Modified Escalation Clauses Unimplemented by Official Order Cannot Confer Vested Contractual Rights

The Review Applicant entered into a contract with Eastern Coalfields Limited (ECL) for hiring equipment, which required the procurement of High-Speed Diesel (HSD).

Initially, the applicant received HSD at subsidized retail rates, but the government later withdrew this subsidy for bulk consumers, significantly increasing costs.

ECL's Board and Functional Directors originally approved a price variation formula to reimburse the applicants for this difference in 2013.

However, following a Central Vigilance Commission (CVC) recommendation, ECL suspended this decision.

The Writ Petitioners (Review Applicants) challenged this suspension. A Single Judge ruled in favor of the applicants, but a Division Bench later modified that order, ruling that the modified escalation formula was never officially incorporated into the contract.

The applicants filed these review petitions following liberty granted by the Hon’ble Supreme Court.

1. Whether the judgment dated 08.01.2020 contained an error apparent on the face of the record or misconception of fact/law regarding the modification of the escalation clause.

2. Whether the Division Bench considered irrelevant/extraneous documents (the communication dated 20.03.2013) while deciding the intra-court appeal.

The court applied the "limited scope of review" under Order 47 Rule 1 of the Code of Civil Procedure (CPC).

It relied on Sanjay Kumar Agarwal vs. State Tax Officer and Perry Kansagra vs. Smriti Madan Kansagra, which establish that a review is maintainable only for errors apparent on the face of the record—errors so self-evident they do not require a long-drawn process of reasoning—or for "sufficient reason," which includes a misconception of fact/law by the Court or an advocate.

The court also invoked the doctrine of actus curiae neminem gravabit (an act of the court shall prejudice no man).

The court emphasized that a review cannot be an "appeal in disguise".

The Court examined the applicant's contention that the Division Bench relied on extraneous documents (Memo No. 204) not part of the original writ. The Court found this argument meritless, noting the document merely recorded facts already pleaded in paragraph 10 of the writ petition.

The Court further analyzed the letters dated 09.04.2013 and 14.06.2013, concluding that while a modification was "approved in principle," its implementation was expressly subject to a future "Office Order" which was never issued.

Consequently, the Court found no "error apparent" because the Division Bench had simply applied the settled principle that a contract cannot be unilaterally rewritten by a court; rather, the terms as agreed (including the requirement for a formal Office Order) must be strictly followed.

The court noted that the Senior Counsel for the writ petitioners had argued the escalation issue at length during the appeal, meaning the issue was not "extraneous" to the proceedings.

The judgment dated 08.01.2020 remains valid, as the escalation formula was never officially implemented by ECL through the required administrative orders.

The Court clarified that the review process cannot be used to re-agitate or re-hear a matter on its merits to substitute a different view.