SAIL/
respondent No. 4 exclusively under Section 17A(1A) of the MMDR
Act, and hence, the Petitioner‟s Application cannot supersede this
reservation. The learned ASG further contends that larger public
interest lies in ensuring that SAIL/the respondent No. 4 continues it
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 29
supply of Iron Ore to its Bhilai Steel Plant in order to meet its long
term investments for which SAIL / Respondent No. 4 has invested
more than Rs. 2,300 Crores. Any disruption to the Growth Plan 2035
of SAIL / Respondent No. 4 shall jeopardize national interest. Ld.
ASG relied on the judgement of Sethi Auto Service Station V DDA,
(2009) 1 SCC 180 wherein the Supreme Court noted that public
interest considerations override private interests. Also in Monnet
Ispat and Energy Limited the Supreme Court held that public
interest in conserving resources for PSUs must prevail over private
commercial interests. Lastly, it has been argued by the Ld. ASG that
the Mining Lease was only granted to SAIL / Respondent No. 4 in
the year 2009 and SAIL / Respondent No. 4 was only permitted to
undertake prospecting work under the MMDR Act until the Mining
Lease is granted. SAIL / Respondent No. 4 proposed to open up the
Rowghat deposit in 2011-2012 as per its Growth Plan 2035 and the
Rowghat deposit would be exhausted by 2034-2035.
9. Having heard the parties and perusing the material on record, this
Court finds that the Rowghat „F‟ Block deposit, iron ore mines is
situated at Rowghat Hills, Malta Reserve Forest, situated in
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 30
Naraynapur Forest Range, District Kanker in the State of
Chhattisgarh (hereinafter referred as the „Rowghat „F‟ Block‟) and
has a total of 7 iron ore reserves. There are three reserves in the
Northern portion of the Rowghat „F‟ Block known as Raodongri, „A‟
Block and Tarhur and four reserves in the Southern portion known as
Anjrel, Kargaon, Khakagaon and Tarkel.
10. It is not in dispute that no Prospecting License or Mining Lease
was held by anyone with respect to the area in which Petitioner had
filed its Mining Lease application. Therefore, it is clear SAIL had
never applied for Mining Lease for the area for which the Petitioner
had given its application for Mining Lease and vice versa. Thus,
under the legal regime which existed prior to the MMDR,
Amendment Act, 2015, which was based on the „first come first serve
basis‟, a preferential right under S.11(2) of the MMDR Act, 1957,
existed in favour of the Petitioner.
11. It is further not in dispute that representations and promises were
made on various occasions it is therefore incorrect on behalf of the
Respondent No.4/SAIL or Respondent No.3/Ministry of Steel to
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 31
contend that assurance of supply of iron ore to Petitioner was never
given by them.
12. The Supreme Court in the matter of Bhushan Power & Steel
Limited V Mr. S.L. Seal, Add. Secretary, Government of Odisha
& others, (2017) 2 SCC 125, while dealing with the provisions of
MMDR Amendment Act, 2015, has held that by insertion of Section
10A a right vested in 3 categories of applicant were protected. The
relevant portion of the decision is reproduced as hereunder:
22. Newly inserted provisions of the Amendment Act, 2015
are to be examined and interpreted keeping in view the
aforesaid method of allocation of mineral resources
through auctioning, that has been introduced by the
Amendment Act, 2015. Amended Section 11 now makes it
clear that the mining leases are to be granted by auction. It
is for this reason that sub-section (1) of Section 10A
mandates that all applications received prior to January
12,2015 shall become ineligible. Notwithstanding, sub-
section (2) thereof carves out exceptions by saving certain
categories of applications even filed before the Amendment
Act, 2015 came into operation. Three kinds of applications
are saved.
............
22.3. Third category is that category of applicants where
the Central Government had already communicated
previous approval under Section 5(1) of the Act for grant of
mining lease or the State Government had issued Letter of
Intent to grant a mining lease before coming into force of
the Amendment Act, 2015. Here again, the raison d'etre is
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 32
that certain right had accrued to these applicants inasmuch
as all the necessary procedures and formalities were
complied with under the unamended provisions and only
formal lease deed remained to be executed.
It would, thus, be seen that in all the three cases, some kind
of right, in law, came to be vested in these categories of
cases which led the Parliament to make such a provision
saving those rights, and understandably so."
13.The said decision is also followed by the Hon'ble Supreme Court
of India in the matter of State of West Bengal & another V M/s
Chiranjilal (Mineral) Industries of Bagandih & another, 2023
SCC OnLine SC 1149.
14. It is further clear that the petitioner altered its position on the
assurance/commitment of supply of Iron Ore. An unconscionable
departure by the Respondent No.4/SAIL and Respondent
No.3/Ministry of Steel in not supplying iron ore to the Petitioner
despite making such promises/commitment at various stages is
contrary to the well-established principles of doctrine of promissory
estoppel. The Supreme Court in Motilal Padampat Sugar Mills Co.
Ltd. v. State of U.P., (1979) 2 SCC 409 clearly applies in the facts of
this case wherein it has been held as under:
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 33
"19. When we turn to the Indian law on the subject it is
heartening to find that in India not only has the doctrine of
promissory estoppel been adopted in its fullness but it has
been recognized as affording a cause of action to the person
to whom the promise is made. The requirement of
consideration has not been allowed to stand in the way of
enforcement of such promise. The doctrine of promissory
estoppel has also been applied against the Government and
the defence based on executive necessity has been
categorically negatived. It is remarkable that as far back as
1880, long before the doctrine of promissory estoppel was
formulated by Denning, J., in England, a Division Bench of
two English Judges in the Calcutta High Court applied the
doctrine of promissory estoppel and recognised a cause of
action founded upon it in the Ganges Manufacturing
Co. v. Sourujmull [(1880) ILR 5 Cal 669 : 5 CLR 533] . The
doctrine of promissory estoppel was also applied against
the Government in a case subsequently decided by the
Bombay High Court in Municipal Corporation of
Bombay v. Secretary of State [(1905) ILR 29 Bom 580 : 7
Bom LR 27] .
23. It was also contended on behalf of the Government that
if the Government were held bound by every
representation made by it regarding its intention, when the
exporters have acted in the manner they were invited to act,
the result would be that the Government would be bound
by a contractual obligation even though no formal contract
in the manner required by Article 299 was executed. But
this contention was negatived and it was pointed out by this
Court that the respondents "are not seeking to enforce any
contractual right : they are seeking to enforce compliance
with the obligation which is laid upon the Textile
Commissioner by the terms of the Scheme, and we are of
the view that even if the Scheme is executive in character,
the respondents who were aggrieved because of the failure
to carry out the terms of the Scheme were entitled to seek
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 34
resort to the Court and claim that the obligation imposed
upon the Textile Commissioner by the Scheme be ordered
to be carried out". It was thus laid down that a party who
has, acting in reliance on a promise made by the
Government, altered his position, is entitled to enforce the
promise against the Government, even though the promise
is not in the form of a formal contract as required by
Article 299 and that Article does not militate against the
applicability of the doctrine of promissory estoppel against
the Government.
33. The State, however, contended that the doctrine of
promissory estoppel had no application in the present case
because the appellant did not suffer any detriment by
acting on the representation made by the Government : the
vanaspati factory set up by the appellant was quite a
profitable concern and there was no prejudice caused to the
appellant. This contention of the State is clearly
unsustainable and must be rejected. We do not think it is
necessary, in order to attract the applicability of the
doctrine of promissory estoppel, that the promisee, acting
in reliance on the promise, should suffer any detriment.
What is necessary is only that the promisee should have
altered his position in reliance on the promise. This position
was impliedly accepted by Denning J., in the High Trees
case when the learned Judge pointed out that the promise
must be one "which was intended to create legal relations
and which, to the knowledge of the person making the
promise, was going to be acted on by the person to whom it
was made and which was in fact acted on", (emphasis
supplied). If a promise is "acted on", "such action, in law as
in physics, must necessarily result in an alteration of
position". This was again reiterated by Lord Denning
in W.J. Alan & Co. Ltd. v. El Nasr Export and Import
Co. [(1972) 2 All ER 127, 140] where the learned Law Lord
made it clear that alteration of position "only means that he
(the promisee) must have been led to act differently from
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 35
what he would otherwise have done. And, if you study the
cases in which the doctrine has been applied, you will see
that all that is required is that the one should have acted on
the belief induced by the other party". Viscount Simonds
also observed in Tool Metal Manufacturing Co.
Ltd. v. Tungsten Electric Co. Ltd. [(1955) 2 All ER 657]
that "... the gist of the equity lies in the fact that one party
has by his conduct led the other to alter his position". The
judgment of Lord Tucker in the same case would be found
to depend likewise on a fundamental finding of alteration of
position, and the same may be said of that of Lord Cohen.
Then again in Emmanuel Ayodeji Ajayi v. Briscoe Lord
Hodson said:"This equity is, however, subject to the
qualification (1) that the other party has altered his
position". The same requirement was also emphasised by
Lord Diplock in Kammins Ballrooms Co. Ltd. v. Zenith
Investments (Terquay) Ltd. [(1970) 2 All ER 871] What is
necessary, therefore, is no more than that there should be
alteration of position on the part of the promisee. The
alteration of position need not involve any detriment to the
promisee. If detriment were a necessary element, there
would be no need for the doctrine of promissory estoppel
because, in that event, in quite a few cases, the detriment
would form the consideration and the promise would be
binding as a contract. There is in fact not a single case in
England where detriment is insisted upon as a necessary
ingredient of promissory estoppel. In fact, in W.J. Alan &
Co. Ltd. v. El Nasr Export and Import Co., Lord Denning
expressly rejected detriment as an essential ingredient of
.promissory estoppel, saying:
"A seller may accept a less sum for his goods than the
contracted price, thus inducing (his buyer) to believe that
he will not enforce payment of the balance : see Central
London Property Trust Ltd. v. High Trees House
Ltd. and D. & C. Builders Ltd. v. Rees [(1956) 3 All ER
837] . In none of these cases does the party who acts on the
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 36
belief suffer any detriment. It is not a detriment, but a
benefit to him to have an extension of time or to pay less, or
as the case may be. Nevertheless, he has conducted his
affairs on the basis that he has had that benefit and it
would not be equitable now to deprive him of it."
We do not think that in order to invoke the doctrine of
promissory estoppel it is necessary for the promisee to show
that he suffered detriment as a result of acting in reliance
on the promise. But we may make it clear that if by
detriment we mean injustice to the promisee which would
result if the promisor were to recede from his promise, then
detriment would certainly come in as a necessary
ingredient. The detriment in such a case is not some
prejudice suffered by the promisee by acting on the
promise, but the prejudice which would be caused to the
promisee, if the promisor were allowed to go back on the
promise. The classic exposition of detriment in this sense is
to be found in the following passage from the judgment of
Dixon, J. in the Australian case of Grundt v. Great Boulder
Pty. Gold Mines Ltd. [(1938) 59 CLR 641 (Aus)] :
"... It is often said simply that the party asserting the
estoppel must have been induced to act to his detriment.
Although substantially such a statement is correct and
leads to no misunderstanding, it does not bring out clearly
the basal purpose of the doctrine. That purpose is to avoid
or prevent a detriment to the party asserting the estoppel
by compelling the opposite party to adhere to the
assumption upon which the former acted or abstained from
acting. This means that the real detriment or harm from
which the law seeks to give protection is that which would
flow from the change of position if the assumption were
deserted that led to it. So long as the assumption is adhered
to, the party who altered his situation upon the faith of it
cannot complain. His complaint is that when afterwards the
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 37
other party makes a different state of affairs the basis of an
assertion of right against him then, if it is allowed, his own
original change of position will operate as a detriment. His
action or inaction must be such that, if the assumption upon
which he proceeded were shown to be wrong, and an
inconsistent state of affairs were accepted as the foundation
of the rights and duties of himself and the opposite party,
the consequence would be to make his original act or
failure to act a source of prejudice."
If this is the kind of detriment contemplated, it would
necessarily be present in every case of promissory estoppel,
because it is on account of such detriment which the
promisee would suffer if the promisor were to act
differently from his promise, that the Court would consider
it inequitable to allow the promisor to go back upon his
promise. It would, therefore, be correct to say that in order
to invoke the doctrine of promissory estoppel it is enough to
show that the promisee has, acting in reliance on the
promise, altered his position and it is not necessary for him
to further show that he has acted to his detriment. Here, the
appellant clearly altered its position by borrowing moneys
from various financial institutions, purchasing plant and
machinery from De Smet (India) Pvt. Ltd., Bombay and
setting up a vanaspati plant, in the belief induced by the
representation of the Government that sales tax exemption
would be granted for a period of three years from the date
of commencement of the production. The Government was,
therefore, bound on the principle of promissory estoppel to
make good the representation made by it. Of course, it may
be pointed out that if the U.P. Sales Tax Act, 1948 did not
contain a provision enabling the Government to grant
exemption, it would not be possible to enforce the
representation against the Government, because the
Government cannot be compelled to act contrary to the
statute, but since Section 4 of the U.P. Sales Tax Act, 1948
confers power on the Government to grant exemption from
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 38
sales tax, the Government can legitimately be held bound
by its promise to exempt the appellant from payment of
sales tax. It is true that taxation is a sovereign or
governmental function, but, for reasons which we have
already discussed, no distinction can be made between the
exercise of a sovereign or governmental function and a
trading or business activity of the Government, so far as the
doctrine of promissory estoppel is concerned. Whatever be
the nature of the function which the Government is
discharging, the Government is subject to the rule of
promissory estoppel and if the essential ingredients of this
rule are satisfied, the Government can be compelled to
carry out the promise made by it. We are, therefore, of the
view that in the present case the Government was bound to
exempt the appellant from payment of sales tax in respect
of sales of vanaspati effected by it in the State of Uttar
Pradesh for a period of three years from the date of
commencement of the production and was not entitled to
recover such sales tax from the appellant."
15. The judgement of the Hon'ble Supreme Court of India in the
matter of Manuelsons Hotels (P) Ltd. V State of Kerala, (2016) 6
SCC 766 also clearly applies to this case wherein it has been held as
under:
19. In fact, we must never forget that the doctrine of
promissory estoppel is a doctrine whose foundation is that
an unconscionable departure by one party from the
subject-matter of an assumption which may be of fact or
law, present or future, and which has been adopted by the
other party as the basis of some course of conduct, act or
omission, should not be allowed to pass muster. And the
relief to be given in cases involving the doctrine of
promissory estoppels contains a degree of flexibility which
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 39
would ultimately render justice to the aggrieved party. The
entire basis of this doctrine has been well put in a judgment
of the Australian High Court in Commonwealth of
Australia v. Verwayen [Commonwealth of
Australia v. Verwayen, (1990) 170 CLR 394 (Aust)] , by
Deane, J. in the following words:
"1. While the ordinary operation of estoppel by conduct is
between parties to litigation, it is a doctrine of substantive
law, the factual ingredients of which fall to be pleaded and
resolved like other factual issues in a case. The persons who
may be bound by or who may take the benefit of such an
estoppel extend beyond the immediate parties to it, to their
privies, whether by blood, by estate or by contract. That
being so, an estoppel by conduct can be the origin of
primary rights of property and of contract.
2. The central principle of the doctrine is that the law will
not permit an unconscionable--or, more accurately,
unconscientious--departure by one party from the subject-
matter of an assumption which has been adopted by the
other party as the basis of some relationship, course of
conduct, act or omission which would operate to that other
party's detriment if the assumption be not adhered to for
the purposes of the litigation.
3. Since an estoppel will not arise unless the party claiming
the benefit of it has adopted the assumption as the basis of
action or inaction and thereby placed himself in a position
of significant disadvantage if departure from the
assumption be permitted, the resolution of an issue of
estoppel by conduct will involve an examination of the
relevant belief, actions and position of that party.
4. The question whether such a departure would be
unconscionable relates to the conduct of the allegedly
estopped party in all the circumstances. That party must
have played such a part in the adoption of, or persistence
in, the assumption that he would be guilty of unjust and
oppressive conduct if he were now to depart from it. The
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 40
cases indicate four main, but not exhaustive, categories in
which an affirmative answer to that question may be
justified, namely, where that party:
(a) has induced the assumption by express or implied
representation;
(b) has entered into contractual or other material relations
with the other party on the conventional basis of the
assumption;
(c) has exercised against the other party rights which would
exist only if the assumption were correct;
(d) knew that the other party laboured under the
assumption and refrained from correcting him when it was
his duty in conscience to do so.
Ultimately, however, the question whether departure from
the assumption would be unconscionable must be resolved
not by reference to some preconceived formula framed to
serve as a universal yardstick but by reference to all the
circumstances of the case, including the reasonableness of
the conduct of the other party in acting upon the
assumption and the nature and extent of the detriment
which he would sustain by acting upon the assumption if
departure from the assumed state of affairs were permitted.
In cases falling within Category (a), a critical consideration
will commonly be that the allegedly estopped party knew or
intended or clearly ought to have known that the other
party would be induced by his conduct to adopt, and act on
the basis of, the assumption. Particularly in cases falling
within Category (b), actual belief in the correctness of the
fact or state of affairs assumed may not be necessary.
Obviously, the facts of a particular case may be such that it
falls within more than one of the above categories.
5. The assumption may be of fact or law, present or future.
That is to say, it may be about the present or future
existence of a fact or state of affairs (including the state of
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 41
the law or the existence of a legal right, interest or
relationship or the content of future conduct).
6. The doctrine should be seen as a unified one which
operates consistently in both law and equity. In that regard,
"equitable estoppel" should not be seen as a separate or
distinct doctrine which operates only in equity or as
restricted to certain defined categories (e.g. acquiescence,
encouragement, promissory estoppel or proprietary
estoppel).
7. Estoppel by conduct does not of itself constitute an
independent cause of action. The assumed fact or state of
affairs (which one party is estopped from denying) may be
relied upon defensively or it may be used aggressively as
the factual foundation of an action arising under ordinary
principles with the entitlement to ultimate relief being
determined on the basis of the existence of that fact or state
of affairs. In some cases, the estoppel may operate to
fashion an assumed state of affairs which will found relief
(under ordinary principles) which gives effect to the
assumption itself (e.g. where the defendant in an action for
a declaration of trust is estopped from denying the
existence of the trust).
8. The recognition of estoppel by conduct as a doctrine
operating consistently in law and equity and the prevalence
of equity in a Judicature Act system combine to give the
whole doctrine a degree of flexibility which it might lack if
it were an exclusively common law doctrine. In particular,
the prima facie entitlement to relief based upon the
assumed state of affairs will be qualified in a case where
such relief would exceed what could be justified by the
requirements of good conscience and would be unjust to the
estopped party. In such a case, relief framed on the basis of
the assumed state of affairs represents the outer limits
within which the relief appropriate to do justice between
the parties should be framed."
(emphasis supplied)
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 42
16. The Hon'ble Supreme Court of India in the matter of R.N.
Gosain V Yashpal Dhir, (1992) 4 SCC 683 has held as hereunder:
"10. Law does not permit a person to both approbate and
reprobate. This principle is based on the doctrine of
election which postulates that no party can accept and
reject the same instrument and that "a person cannot say at
one time that a transaction is valid and thereby obtain some
advantage, to which he could only be entitled on the footing
that it is valid, and then turn round and say it is void for
the purpose of securing some other advantage".
[See: Verschures Creameries Ltd. v. Hull and Netherlands
Steamship Co. Ltd. [(1921) 2 KB 608, 612 (CA)], Scrutton,
L.J.] According to Halsbury's Laws of England, 4th Edn.,
Vol. 16, "after taking an advantage under an order (for
example for the payment of costs) a party may be
precluded from saying that it is invalid and asking to set it
aside"."
17. Further, upon close perusal, the language of Sec. 17A (1A) of the
MMDR Act, 1957 nowhere, either expressly or impliedly, mandates
exclusive accrual of mineral so exploited to such reserved public
sector undertaking. Further, the section nowhere prohibits usage of
exploitation minerals by a third party. If the argument of the Ld. ASG
is accepted then the provisions of Rule 27(3), MCR, 1960 would
become completely otiose in situations where a notification under
Sec. 17A(1A) of the MMDR Act, 1957 is issued. The entire purpose
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 43
of such reservation is only to ensure a proper prospecting or mining
of the area concerned and the end-use of the exploited mineral
however is not covered under the reservation policy. Further, the end
usage of the exploited mineral is governed by the terms and
conditions of the mining lease.
18. This brings to next argument raised by the Ld. ASG on the
maintainability of the writ petition that the court cannot go into the
thicket of commercial transaction in a writ Jurisdiction and the Writ
Petition will not be maintainable in case of disputed question of facts.
As discussed earlier, the present case is not a case of disputed fact
and based on various primary documents and correspondences based
on which the promises were made and benefits taken and when time
came to meet the corresponding obligations attached to such benefits
the beneficiary respondent conveniently resiled from the said
promises. Neither the letters have been disputed nor these letters have
been addressed.
19. Even otherwise, the writ court can go into the disputed questions
of facts and writ is maintainable in contractual obligation, disputed
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 44
facts and grant of consequential monetary claim. Art. 226 is a
valuable safeguard against arbitrariness and misuse of authority.
ABL International Ltd. V Export Credit Guarantee Corporation,
(2004) 3 SCC 553 and Unitech Limited V Telangana State
Industrial Corporation (TSIIC), (2021) 16 SCC 35. Therefore, the
argument of the Ld. ASG is untenable in the facts and circumstance
of the present case as there are no disputed facts in the present case as
explained above and further reliance placed on the decision of
Shubhas Jain V Rajeshwari Shivam & others. (2021) 20 SCC 454.
is completely misplaced and not applicable in the facts of the present
case.
20. This brings to next argument raised by the Ld. ASG that the
Letters and communications had not been crystalized to enable the
Petitioner to claim any right in its favour of the Petitioner since the
same were only at best in the form of suggestions / recommendations.
A perusal of the Letters and communications show that the same in
very clear and unambiguous terms acknowledge the right of the
Petitioner based on which the Petitioner altered its position.
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 45
Therefore, the argument of the Ld. ASG is untenable in the facts and
circumstance of the present case more particularly when all the
Respondents have acknowledged and acted on the communications
exchanged during the course of discussion. Thus, the Judgment of
Jasbir Singh Chhabra V State of Punjab, (2010) 4 SCC 192 relied
by the Ld. ASG is distinguishable on facts and has no application in
the present set of facts.
21. This brings to next argument raised by the Ld. ASG that the there
is no public interest in granting the iron ore to the private entity
namely the Petitioner and therefore the doctrine of promissory
estoppel has no application in the present case. I must say that it is in
the public interest that the promises made by any „state‟ or any
organ/entity of „state‟ including a public sector undertaking should be
kept especially when it is a beneficiary of such promise. Be that as it
may the argument of the Ld. ASG cannot be accepted in the present
set of facts and circumstances as the condition of supply of iron ore
to the Petitioner was on account of the larger public policy i.e. cluster
mining approach for environment protection and National Mineral
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 46
Policy for uniform distribution of minerals as already discussed
above.
22. The argument of the Respondents that the situation has changed
over the period of time due to change in circumstances and that the
writ Petition is hopelessly time barred have been considered by this
Court. It is seen that the writ Petition is based on the basis of the
promises which continued upto the time of the filing of the writ
Petition, thus the same is duly within limitation.
23. The argument raised by the Ld. ASG that if relief is granted in
favour of the Petitioner, it would discriminate against others, hence it
would be violative of Art. 14 & 19 of the Constitution. The case of
the Petitioner cannot be equated with others which is differently
situated. Agreement between the Petitioner and Respondents was
based on a give and take. This give and take had happened on the
basis of the obligation of the State to ensure supply of Iron Ore in
lieu of the investment made by the Petitioner in the state. This give
and take has also happened because the Petitioner had got S.5(1)
approval from the Central Government and had preferential right
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 47
over the area for which said approval was granted. Accordingly, the
argument of Ld. ASG is rejected.
24. The arguments of the Ld. ASG regarding the lack of territorial
jurisdiction of this Court due to the Arbitration Clause and the
express vesting of jurisdiction with the Courts at Durg is not
acceptable because firstly, the writ is duly maintainable against the
instrumentalities of the State for their wrongful actions
notwithstanding an Arbitration Clause. Secondly, the jurisdiction
clause mentioned in the contract is in relation to the proceedings
arising out of the Arbitration. Furthermore, as per Clause 2 of Article
226 of the Constitution of India, the power to issue directions, orders
or writs to any Government, authority or person may also be
exercised by any High Court exercising jurisdiction in relation to the
territories within which the cause of action, wholly or in part, arises
for the exercise of such power, notwithstanding that the seat of such
Government or authority or the residence of such person is not within
those territories.
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 48
25. In view of the above discussions, the present writ petition is
allowed and the Linkage Committee of the respondent no.1 is
directed to provide with immediate effect, continuous and
uninterrupted supply of 2,50,000 metric tons of Iron Ore per annum
to the petitioner Company at the rate of 20,000 metric tons per month
or as per altered circumstances for its Integrated Steel Plant at
Bhandara, Maharashtra through appropriate linkage as assured.
Further, SAIL is directed to make continuous and uninterrupted
supply of the Iron Ore to the petitioner with immediate effect as
required by the Petitioner till the appropriate linkage is provided by
the Union of India. The respondents while fixing the price of iron ore
may consider that the considerable time is lost and the petitioner has
made investment in the past. The Notification dated 20th July, 2006 is
held to be not retrospective and it is held that the Rowghat „F‟ deposit
situated in District Bastar of Chhattisgarh cannot be reserved
exclusively for any Government Company or Corporation until a
confirmed commitment and a contractual obligation is created in the
said Government Company or Corporation to continuously and
uninterruptedly supply the required Iron Ore to the Petitioner. The
Signing Date:08.11.2024 W.P.(C) 4424/2007 Page 49
order of Respondent No.1 rejecting the Application of Petitioner
Company for Prospecting Licence is hereby set aside.
26. The pending application, if any, also stand disposed of.
DR. SUDHIR KUMAR JAIN
(JUDGE)
NOVEMBER 08, 2024
AK/ABK
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