TUSHAR KANTI ROY vs DAMODAR VALLEY CORPORATION AND ORS
- Court
- Calcutta High Court
Form No.J(2)
IN THE HIGH COURT AT CALCUTTA
CONSTITUTIONAL WRIT JURISDICTION
APPELLATE SIDE
Present :
The Hon’ble Justice Raja Basu Chowdhury
WPA 19750 of 2022
With
CAN 1 of 2025
Tushar Kanti Roy
Versus
Damodar Valley Corporation & Ors.
For the petitioner : Mr. Jishnu Saha, Sr. Advocate
Ms. Manju Bhuteria, Sr. Advocate
Mr. Suddhasatva Banerjee
Mr. Surojit Dasgupta
Ms. Arundhati Barman Roy
Mr. Asish Chowdhury
Ms. Uma Banerjee
For the D.V.C. : Mr. Dhrubo Ghosh, Sr. Advocate
Mr. Swarajit Dey
Ms. Ajeyaa Chowdhury
Mr. Saptarshi Kar
Ms. Debsarati Das
Mr. Ayan Ahmed
Heard on : 11.06.2025, 02.01.2026 & 16.01.2026
th
Judgment on : 30 April, 2026.
Raja Basu Chowdhury, J:
1. The instant writ petition has been filed, inter alia, praying for a
direction upon the respondents and each of them to continue the
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supply of fly ash to the petitioner as per the terms and conditions
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contained in the agreement dated 1 January, 2019.
2. The petitioner is engaged in the lifting and selling dry fly ash from
various thermal power plants in West Bengal. The petitioner carries
on business under the name and style of Satyam Sales . According
to the petitioner, in the year 1996, the respondent no.1 had
commissioned Mejia Thermal Power Plant situated at Durlavpur,
Bankura (hereinafter referred to as the “MTPS”). MTPS is one of the
coal-based power plants of the respondent no.1 and apparently is
the largest power plant in terms of generating capacity in the State
of West Bengal. Coal is one of the raw materials used in the power
plant. Since, large quantities of fly ash is generated as a by-product,
which is hazardous to the environment as would corroborate from
the notification issued from the Ministry of Environment and Forest
th th
dated 14 September, 1999 read with notification dated 27
August, 2003 the respondent no.1 had made provisions for free of
cost disposal thereof, and in the process as aforesaid entered into
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an agreement dated 29 May, 2007 with the petitioner whereunder
the respondent no.1 agreed to provide 0 to 300 metric tons of dry fly
ash per day from the Unit of MTPS. The agreement was valid for a
period of 10 years from the date of signing the agreement. As per
such agreement, though the dry fly ash was to be provided from the
unit no.4, free of cost, the petitioner was required to pay Rs.3 per
metric ton, towards administrative-cum-service charges.
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3. The agreement dated 29 May, 2007 was later amended by an
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agreement dated 1 April, 2009. Under such amended agreement,
the respondent no.1 agreed to supply 1000 metric tons of dry fly
ash per day, free of cost to the petitioner from the Unit No. 4, 5 and
6 of the MTPS subject to payment of administrative-cum-service
charges of Rs.1 per metric ton. Such agreement is valid for a period
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of 20 years from the date of commencement thereof i.e. 1 April,
2009. According to the petitioner, notwithstanding the above
agreement being valid and subsisting and creating a binding
obligation to the respondent no.1 to supply at least 1000 metric
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tons of dry fly ash to the petitioner, by a letter dated 20 January,
2017 the respondent no.1 requested the petitioner to participate in
e-auction and purchase the fly ash. The petitioner did not agree to
participate in e-auction. Following the same by a further letter
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dated 13 September, 2017, the respondent no.1 called upon the
petitioner to pay enhanced administrative-cum-service charges for
fly ash lifted under the said agreement at the rate of Rs.20 per
metric ton. The demand was negotiated, on the basis of the
discussion that followed between the parties, the agreement dated
st st
1 April, 2009 was amended on 1 January, 2019. The amended
agreement provided for payment of administrative-cum-service
charges at the rate of Rs.6 per metric ton upto 1000 metric tons per
day, and beyond 1000 metric tons at the e-auction rate prevailing at
that time.
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4. Incidentally, in and around July, 2019, a writ petition being WP
12311(W) of 2019 was filed by one Bijay Kedia against the
respondent no.1 and the petitioner, inter alia , praying for quashing
st
and/or setting aside of the agreement dated 1 April, 2009 as
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amended on 1 January, 2019.
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5. Records would reveal that on 19 October, 2020 a Division Bench
of this Hon’ble Court at the interim stage was, inter alia, pleased to
observe that it is elementary that when the Government or any
public body sells something, the primary consideration should be
that the same fetches the highest price. Though, at the relevant
point of time fly ash was lying dumped in thermal power plants and
the same was regarded as pollutant, the scenario has since changed
and fly ash was now being sold in e-auction. As such public interest
demands that the terms of long-term agreements that the DVC may
have entered be altered.
6. The petitioner would, however, contend that the observations made
by the Division Bench of this Court are stray observations, and
cannot modify the binding agreement between the parties. However,
according to the petitioner, in view of the above order, a meeting
rd
was held between the petitioner and respondent no.1 on 23
November, 2020 wherein the respondent no.1 called upon the
petitioner to increase and match the price of the fly ash with the e-
auction rate. The petitioner, however, did not accede to such
proposal. From this stage, the respondent no.1 started reducing the
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supply of fly ash to the petitioner, and from 12 July, 2022,
without any prior intimation to the petitioner, altogether stopped
supplying dry fly ash. Although, the petitioner had lodged protest by
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letter dated 13 July, 2019, the respondent no.1 only in response
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thereto had by letter dated 19 July, 2022 called upon the
petitioner to enter into a fresh agreement with the respondent no.1
in order to continue to receive the supply of dry fly ash upto 1000
metric ton per day on monthly average basis, on the condition that
the petitioner would successfully participate in the e-auction
bidding process for such fly ash and emerge the successful bidder
in the same. The petitioner would contend that though, the
respondent no.1 had stopped supply of dry fly ash citing guidelines
issued by the Ministry of Power in the year 2021-22, but the
agreement between the parties was not terminated and continues to
subsist even as on this date. It is in the backdrop as aforesaid, the
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writ petition has been filed challenging the letter dated 19 July,
2022 and for a direction upon the respondent no.1 to adhere to the
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terms of the agreement dated 1 January, 2019 and continue
supply of dry fly ash to the petitioner.
7. Mr. Jishnu Saha, learned senior advocate representing the
petitioner, has argued that a concluded contract between the
parties cannot be modified by the Governmental Circulars. The
notification relied by the respondent no.1 did not in any manner
st
interdict the agreement dated 1 April, 2009 entered into between
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st
the parties as modified on 1 January, 2019. The notifications in
fact do not seek to cancel or call for cancellation of the said
agreements. In support of his aforesaid contention, reliance has
been placed on the judgment delivered in the case of Jharkhand
State Mineral Development Corporation Limited and Ors. v.
Tirupati Niryat Private Limited & Ors. , reported in
MANU/JH/0822/2022 . In fact, in such case, it has been held that
rise in price of coal cannot justify withdrawal from a concluded
contract and it would not be in public interest to promote the State
or its instrumentalities to resile from its contractual obligation on
such ground. While justifying the maintainability of the writ
petition, Mr. Saha submits that an aggrieved party which is
arbitrarily deprived of the benefits or advantages under a contract
can legitimately approach the Court.
8. It is next argued that the terms of a contract cannot be unilaterally
altered. By placing reliance on the judgment delivered by the
Hon’ble Supreme Court in the case of Union of India v. Vertex
Broadcasting Company Private Limited & Ors. , reported in
(2015) 16 SCC 198 , he submits that the Union of India also cannot
depart from the terms of NIT unilaterally and on the failure of the
licence to accept modified terms, it cannot resort to forfeiture of
licence fees. Reliance has also been placed in the case of Mary v.
State of Kerala , reported in (2014) 14 SCC 272 for the
proposition that a statutory contract cannot be struck down even
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on the ground of unfairness and that a party cannot escape liability
under such contract whatever may be the reason. It is submitted
that a party cannot be discharged from a consequence of non-
performance of a contractual obligation under a contract. He
submits that the same view has also been reiterated in the case of
Delhi Development Authority & Anr. v. Joint Action Committee,
Allottee of SFS flats & Ors. , reported in (2008) 2 SCC 672 , where
it has been held that purported office orders which are not backed
by statute cannot seek to alter the terms of the contract nor can the
same be thrust upon a party to the contract.
9. In the backdrop as aforesaid, the petitioner would contend that it is
not open to the respondent no.1 to resile from its obligation under
st st
the agreement of 1 April, 2009 as modified on 1 January, 2019.
This apart, by relying on the statement of ash evacuation cost
incurred by the respondent no.1 as disclosed in the writ petition, it
is submitted that it is evident therefrom that MTPS plant of the
respondent no.1 has incurred costs of Rs.93 Crores for the
Financial Year 2021-22 for evacuation of fly ash, as such there
cannot be any reason for the respondent no.1 to walk away from
the terms of the contract. He has also drawn the attention of this
Court to the revenue generated for utilization of dry fly ash through
st st
e-auction during the 1 , April, 2022 to 31 March, 2024, and would
submit that the same tantamount only to Rs. 11.10 Crores for
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financial year 2022-23, and Rs.13.23 Crores for the financial year
2023-24.
10. The respondents have contested the writ petition by filing an
affidavit in opposition. According to Mr. Ghosh, learned senior
advocate representing the respondents, the petitioner is, in fact,
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seeking for specific performance of the agreement dated 1
January, 2019, which according to Mr. Ghosh ordinarily cannot be
granted by this Court in exercise of its extraordinary writ
jurisdiction. He submits that ordinarily, no writ of mandamus can
be issued, granting writ for specific performance of a contract/work
order in an application under Article 226 of the Constitution of
India. According to him, the petitioner can only seek a civil remedy
for its claim. In support of his contention, he has placed reliance on
the judgment delivered by the Hon’ble Supreme Court in the cases
of Sri Ram Builders v. State of Madhya Pradesh & Ors. ,
reported in (2014) 14 SCC 102 , and Surjeet Singh Sahni v. State
of Uttar Pradesh & Anr. , reported in (2022) 15 SCC 536 .
st
11. According to him, the circumstances under which letter dated 1
January, 2019 was issued, would morefully appear from such
letter. In such letter the respondent no.1 has only attempted to
clarify its position to the writ petitioner regarding the changed
circumstances relating to use of dry fly ash. The aforesaid letter
cannot be said to be mala fide or arbitrary. On the contrary, the
same is supported by the best principles of good governance. He
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then submits that it is the obligation of the State authorities to
balance public interest/equity with contractual rights. Since, dry fly
ash is now a revenue earning product, the State cannot
discriminate against the other buyers of fly ash who are buying the
fly ash at the price determined in e-auction, by giving it away for
free to the petitioner. In support of his aforesaid contention, he has
placed reliance on the judgment delivered in the case of Motilal
Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh ,
reported in (1979) 2 SCC 409 , wherein the Hon’ble Supreme Court
has held that the doctrine of promissory estoppel is an equitable
doctrine, the same cannot be enforced when equity demands that
the Government should not be held to its promise when a public
interest is likely to suffer if the Government is held to its promise.
By relying on the judgment delivered in the case of Sharma
Transport v. Government of Andhra Pradesh , reported in (2002)
2 SCC 188 , he submits that in such case, it has been held that
promissory estoppel cannot be applied to compel the Government to
carry out a representation or promise which is prohibited by law
and that promissory estoppel must yield to equity for larger public
interest, it demands. For the aforesaid proposition, he has also
placed reliance on the judgment delivered in the case of Shrijee
Sales Corporation & Anr. v. Union of India , reported in (1997) 3
SCC 398 . By relying on the judgment delivered in the case of Sales
Tax Officer & Anr. v. Shree Durga Oil Mills & Anr. , reported in
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(1998) 1 SCC 572 , it is submitted that the Hon’ble Supreme Court
in such case has held that public interest must override any
consideration of private loss or gain, and the Court will not interfere
with any action taken by the Government in public interest. This
apart, by placing reliance on the judgment delivered in the case of
Natural Resources Allocation, In Re, Special Reference No. 1 of
2012 , reported in (2012) 10 SCC 1 , and the case of Ram and
Shyam Company v. State of Haryana & Ors. , reported in (1985)
3 SCC 267 , and the case of Kasturi Lal Lakshmi Reddy v. State
of Jammu and Kashmir , reported in (1980) 4 SCC 1 he would
submit that the Hon’ble Supreme Court has held that when the
natural resources are made available by the State to private persons
for commercial exploitation exclusively for the individual gain, the
State’s endeavor must be towards maximization of revenue and
must be done at the best available price. He submits that petitioner
is also not entitled to claim damages in the event the respondent
no.1 does not supply the petitioner the fly ash continuously. By
drawing attention of this Court to Clause 4(i) of the agreement
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dated 1 January, 2019 appearing at page 120 of the petition, he
submits that under such agreement the respondent no.1 is not
financially obligated to the petitioner for break or disruption in
supplying of fly ash.
12. Independent of the above, it is submitted that the writ petitioner
has an alternative remedy. The disputes raised herein are
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contractual disputes raising triable issue which requires
adjudication upon taking oral evidence. He submits that in any
event, the actions of the respondents are in accordance with law
and do not warrant any interference at this stage, and as such the
writ petition is liable to be dismissed, with costs. He would submit
that the judgements relied on by the petitioner are distinguishable
on facts, and that they do not assist the petitioner.
13. Having heard the learned advocates appearing for the respective
parties and noting the materials on record, I find that initially, the
petitioner had entered into an agreement with the respondent no.1
th
on 14 May, 2007. As pointed out by Mr. Ghosh, learned advocate
representing the respondents that at the relevant point of time fly
ash was considered useless and a hazardous by-product. As such
the same was required to be disposed of quickly, which had no
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monetary value and accordingly, the above agreement dated 29
May, 2007 was entered with the petitioner who was authorised to
utilize dry fly ash produced by the respondent no.1 for a period of
10 years from the respondent no.1’s Mejia Thermal Power Plant. A
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revised agreement was entered into on 1 April, 2009 for a period of
20 years, whereby the respondent no.1 agreed to provide dry fly ash
upto 1000 metric tons per day free of costs upon payment of Rs.1
per metric ton towards administrative and service charges. During
the tenure of this agreement, the Central Government notified the
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fly ash could be used commercially, and as such devised policy to
sell the same commercially/for monetary consideration.
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14. Accordingly, on 20 January, 2017, the respondent no.1
intimated the 24 entities including Satyam Sales that is the
petitioner herein, M/s. UTCL and M/s. Aniket Enterprise who were
in the business of lifting fly ash to participate in e-auction of dry fly
ash which the respondent no.1 was in the process of
commencement. According to the respondent no.1, except the
petitioner the other entities participated in e-auction process.
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15. On 13 September, 2017 the respondent no.1 intimated all
entities including petitioner that administrative charge has
increased to Rs. 20 per metric ton for collection of dry-fly ash with
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effect from 1 October, 2017. All other entities excepting the
petitioner agreed to such enhancement. The petitioner, however,
refused to accept the increase as would be evident from the letter
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dated 21 September, 2017 on the ground that they are committed
to the end users for supply of dry fly ash at the minimum rate. By
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letter dated 25 January, 2018, the respondent no.1 raised a
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demand in respect of the supply already made up to 31 December,
2017. The petitioner did not make payment of the demand, rather
by raising a dispute invoked the arbitration clause contained in the
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agreement dated 1 April, 2009, by letters dated 6 February, 2018
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and10 May, 2018. By a further letter dated 27 June, 2018, the
petitioner once again invoked the arbitration clause. However, no
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steps had been taken towards proceeding with the arbitration till
date.
16. In the interregnum, however, according to the respondents, the
petitioner had agreed to enhance the administrative charges from
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Rs.1 to Rs.6 per metric ton, accordingly, on 1 January, 2019 an
amended agreement was entered into between the Satyam Sales
and respondent no.1, whereby the petitioner agreed to pay
administrative charges to the extent of Rs.6 per metric ton whereas
the other entities were participating in e-Auction and were also
paying the auction price. At this stage, it was agreed between the
petitioner and the respondent no.1 that if the petitioner takes more
than 1000 metric tons of dry fly ash they would pay the price at par
with the auction rate for such quantity over and above the quantity
of 1000 metric tons. However, the tenure of the original agreement
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dated 1 April, 2009 was not extended thereafter.
17. Records would reveal that sometimes in July, 2019 one Bijay
Kedia had filed a Public Interest Litigation before this Court wherein
petitioner was also a party. It is in connection with such petition
that the Division Bench of this Court in WPA 12311 of 2019 was,
inter alia, pleased to observe as follows:
“ The facts are alarming and it is surprising that Damodar
Valley Corporation hides behind old central notifications and even
refers to Supreme Court judgments as an excuse for selling fly ash
privately at an unconscionably cheap rate while the product
commands a much higher price at auction. Indeed, the Union
represented by Additional Solicitor-General points out that since
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bricks to be used for construction of buildings are now required to
have a fly ash content, there is great demand for such product and
the old notifications may no longer be relevant.
On behalf of DVC it is submitted that there were notifications of
1999 and 2003 issued by the Union Government and orders of the
Supreme Court which regarded fly ash to be a pollutant and it was
thought fit that such pollutant had to be immediately removed,
without charging any money at all, if necessary. DVC suggests
that certain persons were engaged at the relevant point of time on
long-term basis to undertake the work of removal of fly ash and,
though subsequent agreements allow some income to be earned
out of the sale or supply of fly ash by DVC to such contractors, the
much higher price obtained at the auction sales are not comparable
with the price paid by the long-term contractors.
It is elementary that when the Government or any public body
sells something, the primary consideration would be that it should
fetch the highest price. It is true that at one point of time fly ash
would be lying dumped in thermal power plants and the like with
little or no way of removing the same. Fly ash is a pollutant and
has been regarded as a health hazard. It is in the initial stages,
when there was no known use of fly ash, that notifications may
have been issued and Supreme Court orders may have been
passed to get rid of the pollutant, even without charging anything,
if necessary. However, the scenario that prevailed two decades
back or even ten years back cannot be used as an excuse to justify
the undercharging on the ground that long-term agreements may
have been entered into. If public interest demands, the terms of
such long-term agreements may be altered and there is scarcely a
civil court which will pass a decree for specific performance at the
instance of a private contractor seeking to obtain goods from a
public body at an unconscionably low price.
Affidavit-in-opposition to the petition be filed within two weeks
after the vacation; reply thereto, if any, may be filed within a week
thereafter.
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The matter will appear before the appropriate Bench four weeks
after the vacation. ”
18. In the light of the observations as aforesaid, the respondent no.1
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convened a meeting on 23 November, 2020 and called upon the
representatives of the petitioner to pay the price of dry fly ash at par
with the prevalent e-auction rate. The petitioner did not accept the
proposal and informed the same to the respondent no.1 by letter
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dated 25 November, 2020. Later the Ministry of Power issued a
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guideline/Advisory/Circular Notification dated 22 September,
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2025, clarified on 8 February, 2025 and thereafter, on 22
November, 2022 indicating that the ash emerging is a valuable
commodity and giving it for free would lead to malpractice.
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Following the same, the respondent no.1 by letter dated 29 July,
st
2022 informed the petitioner that the agreement executed on 1
January, 2019 cannot be continued and required to be amended
with immediate effect. The respondent no.1 therefore proposed to
enter into a fresh agreement with the petitioner, however, the
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petitioner did not accept such proposal and by letter dated 28
July, 2022 called upon the respondent no.1 to withdraw the same.
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It is the said letter dated 19 July, 2022 which forms subject
matter of challenge in the present writ petition. On the basis of
arguments advanced between the parties, it would transpire that
the following issues fall for consideration:
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a. Whether the petitioner having invoked the arbitration
clause, can be permitted to invoke the extraordinary writ
remedy.
b. Whether the petitioner can compel the respondent no.1 to
continue with the contract and supply fly ash to the
petitioner at a discounted price, and whether can contend
that the respondent no.1 is estopped from denying the
same to the petitioner by citing public interest.
c. Whether the writ Court in exercise of powers under Article
226 of the Constitution of India should grant relief of
specific performance of contract.
d. Whether the writ petition is maintainable since the same
deals with disputed questions of fact.
19. Since, the first issue concerns maintainability of the writ petition
by reasons of presence of an arbitral clause, the same is taken up
first. In this context, I may note that the above issues fell for
consideration before this Court at the very initial stage, when the
point of maintainability was raised by the respondent no.1 on the
ground of presence of an arbitral clause. It is at that stage that the
Coordinate Bench of this Court by noting that the presence of an
arbitration clause can no longer be considered an impediment to
permit interference by a Court under Article 226 of the Constitution
of India as held in the case of Harbanslal Sahnia & Anr. v.
Indian Oil Corporation Ltd. & Ors. , reported in (2003) 2 SCC
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107. , and the case of Whirlpool Corporation v. Registrar of
Trade Marks, Mumbai & Ors. , reported in (1998) 8 SCC 1 , had
held that ordinarily, the exclusion of jurisdiction on the ground of
alternative remedy is more of a rule of discretion rather than one of
compulsion. Even otherwise, since, the petitioner’s right under
Article 19(1)(g) of the Constitution was being considered, as the
impugned action of the respondent no.1 had a direct bearing on the
petitioner’s right to carry on trade and business and the case of
violation of Article 14 being made out, it was held that the same
was sufficient to hold that the writ petition is maintainable and
accordingly, the issue was decided in favour of the petitioner.
Having regard to the above, I am of the view that since at the
threshold the above issue had been decided, the same cannot be
reopened once again. Accordingly, it is held that the writ petition is
maintainable despite presence of the arbitration clause.
20. The next issue that requires consideration is the issue of estoppel
viz a viz public interest. In this context, it may be noted that at the
relevant point of time, when the agreement was first entered into
between the petitioner and the respondent no.1, fly ash had little
commercial value. In fact, it was more onerous for the respondent
no.1 to appropriately dispose of the same in accordance with the
guidelines issued by the Ministry of Environment and Health as fly
ash was considered hazardous. With the passage of time, however,
various uses of the dry fly ash having evolved, dry fly ash in itself
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has became a valuable commodity. I find as rightly pointed out by
Mr. Ghosh, learned senior advocate representing the respondents
that the utilization of dry fly ash has increased manifold and that
presently dry fly ash is being e-auctioned. It may be noted that
apart from the petitioner, there are other entities who are similarly
placed with the petitioner who have been purchasing dry fly ash at
e-auction. It may, however, be also noted that there is a subsisting
arrangement between the petitioner on the one hand and the
respondent no.1 on the other to supply fly ash at the rate of Rs.6
per metric ton on account of administrative cum service charges for
the first 1000 mts., and thereafter at the rate at which dry fly ash is
being sold in the e-auction. Mr. Saha, learned senior advocate
representing the petitioner has by drawing attention of this Court to
the disclosure made by the respondents contended that for the
financial year 2021-22, DVC has generated 47,72,370 mts. of fly
ash, as against the same the respondent no.1 having spent Rs. 93
Crores for evacuation, and has earned Rs.18 Crores from selling the
same. In this context, a chart showing the generation, amount
spent on evacuation and the amount earned through sale of fly ash
for the Financial Year 2022-23 and 2023-24 is extracted
hereinbelow:-
Qty of Fly
Ash sold via
Amt spent by
Amt earned
Qty of Fly
DVC for
evacuation of
by DVC
though selling
Year
Ash
Generated
E-Auction+
EOI
Fly Ash
Fly Ash
FY
2021-
47,72,370 MT (178
of Writ Petition
Month-wise
data present
Rs. 93 crore
(182 of Writ
Rs. 18 crore
(@Pg 181 of
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22 at Pg 175 of
Writ Petition,
in aggregate
comes to
approximately
16.59 LMT
Petition) Writ Petition)
FY
2022-
23
54.88 LMT (Pg 16 of
Supp Affidavit)
12.77 LMT (Pg
16 of Supp
Affidavit)
Rs. 100.95
crore (Pg 16 of
Supplementary
Affidavit)
Rs.11.10 crore
(@Pg 16 of
Supplementary
Affidavit)
FY
2023-
24
50.38 LMT (Pg 16 of
Supp Affidavit)
13.62 LMT (Pg
16 of Supp
Affidavit)
Rs. 168.07
crore (Pg 16 of
Supp Affidavit)
Rs. 13.23
crore (@Pg 16
of
Supplementary
Affidavit)
21. By relying on the above, Mr. Saha has contended that the
respondent no.1 is not benefiting by denying fly ash to the
petitioner and is in fact suffering loss. In this regard, I may note
that the RTI response based on which the above disclosure has
been made has to be read in the context that the same does not
distinguish between the dry fly ash which is a valuable commodity
and the bottom fly ash which also forms part of the production
capacity. According to the claim made by the respondent no. 1 in its
affidavit, I find that the theoretical ratio between the two types of fly
ash i.e. the wet or bottom ash in the ash pond and the dry ash is in
the ratio of 80:20. However, such ratio may vary on various factors.
I also notice from the disclosure made by the respondents that ash
generation takes place inside boilers and it is not physically
possible to measure either the bottom ash or the dry ash inside the
boilers. The bottom ash is taken to the ash pond in slurry form
through pipeline directly from the boilers, the dry fly ash, however,
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is captured through Electrostatic Precipitator Hoppers, and then
taken to silos where the dry ash is stored and the purchasers
including the petitioners bring their tankers and stand in queue to
receive dry fly ash from the silos. The entire process is conducted
mechanically and not manually. The figures provided in response to
the RTI are of total ash generation which includes both dry ash and
bottom ash. Nothing has been placed by any of the parties, based
on which this Court can arrive at a concrete figure as regards the
extent of generation of dry ash. As such, the submissions made by
the petitioner that the respondent no.1 is incurring additional
expenditure for evacuation of dry fly ash, and that it would be far
more beneficial for the respondent no.1 to make the same available
free of cost to the petitioner, does not stand substantiated from the
materials on record.
22. This apart, I find that having regard to the judicial
pronouncement in the case of Bijay Kedia v. Damodar Valley
th
Corporation & Ors., in WP No. 12311 (W) of 2019 dated 19
October, 2020, the respondent no.1 was under an obligation to take
steps. The respondent no.1 had, accordingly, requested the
petitioner to pay the price at par with the e-auction rate. It is also
an admitted position that the petitioner did not accede to such
th
proposal as would corroborate from the communication dated 25
th
November, 2020. It is only thereafter, the letter dated 19 July,
2022 was issued. Although, the petitioner would seek to insist that
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since there is a contract between the parties, the respondent no.1 is
estopped from acting to the contrary, I, however, find that the
Hon’ble Supreme Court in the case of Ram and Shyam Company
(supra) has clearly held that disposal of public money should be
done in the best interest. Again, in the case of Kasturi Lal
Lakshmi Reddy (supra), the Hon’ble Supreme Court has observed
that the Government cannot act in a manner which is solely
benefitting the private party and that such action would both be
unreasonable and contrary to public interest. On such ground, as
also by noting that there cannot be any estoppel against equity
since, equity demands that Government should not be held to its
promise if the public interest is likely to suffer when Government is
held to its promise, provided that the Government can show that it
shall be inequitable to hold the Government to its promise, though
the same should not be lightly inferred. In this context, it would be
relevant to reproduce paragraph 24 of the judgement delivered in
the case of Motilal Padampat Sugar Mills Co. Ltd. (supra).
“24. This Court finally, after referring to the decision in
the Ganges Manufacturing Co. v. Sourujmull, Municipal
Corporation of the City of Bombay v. Secretary of State for
India and Collector of Bombay v. Municipal Corporation of the City
of Bombay summed up the position as follows:
“Under our jurisprudence the Government is not exempt from
liability to carry out the representation made by it as to its
future conduct and it cannot on some undefined and
undisclosed ground of necessity or expediency fail to carry out
the promise solemnly made by it, nor claim to be the Judge of
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its own obligation to the citizen on an ex parte appraisement of
the circumstances in which the obligation has arisen.”
The law may, therefore, now be taken to be settled as a result of
this decision, that where the Government makes a promise
knowing or intending that it would be acted on by the promisee
and, in fact, the promisee, acting in reliance on it, alters his
position, the Government would be held bound by the promise and
the promise would be enforceable against the Government at the
instance of the promisee, notwithstanding that there is no
consideration for the promise and the promise is not recorded in
the form of a formal contract as required by Article 299 of the
Constitution. It is elementary that in a republic governed by the
rule of law, no one, howsoever high or low, is above the law.
Everyone is subject to the law as fully and completely as any
other and the Government is no exception. It is indeed the pride of
constitutional democracy and rule of law that the Government
stands on the same footing as a private individual so far as the
obligation of the law is concerned : the former is equally bound as
the latter. It is indeed difficult to see on what principle can a
Government, committed to the rule of law, claim immunity from the
doctrine of promissory estoppel. Can the Government say that it is
under no obligation to act in a manner that is fair and just or that
it is not bound by considerations of “honesty and good faith”?
Why should the Government not be held to a high “standard of
rectangular rectitude while dealing with its citizens”? There was a
time when the doctrine of executive necessity was regarded as
sufficient justification for the Government to repudiate even its
contractual obligations; but, let it be said to the eternal glory of
this Court, this doctrine was emphatically negatived in the Indo-
Afghan Agencies case and the supremacy of the rule of law was
established. It was laid down by this Court that the Government
cannot claim to be immune from the applicability of the rule of
promissory estoppel and repudiate a promise made by it on the
ground that such promise may fetter its future executive action. If
the Government does not want its freedom of executive action to
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be hampered or restricted, the Government need not make a
promise knowing or intending that it would be acted on by the
promisee and the promisee would alter his position relying upon it.
But if the Government makes such a promise and the promisee
acts in reliance upon it and alters his position, there is no reason
why the Government should not be compelled to make good such
promise like any other private individual. The law cannot acquire
legitimacy and gain social acceptance unless it accords with the
moral values of the society and the constant endeavour of the
Courts and the legislature, must, therefore, be to close the gap
between law and morality and bring about as near an
approximation between the two as possible. The doctrine of
promissory estoppel is a significant judicial contribution in that
direction. But it is necessary to point out that since the docrine of
promissory estoppel is an equitable doctrine, it must yield when
the equity so requires. If it can be shown by the Government that
having regard to the facts as they have transpired, it would be
inequitable to hold the Government to the promise made by it, the
Court would not raise an equity in favour of the promisee and
enforce the promise against the Government. The doctrine of
promissory estoppel would be displaced in such a case because,
on the facts, equity would not require that the Government should
be held bound by the promise made by it. When the Government is
able to show that in view of the facts as have transpired since the
making of the promise, public interest would be prejudiced if the
Government were required to carry out the promise, the Court
would have to balance the public interest in the Government
carrying out a promise made to a citizen which has induced the
citizen to act upon it and alter his position and the public interest
likely to suffer if the promise were required to be carried out by the
Government and determine which way the equity lies. It would not
be enough for the Government just to say that public interest
requires that the Government should not be compelled to carry out
the promise or that the public interest would suffer if the
Government were required to honour it. The Government cannot,
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as Shah, J., pointed out in the Indo-Afghan Agencies case, claim to
be exempt from the liability to carry out the promise “on some
indefinite and undisclosed ground of necessity or expediency”, nor
can the Government claim to be the sole Judge of its liability and
repudiate it “on an ex parte appraisement of the circumstances”. If
the Government wants to resist the liability, it will have to disclose
to the Court what are the facts and circumstances on account of
which the Government claims to be exempt from the liability and it
would be for the Court to decide whether those facts and
circumstances are such as to render it inequitable to enforce the
liability against the Government. Mere claim of change of policy
would not be sufficient to exonerate the Government from the
liability : the Government would have to show what precisely is
the changed policy and also its reason and justification so that the
Court can judge for itself which way the public interest lies and
what the equity of the case demands. It is only if the Court is
satisfied, on proper and adequate material placed by the
Government, that overriding public interest requires that the
Government should not be held bound by the promise but should
be free to act unfettered by it, that the Court would refuse to
enforce the promise against the Government. The Court would not
act on the mere ipse dixit of the Government, for it is the Court
which has to decide and not the Government whether the
Government should be held exempt from liability. This is the
essence of the rule of law. The burden would be upon the
Government to show that the public interest in the Government
acting otherwise than in accordance with the promise is so
overwhelming that it would be inequitable to hold the Government
bound by the promise and the Court would insist on a highly
rigorous standard of proof in the discharge of this burden. But
even where there is no such overriding public interest, it may still
be competent to the Government to resile from the promise “on
giving reasonable notice, which need not be a formal notice, giving
the promisee a reasonable opportunity of resuming his position”
provided of course it is possible for the promisee to restore status
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quo ante. If, however, the promisee cannot resume his position,
the promise would become final and irrevocable. Vide Emmanuel
Avodeji Ajaye v. Briscoe [(1964) 3 All ER 556 : (1964) 1 WLR
1326] ”
23. The same view has been taken in the case of Sharma Transport
(supra). It is well settled that the promissory estoppel cannot be
enforced to compel the Government or a public authority to carry
out a representation or promise which is prohibited by law and the
doctrine of promissory estoppel must yield its place to the equity, if
larger public interest so requires.
24. Admittedly, there is no gainsaying that today, the dry fly ash is a
far more valuable commodity than it used to be when the parties
The same is now sold in public
had entered into the agreement.
auction through the process of e-auction. There are participants in such
public auction, substantial revenue is also generated. Although Mr.
Saha in support of his cause that the State cannot choose to act
unilaterally has relied on the judgement delivered in the case of
Vertex Broadcasting Company Private Limited & Ors. (supra), I
however find that the facts based on which the Hon’ble Supreme
Court has taken a view that the union could not have departed from
the terms of the NIT unilaterally, is entirely different from the case
at hand. In the above case, the Union by departing from the notice
inviting tender was attempting to incorporate new/additional terms
and conditions in the LOI and the draft license agreements which
were already finalized, it is in that context it was held that the
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Union could not have departed from the terms of NIT unilaterally,
and on the refusal of the licensees to accept such modified terms
resort to forfeiture. In the aforesaid case, the issue of large public
interest was not involved. The judgement delivered in the case of
Mary (supra) also does not deal with the issue of public interest.
The case at hand is not one of the state attempting to escape
liability under a statutory contract rather the petitioner trying to
compel the state to carry out a promise which if compelled, it is
more likely that public interest would suffer especially when on one
hand there is no consideration for supply of dry fly ash to the extent
of 1000 mts. by the Government, and on the other, the self-same
product is sold at public auction for the highest fetchable
consideration. It is not a case where the Government is trying to
ignore the contractual terms on indefinite or undisclosed ground of
necessity or expediency. It is true that a Government is bound by
the rule of law and a mere change of policy would not be sufficient
to exonerate the Government from the liability, however, the Court
would have to balance public interest and the Government carrying
out its promise and find out where the equity lies. In this case, the
materials at hand would show the circumstances which lead the
respondent no.1 to review its position, the value of the dry fly ash
increasing manifold, and new users for the same evolving, which
were never contemplated in an era when the agreement was first
executed, as such it would be rather inequitable for this Court to
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compel the respondent no.1 to make available such commodity to
the petitioner in exercise of extraordinary jurisdiction, when such
commodity i.e. dry fly ash is otherwise sold in public auction and on
the petitioner’s own showing, revenue in crores, is generated
therefrom. The conduct of the respondent no.1 in inviting the
petitioner to re-negotiate the terms does not also appear to be
unreasonable, rather the same appears to be affording opportunity
to the petitioner to resume its position. Accordingly, the issue ‘b’ is
decided against the petitioner.
25. On the issue of specific performance, I find that the Hon’ble
Supreme Court in the case of Municipal Council Gondia (supra)
has in no uncertain terms, in paragraph 8 thereof has been pleased
to observe as follows:-
“8. At the outset, it is required to be noted that by the impugned
judgment and order the High Court has issued a writ of
mandamus virtually granting the relief of specific performance of
the contract/work order. From the impugned judgment and order
passed by the High Court it appears that the High Court was
made to believe that the original writ petitioners had already
manufactured the goods which are customized and as per the
specifications and the work order. However, it is now found that
there are no manufactured goods readily available which can be
supplied to the appellant - Council. There are disputed questions
of fact such as whether in fact the goods were manufactured as
per the specifications or not. Nothing was on record before the
High Court that goods were in fact and actually manufactured by
the original writ petitioner No. 1, as per the specifications and the
requirements of the Council and as per the work order. In absence
of any evidence and material on record and there being disputed
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questions of facts the High Court ought not to have passed the
impugned judgment and order directing the Council to continue the
work order and accept the goods from the original writ petitioner
No. 1 and to make the payments as per the work order. Even
otherwise, no writ of mandamus could have been issued virtually
granting the writ for specific performance of the contract/work
order in a writ petition under Article 226 of the Constitution of
India. The original writ petitioners ought to have been relegated to
file a civil suit for appropriate relief of losses/damages, if any,
sustained. ”
26.In the light of the above, and having regard to the observations made
in the case of Surjeet Singh Sahani (supra), and also having regard
to the arbitral clause governing the parties, and the disputed question
involved, including there being no sufficient disclosure on the extent of
fly ash generated viz a viz bottom ash, in my view, it shall not be
prudent to conclusively decide whether specific performance of the
contract between the parties and/or entitlement to damages can at all
be granted, as such it shall be open to the parties to enforce their
claims and/or counter claims and seek resolution of the disputes
through the arbitral process in accordance with law.
27.The other two issues are thus, accordingly decided.
28.In view of the above, the connected application also stands disposed of.
29.There shall be no order as to costs.
Urgent Photostat certified copy of this order, if applied for, be made
available to the parties upon compliance of requisite formalities.
(Raja Basu Chowdhury, J.)